Medicare Physician Payments
Medical Settings and Safety of Endoscopic Procedures Gao ID: GAO-03-179 October 18, 2002Every year millions of Americans covered by Medicare undergo endoscopic medical procedures in a variety of health care settings ranging from physicians' offices to hospitals. These invasive procedures call for the use of a lighted, flexible instrument and are used for screening and treating disease. Although some of these procedures can be performed while the patient is fully awake, most require some form of sedation and are usually provided in health care facilities such as hospitals or ambulatory surgical centers (ASC). Some physician specialty societies have expressed concern that Medicare's reimbursement policies may offer a financial incentive to physicians to perform endoscopic procedures in their offices and that these procedures may be less safe because physicians' offices are less closely regulated and therefore there is less oversight of the quality of care. For the 20 procedures reviewed, there was no evidence to suggest that there in any difference in the level of safety of gastroenterological and urological endoscopic procedures performed on Medicare beneficiaries in either physicians' offices or health care facilities, such as hospitals and ASC's. There was also no evidence found to suggest that the resource-based site-of-service payment differential has caused physicians to conduct a greater proportion of gastroenterological or urological endoscopic procedures in their offices for Medicare beneficiaries. If Medicare coverage for the office procedures in the study were terminated, few access problems would occur in most of the country because physicians perform the vast majority of the procedures that were studied in health care facilities.
GAO-03-179, Medicare Physician Payments: Medical Settings and Safety of Endoscopic Procedures
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Report to Congressional Committees:
United States General Accounting Office:
GAO:
October 2002:
Medicare Physician Payments:
Medical Settings and Safety of Endoscopic Procedures:
Medical Settings and Safety of Endoscopy:
GAO-03-179:
Contents:
Letter:
Results in Brief:
Background:
Level of Safety of Endoscopy Does Not Appear to Differ by Medical
Setting:
Payment Differential Has Increased but Proportion of Office Procedures
Has Not Increased:
If Office Procedures Were Not Reimbursed by Medicare, Access to
Endoscopy Might Be Most Affected in the New York City Area:
Concluding Observations:
Agency Comments:
Appendix I: Scope and Methodology:
Appendix II: Medical Settings for Endoscopic Procedures in
GAO Sample:
Appendix III: Comments from the Department of Health and
Human Services:
Appendix IV: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: GAO Sample of Gastroenterological Endoscopic Procedures for
Medicare Beneficiaries, 2001:
Table 2: GAO Sample of Urological Endoscopic Procedures for Medicare
Beneficiaries, 2001:
Table 3: Medical Setting Usage Trends for 12 Gastroenterological and 8
Urological Procedures, Nationwide, Calendar Years 1996-2001:
Table 4: Medical Setting Usage Trends for 12 Gastroenterological and 8
Urological Procedures, New York City Area and the Remainder of the
United States, Calendar Years 1996-2001:
Figures:
Figure 1: Average Physician Practice Expense Reimbursements for 12
Gastroenterological Procedures for Medicare Beneficiaries by Medical
Setting, Nationwide:
Figure 2: Percentage of 12 Common Gastroenterological and 8 Urological
Endoscopic Procedures Provided in Physicians‘ Offices, Nationwide:
Abbreviations:
ASC: ambulatory surgical center:
BIPA: Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000:
CMS: Centers for Medicare & Medicaid Services:
CON: certificate of need:
CPT: Current Procedural Terminology:
HCFA: Health Care Financing Administration:
Letter:
October 18, 2002:
The Honorable Max Baucus
Chairman
The Honorable Charles E. Grassley
Ranking Minority Member
Committee on Finance
United States Senate:
The Honorable William M. Thomas
Chairman
The Honorable Charles B. Rangel
Ranking Minority Member
Committee on Ways and Means
House of Representatives:
The Honorable W.J. (Billy) Tauzin
Chairman
The Honorable John D. Dingell
Ranking Minority Member
Committee on Energy and Commerce
House of Representatives:
Every year millions of Americans covered by Medicare[Footnote 1]
undergo endoscopic medical procedures in a variety of health care
settings ranging from physicians‘ offices to hospitals. These invasive
procedures call for the use of a lighted, flexible instrument and are
used for screening and treating disease. Although some of these
endoscopic procedures, such as the sigmoidoscopic examination of the
large bowel, can be performed while the patient is fully awake, most
require some form of sedation and are usually provided in health care
facilities such as hospitals or ambulatory surgical centers (ASC). Some
physician specialty societies have expressed concern that Medicare‘s
reimbursement policies may offer a financial incentive to physicians to
perform endoscopic procedures in their offices and that these
procedures may be less safe because physicians‘ offices are less
closely regulated and therefore there is less oversight of the quality
of care.[Footnote 2]
Medicare provides higher payments for medical procedures performed in
physicians‘ offices than if they were performed in hospitals or
ambulatory surgical centers. These differences are based on relative
resources used in the delivery of medical services. Physicians
conducting procedures in their offices are responsible for providing
clinical staff, supplies, and equipment. However, physicians who
conduct procedures in hospitals or ASCs have fewer expenses, since
these facilities provide many of the necessary services.[Footnote 3] As
a result, Medicare payments for procedures in physicians‘ offices are
higher to account for the increased practice expenses. These
differences in Medicare reimbursements based on the setting are known
as ’site-of-service payment differentials.“ The payment differentials
have been phased in since 1999, and were fully implemented in 2002.
During this time, the site-of-service payment differentials have
increased for most endoscopic procedures.
Section 411 of the Medicare, Medicaid, and SCHIP Benefits Improvement
and Protection Act of 2000 (BIPA)[Footnote 4] directed us to examine
the practice of providing physician services that are ordinarily
performed in health care facilities--such as gastroenterological and
urological endoscopic procedures--in physicians‘ offices. We were
directed to (1) review safety evidence regarding medical settings, (2)
assess whether the practice expense site-of-service payment
differential has served as an incentive for physicians to perform such
procedures in their offices rather than in other medical settings, and
(3) assess whether access to care by Medicare beneficiaries would be
affected if these procedures were no longer reimbursed by Medicare when
conducted in physicians‘ offices.
