Twelve Recommendations of National Commission on Physician Payment Reform

Today’s Managing Health Care Costs Indicator is 12

The Society of General Internal Medicine’s National Commission on Physician Payment Reform issued its recommendations earlier this month.   The report, only 21 pages even with large font, is well worth a read. 

Their highlighted conclusion:

“Our nation cannot control runaway medical spending without fundamentally changing how physicians are paid”

The recommendations, and my assessment of each. (All are paraphrased for space)

Recommendation	Assessment
1.       Eliminate fee for service over time	Fee for service is the best modality for many services – like immunizations.  Bundling will prove difficult for many unusual or infrequent services, and in nonurban areas.    Of course, I agree with this general direction.
2.       Test new models of payment, and implement non-FFS payment by end of the decade	Great to push for the ideal; I think the timing will be longer than this.   But if we don’t push hard for unachievable goals, we’ll never get there.
3.       Recalibrate fee for service	A good idea – and for the more cognitive physicians in internal medicine an especially good  idea.
4.       Increase fees for cognitive services and freeze them for procedural services	The Commission doesn’t recommend decreasing some procedural fees- but I think that will be necessary.  See graphic at bottom of post for average income for some specialties.
5.       Stop paying higher facility fees for things done in hospitals rather than offices.	Amen.  See a recent post on this.
6.       Put quality measures into fee for service contracts	A good idea, albeit hard to execute.   Medicare’s pay for reporting can provide an initial platform for this.
7.       Encourage small practices to form virtual alliances to share bundled payment	I remember having discussions about “group practices without walls” in the early 1990s.   We ultimately do need substantially more integration of physician offices – the” cottage industry” time has passed.
8.       Focus payment reform on the places where there is the most opportunity to improve coordination and decrease cost	Agree fully.   We can only do so much “radical change;” let’s focus on where it matters.
9.       Measure the potential of bundled or capitated payments to decrease quality – and keep watch on risk adjustment	My favorite quote on physician payment is from James Robinson of UC Berkeley.   “There are many mechanisms for paying physicians; some are good and some are bad. The three worst are fee-for-service, capitation, and salary” (note finally available ungated) . Fee for service might be terrible – but bundling payments won’t be nirvana either.
10.   Dump the SGR	The Sustainable Growth Rate physician fee schedule cuts are an early preview of the Sequester – stupid, harmful, and a credible threat to allow other changes.  I oppose the SGR – and hope that it is removed as part of a “grand bargain” to reform physician payment.  It’s a bit valuable as a threat – it’s terrible public policy.
11.   Pay for the SGR gap by cuts in other portions of the Medicare program	The Commission is responsible here – not asking for more Medicare dollars- but a more responsible allocation of dollars.
12.   Reform the RUC (Relative Value Scale Update Committee)	The Commission suggests that this committee be more representative of the medical field.  I think they aren’t being bold enough. Why should relative fees be determined by a committee of physicians – even a more representative one?

I think this Commission’s recommendations provide a good roadmap to moving forward. There are a lot of gaps here – including how to make changes to payment methodology for those insured through private commercial health plans, how to deal with novel procedures and innovation, and how to improve risk adjustment.   But 21 pages can’t solve decades of trouble.   These recommendations  have been underreported  - so do your part by reading (and perhaps tweeting) them.

I did a three-part series on fee for service in 2009.  It’s still quite relevant:

Part One   Part Two  Part Three

h/t Jim Gilbert for pointing me to this Commission report