Alter Payment, Delivery Systems to Promote Primary Care Services

The Medicare Payment Advisory Commission, or MedPAC, has endorsed two key recommendations that, if approved by Congress, would shift the focus of the Medicare program toward a more primary care-based system.

During an April 9 meeting here, MedPAC voted to recommend to Congress two separate but interrelated proposals that would alter Medicare's payment and delivery systems to promote the use of primary care services. The first proposal calls on Congress to increase payments for services provided by primary care providers; the second proposal advises Congress to initiate a three-year, $400 million medical home pilot project to improve health care quality, enhance care coordination and save costs.

MedPAC will submit the recommendations to Congress as part of its June report, but the proposals already may be influencing federal lawmakers. Reportedly, Senate Finance Committee Chair Max Baucus, D-Mont., will seek an increase in Medicare payment levels for primary care providers as part of a Medicare payment bill the committee expects to draft within the next several weeks.

"The first initiative, the fee schedule adjustment, focuses on primary care services provided by clinicians who predominantly provide primary care," said Cristina Boccuti, M.P.P., a senior MedPAC analyst. "The second initiative, the medical home pilot, focuses on other activities, such as care coordination."

If approved by Congress, the two recommendations would represent a major turning point for primary care, perhaps ushering in a new era of valuing and paying for primary care services in the public and private sectors. Increasing the use of primary care services "can improve the efficiency of delivery without compromising quality," said Boccuti. "Primary care services have become undervalued over time, and they risk being underprovided," she added.

The fee schedule adjustment recommendation does not specify how big an increase primary care providers should receive, but there are "two precedents," for determining the amount, said Kevin Hayes, Ph.D., principle policy analyst for MedPAC. They are the 10 percent bonus Medicare pays to physicians working in designated health professional shortage areas and the 5 percent bonus paid to providers in physician scarcity areas, he noted.

"In making a judgment about an adjustment for primary care, Congress could consider these precedents -- at least as a starting point," Hayes said.

MedPAC proposes to pay for the recommendation by establishing a "budget-neutral payment adjustment for primary care services billed under the physician fee schedule and furnished by primary care-focused practitioners," according to the text of the proposal. To maintain budget neutrality, the proposal would take money from subspecialty services to pay for the increase for primary care services.

Thomas Dean, M.D., of Wessington Springs, S.D., the only family physician serving on MedPAC, endorsed the recommendation, saying "it is an appropriate first step and something that we need to do and, hopefully, can do relatively quickly."

Commission member Nicholas Wolter, M.D., a pulmonary medicine and critical care physician from Billings, Mont., also voted for the recommendation, but he said the proposal should not stipulate budget neutrality. Investing in primary care is a "wise investment," but a "budget neutrality mind-set" could preclude policy-makers from investing in primary care services, he said.

MedPAC also is recommending that Congress fund a medical home pilot project that would be more expansive than Medicare's current Medical Home Demonstration program, a three-year project that will fund demonstration projects in eight states and is scheduled to take effect in 2009.

The MedPAC recommendation, which defines the medical home as a "clinical setting that serves as a central resource for patient ongoing care," sets out stringent criteria for identifying medical homes. These practices must:

MedPAC's proposed medical home pilot also would include a physician pay-for-performance component and thresholds for determining whether the pilot should be expanded into the full Medicare program or discontinued.

The commission estimates that the recommendation would cost $400 million during a three-year period; however, that $400 million figure does not take into account the expected cost savings, a calculation that should not be excluded, said commission member John Bertko.

"There is a measurable reduction in cost per person when more primary care office visits are the source of regular care," Bertko said. "I think there are cost savings here that have not been recognized."

Despite having voted for the recommendation, Dean admitted he still has some questions about it. "The ideal structure of the medical home is a little bit unclear in my mind," he said, adding that some rural practices may have trouble meeting all of the criteria for the medical home laid out in the recommendation, potentially disqualifying those small practices.