Failure to fix Medicare fee structure could inhibit the move to value-based payment models

By Matt Kuhrt

As Medicare continues its push to measure and reimburse healthcare services based upon value rather than volume, a failure to address the Medicare Physician Fee Schedule's rates could lead to substantial instability or outright failure, warn the authors of an article in the New England Journal of Medicine.

Currently, Medicare fees get established based on a "resource-based relative value scale," in which the article's authors see a range of flaws that generate inaccuracies in their estimates of the time and energy doctors expend on procedures. These flaws in turn cause Medicare to over- or undervalue certain services, or, in some cases, to fail to account for non-procedural work in the first place, write Robert A. Berenson, M.D.,an institute fellow at the Urban Institute, and John D. Goodson, M.D., a practicing internal medicine physician at Massachusetts General Hospital in Boston.

Areas where the Centers for Medicaid & Medicare Services (CMS) overvalues procedures are difficult to change because the expert panel charged with updating the relative values of services "relies on specialty societies to voluntarily identify overvalued codes and propose more accurate work times," according to the authors. Despite suggestions from the Medicare Payment Advisory Commission and the Government Accountability Office that this arrangement could constitute a conflict of interest, CMS has only recently begun to look at collecting empirical data to determine the actual amount of time it takes physicians to do procedures.

In other areas, the authors report, discrepancies crop up because some of the service codes on which Medicare's fees are based reflect the way medicine was practiced three decades ago. They point specifically to the increased complexity presented by longer-lived patients who present with multiple chronic conditions, which increases the amount of time it takes for doctors to make appropriate care decisions. On the other end of the spectrum, the use of technology such as electronic health records has led to a marked reduction in the time it takes to follow documentation guidelines, leading to opportunities for "upcoding."

With CMS ahead of schedule on its move toward value-based payment methods, the authors advocate for a focus on "a transparent, accountable, dynamic process" for measuring the relative resources required for healthcare in a modern setting. Placing new quality measures on the current fee schedule, they say, would amount to "a prescription for failure."

To learn more:
- read the article