Legislators and providers could confront the issue of equal pay for equal work in healthcare because of a congressional advisory panel's suggestion on how to modernize Medicare's fee-for-service payment policy.
The Medicare Payment Advisory Commission's first report to Congress, formally released last week, suggests examining why payment varies for different types of providers performing similar services.
Medicare uses a different formula for each type of provider, which results in varying fees. Efforts to rein in costs through differing statutory limits have complicated the payment method.
The issue could set off alarms in particular for hospitals, which offer many services that also can be delivered in nursing homes, physician practices, freestanding ambulatory surgical centers and in beneficiaries' homes through home health agencies.
While MedPAC's report does not recommend specifically how to change fee-for-service payments, it does suggest looking at the rationale behind the differing calculation techniques.
"Some inconsistencies across payment policies may be appropriate if they reflect different patient mixes or treatment protocols," the report said. "Payment policies should be re-examined, however, if they produce payment differentials that simply reflect how the policies have evolved."
Testifying last week before congressional committees, MedPAC Chairwoman Gail Wilensky said the commission was trying to bring some "rationality and consistency" to Medicare fee-for-service payment.
"How do you look at these services broadly instead of putting them in pigeonholes?" Wilensky said.
For instance, hospitals sometimes are paid more than freestanding skilled-nursing facilities or outpatient surgical centers for similar nonacute-care services. That occurs, for example, because of the different formulas used to pay the hospital-based facilities or because the hospitals treat more acutely ill patients than the freestanding facilities do.
"We need to figure out whether they are legitimate differences or just differences," Wilensky said.
Medicare prepared for such a change in 1992 when it instituted the existing physician fee schedule, which based payments on the complexity of the treatment that doctors deliver to Medicare beneficiaries, Wilensky said.
Robert Graham, M.D., executive vice president of the American Academy of Family Physicians, agreed that using a complexity-based system such as the physician fee schedule would be a way to achieve MedPAC's goal.
"On the face of it, it does make sense to compensate the same for the same service no matter the setting or who provides it," Graham said.
The MedPAC report, as well as many experts in the healthcare field, cautions that such a change must be made carefully because it could result in closure of some facilities or practices or reduce beneficiaries' access to healthcare. It also could result in care delivered in settings where quality is jeopardized.
"Sometimes there may be reasons to want to favor one setting over the other," said Robert Doherty, vice president of governmental affairs and public policy with the American Society of Internal Medicine.
Industry experts also warned against such a change because some of the frustration many patients feel with the healthcare system might stem from constant shifting of procedures from institutional to outpatient settings.
Wilensky, along with other experts, acknowledged that equalizing fees will be complicated by the various coding systems in different settings and might require more data than HCFA has.
Uwe Reinhardt, a former commissioner of the Physician Payment Review Commission, a predecessor organization to MedPAC, said the data are available but HCFA might not have enough funding to gather and interpret the data.
"Is the stuff you need to know to pay properly for Medicare knowable? Yes," said Reinhardt, now a Princeton University health economist. "Is it knowable with the trivial budget Congress allocates (HCFA) for managerial activities? No."