Oberlander's NEJM commentary: Medicare's new physician payment system is 'a leap of faith'

UNC's Jonathan Oberlander, PhD, writes in a “Perspective” commentary published in The New England Journal of Medicine that a new Medicare physician payment system passed by Congress is likely to face many of the same problems of the system it replaced.

Oberlander's NEJM commentary: Medicare's new physician payment system is 'a leap of faith' click to enlarge Jonathan Oberlander, PhD, professor of health policy and management in the UNC Gillings School of Global Public Health and chair of social medicine in the UNC School of Medicine.

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Wednesday, September 23, 2015

For many years, the American Medical Association and other physician organizations urged the U.S. Congress to repeal the sustainable growth rate formula (SGR) that was used for physician fees under Medicare. Each year since 2002, the  SGR mandated cuts in physician payments — only to be averted at the last-minute by Congress.  Most health policy analysts agreed that the formula was not working.  But there was no success in changing it, until Congress repealed the SGR earlier this year and established a new schedule of Medicare fee updates for doctors and other health professionals.  The new system aims to pay doctors on the basis of value rather than simply volume.

Medicare will give physicians powerful financial incentives to participate in accountable care organizations (ACOs) and other new payment and delivery models. But this new payment system is unlikely to solve Medicare’s challenges in paying doctors and will face many of the same problems of the system it replaced, according to a Perspective piece in The New England Journal of Medicine written by Jonathan Oberlander, PhD, professor of health policy and management in the UNC Gillings School of Global Public Health and chair of social medicine in the UNC School of Medicine, and co-author Miriam J. Laugesen, PhD, of Columbia University.

First, Oberlander and Laugesen argue, other countries that spend far less on medical care than the United States pay physicians through the fee-for-service model. International experience suggests that regulating absolute prices is the key to cost control, rather than value-based purchasing. Second, even under the new system, the payment of many physicians -- even salaried physicians -- will still be tied to targets based on volume set by their employers. Third, it is not clear that we have the appropriate measures to quantify individual physicians’ performance on quality of care.

Finally, the new system will not remove politics from Medicare payment policy. It still leaves opportunities for physicians to "stretch the criteria of obtaining higher payments" and fight for other concessions. Implementation of  a physician performance score, with payment based in part on a physician's score, will be another political battleground.

"No technical formula is immune from the politics of health care," Oberlander and Laugesen conclude. "The SGR is gone, but there is no permanent fix for physician payment."
 

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