Physician Payment and Reimbursement

Several new Medicare primary care payment models to launch in 2020

May 9, 2019 3:52 pm

April 22—Medicare eventually hopes to pay one-quarter of fee-for-service (FFS) physicians under one of five primary care models planned for launch at the beginning of 2020.

“Building on the experience of previous models and ideas of past administrations, these models will test out paying for health and outcomes rather than procedures on a much larger scale than ever before,” said Alex Azar, secretary of the U.S. Department of Health and Human Services (HHS). “These models can serve as an inflection point for value-based transformation of our healthcare system, and American patients and providers will be the first ones to benefit.”

One voluntary model is targeted to independent practices and the other to physician groups, with different incentives for each.

Primary Care First seeks to promote independence

The five-year Primary Care First (PCF) model offers two payment options aimed at independent practices.

The first PCF option is for advanced primary care practices and includes:

  • Monthly population-based payments, plus a flat per-visit payment
  • Potential 10% cuts in Medicare payments under downside risk, and potential 50% bonuses
  • Performance criteria that are based on risk-adjusted hospitalizations

Another PCF model will focus on seriously ill populations and offer similar incentives, targeted to providers that offer hospice or palliative care services and take on primary care responsibilities for such FFS patients.

Quality-of-care metrics to be tracked include patients’ experiences of care and key outcomes-based clinical quality measures, which may include controlling high blood pressure, managing diabetes mellitus, and screening for colorectal cancer, according to a Centers for Medicare & Medicaid Services (CMS) fact sheet.

Direct Contracting models aim to engage more-experienced organizations

Two Direct Contracting (DC) models will provide options for larger primary care practices, as well as other entities such as accountable care organizations and Medicare Advantage plans, that have experience with taking on financial risk.

The DC models include a professional option that offers:

  • 50% bonus or penalty risk based on FFS Medicare patients’ total cost of care in Parts A and B
  • Enhanced-services funding through a capitated, risk-adjusted monthly paayment of 7% of the total cost of care

The DC model’s global option includes:

  • 100% risk for potential bonuses or penalties based on total cost of care for Parts A and B
  • Choice of a 7% monthly payment to provide coordinated services or a capitated, risk-adjusted monthly payment for all services by all contracted providers  

“The payment model options are anticipated to appeal to a broad range of physician practices and other organizations because they are expected to reduce burden, support a focus on beneficiaries with complex, chronic conditions, and encourage participation from organizations that have not typically participated in Medicare FFS or CMS Innovation Center models,” stated another CMS fact sheet.

CMS also is seeking comments on another DC model that it aims to launch in mid-2020 and that will be based on care provided in geographic areas. Participants will:

  • Have 100% upside and downside risk for all Parts A and B services used by beneficiaries in a geographic area
  • Commit to provide CMS a discount on total cost of care for a target population
  • Continue to receive full FFS payments

Goals and benefits

At an April 22 press conference in Washington, D.C., Trump administration executives outlined a range of improvements they hope the models will produce, including:

  • Providing primary care providers additional funding and choice on how to invest the funding to improve outcomes
  • Rewarding primary care providers for averting unnecessary utilization 
  • Allowing practices to choose the level of financial risk with which they are comfortable
  • Incentivizing primary care providers to better manage conditions and coordinate care with other providers
  • Creating predictable payment streams
  • Reducing CMS regulatory overhead for primary care providers so they can focus on care
  • Allowing providers to focus on improving outcomes for specific patient populations
  • Reducing clinician burnout and practice acquisition
  • Building on accountable care organizations and other value-based payment models
  • Incentivizing providers to compete for beneficiaries based on service, price and outcomes


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