“Paying for value” could mean the end of small family practices

A Boehner-Pelosi prescription for Medicare doc fixes

By Jennifer Haberkorn and David Rogers
Politico, March 15, 2015

In a rare display of bipartisanship, House leaders are actively pursuing a deal to permanently change the way Medicare pays doctors and to extend a children’s health program for two years.

While details are still being ironed out, the basic contours are clear: The plan would permanently eliminate the Sustainable Growth Rate, the outdated formula that calls for frequent and deep cuts to Medicare providers, and replace it with a new payment system. This is a priority for both parties to end the need for frequent “doc fixes.”

The replacement policy agreed to by the House Energy and Commerce and Ways and Means committees and the Senate Finance Committee would move away from volume-based payments, in which physicians are paid based on the number of tests or procedures ordered, into a value-based system. That would reward them with higher payments when they meet performance thresholds on improved care and quality.

This new system would set up a series of quality measures that physicians will have to meet and would incentivize care coordination, particularly for patients with chronic care needs in which multiple doctors are involved.

The replacement policy is widely supported by medical organizations. But some critics argue the bill is too vague and that its reporting requirements could be ruinous to small practices.

“Aspirationally, it is correct, but we don’t know enough about how to measure value,” said Robert Berenson, the former vice chairman of the Medicare Payment Advisory Commission. “This could mean the end of small general practices for all practical purposes.”



By Don McCanne, MD

The rhetoric sounds great. We are moving away from paying for the volume of health care provided, and we are going to pay for value instead.

In reality, volume will always be an important factor in determining health care costs. Maybe there are marginal expenses that can be reduced, but most services are clinically appropriate and do have relatively fixed costs involved. Reducing volume has really been code language for using various schemes such as accountable care organizations and bundling of payments to reduce prices. These schemes have an almost negligible impact on reducing volume.

What is this increased value that the industry envisions? Usually they are referring to quality measures. Yet those measurements are very primitive. As Robert Berenson says, “we don’t know enough about how to measure value.” Yet reducing payments for volume and giving rewards for Mickey Mouse quality scores increases administrative complexity - increasing busy work without increasing value.

Do we really want to do this? Again, quoting Robert Berenson, “This could mean the end of small general practices for all practical purposes.” My personal primary care physician is a solo practitioner. I should have to give him up simply because some policy people believe that we should continue down this path when there is very little support that these measures will either reduce costs or increase quality?

What the policy people do know is that an improved Medicare that covered everyone for the same amount that we are spending today is the most effective way to improve value. We should go where the action is. Once there, we can tweak the system for quality and volume.