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SGIM Calls for End to Fee-For-Service

John Commins, for HealthLeaders Media, March 4, 2013

Fee-for-service medicine is a financially unsustainable payment model that should be phased out by the end of the decade, a study commissioned by the Society for General Internal Medicine recommends.

The study released Monday by SGIM's National Commission of Physician Payment Reform calls for an aggressive five-year transition into blended payment models such as patient-centered medical homes or accountable care organizations that reward outcomes quality and value. During the transition, the commission said fee-for-service would be "recalibrated" to correct payment inequalities for services such as evaluation and management.

Commission Chairman, Steven A. Schroeder, MD, professor of health and healthcare at the University of California, San Francisco, says he went into the year-long project last March thinking that fix fee-for-service could be fixed, but concluded after months of study that an aggressive phase-out makes more sense.

"It's so complicated to fix it and we've been trying for 30 years," Schroeder tells HealthLeaders Media.

"It promotes higher volume, and because the valuations tend to be huge, to create more high-tech things. It changes the mix of services that a physician provides because there is such a gray area in healthcare. At the margins it creates incentives to do more costly things."

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2 comments on "SGIM Calls for End to Fee-For-Service"


Bart Lee (3/4/2013 at 3:44 PM)
Dr. Knight is right. When people use whatever but don't pay for that whatever, they use a whole lot more of it, limited by only their own better uses of their time. Make employee benefits fully taxable and effective incentives will appear to control costs. Until then, we're on our way to infinite demand for life -prolonging medical care, always paid for by other people [INVALID] so what's not to like about that? ##

James G Knight MD (3/4/2013 at 9:49 AM)
The problem isn't Fee-For-Service; it's the third party payment method that has evolved as a consequence of tax law. The problems are the consequence of someone other than the consumer of services paying the cost of those services. A consumer who is insulated from the cost of the goods and services they use, consume more services and unscrupulous physicians are prone to offer more (unnecessary) services. Consumer directed health care has been shown to control costs without loss of health outcomes. Reconnecting consumers to the lion's share of their day-to-day health care expenditures, while still protecting them from financial ruin due to major illnesses or injury (high deductible insurance coverage), right-sizes health care thru market forces. Making doctors salaried employees is the DMV/ post office approach to the problem and will produce the same culture endemic to these institutions...