*This is an archive page. The links are no longer being updated. 1994. 12.06 : 1995 Medicare Physician Fees Contact: Anne Verano (202) 690-6145 December 6, 1994 MEDICARE PHYSICIAN FEES SET FOR 1995 The fees Medicare pays to physicians will be increased in 1995 by 7.9 percent for primary care services, 12.2 percent for surgical services and 5.2 percent for other services, HHS Secretary Donna E. Shalala announced today. Because the 1995 updates were not changed by Congress, the secretary is required to establish the rates according to a formula mandated by a law enacted in 1989. The annual updates of the Medicare physician fee schedule, effective Jan. 1, 1995, will be published this week in the Federal Register. The updates will increase payments for physician services in calendar year 1995 by an estimated $2.2 billion over calendar year *This is an archive page. The links are no longer being updated. 1994. Medicare spending for physician services is expected to reach $34 billion in calendar year 1995. Although the inflation rate for the costs of medical practice is projected at 2.1 percent in 1995, the Medicare fees are being increased at higher rates because of the statutory formula. The formula rewards doctors because Medicare spending for their services in fiscal year 1993 increased at rates lower than goals established for that year in the Medicare Volume Performance Standards. Current law requires the secretary to set volume performance standards according to a formula that uses a five-year average of growth in the volume and intensity of physician services. The current formula contains a problem that results in high expenditure goals. The administration last year proposed legislation to revise the methodology for developing the volume performance standards. The Federal Register notice sets forth the Medicare Volume Performance Standards for fiscal year 1995. The FY 1995 standards allow a 9.2 percent growth rate of Medicare spending for surgical services; 13.8 percent for primary care services; and 4.4 percent for other non-surgical services. The performance of physicians in meeting the FY 1995 standards can affect the updates for calendar year 1997. In setting the performance standards, the secretary is required by law to consider the estimated inflation rate, the projected growth in the number of Medicare beneficiaries and the volume of services performed by surgeons, primary care physicians and other doctors, and changes in spending due to law or regulation. ###