Doctors' fees called out of balance. Surgery costs too much, consultation not enough, report says

Does the way in which America's physicians are paid encourage them to do too much surgery or expensive tests? Are doctors in general being paid too much? Washington is beginning to discuss these questions. Spurring the debate is a report by physicians at the Harvard School of Public Health, and a response by Dr. William Roper, who heads the federal government's huge medicare and medicaid programs. These two programs provide funds for some of the medical expenses incurred by the elderly and the poor.

Some health experts say these questions presage a major congressional debate over the next two years about how to slow the soaring increase in the billions of dollars that government pays to physicians annually through these two programs.

Congress and the next administration will be seeking ways to hold down these costs. But the implications extend far beyond medicare, as immense as that program is. How much medicare is willing to pay for medical procedures has a major impact on what private insurers are willing to pay, and the fees doctors charge private patients.

The questions at issue:

Are doctors paid too much by government, insurers, and individuals to do surgery and conduct high-tech tests? Are they paid too little for consultations with patients? If the answer to these questions is yes, should the payments be adjusted - down for some surgery and tests, up for consultation? If payments were out of balance, would doctors perform more surgery and complicated tests, irrespective of patient need?

The just-published Harvard report, which appeared Wednesday in the New England Journal of Medicine, supports the view that payments to physicians for different kinds of services are out of kilter. The report, conducted at the request of Congress for the US Department of Health and Human Services, concludes that ``invasive procedures'' such as surgery are ``typically compensated at more than double the rate of evaluation-and-management services,'' such as talking with patients.

How can government rein in the double-digit annual increase in the money it pays physicians in general to care for the nation's elderly and its poor? Since 1975 it has increased annually at about 15 percent, Dr. Roper says, far above the inflation rate. In the next 10 years it probably will triple in cost, he says.

Roper's ultimate solution is to pay physicians not for individual services but, as medicare does with hospitals, to pay to keep or make people well. But he concedes that such an approach will take years to institute, if ever.

In any case he holds that merely rearranging the payments between physicians, while perhaps useful, avoids the main problem: getting the rising costs of physicians' overall services under control. ``Is it worth investing the lion's share of our analytic, administrative, and political resources,'' he testified earlier this year, ``to substitute one fee-for-service payment system for another, leaving medicare's most important issue - increased volume and intensity - untouched?''

Efforts over the past 15 years to deal with increases in physician costs have not succeeded, Roper notes. By contrast, efforts to control rising costs of services provided by hospitals have been successful.

The sad truth, Roper says, is that the federal government does not have an effective way of restraining ``the rapid growth in spending for physicians, which is likely to continue to be out of control.'' The paradox: Continued growth will increase pressures to reduce these costs, both around the US and in the political arena.

That is why Congress can be expected to become heavily involved. In the short run it will try to find a way to hold down the increase in government medicare spending. In the long run it will be seek to put a similar dampening effect on the amount that all Americans pay for physician care.