For our study, we selected 12 gastroenterological and 8 urological
procedures that are ordinarily performed in health care facilities for
Medicare beneficiaries.[Footnote 5] In 2001, there were about 4.8
million of these gastroenterological procedures performed, of which
about 156,000
(3.3 percent) were conducted in physicians‘ offices. During this same
year, there were about 306,000 of these urological procedures
performed, of which about 12,000 (3.8 percent) were conducted in
physicians‘ offices. To determine the relative safety of these
procedures conducted in different medical settings in the 50 states and
the District of Columbia, we reviewed the scientific literature
maintained by the National Library of Medicine and interviewed
physicians; medical directors at Medicare carriers, which are the CMS
contractors that process and review Medicare claims; and a
representative of a trade association that represents the medical
malpractice insurance industry. We also attempted to obtain Medicare
claims data to determine whether patients who had endoscopic procedures
later encountered medical complications. However, such data are not
readily available. To assess whether the practice expense site-of-
service differential has served as an incentive for physicians to
conduct office-based procedures, we analyzed CMS data on the percentage
of endoscopic procedures performed in physicians‘ offices, hospitals,
and ASCs from 1996 through 2001. To determine whether access to care by
Medicare beneficiaries would be affected if these procedures were no
longer reimbursed by Medicare when conducted in physicians‘ offices, we
analyzed CMS data on a geographic basis, leading to a focus on the New
York City area, which has a high utilization rate of physician office-
based endoscopic procedures. For this metropolitan area, we analyzed
CMS medical setting data and interviewed Medicare carrier directors and
New York state officials. We conducted our work from February 2001
through October 2002 in accordance with generally accepted government
auditing standards. (See app. I for more information on our scope and
methodology.):
Results in Brief:
For the 20 procedures we reviewed, we found no evidence to suggest that
there is any difference in the level of safety of gastroenterological
and urological endoscopic procedures performed on Medicare
beneficiaries in either physicians‘ offices or health care facilities,
such as hospitals and ASCs. We also found no indication in the
literature that physician office-based gastroenterological or
urological procedures are less safe than those provided in health care
facilities. In addition, Medicare carrier directors, physicians, and
physician specialty society representatives told us that there is no
indication that physician office-based endoscopy is unsafe. According
to a major trade association that represents the malpractice insurance
industry, office-based endoscopy is not considered riskier than
endoscopy conducted in medical facilities. For example, the two largest
malpractice insurance companies in the New York City area--a locality
with a high proportion of physician office-based procedures--do not
impose a surcharge on physicians who perform any type of endoscopy in
the office.
We also found no evidence to suggest that the resource-based site-of-
service payment differential has caused physicians to conduct a greater
proportion of gastroenterological or urological endoscopic procedures
in their offices for Medicare beneficiaries. Since 1996, the proportion
of these endoscopic procedures performed in physicians‘ offices for
Medicare beneficiaries has not increased. At the same time, practice
expense payments in 2002 for these office-based endoscopic procedures
have increased to five times greater than payments for the procedures
performed in a health care facility. However, because full
implementation of the practice expense component did not occur until
2002, it is too early to tell whether that the percentage of these
procedures performed in physicians‘ offices will increase in the
future.
If Medicare coverage for the office procedures in our study were
terminated, few access problems would occur in most of the country
because physicians perform the vast majority of the procedures that we
studied in health care facilities. However, our analysis of CMS data
demonstrated that the New York City area has a much higher rate of
utilization of physicians‘ offices for these procedures than the rest
of the nation. As noted by state Medicare carrier directors, health
care facility capacity in the New York City area might be initially
inadequate because about 35 percent of the gastroenterological
procedures in our study were performed in physicians‘ offices in this
region. If these gastroenterological procedures could no longer be
provided in offices, medical facilities in the area might not be able
to absorb all the displaced patients in the short term. The effect on
patient access of such a change might be mitigated somewhat over time,
however, by a March 1998 New York State Department of Health rule
change that is causing the numbers of ASCs in the state to increase.
Relatively few of the urological procedures in our study (about 8
percent) are performed in physicians‘ offices in the New York City
area, so if Medicare coverage for office-based procedures was
eliminated, the impact for these procedures would likely be minimal.
CMS provided written comments on a draft of this report, and concurred
with the general findings of the study.
Background:
In 2001, there were about 4.8 million gastroenterological procedures
and about 306,000 urological procedures performed on Medicare
beneficiaries nationwide that were conducted at least 90 percent of the
time in health care facilities and less than 10 percent of the time in
physicians‘ offices. About 3.3 percent (or about 156,000) of these
gastroenterological procedures and 3.8 percent (or about 12,000) of
these urological procedures were conducted in physicians‘ offices.
About 35 percent of all office-based gastroenterological endoscopic
procedures were conducted in the New York City metropolitan
area.[Footnote 6]
Regulations and Guidelines for Endoscopic Procedures:
Medicare regulates ASCs and other health care facilities that conduct
endoscopic procedures by requiring that they satisfy conditions related
to safety, facility design, staff expertise, and other factors in order
to treat Medicare beneficiaries. [Footnote 7] If an ASC is accredited
by a national accrediting body or licensed by a state agency that
provides reasonable assurances that the conditions are met, CMS may
deem it to comply with most requirements. These conditions include, for
example, the following:
* Compliance with state licensure requirements.
* An effective procedure for immediate transfer to hospitals of
patients needing emergency medical care beyond the capabilities of the
ASC.
* Safe performance of surgical procedures by qualified physicians
granted clinical privileges by the ASC under Medicare-approved policies
and procedures.
* Ongoing comprehensive self-assessment of the quality of care with
active participation of the medical staff.
* Use of a safe and sanitary environment, properly constructed,
equipped, and maintained to protect the health and safety of patients.
* Provision of adequate management and staffing of nursing services to
ensure that nursing needs of all patients are met.
* Maintenance of complete, comprehensive, and accurate medical records
to ensure adequate patient care.
* Safe and effective provision of drugs and biologicals under the
direction of a responsible individual.
According to the American College of Surgeons, nine states have
guidelines or regulations[Footnote 8] pertaining to the safety of
office-based surgical procedures (including endoscopy) that address
issues of Medicare certification, state licensure,
accreditation,[Footnote 9] and inspection of physicians‘ offices:
* In California, state licensure, Medicare certification, or
accreditation is required for all outpatient settings where anesthesia
is used.
