Physician Payment Reform: Implications for Physicians and Hospitals

Abstract

This article examines a number of problems with the Medicare system of paying for physician services. It examines and critiques three types of policy initiatives that are likely to be given serious consideration in the near future. These initiatives include the development of a physician fee schedule, modification of current policies toward balance billing, and the introduction of policies to control the growth in volume. The article concludes that the adoption of a fee schedule could have dramatic effects on fees for physician services. Moreover, there is likely to be significant redistribution of income between physician specialties and among physicians within specialties. There is likely to be increased pressure to limit balance billing and perhaps to adopt mandatory assignment for Medicare services. Policies to reduce the growth in volume such as expenditure target policies will also be seriously considered, though the implementation problems appear quite formidable.