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Proposed Medicare Physician Payment Rate Cuts Grab the Spotlight, but Other Policy Changes May Prove As Important in the Long Run

NEJM Health Policy Report Examines Medicare Physician Payment Policies

Media Advisory
Dec. 8, 2010

Alwyn Cassil (202) 264-3484 or

WASHINGTON , DC—Repeated down-to-the-wire congressional interventions to avert double-digit Medicare physician payment rate cuts have hit closest to home for practicing physicians, but other policies to improve the accuracy of physician payment and reform provider payment more broadly may prove as important in the long run, according to a health policy report by Paul B. Ginsburg, Ph.D., published online today by the New England Journal of Medicine.

Just last week, Congress and the administration, as it has done repeatedly since 2003, enacted a short-term fix to avert a 23 percent cut to Medicare physician payment rates slated to take effect Dec. 1 as a result of the so-called sustainable growth rate (SGR) formula. And, the Senate this week was crafting a measure to extend current Medicare physician payment rates through 2011 to avert a 25 percent cut on Jan. 1.

“Less visible, but potentially as important or more important over the longer term, has been a series of steps to revamp the resource-based relative-value scale (RBRVS) underpinning the Medicare Physician Fee Schedule (MPFS), with the goal of more accurately reflecting the relative costs of providing different physician services,” writes Ginsburg, president of the Center for Studying Health System Change (HSC).

And, the health reform law, known as the Patient Protection and Affordable Care Act (ACA), authorizes initiatives to explore broader Medicare provider payment reforms, such as accountable care organizations and bundled payments, that could help improve quality and control costs, according to the article.  

“Many policy experts believe that the reform of payment methods for physicians and other providers is the most promising method of improving the quality of care and controlling costs,” the article concludes. “The ACA may launch an era of large-scale development of payment methods that incorporate quality and broaden incentives to episodes of care and all services required by patients over a period of time. The outcomes of these efforts are uncertain, but, finally, much stronger initiatives will be pursued. Nevertheless, Congress has still not addressed the prospect of sudden sharp reductions in payment rates due to the SGR. To some people, fixing the SGR would seem easier than reforms of payment methods. But in the political world it is not.”

To access the NEJM article, “Rapidly Evolving Physician-Payment Policy—More than the SGR,” which was supported by the Robert Wood Johnson Foundation, go to

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The Center for Studying Health System Change is a nonpartisan policy research organization committed to providing objective and timely research on the nation’s changing health system to help inform policy makers and contribute to better health care policy. HSC, based in Washington, D.C., is funded in part by the Robert Wood Johnson Foundation and is affiliated with Mathematica Policy Research.



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