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 High Fees Seen as Main Cause of Higher Overall Spending on Physician Services in U.S. 
by The Commonwealth Fund - 9/23/2011
A new study comparing fees for physician services in the United States with those in five other nations finds that U.S. physicians are paid more per service than doctors in other countries—as much as double in some cases.

According to the Commonwealth Fund–supported study, which appears in the new issue of Health Affairs, U.S. primary care physicians were paid an average of 27 percent more by public payers for an office visit, and 70 percent more by private payers for an office visit, compared with the average amount paid across the other countries, which include Australia, Canada, France, Germany, and the United Kingdom. For hip replacements, the gap was even larger: U.S. physicians received 70 percent more from public payers, and 120 percent more from private payers, than the average fees paid to physicians in the other nations studied.

The researchers, Miriam J. Laugesen, Ph.D., and Sherry A. Glied, Ph.D., who is currently serving as assistant secretary for planning and evaluation at the U.S. Department of Health and Human Services, say that higher prices paid to physicians were the main drivers of higher spending on physicians in the U.S., rather than physician practice expenses or the costs of medical education.

New Way of Paying Physicians Shows Promise
Also in the new issue of Health Affairs, researchers report on a new alternative to fee-for-service payment being tried by Blue Cross Blue Shield of Massachusetts. As of 2009, health care providers that participate in the Alternative Quality Contract (AQC) receive fixed payments for patient care, plus rewards based on savings generated and performance targets reached.

The AQC gives provider groups a global budget to cover the cost of delivering care to a defined group of patients and allows those groups that control costs to recoup savings. The authors of the Commonwealth Fund–supported study, who include Robert E. Mechanic, M.B.A., of Brandeis University and Michael Chernew, Ph.D., professor at Harvard Medical School and member of The Commonwealth Fund Commission on a High Performance Health System, say that groups in the AQC have been able to slow their health care spending growth and have begun to focus more on quality improvement, reduce their use of expensive sites of care, and coordinate services for high-risk patients.

Although early results suggest financial incentives tied to quality improvement and efficiency can help reduce spending growth, the researchers note that such savings require a multiyear investment by insurers in technical resources and analytic tools, as well as substantial financial incentives.

Provided by The Commonwealth Fund on 9/23/2011
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