The Road To Value Can't Be Paved With A Broken Medicare Physician Fee Schedule.

Value-based payment has been promoted for increasing quality, controlling spending, and improving patient and practitioner experience. Meanwhile, needed reforms to fee-for-service payment (the Medicare Physician Fee Schedule) have been ignored as policy makers seek to move payment toward alternatives, even though the fee schedule is an intrinsic part of Alternative Payment Models. In this article, we show how value-based payment and the fee schedule should be viewed as complementary, rather than as separate silos. We trace the origins of embedded flaws in the fee schedule that must be fixed if value-based payment is to succeed. These include payment distortions that directly compromise value by overpaying for certain procedures and imaging services while underpaying for services that add value for beneficiaries. We also show how the fee schedule can accommodate bundled payments and population-based payments that are central to Alternative Payment Models. We draw two conclusions. First, the Centers for Medicare and Medicaid Services should correct misvalued services and establish a hybrid payment for primary care that blends fee-for-service and population-based payment. Second, Congress should alter the thirty-five-year-old statutory basis for setting Medicare fees to allow CMS to explicitly consider policy priorities such as workforce shortages in refining fee levels.

Repeat testing among Medicare beneficiaries.

BACKGROUND: Although the tendency to repeat examinations is a major determinant of the capacity to serve new patients and of the ability to contain health care costs, little research has described the patterns observed in actual practice. METHODS: We investigated patterns of repeat testing in a longitudinal study of a 5% random sample of Medicare beneficiaries, restricted to 743,478 fee-for-service patients who were alive for a 3-year period after their index test between January 1, 2004, and December 31, 2006. Using the 50 largest metropolitan statistical areas as the unit of analysis, we examined the relationship between the proportion of the population tested and the proportion of tests repeated among those tested. RESULTS: Among beneficiaries undergoing echocardiography, 55% had a second test within 3 years. Repeat testing following other examinations was also common: 44% of imaging stress tests were repeated within 3 years, as were 49% of pulmonary function tests, 46% of chest computed tomography, 41% of cystoscopies, and 35% of upper endoscopies. The proportion of the population tested and the proportion of tests repeated varied across metropolitan statistical areas. The proportion who underwent echocardiography was highest in Miami, Florida (48%, among whom 66% of examinations were repeated in 3 years), and was lowest in Portland, Oregon (18%, among whom 47% of examinations were repeated in 3 years). Across 50 metropolitan statistical areas, the proportion of the population tested was consistently positively correlated with the proportion of tests repeated for echocardiography (Spearman r = 0.87, P < .001), imaging stress test (r = 0.65, P < .001), pulmonary function test (r = 0.62, P < .001), chest computed tomography (r = 0.66, P < .001), cystoscopy (r = 0.21, P = .13), and upper endoscopy (r = 0.59, P < .001). CONCLUSIONS: Repeat testing is common among Medicare beneficiaries. Patients residing in metropolitan statistical areas with high rates of population testing are more likely to be tested and are more likely to have their test repeated.

Getting the price right: Medicare payment rates for cardiovascular services.

Specialized, physician-owned cardiac hospitals have grown rapidly. Physicians have also expanded their capability to provide cardiovascular diagnostic services in their offices. In this paper we consider evidence of errors in Medicare's prices for hospital care and physician services and discuss ways to improve the accuracy of those prices. We find that recent proposals to change the inpatient prospective payment system would help dampen hospitals' financial incentives to favor some kinds of patients and related investments. For the physician fee schedule, we suggest that the Centers for Medicare and Medicaid Services (CMS) review the accuracy of prices for high-growth diagnostic services.