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Getting Paid For Patient Centered Medical Homes

Oct 1, 2011
The Centers for Medicare and Medicaid Services (CMS) has announced a plan to strengthen primary care and put a price tag on the medical-home concept and how it will pay for services.

Physicians participating in the Comprehensive Primary Care Initiative (CPCI) will receive a monthly care-management fee on top of their usual Medicare fee-for-service reimbursements during a 4-year trial run. CMS will initially pay clinicians an average of $20 per Medicare beneficiary per month in the first 2 years. Actual payments will range from $8 to $40 per month because of risk-adjustments based on patients’ claims histories and medical status. The agency also will adjust care-management fees up or down to reflect geographic differences in costs.

Richard Baron, MD, director of the Seamless Care Models Group at the CMS Innovation Center, said at a briefing that the care-management fees are 40% to 50% more than Medicare pays now into primary care.


The care-management fee drops to $15 in the third and fourth years of the CPCI based on the CMS assumption that physicians will become more efficient in this work. In addition, the agency wants to “shift reliance to accountable forms of payment” such as shared savings, which kick in during year 2. Under a shared-savings arrangement, physicians attempt to come under budget in caring for a group of Medicare patients while meeting quality standards. If they succeed, they receive a slice of the savings.

CMS states that the CPCI, an outgrowth of healthcare reform, builds on and extends the patient-centered medical-home concept that many primary care physicians view as the salvation of their specialty. In this delivery model, primary care physicians are financially rewarded for care-management chores — such as talking to a patient’s family members or managing specialty referrals — that typically go unreimbursed in traditional fee-for-service Medicare. Medical homes emphasize prevention, patient and caregiver engagement, continuity of care, easy access, and the use of electronic health record (EHR) software to help make it all happen.

CMS is inviting private insurers to participate in the CPCI as well and either pay care-management fees to physicians or support them with embedded care managers, health educators, or pharmacists. Getting these insurers to sign up is critical for the initiative’s success, according to the agency. Medicare alone cannot motivate physicians to switch to a new care model.

According to Dr. Baron, “Having a majority of a practice’s payers supporting enhanced primary care will ensure that a practice can implement a more consistent and comprehensive approach to treating patients,” the agency stated in a solicitation for insurers to apply. “Without that majority, practices risk not having enough sustained support to provide the services we are seeking.”

Private insurers have until January 17, 2012, to submit an application to participate. CMS said they will choose insurers in 5 to 7 markets and recruit 75 primary care practices in each one to come aboard. The agency expects to begin selecting the practices by the spring of 2012 and start paying them under CPCI by the summer.

“We believe that participating practices, depending on (private) insurance participation, may see a 30% to 50% increase in their gross revenue,” said Dr. Baron. The boost in pay, he said, will enable them to invest in the staffing and information technology needed for this “new business model of primary care.”

It is hoped that this concept will improve patient care, keep costs from rising and bring more satisfaction to clinicians who participate.