ABSTRACT
This chapter begins with a discussion of physician fee schedules. It focuses on the Medicare experience with developing and implementing a resource-based fee schedule and discusses to all-payer rate setting for physicians' services. The chapter also discusses the fee schedules proposed in the Clinton health plan. In negotiating both initial adjustments from payment rates and annual updates, there are two important considerations. First, if the proposal's premium caps were binding in an alliance, control of fee levels would be an important tool for keeping premiums within the their limits. The second consideration would be fee-for-service plan competitiveness. Many are incorporating the Medicare relative value scale into their fee schedules. The payment reform legislation spelled out how payments for a service would vary geographically. In the Medicare Fee Schedule, the initial conversion factor was calibrated so that spending would be the same as projected under the prior system, but an expenditure target mechanism was developed to update the conversion factor.
