Report of the National Commission on Physician Payment Reform

The National Commission of Physician Payment Reform said in a recent report that systems that reward quality of care, such as bundled payment systems and accountable care organizations, should replace physician fee-for-service (FFS). While acknowledging that the move to bundled payments will be gradual, the Commission suggested starting with patients with multiple chronic conditions makes sense particularly beginning with bundling payments for conditions that involve in-hospital and post-acute care, such as heart attacks and joint replacements. The Commission made these twelve recommendations:

• Over time, payers should largely eliminate stand-alone fee-for-service payment to medical practices because of its inherent inefficiencies and problematic financial incentives. 
• The transition to an approach based on quality and value should start with the testing of new models of care over a 5-year time period, incorporating them into increasing numbers of practices, with the goal of broad adoption by the end of the decade. 
• 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. 
• 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. 
• 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. 
• The Sustainable Growth Rate (SGR) should be eliminated. 
• Repeal of the SGR should be paid for with cost-savings from the Medicare program as a whole, including both cuts to physician payments and reductions in inappropriate utilization of Medicare services. 
• The Relative Value Scale Update Committee (RUC) 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.