Healthcare News & Insights

Will proposed bill really fix how doctors are paid?

Nearly everyone in the medical universe knows that the formula used by Medicare to determine physician payment rates is flawed. That’s why a group of bipartisan legislators has drafted a new bill that would revamp the way doctors get paid. But will it really work?

95518411Maybe a better question would be: “Can it be any worse?”

With the current complex set of formulas that determine Medicare pay rates, every year physicians’ pay is threatened with a major cut — this year it’s a 25% cut — and then Congress has to jump in and save the day by overriding the cut.

Exaggerated assessments

The pricing system that Medicare and most private carriers use depends on the American Medical Association (AMA) to assess values to thousands of services physicians provide. And according a Washington Post investigation, those assessments are based on exaggerated assumptions as to how long a procedure takes and unfairly raise doctors’ fees.

In fact, the Post found the exaggerations can be as much as 100%. That translates to some doctors having to work on average more than 24 hours a day to performs all the procedure they’re reporting.

Rep. Jim McDermott (D-Wash.), a critic of the process, told the Post that the values are based “on a one-sided negotiation — doctors negotiating with themselves.”

Annual increases

A draft of the proposed bill was approved by a House subcommittee on July 23. It would replace the current formulas with annual increases of 0.5% for the next 10 years, as well as additional financial incentives for doctors to follow best practices. Sound familiar?

It’s just another version of pay for performance.

This type of pay for performance model would eliminate the uncertainty physicians go through at this time of the year. Although, nowadays physicians expect Congress to jump in and stop the pay cut every year.

While the Washington Post reports that the AMA is pleased that the proposed bill eliminates the unpredictability of Medicare payments, AMA President Ardis Hoven, said in a statement that the legislation “represents continued progress, though work remains to be done.”

Hopefully, legislatures and the AMA will work out the kinks soon when it comes to figuring out the Medicare physician pay rate, as the current system is causing many physicians to not take Medicare patients. This in the end causes many elderly people to not seek care, which leads to sicker patients, and an increase in hospital admissions.

We’ll keep you posted.


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