▸ Giving the Centers for Medicaid and Medicare Services the authority to pay providers differently based on performance measures;
▸ Ensuring accurate prices by identifying and correcting mispriced services;
▸ Encouraging coordination of care and use of care management, especially for patients with chronic conditions.
Path 1 also calls for collecting information on physicians' practice styles and sharing the results with other physicians across the country. If physicians could see how they use resources, compared with their peers, they would revise their practice styles accordingly, according to MedPAC's report.
The commission proposes that Medicare could then use the results to adjust payments to physicians and base rewards on both quality and efficiency.
Path 2 calls for pursuing the approaches in Path 1 but also including a new system of expenditure targets. The MedPAC report states that expenditure targets are necessary because they put “financial pressure on providers to change.” It also recommends that targets should be applied on a geographic basis—applying the most pressure to the parts of the country where there is the highest use of the particular service and the highest contribution to Medicare spending.
Path 2, however, does goes on to propose that expenditure targets should not fall solely on physicians but rather be applied to all providers in an effort to encourage different providers to work together at keeping costs as low as possible.