Decades ago, physicians were not paid by a fee schedule. Instead, they were paid for their “usual and customary” fees, which was an open-ended essentially unregulated payment scheme. It was replaced with a pay for procedure scheme by government and most insurance companies. This is the basis of our current workers’ compensation Official Medical Fee Schedule. Most procedures are listed in the OMFS, next to a formula for computing the maximum fee for the procedure. The more procedures performed, the more the fee. The physician is not paid for success or the outcome.

An alternative to the current pay for procedure fee schedule is a pay for performance system, where the formula for payment also takes into account the quality of the physician’s work, or the outcome. This method will theoretically improve medical success. Physicians have been dreading this next step, and most would prefer to be paid for procedures irrespective of the outcome.

California Health Line reports that a key House subcommittee approved a bipartisan proposal to repeal Medicare’s flawed physician payment formula and replace it with a system that rewards doctors for high-quality care. Under the bipartisan proposal. Medicare physician reimbursements would grow by 0.5% annually over five years. Starting in 2019, Medicare would switch to an enhanced fee-for-service system that would provide physicians with updates and payment incentives based on their performance on certain quality measures. The quality measures — which would compare physicians with others in their subspecialty — would be based on, care coordination, clinical care, patient experience, patient population and safety.

The proposal also directs HHS Secretary Kathleen Sebelius to review and finalize the quality measures for the upcoming year by Nov. 15 of each year. In addition, the HHS secretary would be required to develop codes for complex chronic care management services and develop a fee schedule for those services starting in 2015.

The draft proposal calls for providing physicians with feedback on their performance in meeting the quality measures in “as real time as possible, but at least quarterly.”

The California workers’ compensation fee schedule under SB 863 is based upon the current Medicare RBRVS system. It would seem logical that as the federal system migrates to a pay for performance system, so would the OMFS.