Physician Payment Reform: An Idea Whose Time Has Come

Philip R. Lee, M.D. is Professor of Social Medicine at the Institute for Health Policy Studies, University of California, San Francisco, and Chairman, Physician Payment Review Commission; Lauren B. LeRoy, Ph.D. is Deputy Director, Paul B. Ginsburg, Ph.D. is Executive Director, and Glenn T. Hammons, M.D. is Deputy Director, all of the Physician Payment Review Commission. The Physician Payment Review Commission was created in 1986 to advise Congress on reform of methods used to pay physicians for services to Medicare beneficiaries. In 1988, Congress added to the commission’s charge the consideration of policies to slow the growth in spending for these services. The commission began operation in November 1986, and in its first annual report to Congress, submitted the following March, it called for a fee schedule for Medicare. In April 1989, the commission forwarded a set of proposals to Congress that sought both to rationalize the pattern of payment to physicians and to slow the increases in program costs so that they are affordable to beneficiaries and taxpayers. To realign payments, the commission proposed a Medicare Fee Schedule based primarily on