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A System in Need of Change:
Restructuring Payment Policies to Support Patient-Centered Care

Paper Proposes to Restructure Conventional Fee-for-Service Payment Policies

Washington, January 22, 2007 - A policy paper with proposals to restructure conventional American health care fee-for-service payment policies was released today by The American College of Physicians (ACP) at its annual report on “The State of the Nation’s Health Care.”

“A System in Need of Change: Restructuring Payment Policies to Support Patient-Centered Care” offers a series of nine recommendations to address inadequacies in the current Medicare physician payment and delivery system. The combined recommendations would constitute some of the biggest changes in Medicare payment policies since the program was enacted in 1965.

“The guiding philosophy of these recommendations is that patient needs are best met through the delivery of patient-centered, longitudinal, coordinated care,” explained Lynne M. Kirk, MD, FACP, president of ACP.

“This is the model of care that internists and other physicians who provide primary and principal care are trained and well-suited to deliver yet has been historically unrecognized or under-recognized by the payment system,” Dr. Kirk emphasized.

The specific recommendations result from three major ACP goals:

- Instituting a multi-component, bundled payment structure that facilitates more effective and efficient care delivery for patients through the Advanced Medical Home (AMH). The AMH, also called the patient-centered medical home, offers the benefits of a personal physician with a whole-person orientation. The physician accepts overall responsibility for the care of the patient and leads a team that provides enhanced access to care, improved coordinated and integrated care, and increased efforts to ensure safety and quality.

- Eliminating Medicare’s Sustainable Growth Rate (SGR) formula for annual physician fee updates. The College proposes a transitional pathway to accomplish this goal that culminates in a stable and predictable methodology for updating physician payments and creates positive incentives for physicians to participate in quality improvement programs.

At the end of the transition, the SGR would be replaced with a new update system that would establish a baseline physician payment update that takes into account the costs of delivering care, beneficiary access to services, workforce and other data on trends that may affect access and quality; provide ongoing funding for programs that can achieve quality improvements and cost efficiencies, and allow for targeted changes in payment policies to achieve specific policy objectives.

- Implementing changes within the Resource Based Relative Value Scale (RBRVS) system that improve the accuracy of work and practice-expense relative values, providing incentives for the adoption of health information technology linked to quality improvement efforts, as well as for physicians to continuously improve, measure and report on the quality and cost of the care provided.

The paper was released by ACP in conjunction with its annual report on the state of the nation’s health care. The state of the nation’s health care report provides compelling evidence that there are core deficiencies in the current payment and delivery system that will be corrected by adoption of ACP’s proposals to support patient-centered health care.”

“There is strong evidence that these proposals will improve the quality and effectiveness of care provided in this country,” Dr. Kirk concluded. “They will facilitate a sustainable environment in which physicians are able to acquire the systems needed to manage and coordinate care for the whole patient. Other industrialized nations have redesigned their health systems around patient-centered care, and they have consistently better outcomes at much lower cost than the United States. And within the U.S., states that rely more on primary care have lower Medicare expenditure and better overall quality.”

The American College of Physicians is the largest medical specialty organization and the second-largest physician group in the United States. ACP members include 120,000 internal medicine physicians (internists), related subspecialists, and medical students. Internists specialize in the prevention, detection and treatment of illness in adults.

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