Physician Payment Reform: An Idea Whose Time Has Come

Abstract

The articles by Hsiao and associates 1-9 in this issue ofTHE JOURNALon the development of a Resource-Based Relative Value Scale (RBRVS) are certain to stir controversy among physicians. Because of growing dissatisfaction with Medicare's prevailing, and method of determining payments to physicians, Congress in 1984 mandated a study of relative values. In 1986, Congress also established the Physician Payment Review Commission to advise it on reforms in Medicare's methods of physician payment. Physician Payment Reform The customary, prevailing, and reasonable method has been criticized by many for encouraging fee inflation and causing serious distortions in the relative payments for different types of services and across geographic areas. 10-14 It has given practicing physicians inappropriate economic signals concerning how to practice, what specialty to choose, and in which locality to set up a practice, as well as causing inequities among them. Finally, the customary, prevailing, and reasonable