* In Connecticut, state regulations require any office or facility
operated by a licensed health care practitioner or practitioner group
to be accredited by a nationally recognized body if sedation or
anesthesia is used.
* In Florida, the state is required to inspect a physician‘s office
where certain levels of surgery (including endoscopy) are performed,
unless a nationally recognized accrediting agency or another
accrediting organization approved by the Board of Medicine accredits
the office.
* In Illinois, state regulations allow the delivery of anesthesia
services by a certified registered nurse anesthetist in the office only
if the physician has training and experience in these services.
* In Mississippi, physicians conducting office procedures must register
with the state, maintain logs of surgical procedures conducted, follow
federal standards for sterilization of surgical instruments, and report
any surgical complications to a state board.
* In New Jersey, state regulations have been developed to establish
training programs for physicians who utilize anesthesia in their office
practices.
* In Rhode Island, state regulations require licensure for offices in
which surgery, other than minor procedures, is performed. Accreditation
by a nationally recognized agency or organization is also required.
* In South Carolina, guidelines address the safe delivery of
anesthesia, the presence of emergency equipment, procedures to transfer
emergency cases to hospitals, and physician training.
* In Texas, regulations govern physicians in outpatient settings
providing general or regional anesthesia.
In addition, organizations such as the American Society for
Gastrointestinal Endoscopy and the Society of American Gastrointestinal
Endoscopic Surgeons publish safety guidelines that are similar to the
Medicare guidelines for ASCs. These guidelines are designed to ensure
that endoscopies are conducted safely regardless of whether they are
conducted in health care facilities or physicians‘ offices. However,
the Medicare program does not regulate physicians‘ offices and does not
make judgments about the safety of procedures conducted there.
Medicare‘s Practice Expense Payments and Site-of-Service
Differentials:
In 1992, the Health Care Financing Administration (HCFA) began the
implementation of a resource-based physician fee schedule for the
Medicare program. The physician fee schedule is applicable to
procedures conducted in a variety of health care settings, including
hospitals, ASCs, and physicians‘ offices.[Footnote 10] Under this fee
schedule, physician payments are based on relative amounts of resources
needed to provide procedures regardless of the health care
setting.[Footnote 11] The physician fee schedule includes three
components. The physician work component (implemented in 1992) provides
payment for the physician‘s time, effort, skill, and judgment necessary
to provide a service. The malpractice insurance component reimburses
physicians for the expense of their professional liability insurance.
The practice expense component compensates physicians for direct
expenses, such as clinical staff salaries, medical supplies, and
medical equipment and indirect expenses, such as administrative staff
salaries and other office expenses incurred in providing services.
Unlike the other two components, physician practice expenses can differ
depending on where the procedure is performed.[Footnote 12] In the
office setting, the physician is responsible for providing clinical
staff, supplies, and equipment needed to perform a service. In the
facility setting, such as a hospital or ASC, these are the
responsibility of the facility. Medicare‘s practice expense payments to
physicians can differ depending upon the medical setting to reflect
these differences. For medical facilities, practice expense payments to
physicians are generally lower, because Medicare pays for nursing
support, equipment, and supplies needed with a separate facility fee.
However, when these procedures are performed in an office, Medicare
pays physicians for these expenses in the practice expense portion of
the physician fee schedule.[Footnote 13] The differences in practice
expense payments for the same procedure are referred to as the site-of-
service differential.[Footnote 14] In 1999, HCFA began a now completed
3-year phase-in of the site-of-service payment differential, as a part
of the resource-based practice expense system. In previous work, we
found that HCFA used acceptable methodology and relied on the best data
available to develop the practice expense component of its Medicare
payment system of which this payment differential is a result.[Footnote
15] Medicare‘s higher payment for office-based procedures reflects the
higher expenses to the physicians of providing those procedures, but
this payment may not cover all of their expenses.[Footnote 16]
Level of Safety of Endoscopy Does Not Appear to Differ by Medical
Setting:
We found no evidence to suggest that the level of safety of
gastroenterological or urological endoscopy conducted on Medicare
beneficiaries differs by medical setting. In our search of the relevant
scientific literature maintained by the National Library of Medicine
and in discussions with Medicare carrier medical directors, physicians,
and physician specialty societies, we found no evidence of a higher
occurrence of medical complications from office-based
gastroenterological and urological endoscopic procedures relative to
other medical settings.[Footnote 17] Furthermore, according to a major
trade association representing medical malpractice insurance
companies, the pricing policies of insurance companies indicate that
those companies do not believe that office-based endoscopy poses
additional safety risks.
Available Evidence Suggests Complications Are Few with Office-Based
Endoscopy:
Our search of relevant scientific literature maintained by the National
Library of Medicine and discussions with physicians revealed little
evidence of complications associated with office-based endoscopy for
gastrointestinal and urological procedures. The scientific literature
on the safety of office endoscopy is sparse; we were able to locate
only one published study. This study of upper gastrointestinal
procedures conducted in France showed very few complications over the
course of nearly 18,000 endoscopic procedures.[Footnote 18] In this
study, there was one death (the patient had previously diagnosed heart
disease), one case of breathing difficulty (considered avoidable by the
authors), and five other minor incidents. During the 10,000 exams
performed over the last 12 years of this 17-year study, no clinically
significant incidents occurred.
We discussed the safety of office-based endoscopy with physicians,
including representatives of three organizations critical of the CMS
practice expense site-of-service differential policy. We also discussed
in-office safety issues with four Medicare carrier medical directors,
including those in New York where there is a relatively high proportion
of office procedures conducted. All of these officials, including the
critics of the policy, emphasized that the procedures as currently
conducted are safe and that complications are extremely rare.
Major Malpractice Insurance Companies Do Not Levy Surcharge on
Physicians Who Conduct Office-Based Endoscopy:
According to the Physician Insurers Association of America, a trade
association that represents the malpractice insurance industry, office-
based endoscopy is not riskier than endoscopy conducted in health care
facilities. For example, two large New York malpractice insurance
companies do not levy a surcharge on physicians who conduct office-
based surgery, including the endoscopic procedures included in our
study. One of these New York companies, which has the largest market
share nationwide (and 57 percent of the malpractice insurance market in
New York) does not consider office-based surgery an issue when setting
rates for its clients. The other New York company requires physicians
who conduct surgery in their offices to follow its company standards
for equipment and safety backup procedures, and it reserves the right
to conduct unannounced inspections of their offices. It does not,
however, impose a surcharge on physicians for office-based procedures.
