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National Commission Calls for End of Fee-for-Service Pay Within 5 Years

Physicians should be paid for quality of care, not just quantity, panel says (Mar. 4)

The National Commission on Physician Payment Reform (NCPPR) has issued a report detailing a series of sweeping recommendations aimed at reining in health spending and improving quality of care by fundamentally changing the way physicians are paid. The commission calls for eliminating stand-alone fee-for-service payment by the end of the decade. The group also urges a transition over 5 years to a blended payment system, which is expected to yield better results for both public and private payers, as well as for patients.

“We can’t control runaway medical spending without changing how doctors get paid,” said former Senate Majority leader Bill Frist, MD. “This is a bipartisan issue. We all want to get the most from our health care dollars, and that requires re-thinking the way we pay for health care.”

Commission chair Steven A. Schroeder, MD, added: “The way we pay doctors is profoundly flawed. We need to move rapidly away from fee-for-service and embrace new ways of paying doctors that encourage cost-effective, high-quality care. The Commission’s recommendations put us on that path.”

After a year of deliberation, the 14-member commission — composed of physicians from a variety of specialties, public and private-sector leaders, consumer advocates, and health policy experts — adopted 12 recommendations for reforming physician payment.

The commission’s recommendations provide a blueprint for phasing out fee-for-service and transitioning to a more value-based, mixed payment model over a 5-year period. Initial steps include fast-tracking new models of care, such as accountable care organizations and patient-centered medical homes that reimburse physicians through fixed payments and shared savings, and adopting bundled payments for patients with multiple chronic conditions and for in-hospital procedures and their follow-up.

The commission noted that fee-for-service will remain an important mode of payment into the future, and that bundled payments and other fixed-payment models are not a panacea; many of these models still pay individual physicians on a fee-for-service basis. The commission issued several recommendations for recalibrating fee-for-service payment to fix payment inequities and to reward care that improves patients’ health.

The recommendations include:

  • Increase reimbursement for evaluation and management (E&M) services
  • Pay equal rates for the same physician services regardless of specialty or setting
  • Abolish Medicare’s sustainable growth rate (SGR)
  • Improve the Relative Value Scale Update Committee (RUC)

At nearly three trillion dollars a year — 18% of the gross domestic product (GDP) — spending on health care in the U.S. has reached an unsustainable level, according to the commission. Recognizing that the way physicians are paid drives this high level of spending, the Society of General Internal Medicine, based in Alexandria, Va., convened the NCPPR in March 2012.

“Health care providers should be paid for the quality of the care they deliver, not just the quantity. The work of this commission helps move us toward that goal,” said Risa Lavizzo-Mourey, MD. “These recommendations come directly from physicians and others who are showing leadership in addressing the rising costs of health care.”

Sources: NCPPR; March 4, 2013; and Commission Report; March 2013.

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