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MEDICAL YEAR
IN REVIEW

A Brief History of Physician Payment

By Ezequiel Silva, III, MD

The next time you visit with an octogenar- the higher the relative payment. During the Payment Models (APMs). MIPS unified the
ian physician, ask how physicians were paid history of the RBRVS, the federal govern- existing P4Ps into one system with one over-
during the 1970s. Most likely, the response ment has continued to experience increases all performance score. This score adjusted
will be, “We were paid what we billed.” Ask in expenditures within the MPFS. Moreover, FFS payments depending on performance
that same question of an early-career physi- policymakers perceive shortcomings in qual- and determined by four categories: quality,
cian today, and the answer will be quite dif- ity, or at least a relative lack of accountability cost (initially, resource use), promoting inter-
ferent. You may hear they are paid based on for quality. operability (initially, advancing care informa-
national fee schedules, adjusted for quality To achieve greater accountability for qual- tion) and improvement activities. The second
performance and mandating financial down- ity, in the mid to late 2000s the federal gov- arm, advanced APMs, includes models that
side risk. What a difference 50 years makes! ernment created several quality-based are less dependent on FFS architecture, such
How did we get here? To answer this ques- programs, referred to as Pay for Performance as Accountable Care Models (ACOs), bun-
tion, a brief history of physician payment (P4P). Such initiatives as the Physician Qual- dled care initiatives and other innovative
under Medicare may provide insight. ity Reporting Initiative (PQRI) and Meaning- models. Advanced APMs must either im-
Medicare was signed into law in 1965. In ful Use emerged. This move toward quality prove quality or lower cost – or both. And
its early years, physician payment was based accelerated in 2010 with the passage of the they require that providers assume downside
on usual and customary charges. In other Affordable Care Act (ACA). As a result, the financial risk.
words, physicians could charge whatever they PQRI became permanent, updating its name A lot has changed in the past 50 years. We
could justify, and that amount was paid. The to the Physician Quality Reporting System have gone from a system of usual and cus-
system came to be known as fee-for service (PQRS); and the Value-Based Modifier and tomary charges to a system of national fee
(FFS). Perhaps predictably, this arrangement codified accountable care organizations, schedules, quality adjustments, emerging al-
resulted in sizable regional variation in pay- (shared savings models), were created. In ad- ternative payment models mandating the
ments and associated growth in overall fed- dition, the ACA provided $5B in funding for demonstration of value, and downside finan-
eral spending. To address this growth, the the CMS Innovation Center to develop and cial risk. The evolution of the QPP and its
federal government created a national fee test innovative health care models. Around emerging APMs will have a direct effect on
schedule. Based on studies of physician work this time, FFS came to be described as vol- the future of physician payment. Maintaining
from the Harvard School of Public Health, ume-driven care; P4P, value-driven care. A appropriate physician payment and support-
a new system was born: The Resource-Based popular catchphrase in policy circles de- ing independent practice will require not only
Relative Value Scale (RBRVS). scribed a move from volume-driven care to our knowledge of payment systems but also
I wrote about the RBRVS in San Antonio value-driven care. This effort culminated in our full engagement in their maturation.
Medicine last July . In that column, I described 2015 with the passage of the Medicare Ac-
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how payments within the Medicare Physician cess & CHIP Reauthorization Act (MACRA). Dr. Ezequiel “Zeke” Silva III, MD, a mem-
Fee Schedule (MPFS) are based on the MACRA provided the blueprint for the fu- ber of the Bexar County Medical Society, is with
RBRVS. Physician services are described by ture of physician payment. First, it is worth South Texas Radiology Group in San Antonio
CPT codes, and each code is assigned a valu- pointing out that MACRA replaced the and was recently elected as an alternate delegate
ation based on the required resources to pro- flawed Sustainable Growth Rate (SGR), a of the Texas Delegation to the AMA. Dr. Silva
vide the services. For instance, the physician widely criticized method to control Medicare is a Diagnostic Radiologist, with Vascular and
work of a surgical procedure is determined spending on physician services. In exchange Interventional specialization.
by the time, technical skill, physical effort and for SGR relief, MACRA further accelerated
psychological stress of the procedure. Prac- the focus on value-based payments. MACRA, References:
tice expense and malpractice are also included which later spawned the Quality Payment 1 - “The RVS Update Committee and its
in the resultant payment amount. Payments Program (QPP) created two payment arms: role in Physician Payment” - Ezequiel Silva,
are based on relativity across all physician (1) the Merit-Based Incentive Payment Sys- III, MD, San Antonio Medicine magazine, July
services, that is, the more resources required, tem (MIPS) and (2) advanced Alternative 2019.

20 San Antonio Medicine • December 2019