Update: Medicare Spending Increased When Consult Pay Eliminated

A study of Medicare claims data suggests that eliminating payments for consultations commonly billed by specialists was associated with a net increase in spending on visits to both primary care physicians and specialists by 6.5%, according to a report published by the Archives of Internal Medicine, a JAMA Network publication.

Prior to 2010, the Medicare Physician Fee Schedule provided higher payments for consultations than for office visits at every level of complexity.

Example: In 2009, Medicare paid $124.79 on average for a consultation of medium complexity, compared with $91.97 for a new patient office visit and $61.31 for an established patient office visit of similar complexity.

EXTRA: See our infographic on the troubles of Medicare

With the fee schedule implemented during calendar year 2010, the Centers for Medicare and Medicaid Services eliminated payments for consultations altogether, so that all outpatient physician encounters would be billed as office visits, while simultaneously raising the fees for office visits. The change was designed specifically to be budget-neutral for the Medicare program.

Despite what was intended to be a budget-neutral approach to leveling the playing field between primary care and specialist physicians, overall spending increased as a response to the changes to office visit reimbursements. The decrease in consultation spending was not large enough to mitigate the increase in office visit spending.

In an editorial, Patrick G. O’Malley, M.D., M.P.H., of the Uniformed Services University, Bethesda, Md., writes: “Primary care has been marginalized, and our own professional societies have encountered numerous obstacles in advocating for the preeminence of primary care.”

“Fix the pay differential, and make providers’ lives easier. How to do this may seem complicated, but it is not. The main barrier is for our professional leadership at every level, whether in the clinic, hospital, medical school, health system, professional society, government agencies or society in general, to acknowledge the problem and then take responsibility and act,” O’Malley continues.

“We need a more definitive and more intentional workforce policy plan, and given the current morale of our adult primary care workforces, it will have to involve higher and more parity in pay as well as substantial improvement in work hours and working environment,” O’Malley concludes.

In light of these new Medicare developments, many doctors are learning of the SignatureMD concierge model, in which patients pay their primary care physicians a retainer in return for basic services and enhanced care. Most SignatureMD physicians continue to accept insurance and use their concierge patients’ retainers as supplementary fees.

The advantages to physicians of concierge medicine include the ability to provide enhanced services to patients and to retain control over the costs of providing such services.  There is less financial glut with concierge healthcare as a result of a decreased reliance on patient office visits and a reduced need to bill Medicare for the patient’s care.


I. JAMA and Archives Journals

About SignatureMD

SignatureMD is one of the nation’s largest firms providing initial conversion and ongoing support services to concierge medicine physicians. SignatureMD currently partners with over 200 affiliated primary care physicians and specialists across 35 states, and its network is rapidly expanding.