Medical care
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Physicians, carefully adhering to the definitions of Physicians' Current Procedural Terminology (CPT) billing codes, used the same CPT codes to denote evaluation and management services that varied widely in work and used different codes for services whose work was the same. As payment shifted to the Medicare Fee Schedule, it was important that the coding system be redefined so that codes consistently reflect the resource costs of these services. Redefining these codes for a resource-based payment system required an understanding of how verifiable predictors relate to physician work. ⋯ Intraservice time, which accounted for 90% of the variance, was the most important predictor of intraservice work. Specification of time, which previously had not been an element in the definitions of CPT codes for evaluation and management services, was useful in refining these codes so that their value corresponds more closely to resource costs. Other predictors of work were site of service or visit type, patient status (new/initial, established/subsequent), and referral status (consultation, nonconsultation).
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On January 1, 1992, the Health Care Financing Administration implemented the 1989 legislation reforming the Medicare payment system for physicians' services. The cornerstone of the new payment reform is the Medicare Fee Schedule (MFS), which is based on the Resource-Based Relative Value Scale (RBRVS). ⋯ Under this scenario, fees for evaluation and management services increase by 15% to 45%, while fees for invasive services and diagnostic tests decrease by 20% to 30%. These changes increase the Medicare income of family practitioners by more than 30% while decreasing the income of most surgical specialties by 10% to 20%.