Abandon Medicare fee for service, commission says

A panel of internists and health economists have called for phasing out the Medicare fee-for-service payment system and fundamentally changing the way physicians are paid within five years.

The National Commission on Physician Payment Reform published a March 4 report recommending the policy changes, which include higher fees for office visits and the introduction of pay parity for certain tests regardless of the site of service. The current system would be replaced by a blended payment system that would provide higher quality of care at a lower cost in private and public markets, the report authors stated.

Commissioners believe that the reforms are necessary to make Medicare sustainable for future generations. The entitlement program is projected to cost nearly $950 billion in 2020 and consume 17.4% of the federal budget.

“We can’t control runaway medical spending without changing how doctors get paid,” said former Sen. Bill Frist, MD (R, Tenn.), a surgeon and the honorary chair of the commission. “This is a bipartisan issue. We all want to get the most from our health care dollars, and that requires rethinking the way we pay for health care.”

The report maps out 12 steps to reforming Medicare. They include six recommendations for advancing new pay models, such as increasing payments for evaluation and management codes each year while freezing pay for procedural services for three years. The Medicare sustainable growth rate would be eliminated and paid for by trimming unnecessary or inefficient services and lowering fraud throughout the system.

The plan offers several recommendations from other reform proposals released in recent years. The American Medical Association supports SGR repeal, but it said the commission report strays from policy that has the support of all organized medicine groups.

“Many of the ideas discussed in the physician payment report, such as the need to eliminate the Medicare physician payment formula, are consistent with AMA policy, which is developed by our House of Delegates with members from all state and national medical specialty societies,” said AMA President Jeremy A. Lazarus, MD. “However, much of this report reflects the view of only one specialty and does not reflect the broad, diverse field of medicine.”

The commission was funded in part by the Robert Wood Johnson Foundation and the California Health Care Foundation. The report can be accessed online (link).