As part of payment reform effort, Medicare pays primary care doctors more for managing chronic conditions

Doctor with patient
CMS has a two-pronged approach to make primary care more financially attractive to physicians.

To attract more doctors to primary care, the Centers for Medicare & Medicaid Services has taken a two-pronged approach to reform Medicare payment systems for those physicians: paying more for managing care for patients with chronic conditions.

A new analysis, prepared by researchers at the non-profit Urban Institute, focused on the two reform methods being used by CMS to address underpayment for primary care. Those are:

  • Adding new primary care billing codes to the Medicare Physician Fee Schedule to incentivize activities that clinicians were already doing but not getting paid for, and paying for new activities it wants clinicians to start doing.
  • Conducting demonstration projects to test new primary care payment and delivery models, such as the patient-centered medical home model.

The two methods are being used by CMS to try and level the playing field when it comes to the disparity in income between primary care and specialty practitioners that is contributing to shortages of primary care physicians in many areas of the country, including rural areas and underserved communities. According to surveys, primary care doctors’ median income ranges from $225,000 to $250,000, while top-earning specialists, such as interventional cardiologists, orthopedic surgeons and radiologists, have median incomes as high as $550,000.


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Funded by the Robert Wood Johnson Foundation, the report concluded that billing codes added in recent years by CMS suggest the agency has become increasingly comfortable paying for non-face-to-face services for patients.

CMS has also taken a more diversified approach to paying for primary care, adding monthly payments to cover packages of low-cost activities that doctors would find impractical to bill for separately, such as emails, phone calls and conversations among staff related to managing the care of complex patients.

As for the demonstrations, researchers found higher and higher monthly payments offered to practitioners and a shift from end-of-year bonuses to up-front payments. Practitioners are also being held accountable for a growing range of outcomes, including patient satisfaction, care quality and appropriate utilization, but, increasingly, are not expected to independently influence the total cost of care for patients.

The most noticeable trend observed by researchers is a willingness by CMS to pay increasingly large amounts for managing the care of patients with chronic conditions—a high-need, high-cost group.

“CMS has an important opportunity to incentivize innovations in payment and delivery,” said Katherine Hempstead, Ph.D., senior adviser at the Robert Wood Johnson Foundation, in an emailed announcement. “The right kinds of delivery system reforms will encourage prevention and less intensive settings, yet still provide complex patients with the care they need.”

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