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Five things to know: CMS’ plan to up PCP payments by millions


CMS announced changes to how Medicare pays for primary care. Here’s 5 things to consider.

By 2017, an additional $140 million could be channeled to primary care physicians, according to the final version of the Medicare Physician Fee Schedule (PFS) released by CMS.

Over time, according to a blog post from CMS Acting Administrator Andy Slavitt, if the clinicians qualified to provide these services were to fully provide these services to all eligible beneficiaries, the boost could be as much as $4 billion or more in additional support for care coordination and patient-centered care. Clinicians will additionally be able to bill and be paid more appropriately when they spend more time with their patients and better coordinating care.


“This payment change shows that CMS continues to shift payment structures to support coordination of care whether that’s for coordination of primary care, as in this case-or population health [e.g., ACOs]-or high-cost episodes [e.g., bundled payments],” says Sam Ogie, director of healthcare programs at Simon Business School at the University of Rochester. “Payment for healthcare services has been oriented toward procedures for decades-‘if it bleeds, it pays’-so it is likely a good sign that CMS is putting more money behind diagnosis and care coordination.”

Here, experts share 5 things to know about this boost to primary care reimbursement:

1. Although the evidence is mixed, on balance it suggests that care coordination can reduce spending and utilization while maintaining quality, according to Ogie, referring to The Patient-Centered Medical Home’s Impact on Cost and Quality: Annual Review of Evidence, published for the last five years by the Patient-Centered Primary Care Collaborative.

“On the other hand, lower utilization and spending may not be passed on to managed care plans and their customers,” Ogie says. “Care coordination is difficult, often requiring investment in IT and staff. This will tend to continue or even accelerate the trend toward physician employment-vertical integration with hospitals-and larger group practices.”

According to a 2016 survey by Merritt Hawkins, the proportion of employed PCPs increased from 58.2% in 2014 to 63.2% in 2016 (increased from 43.7% to 57.9% for all physicians). The survey also found significant increase in the size of medical practices. Practices of 101 or more physicians increased from 12.1% to 19.9% (2014 to 2016 surveys) and practices for 31 to 100 physicians increased from 7.8% to 12.4%. Looking at both groups combined, practices of 31 plus physicians increased from 19.9% in 2014 to 32.3%.

“Both larger physician practices and physicians employed by hospital systems will improve provider negotiation leverage and could reduce the proportion of cost savings that is passed on to managed care organizations and ultimately patients,” Ogie says.

2. CMS is getting more serious about trying to create more of a healthcare system for Medicare and move away from its fee-for-service environment.

“I also think that we will see a number of managed care entities emulate these efforts in their non-Medicare markets,” says Managed Healthcare Executive advisor Don Hall, principal of Delta Sigma LLC. “The ROI on this approach is very high and the potential impact on quality of care is substantially increased.”3.   Primary care providers should play the prominent role in coordinating care for beneficiaries.

3. Primary care providers should play the prominent role in coordinating care for beneficiaries.


“As Congress and HHS steer more payments to models that are based on value-better quality at lower cost-we will likely continue to see higher payments for primary care and a greater role for those providers,” says Joel White, president, Council for Affordable Health Coverage.

4. More attention should be given to how Medicare Advantage can deliver coordinated care and benefits at lower cost-“$140 million is a drop in the bucket in a $700 billion a year program,” according to White. “Congress will likely focus on how to promote more competition in MA next year.”

5. Don’t ignore this CMS move. “CMS is seeking input from managed care experts to inform Medicare and Medicaid payment systems,” White says. “Industry leaders would be foolish to ignore what CMS is doing here, or miss an opportunity to open a constructive dialogue with the new Administration

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