Press Release

For Immediate Release Contact


Sue Ducat
Director of Communications
(301) 841-9962


From Health Affairs:


Reforming Medicare's Physician Payment Strategy


Bethesda, MD -- A new commentary, being released today as a Web First by Health Affairs, reviews the recent history and future direction of physician payment reform. Since 1992 Medicare has reimbursed physicians on a fee-for-service basis. In 1997, as medical costs escalated, Congress began using a Sustainable Growth Rate (SGR) formula to reduce reimbursements if overall physician spending exceeded the growth in the economy. However, in all but one year, Congress ignored its own earlier directive, postponing physician payment cuts even as costs remained out of control. With this game of "kick the can down the road" becoming increasingly tiresome to both lawmakers and physicians, Congress is now considering new legislation to do away with the current SGR formula and reimburse physicians for improving quality and lowering costs.


Developing A Viable Alternative To Medicare's Physician Payment Strategy


By Gail Wilensky


Wilensky, who directed the Medicare and Medicaid programs and served as senior advisor on health and welfare issues to President George Herbert Walker Bush, is a senior fellow at Project HOPE in Bethesda, Maryland.


The study, which was supported by the Commonwealth Fund, will also appear in the January issue of Health Affairs.


In her analysis, the author observes that there seems to be growing agreement on the elements that a physician payment reform strategy should contain. Wilensky compares the provisions in several key bills that would replace the SGR with more value-oriented payment systems. The author also examines several pilot programs currently being tested, including medical homes and accountable care organizations. So far, she notes, these programs have produced inconsistent results. "What they do not do is provide evidence about the effects of various ways to reimburse physicians when the payments for physicians are not part of a hospital's bundled payment." She considers the discussion draft, recently released by the House Ways and Means Committee and the Senate Finance Committee, the most promising development but cautions: "[T]he reduced cost of eliminating the much less than it has been for most of the past decade but still represents a sizable cost that will have to be paid for with other spending reductions or revenue sources."

About Health Affairs

Health Affairs is the leading journal at the intersection of health, health care, and policy. Published by Project HOPE, the peer-reviewed journal appears each month in print, with additional Web First papers published periodically at The full text of each Health Affairs Web First paper is available free of charge to all website visitors for a one-week period following posting, after which it switches to pay-per-view for nonsubscribers. Web First papers are supported in part by a grant from The Commonwealth Fund. You can also find the journal on Facebook and Twitter. Read daily perspectives on Health Affairs Blog. Download our podcasts, including monthly Narrative Matters essays, on iTunes. Tap into Health Affairs content with the new iPad app.