The Mayo Clinic under the leadership of CEO Dennis Cortese, M.D., has released a payment reform proposal to Congress based on value-based indexing, meaning payment would be based much less on volume of services, and much more on quality and efficiency (Q/C = value).

It’s an interesting payment reform concept (strongly supported by Harvard Business School and various physician-friendly economists) that would require the creation of a value index within the formula used to determine Medicare physician fees.

(For those interested in the related specific policy details, their proposal eliminates the current geographic indexing of the physician work component of the fee schedule, and applies instead a value index to the work component.  It does not change the indexing of practice expense or malpractice expense. While the current fee schedule formula applies the geographic index to 25% of the work component, and there is currently a temporary floor at 1.0, the Mayo proposal applies the value index to the entire work component and there is no floor or ceiling).

While not everybody will like (much less fully understand) this, it could possibly be a way out of the mess we’re in. Of course the devil’s in the details, but in looking through the Mayo proposal, many of the methods proposed involve (real or virtual) integrated systems. The College is exploring “virtual integration” concepts that we would suggest to CMS as “pilots in payment reform.”

But, there is also a “patriotic cause” here in promoting "value" as a pathway to reduce the risk of a bankrupted or much diminished system of rationing in the near future. In addition, I suggest we also consider a potential patient and physician opportunity here, were we able to design and recommend a 'value' approach that both allows a systematic means of improving quality, and also providing a real upside for physician practices.

Present, Past and Future
It ain't easy, but that's because we have for decades been immersed in a frustrating, dizzyingly complicated, and volume-based reimbursement concept that we seem to be clinging to, hoping that we can tweak it to viability. I don’t believe we can. The current payment model needs to be replaced in carefully planned phases. I predict that in the future cardiologists and most physicians will compete on and be paid by market-based salaries (with quality and patient satisfaction incentives). Practice organizations will administratively interact with the payment formulas and models of tomorrow, which will also be freeing doctors to spend more time with their patients, while reducing administration costs enormously. However, administrative “liberation” should not mean that physicians should ignore the responsibility for leadership of their practices in the future. Quite the contrary -- if we had not in the past abrogated such leadership, we wouldn’t be saddled with the dysfunctionality of the current payment system!

I applaud Mayo for suggesting a potential pathway to a better future for doctors, patients, and society. But most of medicine is hardly positioned to participate as easily as Mayo and other integrated systems might. We need to work with ‘non-integrated’ practices to get them ready for the coming changes, not just to survive, but rather to thrive. Nothing is more important for us in my opinion. I think we’re up to the challenge; but we’ll need to work together to educate, experiment, and make such a transition possible for most members.

*** Image from Flickr (alasam) *** 

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