Mid-Atlantic Health Law TOPICS

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New Medicare Payments for Primary Care

In an effort to transition away from fee-for-service payments for health care, the Centers for Medicare and Medicaid Services (CMS) announced a new program that will start in 2020: the Primary Care Initiative (PCI).

PCI consists of two pathways: the Primary Care First (PCF) path and the Direct Contract (DC) path. Each pathway consists of multiple value based payment options to encourage quality advanced primary care.

CMS anticipates that these programs will impact approximately 11 million patients,  representing over a quarter of all Medicare beneficiaries.

A.  Eligibility

The program will be available in 26 areas of the country, including Delaware and Virginia, though it will not extend to Maryland (where providers can already participate in the “Total Cost of Care Model” which also offers a value-based payment methodology to primary care providers). Eligible providers may choose to be paid as they have always been paid or instead opt into these new programs.

The PCF path provides an opportunity for smaller primary care providers to participate in a value based model. The program is open to MDs, DOs, nurse practitioners, and physician assistants who are certified in internal, general, family, hospice and palliative medicine in one of the identified regions, and provide services to a minimum of 125 attributed Medicare beneficiaries. Additionally, primary care services must account for at least 70% of the provider’s collections.

The DC path is for larger providers. To be a Direct Contracting Entity (DCE), the organization must have at least 5,000 aligned Medicare beneficiaries. DCEs may be health plans, health care technology companies, or existing Medicare ACOs, in addition to large provider groups.


In the PCF path, participating providers will receive payments for the provision of primary care services to their attributed beneficiaries through a multi-part formula. PCF payments are made up of three components: (1) a population based payment; (2) a flat primary care visit fee; and (3) a performance based adjustment.

Each practice will receive a payment per beneficiary per month for attributed beneficiaries. The rate is adjusted for practices carrying higher risk populations, and ranges from $24 to $175. Practices will also receive a flat primary care visit fee for face-to-face appointments. Generally, this will be $50 per visit, though the rate may be adjusted for some geographic regions.

Finally, practices can increase or decrease their revenue via a performance-based adjustment calculated on several performance measures, and paid on a quarterly basis. In the first year of the program, providers who have less hospitalizations compared to a national group will receive a positive adjustment.

In years two through five, providers that exceed certain quality metrics will become eligible to receive an adjustment of up to 50% of the total primary care payment they receive.

CMS will calculate the percentage of the adjustment by comparing the provider’s performance to three types of benchmarks that take into account national hospitalization metrics, the results of other PCF participants, and whether the practice’s performance improves annually. 

If practices fail to meet minimum targets in these later years, they will lose 10% of the payments they received.

In addition to providing value based payments for primary care services, providers can also opt into the PCF High Need Populations Payment Model. Providers who chose to join this part of the program will be assigned “Seriously Ill Patients” (SIPs) who do not currently have primary care providers but would benefit from care coordination and other primary care services.

In exchange, practices will receive higher payments ($325 for an initial visit and $275 monthly for up to 12 months) corresponding to the increased needs of these more medically complex cases.

Providers may choose to participate exclusively in this part of the model (in which case the eligibility requirements described above are less stringent).

Providers that focus entirely on palliative care will also have the option to partner with primary care providers to participate in all aspects of the PCF path.

C.  Direct Contract

The DC pathway is for organizations to test new risk-sharing arrangements. There are three models under this pathway, the Professional Option, the Global Option and the Geographic Option. 

The Professional Option allows DCEs to bear 50% of the risk for shared savings/losses on the total cost of care (for all Medicare Part A and B services). Providers receive a Primary Care Capitation, which is a capitated, risk-adjusted monthly payment for enhanced primary care services. 

In the Global Option, DCEs bear risk for 100% of shared saving and losses. DCEs in these options can chose either Primary Care Capitation payments or Total Care Capitation, which is a risk adjusted monthly payment for all services provided by the DCE or affiliated providers.

CMS is still developing the Geographic option, which could see DCE’s taking on risk for all Medicare beneficiaries in a certain area.

D.  Attributed and Aligned Beneficiaries

CMS will use a multi-step methodology to attribute beneficiaries to participating providers for the PCF path. First, patients will have the opportunity to select a particular provider online. If patients do not select a provider, CMS will follow a claims-based attribution process.

CMS will review claims for the prior 24 months and assign patients to the doctor where they most recently had a chronic care visit, annual wellness exam, or a “Welcome to Medicare” meeting. If the patient has not received any of those services, CMS will assign the beneficiary to the provider who has performed a plurality of the patient’s care in that time period. CMS will provide an updated list of attributed patients on a quarterly basis. 

As of this writing, CMS had not yet issued guidance as to how a Medicare beneficiary becomes aligned with a DCE for the DC path.

E.  Other Payers

Though the Primary Care Initiative is limited to Medicare beneficiaries, CMS is encouraging other payers to adopt similar programs. CMS believes that if it can attract other payers to the program, it will ease the administrative burden on doctors, and allow them to focus on caring for patients rather than revenue cycle management.

Alexandria K. Montanio
410-576-4278 • amontanio@gfrlaw.com