It does require a surcharge for endoscopic procedures, but the amount
does not differ by medical setting.
Payment Differential Has Increased but Proportion of Office Procedures
Has Not Increased:
Although the site-of-service Medicare payment differential for the
12 common gastroenterological endoscopic procedures in our study has
increased since the practice expense component of the resource-based
fee schedule began to be implemented in 1999, the percentage of these
procedures performed in the office has not increased. The average
Medicare practice expense payments for the 12 gastroenterological
endoscopic procedures are presented in figure 1.[Footnote 19] The
figure shows that the payment differential has increased both because
the average practice expense payments for procedures performed in
health care facilities have decreased substantially (from $133 in 1998
to $59 in 2002) and because the payment for office-based procedures has
nearly doubled (from $143 in 1998 to $277 in 2002). The payment
differential for urological procedures has similarly increased since
the average practice expense payments for such procedures performed in
health care facilities have decreased by more than half (from $218 in
1998 to $83 in 2002) and because the average payments for office-based
procedures have more than doubled (from $218 in 1998 to $448 in 2002.):
Figure 1: Average Physician Practice Expense Reimbursements for 12
Gastroenterological Procedures for Medicare Beneficiaries by Medical
Setting, Nationwide:
[See PDF for image]
Note: See app. I for a list of included procedures.
[A] Practice expense site-of-service differential phase-in begins.
[B] Practice expense site-of-service differential phase-in completed.
Source: GAO analysis of CMS data.
[End of figure]
The nationwide percentage of common office-based gastroenterological
and urological endoscopic procedures conducted on Medicare
beneficiaries has not increased (see fig. 2).[Footnote 20] For example,
the percentage of the gastroenterological procedures in our study
conducted in the office nationwide declined from about 4.8 percent in
1996 to 3.9 percent in 1998, the last year of the old practice expense
payment system, and to 3.3 percent in 2001 as the phase-in of the new
practice expense system approached completion. Similarly, the
percentage of the urological procedures in our study declined from
about 5.7 percent in 1996 to 4.7 percent in 1998 to 3.8 percent in
2001.
From 1996 through 2001 in the New York City metropolitan area, where
about 35 percent of the nationwide Medicare-covered office procedures
were conducted, the proportion of office-based endoscopic procedures
for gastroenterology has remained fairly constant at slightly less than
30 percent. During the same period, the proportion of office-based
urological procedures in our study has declined from 11 percent to 8
percent.
However, regardless of geographic area, these findings must be
interpreted with caution. It is too early to determine the full effects
of the new practice expense system‘s payment differential, as it was
not fully implemented until 2002.
Figure 2: Percentage of 12 Common Gastroenterological and 8 Urological
Endoscopic Procedures Provided in Physicians‘ Offices, Nationwide:
[See PDF for image]
Note: See app. I for a list of included procedures.
[A] Practice expense site-of-service differential begins phase-in.
Source: GAO analysis of CMS data.
[End of figure]
If Office Procedures Were Not Reimbursed by Medicare, Access to
Endoscopy Might Be Most Affected in the New York City Area:
We were directed by BIPA to assess whether the access to care by
Medicare beneficiaries would be adversely affected if
gastroenterological procedures conducted in physicians‘ offices were no
longer reimbursed by Medicare. If this occurred, patients in most of
the nation would not likely experience access problems for the
procedures in our study, given that relatively few procedures are
performed in the office setting. However, some New York City
metropolitan area Medicare patients might have initial difficulty
obtaining care. In 2001, 28 percent, or about 54,000, of the
gastroenterological procedures for Medicare patients in the New York
City area were conducted in physicians‘ offices, accounting for about
35 percent of these office procedures nationwide. According to CMS
data, the New York City area has the largest proportion and total
number of office-based gastroenterological procedures of any geographic
area in the nation. In our review of CMS data on the geographic
dispersion of office procedures, we have been unable to locate other
areas of the country with such a major reliance on the availability of
office-based gastroenterological endoscopy. If Medicare coverage for
the common endoscopic office procedures included in our study were
withdrawn, medical facilities might not have the capacity to absorb the
displaced patients in the short term, according to a New York State
Department of Health official and Medicare carrier directors.
However, in 1998, New York State eased requirements for approval of new
ASCs, and, as a result, medical facility capacity has recently begun to
increase in the state and in the New York City area. New York requires
an approved certificate of need (CON) in order to approve a new ASC. To
obtain a CON, the need for the services of a proposed ASC must be
demonstrated for specific geographic areas. According to a New York
State Department of Health official, the rules for CON approval were
relaxed significantly in March 1998, and nearly all applications are
currently being approved. Since March 1998, there has been an increase
of almost 200 percent in the number of ASCs in New York, including
major increases in the New York City area. CON approvals can be
obtained in the New York City area because most area hospitals are
operating at capacity. In the future, if ASCs are equipped to offer the
gastroenterological procedures included in our study, it is possible
that they could accommodate displaced patients, if they are located in
areas accessible to these patients. In contrast, only about 8 percent
of the urological procedures in the New York City area were conducted
in offices, so the elimination of Medicare reimbursement would likely
have a minimal effect on the delivery of these procedures.
Concluding Observations:
Some critics of the Medicare site-of-service payment differential for
endoscopic procedures have questioned the practice of conducting them
as office procedures because of concerns about patient safety. They
have suggested that the differential provides an incentive to the
physician to provide endoscopic procedures in a setting--the
physician‘s office--that is less safe than another setting, such as a
hospital or an ASC. But in our review of common gastroenterological and
urological endoscopic procedures, we found no evidence that safety
problems are greater for these procedures conducted in physicians‘
offices. Furthermore, we found that the proportion of common office-
based gastroenterological and urological endoscopic procedures
included in our study has not increased as the site-of-service
differential has been phased in. However, because the payment
differential has been in effect only since 1999 and was not fully
implemented until 2002, it is too early to tell whether it will affect
the percentage of procedures conducted in the office in the future. If
the common office-based endoscopic procedures included in our study
were no longer reimbursed by Medicare, most areas of the country would
not develop patient access problems. However, the initial effects in
the New York City metropolitan area--where there is a predominance of
office-based procedures--could be problematic, although the increase in
ASCs in the New York City area could mitigate patient access problems
in the future.
