On June 15, the Medicare Payment Advisory Commission (MedPAC) released its annual "Report to the Congress: Medicare and the Health Care Delivery System." This report examines several issues within Medicare itself, as well as aspects of the broader health care system.
The report addresses two fundamental problems with the current sustainable growth rate (SGR) system. The first being the design of the SGR as a strict budgetary tool, with no mechanism for influencing provider performance toward improved care and prudent use of resources. The second problem relates to the cost of replacing or restructuring the SGR.
For 2012, a 30 percent reduction in physician fee schedule payments is predicted, unless Congress intervenes. The Commission is concerned that the magnitude of this payment reduction, coupled with repeated short-term “fixes” to prevent a fee schedule cut, undermine provider and patient confidence in Medicare and raise concerns about access to care.
The Commission is considering a range of policy issues to replace the SGR with a different payment structure that would implement modest annual updates, improve accuracy of fee schedule payments, shift resources from procedural to cognitive services, realign payments to support quality of care, identify overpriced services and develop new payment models that focus on population health and coordination of care — such as bundling, ACOs and medical homes.
The report also builds on the Commission’s previous recommendations to improve payment accuracy and appropriate use of ancillary services, and calls for Congress to implement policy changes to reduce a provider’s financial incentives to order and perform imaging and other diagnostic services in office.
A new payment system is expected to take several years to create.MedPAC has acknowledged that physician self-referral in and of itself is not the root of the problem. It is physician self-referral of ancillary services that leads to higher volume when combined with fee-for-service payments. The Commission believes a long-term approach to address self-referral will require development of payment systems under which providers are rewarded for constraining volume growth while improving the quality of care.
A new payment system is expected to take several years to create, but the Commission recommends a series of policies that could be adopted for the time being. These recommendations were discussed and voted on during the Commission’s public meetings in February and April 2011.
Specifically, the Commission recommends in its report to Congress:
Recommendation 1: The Secretary should accelerate and expand efforts to package discrete services in the physician fee schedule into larger units for payment.
Recommendation 2: Congress should direct the Secretary to apply a multiple procedure payment reduction to the professional component of diagnostic imaging services provided by the same practitioner in the same session.
Recommendation 3: Congress should direct the Secretary to reduce the physician work component of imaging and other diagnostic tests that are ordered and performed by the same practitioner.
Recommendation 4: Congress should direct the Secretary to establish a prior authorization program for practitioners who order substantially more advanced diagnostic imaging services than their peers.
At the 2011 annual meeting of the American Medical Association House of Delegates, a resolution was put forth urging opposition of any policy that would apply a payment reduction to the professional component of diagnostic services where multiple imaging studies are interpreted by the same practitioner during the same sessions. The resolution also opposes any policy that reduces the physician work component of imaging and other diagnostic tests that are ordered and interpreted by the same practitioner.
MedPAC’s recommendations, if implemented, would apply in all settings, including physicians’ offices and hospitals, and would affect dermatologists who both order and perform pathology services in office.
Several speakers also noted that the MedPAC report includes other recommendations that could be problematic to physicians. The AMA has already circulated to specialty societies a draft sign on letter that will be sent to the members of Congress expressing concern about the MedPAC recommendations.
In the report, the Commission also reviews Medicare’s fee-for-service benefit design, coordination of care for dual-eligible beneficiaries, the function of federally qualified health centers, and variation in private sector payment rates.