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Accuracy of Medicare Physician Fee Schedule Key to Broader Reform

Fee for Service Likely to Remain Core Physician Payment Method Under New Payment Models

Media Advisory
Sept. 4, 2012

Alwyn Cassil (202) 264-3484 or

WASHINGTON, DC—Despite growing interest in replacing fee-for-service payments to health care providers, fee for service is likely to remain the core way of paying physicians, so ensuring the accuracy of these payments will be important to the success of broader payment reforms, according to an article by Paul B. Ginsburg, Ph.D., president of the Center for Studying Health System Change (HSC), published in the September edition of Health Affairs.

“Many health policy analysts envision provider payment reforms currently under development as replacements for the traditional fee-for-service payment system. Reforms include per episode bundled payment and elements of capitation, such as global payments or accountable care organizations. But even if these approaches succeed and are widely adopted, the core method of payment to many physicians for the services they provide is likely to remain fee-for-service. It is therefore critical to address the current shortcomings in the Medicare physician fee schedule, because it will affect physician incentives and will continue to play an important role in determining the payment amounts under payment reform,” according to the article.

Funded by the Robert Wood Johnson Foundation, the article details the development of the Medicare physician fee schedule, which also is used as a starting point for physician payment by many private insurers and Medicaid programs; shortcomings in the fee schedule; and recent policy changes to improve the accuracy of the fee schedule.

“Fee-for-service payment of physicians will be an integral part of virtually all of the provider payment reforms envisioned at this timeā€¦. Indeed, putting the Medicare physician fee schedule on a firmer foundation will be essential to the success of broader payment reform to improve quality and efficiency of care delivery. Policymakers would be wise to ensure that shoring up the foundation of fee-for-service payment to physicians receives adequate resources,” the article concludes.

The article, titled, “Fee-For Service Will Remain a Feature of Major Payment Reforms, Requiring More Changes in Medicare Physician Payment,” is available online at


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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 affiliated with Mathematica Policy Research.



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