Agency Comments:
CMS provided written comments on a draft of this report, and concurred
with the general findings in the study (see app. III). The agency
provided technical comments, which we have addressed where appropriate.
We are sending this report to the CMS Administrator and interested
congressional committees. We will also make copies available to other
interested parties on request. In addition, the report available at no
charge on the GAO Web site at http://www.gao.gov.
If you or your staffs have any questions, please contact me at (202)
512-7101. Major contributors to this report are listed in appendix IV.
Marjorie Kanof
Director, Health Care---Clinical
and Military Health Care Issues:
Signed by Marjorie Kanof:
[End of section]
Appendix I: Scope and Methodology:
This appendix provides detailed information on the gastroenterological
and urological procedures that we selected for our study. It also
describes the methods that we used to address the study‘s main
objectives.
We selected the 12 gastroenterological and 8 urological endoscopic
procedures that are ordinarily performed in health care facilities and
that we defined as being conducted at least 90 percent of the time in
health care facilities and less than 10 percent of the time in offices.
These gastroenterological and urological procedures are common types of
endoscopy. These procedures have a practice expense site-of-service
differential. The procedures included in our study accounted for about
30 percent of the total number of gastroenterological and urological
endoscopic procedures conducted for Medicare beneficiaries in 2001;
about 3.5 percent of the procedures in our study were conducted in
offices. Many of these procedures require the use of sedation and
entail some risks for patients. Our results are not generalizable to
other endoscopic procedures. Tables 1 and 2 provide detailed
information on the 20 procedures included in our study.
Table 1: GAO Sample of Gastroenterological Endoscopic Procedures for
Medicare Beneficiaries, 2001:
Procedure name: Esophagus endoscopy; (43200); Total performed: 16,636;
Percentage in office: 5.96; Practice expense reimbursement[B]: Health
care facility: $52; Practice expense reimbursement[B]: Physician‘s
office: $215.
Procedure name: Esophagus endoscopy with biopsy; (43202); Total
performed: 6,573; Percentage in office: 2.40; Practice expense
reimbursement[B]: Health care facility: 54; Practice expense
reimbursement[B]: Physician‘s office: 179.
Procedure name: Upper GI--examination; (43234); Total performed: 3,492;
Percentage in office: 2.21; Practice expense reimbursement[B]: Health
care facility: 53; Practice expense reimbursement[B]: Physician‘s
office: 132.
Procedure name: Upper GI--diagnostic; (43235); Total performed:
507,438; Percentage in office: 2.50; Practice expense reimbursement[B]:
Health care facility: 61; Practice expense reimbursement[B]:
Physician‘s office: 169.
Procedure name: Upper GI--biopsy; (43239); Total performed: 1,246,051;
Percentage in office: 3.09; Practice expense reimbursement[B]: Health
care facility: 67; Practice expense reimbursement[B]: Physician‘s
office: 178.
Procedure name: Change gastronomy tube; (43760); Total performed:
73,779; Percentage in office: 7.59; Practice expense reimbursement[B]:
Health care facility: 20; Practice expense reimbursement[B]:
Physician‘s office: 46.
Procedure name: Diagnostic colonoscopy; (45378); Total performed:
1,211,962; Percentage in office: 3.59; Practice expense
reimbursement[B]: Health care facility: 91; Practice expense
reimbursement[B]: Physician‘s office: 232.
Procedure name: Colonoscopy and biopsy; (45380); Total performed:
572,206; Percentage in office: 3.09; Practice expense reimbursement[B]:
Health care facility: 98; Practice expense reimbursement[B]:
Physician‘s office: 244.
Procedure name: Colonoscopy and control bleeding; (45382); Total
performed: 20,037; Percentage in office: 1.62; Practice expense
reimbursement[B]: Health care facility: 125; Practice expense
reimbursement[B]: Physician‘s office: 289.
Procedure name: Colonoscopy and lesion removal; (45383); Total
performed: 66,250; Percentage in office: 2.97; Practice expense
reimbursement[B]: Health care facility: 133; Practice expense
reimbursement[B]: Physician‘s office: 286.
Procedure name: Colonoscopy and lesion removal--with forceps or bipolar
cautery; (45384); Total performed: 337,139; Percentage in office: 2.62;
Practice expense reimbursement[B]: Health care facility: 113; Practice
expense reimbursement[B]: Physician‘s office: 266.
Procedure name: Colonoscopy and lesion removal--with snare technique;
(45385); Total performed: 694,714; Percentage in office: 3.46; Practice
expense reimbursement[B]: Health care facility: 126; Practice expense
reimbursement[B]: Physician‘s office: 286.
Procedure name: Total; Total performed: 4,756,277; Percentage in
office: 3.25; Practice expense reimbursement[B]: Health care facility:
[Empty]; Practice expense reimbursement[B]: Physician‘s office:
[Empty].
[A] CPT codes, which are maintained and copyrighted by the American
Medical Association, are descriptive terms and identifying codes for
reporting physician services and other medical services, including
outpatient hospital procedures. CPT codes are used by health care
providers to bill Medicare for covered services.
[B] These are national reimbursement rates. The rates differ for
specific geographic areas.
Source: GAO analysis of CMS data.
[End of table]
Table 2: GAO Sample of Urological Endoscopic Procedures for Medicare
Beneficiaries, 2001:
Procedure name: Kidney stone fragmentation; (50590); Total performed:
40,666; Percentage in office: 2.86; Practice expense reimbursement[B]:
Health care facility: $248; Practice expense reimbursement[B]:
Physician‘s office: $397.
Procedure name: Cystoscopy with ureteral catherization; (52005); Total
performed: 69,293; Percentage in office: 7.84; Practice expense
reimbursement[B]: Health care facility: 46; Practice expense
reimbursement[B]: Physician‘s office: 162.
