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U.S. House takes aim at Medicare spending for physician services
During recent subcommittee hearing, policy experts weighed in on options for improving quality, efficiency while controlling rising costs.
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On May 10, several top health care policy analysts testified before the U.S. House of Representatives Committee on Ways and Means, Subcommittee on Health, regarding options for improving quality and efficiency in the delivery of physician services to Medicare beneficiaries nationwide.
Subcommittee members considered testimony submitted by the U.S. Government Accountability Office, the Centers for Medicare and Medicaid Services, the American Academy of Family Physicians and the Medicare Payment Advisory Commission, among others, against a backdrop of rising overall Medicare spending for physician services and increases in both the volume and intensity of services provided per Medicare beneficiary.
Medicare spending for physician services is estimated to exceed $60 billion in 2007, amounting to almost 15% of overall Medicare spending. Experts attribute the growth of spending to inefficient delivery of physician services, meaning that physicians on average are providing more services per beneficiary (ie, the volume of services is increasing) and are providing more costly and complex services (ie, the intensity of services is increasing).
Given that Medicare spending on physician services has already proved costly enough to warrant a 10% decrease in physician reimbursements scheduled to take effect Jan. 1, the subcommittee and experts agree that developing tools to evaluate present practices and encourage efficiency while maintaining quality should be a top priority in the coming months.
Improving efficiency
 Alan E. Reider |  Allison Weber-Shuren |
In a written statement and oral testimony before the subcommittee, A. Bruce Steinwald, the health care director for the U.S. Government Accountability Office (GAO), summarized the GAO’s April report findings and advocated for CMS to develop a system for identifying individual physicians with inefficient practice patterns and then use that data to improve overall program efficiency.
The April report, titled “Medicare: Focus on Physician Practice Patterns Can Lead to Greater Program Efficiency,” detailed the GAO’s analysis of recent Medicare claims data for generalists in 12 metropolitan areas, which showed certain outlier physicians treating a disproportionate amount of expensive patients (ie, patients with particularly high Medicare expenditures compared with other individuals with similar health status) in all 12 locations.
As a result of these findings, the GAO suggested that, as a preliminary measure, CMS use its existing Medicare claims data to conduct physician profiling in order to educate physicians about their practice efficiency as compared with their peers. This proposed profiling system would consist of the following elements:
- Total Medicare expenditures (as the basis for measuring efficiency).
- Adjustments for differences in patients’ health status.
- Empirically-based standards that set efficiency parameters.
- Educational programming that explains how the profiling system works and how physicians’ efficiency data compare with their peers.
- Methods for measuring the impact of physician profiling on program spending and physician behavior.
- Financial or other incentives for physicians to provide more efficient care.
Rachel E. Lerner |
The GAO stressed that CMS could promote efficiency most effectively if educational efforts were bolstered by certain financial incentives for physicians, but it acknowledged that additional legislative authority might first be required.
Herb Kuhn, acting deputy administrator of CMS, affirmed CMS’ commitment to encouraging physicians “to provide the right care at the right time and in the right setting.” Mr. Kuhn reiterated the importance of collecting useful data in a cost-effective manner and discussed several of the ongoing Medicare demonstration projects that CMS is using to evaluate physician efficiency, such as the Medicare Physician Group Practice Demonstration and the Medicare Health Care Quality Demonstration.
Mr. Kuhn also noted that in evaluating physician efficiency in the future, it will be important to assess not only the services furnished by the physician but also the services the physician orders, such as diagnostic testing and hospitalization.
More proposals
Others testifying before the subcommittee discussed the benefits and drawbacks of particular cost-cutting proposals, such as the chronic care model and bundled services. Rick Kellerman, MD, president of the American Academy of Family Physicians, for example, advocated for the chronic care model or “patient-centered medical home” as a component of Medicare physician services, in which fee-for-service reimbursement is combined with a per-beneficiary, per-month stipend for the physician coordinating care for the patient’s chronic conditions.
John E. Mayer Jr., MD, president of the Society of Thoracic Surgeons, suggested that bundling payments for physician services, particularly for costly areas such as chronic care, would shift the current system’s “a la carte” incentives toward promoting the performance of tests or procedures only when appropriate for quality care.
Although the written and oral testimony presented to the subcommittee discussed a variety of proposals for encouraging more efficient delivery of physician services to Medicare beneficiaries, all parties seemed to agree that increasing expenditures will not be solved by adjustments to the sustainable growth rate alone.
For more information:
- Rachel E. Lerner, JD, can be reached at Arent Fox LLP, 1050 Connecticut Ave. NW, Washington D.C. 20036; 202-857-6111; e-mail: lerner.rachel@arentfox.com.
Reference:
- U.S. Government Accountability Office. Medicare: Focus on physician practice patterns can lead to greater program efficiency. Available at: www.gao.gov/new.items/d07307.pdf.