Fee for Service Is Going Down, Slowly and Maybe Not Entirely

John Marcille

We die from the moment of birth, and even the ground we walk upon has a beginning and — the physicists (or is it cosmologists?) tell us — an end that we won’t witness. The fee-for-service (FFS) payment system spins on the circle of life, as well.

It has been dying for an awfully long time, as our cover story on page 21 notes. Will we ever see the end of FFS? It won’t happen this year, or maybe even this decade, but little engines of change rev throughout the health care system.

The accountable care organizations and patient-centered medical homes that the Affordable Care Act promotes try to push FFS to the side. Can they? Contributing Editor Joseph Burns notes FFS’s stubborn refusal to go. It is entangled with the Current Procedural Terminology system, for one thing. And most health plans lack the information systems needed to sustain whatever might replace FFS. Contracts with thousands of provider groups would need to be rewritten.

The Catalyst for Payment Reform, an organization headed by Suzanne F. Delbanco, PhD, says that only 11% of payment to providers is not FFS. It “might be at 13% in the next year or two,” says Jim Evans, a McKesson consultant.

Still, are there not some health care operations where FFS makes sense?

What if an asteroid hadn’t ended the age of dinosaurs? What if they just decided to not show up for work one day? The Centers for Medicare & Medicaid Services reports that nearly 10,000 physicians opted out of Medicare, which is mostly FFS, in 2012, more than twice the number of doctors who had made that same decision in 2009.

Physicians have long bristled at CMS’s now-you-don’t-see-it, now-you-do pay raises. This time looms the threat that Medicare payments might be slashed by about 25% next year. Congress might step in again, but doctors tire of the game.

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