MedPAC to study if reimbursement overpays on services

The advisory panel should consider appropriateness of care when pursuing the link between payment and utilization, an AMA trustee says.

By David Glendinning, AMNews staff. July 11, 2005.

Washington -- The commission that advises Congress on Medicare reimbursement has a theory as to why utilization of physician services is going up so rapidly: The government is paying too much for some of them.

In a report delivered to lawmakers last month, the Medicare Payment Advisory Commission responded to concerns from program officials that spending on physician services went up too steeply -- 15.2% -- last year. Higher numbers of office visits, minor procedures and imaging services accounted for a majority of the increase.

The complex method that the federal government uses to determine how much to pay physicians based on type of service and practice location could be partly to blame for the sharp rise, MedPAC said.

"If mispricing includes Medicare overpaying for services, that mispricing could contribute to overuse of services -- one of the concerns with the spending increase in 2004," the commission said in its report.

MedPAC plans to look at services with the fastest-growing volume to see if they are ones that are relatively well-reimbursed by the program. If the panel finds that physicians are gravitating toward the treatments or procedures that are overvalued by Medicare and away from the undervalued services, it could recommend policy changes to bring payments more into line.

"We've been saying [to Congress] that you need to rethink how you pay for imaging, you need to think about pay-for-performance, you need to think about more sophisticated and targeted volume-control policies," said Mark Miller, executive director of MedPAC. "For our upcoming agenda, we'll be working more aggressively at the guts of the physician payment system because we think there are some incentives in the payment system that are driving the use of these services and the moving of some of these services into the physician's office."