PHYSICIAN-PAYMENT REFORM - PAST AND FUTURE

Medicare's decision to compensate physicians using a fee schedule base d on the relative value of their services was an attempt to rationaliz e fee-for-service payment of physicians. Reformers hoped also to contr ol the costs of care, improve its quality, and protect access to healt h services among Medicare beneficiaries. A close examination of the sy stem's provisions indicates, however, that the reform does not address many fundamental problems that have plagued physician payment under M edicare in the past. In the cost area, for example, the new fee schedu le docs not affect such factors as the basic incentives built into fee -for-service medicine and the explosion of new medical technologies. T he failure of the program to achieve its goals in cost containment and other areas could result in abandonment of fee-for-service compensati on of physicians under Medicare.