The Politics of Relative Values: Physicians and Medicare Fees

Award Year:
Miriam Laugesen
Two decades after Congress reformed Medicare physician payment, Medicare costs continue to rise, physicians are still paid for each service provided to each patient, and payment incentives remain skewed toward highly specialized, procedure-oriented care. Although spending for physician services exceeded annual targets from 2003 to 2010, Congress postponed nine scheduled cuts in physician fees. Clearly, Medicare's system for paying physicians needs fixing. In a project titled, The Politics of Relative Values: Physicians and Medicare Fees, Miriam J. Laugesen, Ph.D., examines why Medicare payment reforms fell short of their original objectives to contain costs and equalize payment gaps between primary care physicians and specialists. Her study will investigate the impact of the Resource-Based Relative Value Scale (RBRVS) implemented in 1992 for determining Medicare's fee schedule for physician services, including the role of physicians' participation in the scheduled reviews of the RBRVS, a largely undocumented process. Dr. Laugesen's findings will address the strengths and limitations of the process used to determine Medicare physician fee levels, as well as the future role of physicians in determining payment policies. Her project should provide policymakers with a better understanding of possible payment reforms that are technically and politically feasible and could encourage more coordinated, effective, and better-compensated primary care for Medicare beneficiaries.