The commission report also calls for equal pay for physician services regardless of the setting. The study noted that Medicare pays $450 for an echocardiogram in a hospital and $180 for the same procedure in a physician's office.
"Right now you have terrific incentives for hospitals and physicians doing the procedures to let the hospital buy them up," Schroeder says. "They can have a major increase in their billing for the same product and the public is stuck with increased fees. This is an example where you are getting no extra value. You are just paying more."
The commission also calls for the elimination of the widely reviled Sustainable Growth Rate cap, with the $138 billion cost of removing the reimbursement cap paid for by identifying and reducing overuse of Medicare medical services.
Anders M. Gilberg, senior vice president, government affairs with the Medical Group Management Association, says many of the recommendations brought out in the report are "generally in line" with previous reports from other groups, commissions and think tanks.
"There is a recognition in this paper that you wouldn't simply be able to save money in Medicare just looking at the physicians' services piece of the pie alone. Physicians' services are only about 12% of the Medicare payment," Gilberg says. "It seems like what they are thinking here and what others are thinking is what can physicians do to prevent hospitalizations and in less-costly settings. My gut reaction is that it does have that bigger-picture focus that looks across multiple aspects of Medicare for savings, which is what you'd have to do to really save the system money."