Ensuring Efficient Use of Resources in Medicare

In recent years, GAO and others have reported that over the long term, because of rising health care costs and growing numbers of eligible baby boomers, the Medicare program is unsustainable in its present form. Experts agree that physicians play a central role in the generation of health care expenditures in total, because of the influence of their referrals, admissions, and orders on the services patients receive. Their services are estimated to account for 20 percent of total health care expenditures, whereas their influence is estimated to account for up to 90 percent of this spending. Medicare's largely fee-for-service payment system, in which physicians receive a fee for each service provided, encourages physicians to increase the volume of services they provide without regard to quality or outcomes. According to the Medicare Trustees, Part B spending under the Medicare physician fee schedule rose from about $37 billion in 2000 to about $57.6 billion in 2007. Spending for imaging services is one of the fastest-growing sets of services paid for under the physician fee schedule—growing from about $6.7 billion to $12.1 billion over the same time period. To address this rapid spending growth, GAO has studied efforts by private payers to constrain health care spending and has recommended certain reforms to encourage program efficiency. These reforms include

• developing a physician-profiling program that identifies individual physicians with inefficient practice patterns and uses the results to improve the efficiency of care; and


• addressing double-digit growth in spending for imaging services paid for under Medicare’s physician fee schedule by examining the feasibility of more front-end payment approaches, including requirements for physicians to obtain some form of approval to ensure coverage before ordering imaging services.

^ Back to topKey Reports

Medicare: Trends in Fees, Utilization, and Expenditures for Imaging Services before and after Implementation of the Deficit Reduction Act of 2005

GAO-08-1102R, September 26, 2008

Summary (HTML)   Full Report (PDF, 19 pages)   Accessible Text

Medicare Part B Imaging Services: Rapid Spending Growth and Shift to Physician Offices Indicate Need for CMS to Consider Additional Management Practices

GAO-08-452, June 13, 2008

Summary (HTML)   Highlights Page (PDF)   Full Report (PDF, 55 pages)   Accessible Text   Recommendations (HTML)

Medicare: Focus on Physician Practice Patterns Can Lead to Greater Program Efficiency

GAO-07-307, April 30, 2007

Summary (HTML)   Highlights Page (PDF)   Full Report (PDF, 53 pages)   Accessible Text   Recommendations (HTML)