Out of Whack: Pricing Distortions in the Medicare Physician Fee Schedule

By: Robert A. Berenson, MD, Institute Fellow, Urban Institute

While there is near universal agreement that we need to move away from Medicare’s fee-for-service physician payment system, Dr. Berenson argues that in the short term we still need to focus on improving the current physician fee schedule. Not only are the value-based payment systems that most reformers envision still many years from widespread reality, the existing fee schedule prices will serve as the building blocks for some of the newer aggregate payment approaches. In this essay, Dr. Berenson offers thoughts on how to improve the system in ways that both address current payment system woes and serve as a step toward future value-based payment systems.