CMS Supports AMA/RUC Payment Scale for Medical Home Demo

Physician practices that participate in an upcoming Medicare medical home demonstration project should receive a per-member, per-month fee based on a recommendation made by the AMA/Specialty Society Relative Value Scale Update Committee, or RUC. However, CMS may have to reduce the payment rates to meet cost-neutrality requirements, according to Jim Coan, a CMS project officer in charge of the medical home demonstration project.

The three-year Medicare medical home demonstration project (3-page PDF; About PDFs) was created by Congress through the Tax Relief and Health Care Act of 2006. The demonstration will take place in eight states, involve urban and rural practices, and target chronically ill Medicare patients. CMS will start recruiting physician practices for the project in January and has relied on the RUC for recommendations on how to structure monthly payments to participating practices.

CMS has modified the three-tiered medical home recognition program developed by the National Committee for Quality Assurance, or NCQA, to determine payment recommendations for the demonstration project. The three-tiered payment system would provide

According to the federal government's cost-neutrality requirements, the cost of the medical home demonstration project has to be offset by the savings generated by the program so it incurs no added cost during the three-year project. CMS is not sure it can apply the recommended rates and still maintain the project's cost-neutrality requirements, Coan said in an interview with AAFP News Now. The agency is working on the calculations, which will be submitted to the White House's Office of Management and Budget for review.

"We have a reflection of what the (RUC) committee believes would be a fair compensation for medical home services," said Coan. "But no one has done calculations about how much this would actually cost using these rates and, therefore, how much would have to be saved in order to cover these costs and make it budget-neutral."

Although CMS will start recruiting practices for the demonstration project in early 2009, it will not start paying practices in the project until 2010, said Coan. CMS will choose practices based on whether they have met the qualification criteria laid out in a special CMS demonstration version of the NCQA's medical home recognition program.

"Practices are going to have to comply with qualification criteria to participate in the demonstration," said Coan. "That process could take months; therefore, we want to give practices as much time as we can so they can comply."

Congress, meanwhile, appropriated an additional $100 million for the demonstration project as part of the recently enacted Medicare Improvements for Patients and Providers Act of 2008. The law gives the HHS secretary the authority to expand the duration and scope of the demonstration project if certain quality and saving targets are achieved.

CMS officials are not clear on how the $100 million should be spent, Coan said.

"The legislative language is less than descriptive," he explained. "It just says there is an additional $100 million but not exactly what it is for."