Procedure name: Cystoscopy with fulguration and/or resection of small
bladder tumor(s); (52234); Total performed: 34,522; Percentage in
office: 5.96; Practice expense reimbursement[B]: Health care facility:
93; Practice expense reimbursement[B]: Physician‘s office: 241.
Procedure name: Cystoscopy with fulguration and/or resection of medium
bladder tumor(s); (52235); Total performed: 33,230; Percentage in
office: 1.67; Practice expense reimbursement[B]: Health care facility:
114; Practice expense reimbursement[B]: Physician‘s office: 263.
Procedure name: Cystoscopy with fulguration and/or resection of large
bladder tumor(s); (52240); Total performed: 25,419; Percentage in
office: 1.38; Practice expense reimbursement[B]: Health care facility:
204; Practice expense reimbursement[B]: Physician‘s office: 352.
Procedure name: Cystoscopy with direct vision internal urethrotomy;
(52276); Total performed: 14,817; Percentage in office: 6.60; Practice
expense reimbursement[B]: Health care facility: 95; Practice expense
reimbursement[B]: Physician‘s office: 246.
Procedure name: Remove bladder stone; (52317); Total performed: 6,832;
Percentage in office: 4.00; Practice expense reimbursement[B]: Health
care facility: 129; Practice expense reimbursement[B]: Physician‘s
office: 792.
Procedure name: Cystoscopy with insertion of stent; (52332); Total
performed: 80,925; Percentage in office: 1.13; Practice expense
reimbursement[B]: Health care facility: 60; Practice expense
reimbursement[B]: Physician‘s office: 841.
Procedure name: Total; Total performed: 305,704; Percentage in office:
3.84; Practice expense reimbursement[B]: Health care facility: [Empty];
Practice expense reimbursement[B]: Physician‘s office: [Empty].
[A] CPT codes, which are maintained and copyrighted by the American
Medical Association, are descriptive terms and identifying codes for
reporting physician services and other medical services, including
outpatient hospital procedures. CPT codes are used by health care
providers to bill Medicare for covered services.
[B] These are national reimbursement rates. The rates differ for
specific geographic areas.
Source: GAO analysis of CMS data.
[End of table]
To assess the safety of office-based endoscopy, we reviewed the
scientific literature and interviewed physicians; four Medicare carrier
medical directors in the New York City area; North Dakota; and Wyoming;
a representative of Physicians Insurance Association of America; an
official from a trade association that represents the medical
malpractice insurance industry; and representatives of two large New
York malpractice insurance companies. We also interviewed interest
group representatives, including members of the American College of
Gastroenterology, American Society for Gastrointestinal Endoscopy,
American College of Surgeons, American Gastroenterology Association,
and American Urological Association. We also reviewed regulations and
guidelines on physician office-based endoscopy in the nine states that
have such regulations and guidelines. These states are California,
Connecticut, Florida, Illinois, Mississippi, New Jersey, Rhode Island,
South Carolina, and Texas.
To assess whether the practice expense site-of-service payment
differential acts as an incentive for physicians to conduct
gastroenterological and urological endoscopic procedures in their
offices, we analyzed data from the Centers for Medicare & Medicaid
Services (CMS) using the Part B Extract and Summary System on the
medical settings (office, inpatient hospital, outpatient hospital, and
ambulatory surgical center) for relevant procedures for 1996 through
2001. For the gastroenterological and urological procedures in our
analysis, we developed averages of practice expense reimbursements for
health care facilities and offices for each year from 1998 through
2002.
To determine whether access to care by Medicare beneficiaries would be
affected if endoscopic procedures in physicians‘ offices were no longer
reimbursed by Medicare, we analyzed CMS data (using the Part B Extract
and Summary System) on office-based endoscopy for the nation as a whole
and for the New York City area, which has the highest proportion of
office-based procedures in the nation. We interviewed Medicare carrier
medical directors in several locales with a range of population size
and density, including the New York City area, North Dakota, and
Wyoming.
[End of section]
Appendix II: Medical Settings for Endoscopic Procedures in GAO Sample:
Tables 3 and 4 summarize the percentages of gastroenterological and
urological endoscopic procedures in our sample performed in physicians‘
offices, hospitals (both inpatient and outpatient), and ASCs for 1996
through 2001. In the data provided to us by CMS, there was another
medical setting category (’other“) that captured a broad variety of
medical settings, including nursing facilities, rural health clinics,
and military treatment facilities. The proportion of procedures
conducted in these settings was very low, about 1 percent or less. In
1999, some of the claims data were coded incorrectly, and the Health
Care Financing Administration inaccurately assigned larger proportions
to the ’other“ category (from 5 to 9 percent). Because of this
confusion, we have eliminated the ’other“ category from the analysis
for 1999 and the other years to ensure consistency in comparisons. Our
reanalysis affects the results for 1999 because it is unclear where the
claims categorized as ’other“ should have been categorized. However,
because of the relatively few cases affected, we do not believe that
this error affects our analyses or conclusions.
Table 3: Medical Setting Usage Trends for 12 Gastroenterological and 8
Urological Procedures, Nationwide, Calendar Years 1996-2001:
Gastroenterological procedures[A].
Office; Year: 1996: Percentages: 4.76; Year: 1997: Percentages: 4.30;
Year: 1998: Percentages: 3.87; Year: 1999: Percentages: 3.55; Year:
2000: Percentages: 3.37; Year: 2001: Percentages: 3.25.
Inpatient hospital; Year: 1996: Percentages: 26.63; Year: 1997:
Percentages: 25.97; Year: 1998: Percentages: 24.35; Year: 1999:
Percentages: 23.02; Year: 2000: Percentages: 21.35; Year: 2001:
Percentages: 19.93.
Outpatient hospital; Year: 1996: Percentages: 49.49; Year: 1997:
Percentages: 48.94; Year: 1998: Percentages: 49.33; Year: 1999:
Percentages: 48.89; Year: 2000: Percentages: 48.73; Year: 2001:
Percentages: 47.15.
ASC; Year: 1996: Percentages: 19.11; Year: 1997: Percentages: 20.79;
Year: 1998: Percentages: 22.45; Year: 1999: Percentages: 24.54; Year:
2000: Percentages: 26.54; Year: 2001: Percentages: 29.64.
