Surprise spending spike tied to end of Medicare consultations

Washington Eliminating the popular consultation billing option for physicians was intended to have a negligible effect on Medicare spending, but the policy change had unintended consequences that led to an increase in net Medicare spending, suggests a study from Archives of Internal Medicine.

Higher fees authorized by Medicare for outpatient office visits and a sizable increase in physicians billing more complex evaluation and management codes were reasons cited for the higher spending. The elimination of consults led to a 6.5% increase in spending on office visits in 2010, the study said.

“It might be a transient year, but all we can say for now is there was a one-time increase in spending on outpatient encounters,” said Zirui Song, PhD, of Harvard Medical School in Boston and one of the study's authors. “Whether spending returns to previous spending levels is unknown.”

Physicians had the option to bill consultations before 2010. Consults were paid at higher rates compared with other types of office visits and commonly were billed by specialists after patient referrals from primary care doctors. The Centers for Medicare & Medicaid Services cited several reasons — such as confusion about policy requirements — for canceling payment for the specific consultation codes.

The consult service for patients still exists, but specialists treating patients during consultation encounters bill new or established patient office visit codes.

Medicare expected the policy change to be budget-neutral. Because consultations that paid higher rates no longer would be a billing option, CMS increased payments for other evaluation and management services. For instance, a new high-level established patient visit, CPT 99214, paid $97.77 in 2010, a 6% increase from $92.33 in 2009.

The total volume of patient visits to physicians did not change significantly, Song said. He and his colleagues attributed the increased net spending to the higher fees and a change in doctor coding behavior. More higher-level services were billed after the change.

Both specialty and primary care physicians shifted toward billing the higher-intensity services, researchers found after examining outpatient claims for 2.2 million beneficiaries. An additional $10.20 was spent per beneficiary, per quarter in 2010.

Song warned against taking the results of the study out of context and emphasized its limitations. For instance, the authors' research does not pinpoint a reason for physicians billing more complex evaluation and management services, as the definitions for the services are open to interpretation. The results should not be used to evaluate specific proposed reforms to the way Medicare pays for patient services, he said.

Still, the study demonstrates how price-based policy can affect behavior.

“Our evaluation of Medicare's elimination of consultations offers potential lessons for policymakers,” the authors said. “Primarily, the volume effects associated with fee cuts will depend on the nature of the service.”

Associations representing specialists have opposed the policy eliminating the consultation codes. The American Medical Association in the years since the change has called for CMS to restore the codes.

The study shows that the policy change produced a result that was not anticipated, said James Fasules, MD, senior vice president of health policy and advocacy at the American College of Cardiology. The ACC still opposes the coding revision.

Testing payment models and providing physicians with data and benchmarks to make care delivery changes would be more powerful than making such tweaks to payment policy, Dr. Fasules said.