Physician Reimbursement: Fee-for-Service, Accountable Care, and the Future of Bundled Payments

In 1992, the use of relative value units to link a particular payments with specific services was initiated to replace traditional fee for service. The system incentivizes volume rather than quality. In 1997, initiatives were formalized to emphasize quality measures. Physicians must participate in the Merit-based Incentive Payment System (MIPS). Physicians can opt out of MIPS if they participate in an Alternative Payment Model such as Bundled Payments. Reimbursement based on an episode of care reduces perceived incentive to increase volumes, but may result in difficulty with access to care for patients with complex medical issues or significant comorbidities.