Final answer:
Medicare developed the Resource-Based Relative Value Scale (RBRVS) by 1990 as a payment system for physicians, which calculated payments based on the resources required for services provision, adjusted by geographic areas.
Step-by-step explanation:
By the year 1990, Medicare had developed a payment system for physicians known as the Resource-Based Relative Value Scale (RBRVS). This system assigned relative values to services based on the resources necessary to provide them, such as the physician's work, the practice's overhead costs, and the cost of malpractice insurance. These values were then adjusted by geographic region and converted into a fee schedule, which determined the payments that physicians received from Medicare. Medicare payment methods were developed to limit the escalating costs of medical care, a consequence noted of previous structures where medical providers raised their prices significantly once insurance companies and the federal government became the primary payers. However, significant reforms, such as the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, continued to shape the program, notably by adding prescription drug benefits to reduce the cost burden on the elderly and disabled.