Urological procedures[B].
Office; Year: 1996: Percentages: 5.70; Year: 1997: Percentages: 5.17;
Year: 1998: Percentages: 4.70; Year: 1999: Percentages: 4.44; Year:
2000: Percentages: 4.05; Year: 2001: Percentages: 3.84.
Inpatient hospital; Year: 1996: Percentages: 32.74; Year: 1997:
Percentages: 31.32; Year: 1998: Percentages: 29.19; Year: 1999:
Percentages: 27.48; Year: 2000: Percentages: 26.33; Year: 2001:
Percentages: 25.76.
Outpatient hospital; Year: 1996: Percentages: 54.52; Year: 1997:
Percentages: 56.06; Year: 1998: Percentages: 57.48; Year: 1999:
Percentages: 58.80; Year: 2000: Percentages: 59.33; Year: 2001:
Percentages: 59.16.
ASC; Year: 1996: Percentages: 7.04; Year: 1997: Percentages: 7.46;
Year: 1998: Percentages: 8.63; Year: 1999: Percentages: 9.28; Year:
2000: Percentages: 10.29; Year: 2001: Percentages: 11.24.
[A] Includes 12 procedures. See app. I for complete list.
[B] Includes 8 procedures. See app. I for complete list.
Source: HCFA Part B Extract and Summary System (1996-2001).
[End of table]
Table 4: Medical Setting Usage Trends for 12 Gastroenterological and 8
Urological Procedures, New York City Area and the Remainder of the
United States, Calendar Years 1996-2001:
New York City metropolitan area; Gastroenterological procedures[A].
Office; Year: 1996: Percentages: 29.19; Year: 1997: Percentages: 28.45;
Year: 1998: Percentages: 29.22; Year: 1999: Percentages: 28.70; Year:
2000: Percentages: 27.87; Year: 2001: Percentages: 28.11.
Inpatient hospital; Year: 1996: Percentages: 33.45; Year: 1997:
Percentages: 32.49; Year: 1998: Percentages: 30.15; Year: 1999:
Percentages: 27.38; Year: 2000: Percentages: 24.56; Year: 2001:
Percentages: 22.72.
Outpatient hospital; Year: 1996: Percentages: 28.63; Year: 1997:
Percentages: 30.39; Year: 1998: Percentages: 32.21; Year: 1999:
Percentages: 34.37; Year: 2000: Percentages: 36.82; Year: 2001:
Percentages: 38.08.
ASC; Year: 1996: Percentages: 8.73; Year: 1997: Percentages: 8.67;
Year: 1998: Percentages: 8.42; Year: 1999: Percentages: 9.55; Year:
2000: Percentages: 10.75; Year: 2001: Percentages: 11.09.
Urological procedures[B].
Office; Year: 1996: Percentages: 11.49; Year: 1997: Percentages: 9.28;
Year: 1998: Percentages: 9.36; Year: 1999: Percentages: 9.71; Year:
2000: Percentages: 8.61; Year: 2001: Percentages: 8.05.
Inpatient hospital; Year: 1996: Percentages: 62.40; Year: 1997:
Percentages: 62.04; Year: 1998: Percentages: 57.70; Year: 1999:
Percentages: 53.69; Year: 2000: Percentages: 48.26; Year: 2001:
Percentages: 45.17.
Outpatient hospital; Year: 1996: Percentages: 21.80; Year: 1997:
Percentages: 24.37; Year: 1998: Percentages: 28.86; Year: 1999:
Percentages: 31.84; Year: 2000: Percentages: 38.19; Year: 2001:
Percentages: 42.08.
ASC; Year: 1996: Percentages: 4.30; Year: 1997: Percentages: 4.30;
Year: 1998: Percentages: 4.08; Year: 1999: Percentages: 4.76; Year:
2000: Percentages: 4.94; Year: 2001: Percentages: 4.70.
Rest of United States Gastroenterological procedures[A].
Office; Year: 1996: Percentages: 3.63; Year: 1997: Percentages: 3.21;
Year: 1998: Percentages: 2.74; Year: 1999: Percentages: 2.47; Year:
2000: Percentages: 2.28; Year: 2001: Percentages: 2.22.
Inpatient hospital; Year: 1996: Percentages: 26.32; Year: 1997:
Percentages: 25.67; Year: 1998: Percentages: 24.10; Year: 1999:
Percentages: 22.84; Year: 2000: Percentages: 21.21; Year: 2001:
Percentages: 19.82.
Outpatient hospital; Year: 1996: Percentages: 50.46; Year: 1997:
Percentages: 49.78; Year: 1998: Percentages: 50.09; Year: 1999:
Percentages: 49.51; Year: 2000: Percentages: 49.26; Year: 2001:
Percentages: 47.53.
ASC; Year: 1996: Percentages: 19.59; Year: 1997: Percentages: 21.33;
Year: 1998: Percentages: 23.07; Year: 1999: Percentages: 25.18; Year:
2000: Percentages: 27.25; Year: 2001: Percentages: 30.43.
Urological procedures[B].
Office; Year: 1996: Percentages: 5.45; Year: 1997: Percentages: 4.99;
Year: 1998: Percentages: 4.51; Year: 1999: Percentages: 4.23; Year:
2000: Percentages: 3.85; Year: 2001: Percentages: 3.66.
Inpatient hospital; Year: 1996: Percentages: 31.45; Year: 1997:
Percentages: 29.99; Year: 1998: Percentages: 28.01; Year: 1999:
Percentages: 26.45; Year: 2000: Percentages: 25.40; Year: 2001:
Percentages: 24.96.
Outpatient hospital; Year: 1996: Percentages: 55.95; Year: 1997:
Percentages: 57.43; Year: 1998: Percentages: 58.67; Year: 1999:
Percentages: 59.86; Year: 2000: Percentages: 60.23; Year: 2001:
Percentages: 59.86.
ASC; Year: 1996: Percentages: 7.16; Year: 1997: Percentages: 7.60;
Year: 1998: Percentages: 8.81; Year: 1999: Percentages: 9.46; Year:
2000: Percentages: 10.52; Year: 2001: Percentages: 11.51.
[A] Includes 12 procedures. See app. I for complete list.
