Medicare Physician Fee Schedule: Key Discussions and Proposals

During a recent House Energy and Commerce Health Subcommittee hearing, discussions focused on potential improvements to the Medicare Physician Fee Schedule and increasing the adoption of advanced alternative payment models (AAPMs). Representative Diana DeGette (D-Colo.) highlighted the substantial impact Medicare payments have on clinicians, given that over 95% are reimbursed through this program. She stressed that physician compensation has fallen 33% in real terms since 2011 due to payments not keeping pace with inflation.

A consensus emerged around implementing an inflationary update to Medicare physician payments. This proposal involves aligning payments with rising input costs, utilizing the Medicare Economic Index (MEI) as a basis. William Fox, MD, and Steven Furr, MD, advocated reforming budget neutrality provisions and instituting updates based on inflation. Budget neutrality often leads to tensions among specialties, as increases for one can require reductions for others.

Legislation introduced by Rep. Raul Ruiz, MD (D-Calif.), and Rep. Gus Bilirakis (R-Fla.) recommends an inflationary update tied to the MEI to stabilize provider payments amidst annual uncertainties. The discussion also covered the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) and its dual-track system for quality-based payments. Dana Smetherman, MD, underscored the need for models that better cater to specialty-specific needs.

Despite MACRA's intention to shift practices from fee-for-service to AAPMs, the delineation remains unclear for many providers. Farzad Mostashari, MD, noted CMS's hesitancy to impose significant penalties on underperforming practices, reducing the incentives to join AAPMs. Concerns were also raised about location-based payment disparities for identical procedures, which can yield higher costs in hospital settings.

Another critical discussion point was the impact of practice consolidations on healthcare costs, with Rep. Buddy Carter (R-Ga.) inquiring if these consolidations have resulted in financial savings. In addition, the subcommittee scrutinized the methodology for establishing billing codes and relative values. William Fox, MD, called for modernizing these processes, suggesting the integration of advanced tools such as electronic health records and time-motion studies. Representative Lori Trahan (D-Mass.) expressed interest in pursuing these updates to enhance the accuracy and fairness of healthcare service valuations.