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CONFERENCE SUMMARY Sunny G. Yoder The Institute of Medicine sponsored a conference on Strategies for Reform of Physician Payment that was held on October 27 and 28, 1983, at the National Academy of Sciences, Washington, D.C. The conference was organized by the Institute's Division of Health Care Services to provide an opportunity for members of the Institute and others from medicine, industry, government, and academia to discuss the issues involved in physician payment, to identify problems with existing payment methods, and to suggest how the Institute might contribute to future deliberations on the topic by public and private decision makers. A list of participants appears as Appendix A. Although a primary purpose of the conference was advice on a possible further Institute activity, the discussion summary and the background papers should be of interest to all concerned with physician payment issues. The conference represented the most recent manifestation of a long- standing Institute concern about the influence of physician payments on health care in this country. In a 1974 study, Medicare-Medicaid Reimbursement Policies,. an Institute committee examined alternative methods of payment for physician services in teaching hospitals and considered the effects of those payments on the specialty and geographic distribution of physicians. The committee recommended that payment mechanisms be changed to provide higher payments for ambulatory services in order to better support primary care residency training and thereby increase the number of primary care physicians. Other Institute studies have identified undesirable and usually unintended inf luences of payment policies on patterns of health care. A 1978 study, for example, found that payments for primary care services were having an adverse effect on the avai labi lity of primary care. The study committee recommended that third-party payers change their payment structures and practices to (1) pay all physicians the same amount for primary care services, with payment levels based on the minimum level of skill required; (2) reduce the differentials in payment levels between primary care and other procedu res; and

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(3) institute payments for certain primary care services such as health education and preventive services.* More recently the Institute's Board on Health Promotion and Disease Prevention has pointed to inadequate payment levels (and inadequate insurance coverage) as negative influences on patients' decisions to seek, and physicians' decisions to provide, preventive services. The Board on Mental Health and Behavioral Medicine has raised the issue of low payment levels for cognitive and psychosocial services. In a 1982 survey, Institute members were asked to suggest critical issues that the organization should address. They ranked physician payments as having the highest priority. An ad hoc group was convened in March of 1983 to consider how the Institute of Medicine could engage with this issue. The group found it likely that the IOM could make a useful contribution, but that the complexity and sensitivity of the issues called for a sequence of act ivities: commissioning of papers by experts on several aspects of phys ic fan payment a staff analysis of existing forms of physician payment and physician earnings 3. a meeting whose participants were familiar with the commiss toned papers and stat f analysis. The meeting was envisioned as a small, invitational conference of 25 or 30 people. But because of the intense membership interest in the issue, the conference was expanded by extending invitations to all members and scheduling it in conjunction with the 1983 annual meeting of the Institute. Five background papers were commissioned and distributed in advance: The Impact of Changes in Payment Methods on the Supply of Physicians' Services,. a critical review of relevant economics literature by Robert Lee, an economist at the University of North Carolina; Politics as Usual and Customary? Physician Payment in Transition,. an assessment of political considerations *Institute of Medicine, HA Manpower Policy for Primary Health Care,. Washington, D.C.: National Academy of Sciences, 1978, pages 45-52. A conference was held by the IOM in 1978 to explore the payment issues raised in the primary care report with public and private third-party papers, union and industry purchasers of health insurance, physicians, and other providers of health care. See Institute of Medicine, Reimbursement Policies for Primary Health Care,. Report of a Health Policy Forum, May 24, 1978, St. Louis, Missouri. Washington, D.C.: Nat tonal Academy of Sciences, October 1978. 2