Market Institute President Charles Sauer argues that Congress has an opportunity to strengthen independent medicine through the Patients First Act—but lawmakers should ensure that physician payment reform does not simply become another source of higher federal spending.
Writing in RealClearHealth, Sauer notes that Americans overwhelmingly prefer independent physician practices, even as the share of doctors working in physician-owned settings has continued to decline. Federal payment policy is one factor accelerating that consolidation.
Medicare reimbursement rates are set by Washington and have repeatedly been subjected to scheduled cuts followed by temporary congressional fixes. For independent practices facing rising operating costs, that uncertainty can make remaining independent increasingly difficult.
The Patients First Act attempts to address part of that problem by providing annual physician payment updates that better reflect changes in the cost of operating a medical practice.
Sauer argues that this would improve the existing Medicare payment system and help protect patient access to independent physicians. But he cautions that Congress should not finance the changes by simply increasing Medicare spending.
Instead, lawmakers should pair physician payment reform with savings elsewhere in the program.
One opportunity is site-neutral payment reform. Medicare can currently pay more for certain services performed through hospital-owned facilities than it does for the same services delivered by independent providers. Those payment differences can encourage consolidation while increasing costs for Medicare.
Reducing those disparities would generate savings while also removing a federal incentive that can push independent physician practices toward hospital ownership.
Sauer also points to wasteful spending in Medicare Advantage. A 2023 Department of Health and Human Services inspector general analysis found that diagnoses reported only through certain health risk assessments and related chart reviews generated an estimated $7.5 billion in Medicare Advantage payments.
Reforming those incentives could provide additional savings to help finance physician payment changes without simply passing the cost along to taxpayers and Medicare beneficiaries.
“The Patients First Act will not create that kind of market-based system,” Sauer writes. “But Congress can improve the legislation by keeping the physician-payment reforms that better reflect the cost of care, removing provisions that unnecessarily expand spending, and paying for the changes through reforms such as site-neutral payments and Medicare Advantage.”
The goal should be straightforward: protect patients’ ability to choose independent physicians while eliminating federal policies that encourage consolidation and unnecessary spending.
Read Charles Sauer’s full piece in RealClearHealth: “Patients First Act: Protecting Choice and Taxpayers.”
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