The June 2011 report to Congress by the Medicare Payment Advisory Commission (MedPAC) called for a move away from fee-for-service reimbursement and toward a payment system that rewards quality and efficiency in the delivery of healthcare services.
The report builds on MedPAC's previous recommendations to change Medicare's payment systems, calling for a shift away from rewarding increased volume and intensity. Examples of payment reforms endorsed by MedPAC include a single payment for larger bundles of healthcare services and linking payments to quality.
"The commission believes payment reform is a necessary, although not sufficient, condition for reform of the healthcare delivery system," said MedPAC Chairman Glenn Hackbarth in releasing the report.
In Medicare and the Health Care Delivery System, the commission provided a set of recommendations to help motivate and support quality improvement among providers who treat Medicare patients. These recommendations would fundamentally restructure Medicare's Quality Improvement Organization (QIO) program, said Hackbarth.
The commission also issued recommendations concerning ancillary services, such as diagnostic imaging and other tests. In the last decade, ancillary services have reached high levels of use, fueled at least in part by unduly high payments. MedPAC advocates improving payment accuracy to reduce providers' financial incentives to order more ancillary services, while strengthening clinical support tools to improve appropriate use of ancillary services.
Unsurprisingly, MedPAC noted that the sustainable growth rate system (SGR), Medicare's expenditure target system designed to link updates to Medicare's physician fee schedule to service volume, is unworkable. For 2012, the SGR prescribes a 30 percent reduction to physician fee schedule payments, unless Congress intervenes.
The commissioners asserted that the magnitude of the planned payment reduction, coupled with repeated short-term "fixes" to prevent the cut, undermine provider and beneficiary confidence in Medicare and raise concerns about beneficiaries' access to physician services.
The report also addressed Medicare fee-for-service benefit design, and Hackbarth said MedPAC was exploring options to better protect beneficiaries against high out-of pocket spending while at the same time encouraging them to weigh their use of discretionary care.
Other issues tackled in the June report include the coordination of care for dual-eligible beneficiaries, the potential for increasing use of Federally Qualified Health Centers and the variation in private sector payment rates.
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