The Medicare Physician Fee Schedule favors services with separately billable professional and technical components, allocating indirect practice expense (PE) using the sum of physician work and clinical labor. For most other services, indirect PE depends only on physician work. This report shows that revising the allocation to depend on both physician work and clinical labor for all services is a straightforward approach to align payments.
This research was sponsored by the Centers for Medicare and Medicaid Services and conducted in the Financing and Organization Program of RAND Health.
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