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The annual government “strategy” to contain the cost of health care by cutting rates misses the cause of the problem: the fee-for-service (FFS) reimbursement model and its disconnect from outcomes that matter. By paying providers based on the number of services they deliver to each patient – tests, examinations, images, etc. – FFS incentivizes providers to deliver more services. It effectively guarantees increasing costs unrelated to outcomes. This broken model, in combination with CMS’ efforts to contain costs, promises to cripple our health care delivery system unless providers transition to a value-based care model – and soon.
Between 2001 and 2023, inflation-adjusted Medicare physician payments declined 26%, even as the cost of providing services nearly doubled. Physicians are opting out of Medicare with increasing frequency because of the financial loss associated with treating Medicare patients. Beyond this, the complex FFS billing system has forced physicians to spend almost half of their day filling out electronic health records and other paperwork, with only 27% of their time going to direct patient interactions. The harsh realities of working as a physician in this environment have forced many to forgo independent practice in favor of joining hospitals, where 74% of physicians currently work.