What's the Magic Payment Mix for Medicare Primary Care Providers?

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A report from the Urban Institute traces CMS' evolving approach to compensating primary care physicians to treat those with multiple chronic conditions.

CMS is increasingly using new billing codes and demonstrations to both improve care as well as address the problem of underpayment for primary care physicians, a new analysis shows.

The strategy aims to address the shortage of primary care doctors relative to specialists in many parts of the country, according to the report from the Urban Institute. Primary care physicians’ median incomes range from $225,000 to $250,000, but specialists, such as cardiologists or orthopedic surgeons, have median incomes as high as $550,000.

The 2 approaches—new billing codes to incentivize specific activities that CMS seeks, and demonstrations that test whether CMS can improve outcomes by paying for new care delivery approaches–each have their pros and cons. However, the lead author of the report, Medicare’s Evolving Approach to Paying for Primary Care, said it is clear that CMS is determined to find the right payment amount to move physician behavior.

“From my perspective, it seems that CMS’ biggest priority is finding the right dollar amount to pay providers to engage the high cost, complex patient,” said Rachel Burton, a senior research associate at the Urban Institute.


About 69% of Medicare fee-for-service (FFS) beneficiaries have 2 or more chronic conditions, making their primary care practitioners eligible to be paid for chronic care management (CCM) services. These patients account for 93% of Medicare spending.

But by November 2016, CMS reported that it had only received CCM claims for about 500,000 beneficiaries, who each received the service an average of 4 times, with payments totaling $93 million over nearly 2 years.

CMS is moving towards a blended payment approach that includes FFS, but adds flat monthly payments to cover sets of low-cost activities that CMS wants providers to engage in, like phone calls with patients or conversations with providers that are impractical to bill for separately.

Demonstrations give CMS several capabilities, such as:

  • Allowing the impacts of paying for new services or paying for current services differently to be evaluated.
  • Testing flexible payment models.
  • Providing a financial incentive to engage in activities that may otherwise be hard to define or include in a fee schedule (for example, calling patients or calling other providers).

In addition, there has been a shift from end-of-year bonuses to up-front payments, and monthly payments have increased.

“CMS keeps doubling the amount they are willing to pay,” said Burton.

When the CCM fee was added to Medicare’s fee schedule in 2015, it was set at $42.71. Previous fees were $10, and subsequently $20. In 2017, the fee rose again, to $93.67, when the complex chronic care management fee was added.

Over time, CMS has also lessened some of the requirements imposed on providers willing to use the new care codes. Physicians have said that some of the requirements, such as obtaining written consent from a beneficiary to in order to participate, collect an additional copay, offer comprehensive case management, and other requirements were unduly burdensome.

“Through these efforts, it’s possible CMS may begin to shrink the wide disparities between the salaries of primary care physicians and specialists over time,” the report said.

The report said the 2 approaches suggest 2 philosophies about provider accountability and suggested that by using both, CMS is trying to achieve 2 things at once. Billing codes insist on documentation that a service was provided to a patient and dictate what activities have to happen in order to use the code. Demonstrations implement new care delivery approaches and are more focused on patient and spending outcomes.

The Robert Wood Johnson Foundation supported the research report.