Publications on Hospitals & Physician Payment

Seven case studies of provider organizations implementing innovative approaches to care coordination and disease management of patients with one or more serious chronic conditions and to the homebound frail elderly demonstrate a range of issues that need to be addressed to produce rapid dissemination of these approaches throughout the health care system. Study participants all describe perverse incentives within fee-for-service environments that frustrate chronic care-oriented activities. Nevertheless, innovative programs, some providing an important role for hospitals working collaboratively with physicians and others featuring geriatric home visiting, appear to be models for expansion.

Primary care is essential to the effective and efficient functioning of health care delivery, yet we face an impending crisis due in part to a dysfunctional payment system. The paper proposes a new payment model to replace fee-for-service. A comprehensive payment would support health information systems and teams essential to the delivery of comprehensive and coordinated care. In theory, expecting-and paying-primary care physicians to take greater responsibility for patients as they encounter the health care system should result in higher quality and lower costs. Field tests of the new approach are needed to test the hypothesis.

The resource-based relative value scale (RBRVS) adopted in Medicare in 1992 was intended to address distortions produced by payments based on physician charges. Medicare and an increasing percentage of private insurers now pay physicians based on the RBRVS payment system, which is maintained by the Centers for Medicare and Medicaid Services (CMS), relying on advice on service valuations by the American Medical Relative Value Scale Update Committee (RUC). The paper describes particular problems with the process used by CMS and the RUC and explains why reimbursement for primary care physicians continues to lag those of other specialties.

This paper demonstrates that while fees for physician evaluation and management increased over the first ten years of the Medicare Fee Schedule, the quantity of imaging services and non-major procedures increased even more, making the share of program spending on evaluation and management services in 2002 the same as it was in 1992. Two factors explained the differential spending growth across types of services: the introduction of new services and the process for reviewing and revising fees. The authors argue that differences in expenditure growth across service types affect Medicare's costs and should be considered in the program's spending control policies.

This study, funded by the Maine Health Access Foundation, presented alternative estimates of the costs of health care that uninsured Maine residents receive and determined how much public revenue was available to offset those costs. Using data from health care providers, the study estimated that the costs of caring for the uninsured in Maine were $138 million in 2005, with hospitals and Veterans' Affairs facilities identified as the largest providers. Estimates based on household survey data from the Medical Expenditure Panel Survey showed that uncompensated care costs for the uninsured were only $81 million in 2005. The report discusses possible reasons for the large discrepancy between these two sources. Our review of federal and state funding sources in 2005 suggests there were roughly $110 million available to offset these costs of caring for the uninsured.