[B] Includes 8 procedures. See app. I for complete list.
Source: HCFA Part B Extract and Summary System (1996-2001).
[End of table]
[End of section]
Appendix III: Comments from the Department of Health and Human
Services:
DEPARTMENT OF HEALTH & HUMAN SERVICES:
Administrator Washington; DC 20201:
TO: Marjorie E. Kanof:
Director, Health Care-Clinical and Military Health Care Issues General
Accounting Office:
FROM: Thomas A. Scully Administrator:
Signed by Thomas A. Scully:
Centers for Medicare & Medicaid Services:
SUBJECT:General Accounting Office (GAO) Draft Report, ’MEDICARE
PHYSICIAN PAYMENTS. Medical Settings and Safety of Endoscopic
Procedures,“ (GAO-02-885):
We appreciate the opportunity to review GAO‘s above-subject draft
report to Congress. This study was completed to meet the requirements
of section 411 of the Medicare, Medicaid, and State Children‘s Health
Insurance Program Benefits Improvement and Protection Act of 2000
(BIPA). We agree with the GAO‘s general findings in this study. The
report is very helpful in addressing long-standing questions raised by
specialty groups.
We have provided specific editorial comments.
[End of section]
Appendix IV: GAO Contact and Staff Acknowledgments:
GAO Contact:
Marjorie Kanof, (202) 512-7101:
Acknowledgments:
Lawrence S. Solomon, Martin T. Gahart, Vanessa Taylor, Wayne Turowski,
Roseanne Price, and Mike Thomas made major contributions to this
report.
FOOTNOTES:
[1] The Medicare program is administered by the Centers for Medicare &
Medicaid Services (CMS), a federal agency within the U.S. Department of
Health and Human Services. On July 1, 2001, the Secretary of Health and
Human Services changed the name of the Health Care Financing
Administration (HCFA) to CMS. This report refers to the agency as CMS
when discussing actions taken since the name change and as HCFA when
discussing actions taken before the name change.
[2] The specialty societies‘ concerns are outlined in 65 Fed. Reg.
65,400 (Nov. 1, 2000).
[3] Medicare provides a facility fee to hospitals and ASCs to reimburse
their expenses for clinical staff, supplies, and equipment.
[4] Pub. L. No. 106-554, App. F, 114 Stat. 2763, 2763A-508.
[5] We defined ’ordinarily performed“ in health care facilities as
procedures performed at least 90 percent of the time in health care
facilities and less than 10 percent of the time in physicians‘ offices.
We have included all gastroenterological and urological procedures that
have been ordinarily performed in health care facilities. See app. I
for a list of these procedures.
[6] This pattern does not exist for the urological procedures. Only
about 8 percent of the office-based procedures were conducted in the
New York City area.
[7] 42 C.F.R. §§ 416.40 - 416.48 (2001).
[8] These state guidelines and regulations cover a wide range of
office-based procedures, of which gastroenterological and urological
endoscopy are only a portion.
[9] The application of safety and quality standards to offices that
conduct surgery may result from their seeking accreditation by the
Accreditation Association for Ambulatory Health Care, American
Association for Accreditation of Ambulatory Surgery Facilities, or the
Joint Commission on Accreditation of Healthcare Organizations.
[10] 42 U.S.C. § 1395w-4 (2000).
[11] Prior to 1992, fees were based on charges physicians billed for
their services.
[12] HCFA convened clinical practice expense panels composed of
physicians, non physician clinicians, and practice administrators to
review the types and quantities of practice expense components used for
medical procedures. A contractor used the resulting data to develop
dollar cost estimates. These estimates resulted in practice expense
amounts assigned to different medical settings. There has been an
ongoing multi specialty panel review of these estimates since 1999.
According to CMS, this review has changed the estimates for more than
1,000 procedure codes. See 66 Fed. Reg. 55,245 (Nov. 1, 2001) for the
most recent Medicare physician fee schedule.
[13] The payment schedule for diagnostic colonoscopy, a common
gastroenterological procedure, illustrates how payments to physicians
differ by medical setting. In 2002, the practice expense payment to
physicians who provide the procedure in an office, $318, is about five
times greater than the practice expense payment of $64 to physicians
who conduct the procedure in a medical facility, such as a hospital or
an ASC. However, when this procedure is conducted in a hospital or ASC,
Medicare also pays a facility fee of $372 to hospital outpatient
departments and $433 to ASCs. These are national reimbursement rates.
The rates differ for specific geographic areas.
[14] App. I lists the practice expense relative value units for each
procedure included in our sample listing those for health care
facilities and the physicians‘ offices separately. The Medicare program
translates the relative value units for practice expense (as well as
those for physician work and malpractice insurance) into dollars by
multiplying them by a single conversion factor. Since the practice
expense relative value units are higher for physicians‘ offices than
for health care facilities, they result in higher reimbursement amounts
for the physicians‘ offices, hence a payment differential.
[15] See U.S. General Accounting Office, Medicare Physician Payments:
Need to Refine Practice Expense Values During Transition and Long Term,
GAO/HEHS-99-30 (Washington, D.C.: Feb. 24, 1999).
[16] See U.S. General Accounting Office, Medicare Physician Fee
Schedule: Practice Expense Payments to Oncologists Indicate Need for
Overall Refinements, GAO-02-53 (Washington, D.C.: Oct. 31, 2001).
[17] The Medicare program does not routinely collect safety data for
endoscopic procedures performed in offices or other medical settings.
[18] B. Maroy and P. Moullot, ’Safety of Upper Gastrointestinal
Endoscopy with Intravenous Sedation by the Endoscopist at Office:
17,963 Examinations Performed in a Community Center by Two Endoscopists
over 17 Years,“ Journal of Clinical Gastroenterology, vol. 27, no. 4
(1998): 368-69.
[19] These calculations are based on practice expense reimbursement
data for 12 gastroenterological endoscopic procedures as detailed in
app. I. Each procedure is assigned a specific dollar payment amount by
CMS for practice expense reimbursement. The payment amounts reported
reflect national reimbursement rates; the rates differ for specific
geographic areas.
[20] See app. II for more information on site-of-service usage from
1996 through 2001 for the endoscopic procedures in our study.
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