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1992.11.20 :  Medicare Physician Fees

Contact:  Bob Hardy (202) 690-6145
November 20, 1992

       Medicare payments will be increased by 3.1 percent for
surgical services and 0.8 percent for other physician services in
the 1993 calendar year, HHS Secretary Louis W. Sullivan, M.D.,
announced today.
       The secretary is required to use a formula prescribed by
law to update the Medicare physician fee schedule if Congress
does not legislate the changes. 
       Because Congress did not enact legislative changes, the
fee changes for 1993 are being set according to the statutory
formula.  The update equals an inflation estimate adjusted to
reflect the performance of physicians in meeting goals for the
growth rate of Medicare spending for physician services in fiscal
year 
1991.
       Secretary Sullivan also announced the performance
standards, or goals, for the 1993 fiscal year.  The overall goal
for the growth rate of Medicare spending on physician services in
FY 1993 is 10.0 percent.  The performance standard is 8.4 percent
for surgical services and 10.8 percent for other physician
services. 
       The secretary is required by law to establish the
performance goals if Congress does not set the standards.  The
formula for setting the standards includes the estimated
inflation rate for the costs of medical practice, the growth of
Medicare enrollments, the 
average historical increases in the volume and intensity of
physician services, and the impact of legislation and
regulations.
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       The performance of physicians in meeting the 1993
standards could affect the fee updates they receive in 1995.  The
process is designed to reward physicians when Medicare spending
for their services increases at a pace slower than the
performance standards. But fee updates can be reduced when
performance standards are exceeded.
       The 1993 inflation estimate for the costs of medical
practice is 2.7 percent.  Surgical fees will be updated by 3.1
percent because the growth rate of Medicare spending for surgical
procedures in FY 1991 was 0.4 percent less than the performance
standard for those services.
       For non-surgical services, the 1993 fee update will be 0.8
percent because Medicare expenditures for those services in FY
1991 increased at a rate 1.9 percent greater than the performance
standard.
       The procedures for establishing the annual performance
standards and fee updates are specified in 1989 legislation that
reformed the Medicare physician payment system. 

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EDITOR'S NOTE:  HCFA, an agency of the U.S. Department of Health
and Human Services, directs the Medicare and Medicaid programs,
which help pay the medical bills of more than 62 million
Americans.  HCFA's estimated fiscal year 1993 expenditures are
$230 billion, the 12th largest government budget of any kind in
the world.