Re-Evaluating the Physician Fee Schedule

Even if they are in value-based contracts, most physicians are still paid based on fee-for-service billing codes. There are many idiosyncrasies and flaws in existing fee schedules. As is well known, procedures are highly valued but cognitive interventions are not. There is no clear association between the payment level and the health benefit of the services rendered. Furthermore, no intervention has clearly and consistently shifted physician practice to reduce low value care.  

HTI is trying to reform the physician fee schedule, so payments more accurately reflect the health service’s value. This would align physicians incentives with reducing use of low-value services. 

HTI’s approach is to evaluate which medical services are used in risk-based, value-based provider payment models such as global capitation versus fee-for-service payment. This information will then be used to 1) create a benchmarking tool that can identify potentially wasteful health care utilization and to 2) develop an alternative fee schedule. Both tools will be applied to shift utilization in fee-for-service payment models toward the utilization observed in value-based contracts and to drive policy discussion.

HTI has already been working with private insurers to establish a proof-of-concept. For example, working with one major insurer, we identified that under traditional fee-for-service arrangements the use of arthrocentesis and associated spending was 2x higher than that in global capitation contracts (after risk-adjustment). Preliminary work supporting the value-based fee schedule development for a new insurance product is also demonstrating feasibility.