Congressional Testimony

MedPAC Proposes New Medicare Payment for Primary Care

June 25, 2014 08:25 pm Michael Laff

The Medicare Payment Advisory Commission (MedPAC) is proposing to take another small step toward offering real alternatives to the strictly fee-for-service payment model.

Mark Miller, Ph.D., testifies before a House subcommittee on the latest Medicare Payment Advisory Commission report.

The commission, which advises Congress on Medicare issues, outlined several proposals in its June report to Congress( that reward physicians for keeping patients healthy rather than simply for treating them when they are sick. Among them is a proposed monthly payment of $2.60 per patient. Based on that figure, the average eligible physician could receive about $3,900 in additional Medicare payments per year.

Although the commission acknowledged the figure is modest, Medicare is not the only payer providing incentive payments on a per-patient basis. Both Medicare and private insurers are gradually introducing new payment models that encourage physicians to establish ongoing relationships with patients rather than relying exclusively on one-time office visits.

Mark Miller, Ph.D., executive director of MedPAC, testified before the House Committee on Ways and Means Subcommittee on Health( about the latest report. Even if Congress approves the new per-patient stipend, a wholesale transformation of Medicare economics is unlikely to occur in the near term, he predicted.

"We're going to be living with fee-for-service for a long time, perhaps forever, and I'm not sure that's a bad thing," Miller told the subcommittee. "It can be efficient in some parts of the country."

Story Highlights
  • In its June report to Congress, the Medicare Payment Advisory Commission (MedPAC) is proposing that eligible physician practices receive $2.60 per Medicare patient, per month.
  • In testimony before a U.S. House panel, MedPAC executive director Mark Miller, Ph.D., also recommended that Medicare's Primary Care Incentive Payment program be extended beyond 2015.
  • A MedPAC report noted that payments for primary care services are undervalued.

MedPAC issues two reports each year, which serve as its outlet for policy recommendations to Congress. The latest report also addresses the Primary Care Incentive Payment (PCIP) program that was outlined in the Patient Protection and Affordable Care Act, which is intended to increase access to primary care.

Under the current bonus payment program, primary care physicians are eligible for a 10 percent bonus if at least 60 percent of their allowed charges are for specific primary care services. The program expires at the end of 2015.

The proposed per-patient stipend differs from the PCIP program in that a patient would select a primary care physician and continue to receive care from the same practice in future years to foster a relationship. This stipulation would prevent multiple payments to different physicians for a single patient.

Medicaid and private insurers are testing a similar payment model with per-patient stipends averaging between $1.50 and $30, according to the report. Several state Medicaid programs already include a per-patient stipend component, including Alabama and North Carolina. The programs typically require that a practice be certified as a medical home.

Details are still being worked out about what physician practices might be required to do to receive the monthly payment. For example, practices might be required to expand access through longer office hours or 24-hour phone service or boost their care coordination services by developing care plans or hiring a care manager.

What the proposed per-patient stipend would do is supplement and possibly replace the current bonus payment. As long as entitlement programs are subject to annual wrangling in Congress, the report acknowledged that the PCIP program might not be extended beyond 2015.

"Allowing the Medicare primary care bonus to expire without a replacement would send a poor signal to primary care practitioners," the report stated.

In his testimony, Miller was cautious about what effect an increased payment might have on primary care but noted it could benefit health outcomes. Rep. Mike Thompson, D-Calif., observed that he still hears from individuals in his district about having to wait for an appointment with a primary care physician and about physicians who will not accept new Medicare patients.

"I don't want to overstate that it will correct issues in primary care like long wait times," Miller responded. "This sends an important signal to primary care about what they can provide in care coordination (within) a reformed system, and we do think it is important that the (payment) persists."

When Thompson asked Miller whether Congress should extend the bonus payment beyond 2015, Miller said that although the commission has not made an official recommendation, it is moving toward issuing one that supports continued increased payments for primary care.

Elsewhere in the report, MedPAC acknowledged that primary care services are undervalued. The report noted that Medicare fees for procedures are too high and should be reduced to favor "cognitive" services such as those frequently provided by family physicians, and it recommended that incentives be developed to increase payments for primary care.

The report made clear that there are no assurances that the proposed new payment could reduce overall medical costs. Small practices might be discouraged from participating because of the possible requirements related to expanded access. Also, verifying that practices are in compliance with the requirements would come at a price.

Still, the overall intent is to make medical institutions responsible for keeping patients healthy and reduce hospital visits, two pillars of the accountable care organization (ACO) model, said Miller. And although the ACO concept is still in its infancy, physicians and hospitals have to change their delivery of care because generating more services works against their interests.

"Five million people are in ACOs," Miller told the subcommittee. "The results are mixed, which is what everybody expected. Some are saving money, but the health results are improving."