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Potential Contributions by the Institute of Medicine The conference participants suggested several potential Institute contributions to a broad reconsideration of physician payment methods. There was a high regard for the success of this conference in convening on neutral gound a diverse group of interested parties, researchers, policy analysts, and policymakers from the public and private sectors to consider these controversial issues. A continuing series of such conferences, each focused on a specific aspect of physician payment, was seen as a potentially useful contribution to the policy debate. A related suggestion was that the Institute serve as a clearinghouse for informal ion on local innovations in physician payment practices, monitoring the innovations and disseminating information to interested parties. Such a function might be extended to recommending designs for systematic evaluations and monitoring ongoing evaluation studies. Participants also made suggestions for a greater degree of active IOM involvement in defining directions for reform of physician payments. Conference participants suggested that an Institute committee could contribute in the near term by analyzing and commenting on policies currently under active consideration such as freezing physician fees, establishing fee schedules, and adopting prospective payments for inpatient physician services. Such a study would be directed to measures aimed at immediate cost containment. A longer-term major study could have an enlarged scope of concern extending to the effects of physician payments on desired health care objectives. These objectives, which the study would define specifically, could include access to primary care, and to preventive and psychosocial services; use of health resources and technologies; and distribution of health manpower. With such objectives as criteria, the study could examine payment options, including all the appropriate alternatives to fee-for-service payment. Finally, a number of conference participants urged that the Institute undertake a study of the relative values of physician services. Such a study would address directly the issue most cited as a concern by IOM members: distortions in health care delivery due to disparities in payment levels for different services. It was felt that the IOM was an appropriate body to examine the relationship between existing fee structures across medical specialties and (1) the costs of providing a service, (2) its medical efficacy, (3) consumer preferences, and (4) other criteria that might be developed for establishing ~value,. and to recommend one or more new methods for developing and updating physician fees. A number of participants pointed out that the issue of relative value pervades all payment mechanisms. Efforts to develop a better rationale for valuation would therefore be helpful in determining payment levels irrespective of payment methods that might be adopted in the future. 8