Commission on Physician Payment Reform Sides with Healthcare Reform

After more than a year of study and research, the National Commission on Physician Payment Reform issued a report that appears to be a vote of confidence for healthcare reform.

The commission, composed almost entirely of physicians, offered 12 recommendations to fix healthcare in the United States. The report’s conclusions appear to adhere closely to where healthcare reform via the Patient Protection and Affordable Care Act is taking the nation: replacing fee-for-service payments, placing more focus on patient outcomes, increasing importance (and financial remuneration) of primary care physicians, and coordinating total care for patients. The physicians group also recommends spending five years exploring other care models, such as accountable care organizations, which is a cornerstone of the ACA.

The report also recommends the elimination of the Sustainable Growth Formula and an overhaul of the Relative Value Scale Update Committee, which “should make decision-making more transparent and diversify its membership so that it is more representative of the medical profession as a whole. At the same time, CMS should develop alternative open, evidence-based, and expert processes to validate the data and methods it uses to establish and update relative values.”

While fee-for-service will diminish, it will not be going away, the report concludes. “Because fee-for-service will remain an important mode of payment into the future, even as the nation shifts toward fixed-payment models, it will be necessary to continue recalibrating fee-for-service payments to encourage behavior that improves quality and cost effectiveness and penalize behavior that misuses or overuses care.”

The meat of the commission’s report provides “a blueprint for transitioning to a value-based blended payment model over a five-year period, focusing on increasing reimbursement for evaluation and management services, reducing gaps in payment for the same physician services regardless of specialty or setting, and advancing bundled payment and capitation.” Among the recommendations:

• For both Medicare and private insurers, annual updates should be increased for evaluation and management codes, which are currently undervalued. Updates for procedural diagnosis codes should be frozen for a period of three years, except for those that are demonstrated to be currently undervalued.
• Higher payment for facility-based services that can be performed in a lower-cost setting should be eliminated. Doctors are fleeing small, independent practices for hospitals and large outpatient clinics because Medicare and insurance reimbursements are much higher.
• Fee-for-service contracts should always incorporate quality metrics into the negotiated reimbursement rates.
• Fee-for-service reimbursement should encourage small practices (those having fewer than five providers) to form virtual relationships and thereby share resources to achieve higher quality care.
• Fixed payments should initially focus on areas where significant potential exists for cost savings and higher quality, such as care for people with multiple chronic conditions, and in-hospital procedures and their follow-up.
• Measures to safeguard access to high quality care, assess the adequacy of risk-adjustment indicators, and promote strong physician commitment to patients should be put into place for fixed payment models.