Medicare physician payment reform. An introduction to the new fee system and its implications for hospitals.

Set to go into effect on October 1, the new Medicare physician-reimbursement system attempts to bring Medicare payments ever closer in line with physicians' actual costs. Among other things, the new fee schedule should eventually reduce the disparity between specialty and family-practice physicians' reimbursements and encourage more med students to enter primary care. Hospitals should be aware, however, that some things--like conflict between their and physicians' financial incentives--will not change.