HealthReformGPS is made possible through generous financial support from the RCHN Community Health Foundation. Visit them at

House Ways and Means Health Subcommittee holds hearing on how to reform Medicare physician payment system

Posted on July 30, 2012 | No Comments

PDF Version
Key Developments
Implementation Briefs

House Ways and Means Health Subcommittee held a a hearing at 1o a.m. on July 24, 2012 in the Longworth House Office Building to explore physician organization efforts to promote high quality patient care.  The goal of the hearing was to inform Subcommittee members regarding how to reform the Medicare physician payment system. The Subcommittee heard from organizations representing the physicians at the forefront of patient care.

Physicians told the House panel that a new physician Medicare reimbursement system should provide incentives for doctors to provide quality care and the flexibility to adapt to different medical specialties and approaches.

The six physician groups present at the hearing offered a plethora of ideas regarding how the new Medicare physician payment system should be established. They all agreed, however, that the goal of the new system should be to improve the quality of care and move away from the fee-for-service system in place.

Unless Congress acts, physicians’ Medicare reimbursement will be reduced about 30 percent at the start of 2013. Several hearings have been held over the past few months in the House and Senate, as lawmakers work to create a solution to the issue.

For links to the physician group testimonies, click here.

No Comments

Public comments are closed.

The Centers for Medicare and Medicaid Services (CMS) issued a final rule revising the Medicare hospital inpatient prospective payment systems (IPPS). In adherence to the Affordable Care Act (ACA), part of the rule would effectively reduce payments to disproportionate share hospitals (DSH), which serve the most vulnerable patients. DSH payment reductions are a result of the expansion of Medicaid, however in states that chose not to expand, hospitals still risk losing some payment for uncompensated care.
Health and Human Services (HHS) Secretary Kathleen Sebelius announced today the release of a new rule for doctors, hospitals, and health plans. According to the HHS press release, in combination with a previously issued regulation, the rule will save up to $9 billion over the next ten years. The regulation finalizes rules for making health care claim payments electronically and describing adjustments to claim payments. The press release noted that studies have found that the average physician spends three weeks a year on billing and insurance related tasks, and, in a physician’s office, two-thirds of a full-time employee per physician is necessary to conduct these tasks. By receiving payments electronically and automating the posting of the payments, a physician practice and hospital’s administrative time and costs can be decreased.
The Middle Class Tax Relief and Job Creation Act of 2012 required that the Government Accountability Office (GAO) examine private-sector initiatives that base or adjust physician payment rates on quality and efficiency, and the applicability of these initiatives to the Medicare program. The resulting GAO report provides information on private entities with payment incentive initiatives, physician perspectives on themes within those initiatives, and the extent to which CMS’s financial incentive initiatives for Medicare physicians reflect such themes. The report identifies several common themes among private entities that provide incentives for high-quality, efficient care, and selected physician organizations generally support these themes:
  • Private entities generally measure performance and make incentive payments at the physician-group level rather than at the individual-physician level. Physician organizations favor this approach.
  • Private entities use nationally endorsed performance metrics and noted the need for a standardized set of metrics across all payers. Physician organizations concur that a standardized set of metrics would be less administratively complex.
  • Most private entities in GAO's study provide financial incentives tied to meeting absolute benchmarks--fixed performance targets--or a combination of absolute benchmarks and performance improvement. Physician organizations prefer incentives tied to absolute benchmarks over those based on how physicians perform relative to their peers. Physician organizations also favored incentives that reward improvement because baseline levels of performance vary.
  • While private entities' incentive payments vary in size and in method, private entities typically provide such payments within 7 months of the end of the performance measurement period. Physician organizations stated that financial incentives should be distributed soon after the measurement period to have the greatest effect on performance.
The Centers for Medicare & Medicaid Services (CMS) is currently making efforts to transform the physician payment system in Medicare reflect the themes that GAO identified among selected private entities with physician payment incentives.
The Affordable Care Act (ACA) introduced bundled payments, which provides payment for all of the care a patient needs over the course of a defined clinical episode. The goal of bundling payment is to encourage doctors, hospitals, and other health care providers to work together to better coordinate care for patients both when they are in the hospital and after they are discharged. An article recently released by Health Affairs evaluates the initial "road test" of the PROMETHEUS Payment, one of the bundled payment pilot projects. The pilots have taken longer to set up than expected, primarily due to the intricate payment model and the fact that it builds on the existing fee-for-service payment system. Although participants were hopeful regarding the success of the bundled payment program, the report found that desired benefits may take some time to materialize. To read CMS's Fact Sheet regarding Bundled Payments, click here.
The Center for Medicare and Medicaid Innovation, created by the Affordable Care Act (ACA), has a mandate to develop innovative payment models to improve health care delivery. The aim of this initiative is to achieve higher quality health care delivery and slower cost growth. The Commonwealth Fund Commission on a Higher Performance Health System's issue brief, "Developing Innovative Payment Approaches: Finding the Path to High Performance," discusses how the development, implementation, and evaluation of new care payment approaches can be improved, and how those improvements can help achieve the broader goals of health reform. The brief focuses largely on Medicare, but also considers how payment innovation pilots should not be limited to Medicare alone. Instead, payment innovations should also include Medicaid and the Children's Health Insurance Program (CHIP) to minimize the fragmented nature in which health care is provided.
Drug companies and medical device manufacturers commonly collaborate with physicians when developing or modifying drug or devices. These collaborations may include consulting arrangements in which physicians provide input and guidance related to drug or device development, participation in clinical trials testing the efficacy and effectiveness of the drug or device, or educational programs to train and teach physicians about the benefits of a new drug or in the case of a medical device, how to use the device effectively. In return for their services and expertise, physicians often receive payment or other items of value such as an honorarium and/or travel expenses. These financial relationships between manufacturers and physicians, while largely beneficial, raise concerns...
Strengthening and modernizing the health care workforce was a major goal of the Patient Protection and Affordable Care Act (ACA). The ACA contains dozens of provisions related to health care workforce issues, including strengthening primary care, national workforce policy development, increasing the supply of health care workers, and more. This Implementation Brief focuses on those provisions of the ACA that specifically target the strengthening of the primary care physician workforce.
A Medicare pilot program will be set up under the new health reform law to test “bundled payments” for certain “applicable conditions” around a hospitalization.