Doctors accepted government-set fees and gave up the right to bill patients for anything beyond the government-set maximum in a record 66 percent of Medicare cases in November, according to an internal report prepared by the Department of Health and Human Services.
The big jump over the previous level of 56 percent in fiscal 1984 was due largely to the fact that 29.8 percent of doctors serving Medicare patients agreed under a new provision of law to accept the government-set payment as full payment for their Medicare patients. The remaining doctors accepted it in some cases but did not agree to do so all the time.
Medicare experts in HHS and on Capitol Hill said the increase in the number of cases settled on the basis of government-fee schedules for Medicare could save elderly patients hundreds of millions of dollars in the next six months and guarantee the success of a new law freezing Medicare-reimbursement rates to doctors but also seeking to block them from raising their rates to patients to make up the loss on the freeze.
The new law was passed last year in an effort to hold down Medicare costs.
Under basic Medicare rules, the government sets maximum fees for various services by doctors to Medicare patients. They are normally increased annually to cover inflation.
If doctors accept the Medicare rate as the maximum they can charge the patient, they bill the government for four-fifths of the payment and collect the remaining 20 percent (but no more) from the patient.
But they have the option of charging more than the allowable rate, in which case they must collect the entire amount from the patient. Medicare then reimburses the patient, but only for 80 percent of the government-set Medicare maximum.
Thus, if Medicare sets a maximum of $100 for a certain type of treatment and the doctor chooses to accept this fee so he can have the certainty of payment from the government, he bills the government for $80 and the patient for the remaining $20. But if the doctor wants to charge $120, he bills the patient directly for $120. The patient is reimbursed by Medicare, but only for $80, so the patient in this case must pay $40.
To hold down the government's outlays for Medicare, Congress last year "froze" the existing fee schedules and wiped out the normal inflation increase, at the president's request. But Congress feared that doctors would make up the loss by charging patients more and forgoing the right to bill the government, thus achieving government savings at the patient's expense.
As a result, it created a program encouraging doctors to sign up annually to charge only the Medicare maximum in all cases for the year. Doctors who did this were to obtain advantages, such as having their names publicized via toll-free telephone lines and directories of participating physicians.
About 20 percent of doctors in the past normally accepted the government fee in virtually all their cases, though without advance agreement to do so. "We thought if it went up a few points it would be pretty good," said one source.
Instead, 118,428 doctors or group practices out of 396,840 signed up -- 29.8 percent. Among the biggest signers: radiologists, 41 percent; optometrists, 44 percent; cardiovascular specialists and neurologists, 35 percent; pathologists, 39 percent. Among the lowest group of signers: general practice doctors, 27 percent; anesthesiologists, 21 percent; miscellaneous surgical specialists, 18 percent. For internal medicine, the figure was 32 percent.
In the District of Columbia the doctor sign-up rate was 49 percent (one of the highest rates), in Maryland 30 percent and in Virginia 28 percent. Alabama topped the nation at 50 percent. South Dakota was lowest at 10.7 percent.