Regulating Doctors' Fees: Competition, Benefits and Controls Under Medicare.

• Author: Chasin, Steven H.

Regulating doctors' fees is a crucial component in the federal government's struggle to slow health expenditures that consumed 12.2% of the 1989 GNP [1, ix]. The Omnibus Budget Reconciliation Act of 1989 contained a Congressionally-mandated fee schedule to rein in the $41.2 billion Medicare physician payments [1, 56]. The fees would be based on a national standard adjusted for geographic regions [1, 5]. Regulating Doctors' Fees: Competition, Benefits, and Controls under Medicare is a timely compilation of articles, commentaries and discussions that examine William Hsiao's proposal for Medicare to use his Resource-based Relative Value Scale (RBRVS) as a cornerstone for physician payments. In general, the articles deliberate payment issues, explain the medical marketplace, critique Hsiao's work, project the impact of implementing the RBRVS and offer alternative proposals.

Hsiao's scale is based on measuring three patient care resource inputs from about 1,900 physicians: time involved and intensity of services; practice costs; and physician training opportunity costs. An innovative part of the methodology employed 14 physician advisory committees to oversee the project.

Hsiao found that Medicare physician payments, relative to resources, are too low for evaluative and management services and too high for imaging, invasive and laboratory services [p. 2331. This, not surprisingly, encourages inappropriately high use of surgery and tests by Medicare patients [p. 234].

H. E. Frech III opens the book with a helpful overview of health care payment issues and summary of other authors. He outlines the problems of consumer information, defines monopolistic competition, physician payments under Medicare, policy alternatives, the Resource-based Relative Value System and then neatly summarizes the subsequent essayists. Part One focuses on Physicians Markets and Medicare benefits. Joseph Antos first discusses increasing Medicare payments, growth in physician payments, policy alternatives and policy implementation issues. With this background, other contributors examine different aspects of the medical market with an occasional reference to Hsiao's findings.

In Part 2, Hsiao recaps his research, which is my only complaint. The earlier discussions of Hsiao's methodology by other authors is more detailed compared with Hsiao's own explanation. I would have preferred that Hsiao provided the detailed explanation. This is important because other contributors...