How CMS Improves Primary Care Payments Through Codes, APMs

December 13, 2017 - New medical billing codes for non-face-to-face encounters and alternative payment models are trying to change the way Medicare reimburses for primary care, according to researchers at the Urban Institute’s Health Policy Center.

The report, supported by the Robert Wood Johnson Foundation, showed that CMS aims to find the right payment amount and structure to reimburse providers for treating high-cost, medically complex patients.

Care for high-cost, complex patients requires extensive care management services, which are not always billable services. A recent study revealed that primary care providers now evenly split their time between direct patient care and “desktop medicine,” such as online communications with patients, ordering tests, reviewing results, and coordinating with other staff.

The federal agency also intends to decrease the pay disparity between primary care providers and specialists. Primary care provider compensation ranged from a median of $225,000 to $250,000 a year, while top-earning specialists made as much as $555,000 on average per year.

Compensation disparities exacerbate the primary care shortage. Between 7,000 and 16,400 primary care providers are needed to correct the current shortage, research showed.

READ MORE: Does the Medicare Physician Fee Schedule Undervalue Primary Care?

As the largest payer in the country, Medicare has leveraged this role to improve primary care payment and compensation by developing new medical billing codes and implementing alternative payment models.

Both methods showed that CMS is willing to pay more to primary care providers for treating chronically ill patients. The federal agency also demonstrated its intentions to shift primary care payments to flat monthly reimbursements to provide additional flexibility to primary care providers.

But each method has its own advantages and disadvantages, researchers pointed out. Researchers examined how new medical billing codes and alternative payment models have evolved to improve primary care payments.

New billing codes for non-face-to-face encounters

The Medicare Physician Fee Schedule (PFS) reimburses physicians primarily for providing face-to-face office visits. CMS updates the codes and corresponding rates each year.

Recently, CMS started to add PFS codes that reimburse providers for non-face-to-face activities. For example, in 2013, the federal agency began to pay physicians for care transition management for patients recently discharged from the hospital (99495 and 99496). The codes cover a face-to-face visit and non-encounter-based services, including patient communication, education, and assessments. Care coordination with other clinicians is also billable with the codes.

READ MORE: Preparing the Healthcare Revenue Cycle for Value-Based Care

By 2015, CMS added ongoing chronic care management codes for patients with multiple chronic conditions (99490). The federal agency intended for the codes to cover the costs of creating and updating care plans, reviewing results, communicating with other providers outside of the practice, and regularly adjusting treatment regimens.

Non-physician staff can also perform some of the chronic care management services under the supervision of a physician.

“In creating this new billing code, CMS acknowledged that the existing payments for some patient visits did not provide sufficient compensation to cover all the prep and follow-up work required for such visits,” the report stated.

The code also suggests an endorsement of team-based care since non-physician staff can perform some of the services.

While the medical billing codes attempted to rectify primary care underpayment, primary care providers found the rate for chronic care management too low and the requirements for billing too burdensome. The rate for the chronic care management code was $42.71 per month, but providers claimed that this was not sufficient to cover the resources needed to furnish care management services and gather the necessary documentation.

READ MORE: How to Prepare for Alternative Payment Model Implementation

Providers also complained of excessive administrative burdens. To bill for the code, Medicare required that physicians conduct a qualifying visit, acquire written consent from beneficiaries, and meet certified EHR standards. Providers also had to offer constant care access and continuity of care, comprehensive care management, care transition management, home- and community-based care coordination, and advanced communication methods (eg, secure texting).

In light of the challenges, providers did not use chronic care management codes. CMS projects about 26.5 million Medicare fee-for-service beneficiaries have two or more chronic conditions, making their primary care services eligible for the code.

However, CMS only received claims with the code for 500,000 beneficiaries in November 2016.

CMS addressed provider concerns by reducing administrative requirements for the code in 2017. The federal agency also added another code for treating medically complex patients, with reimbursed providers $93.67 per month.

Updating and adding codes is a quick way for CMS to modify provider incentives and encourage providers to engage in high-value care services.

However, medical billing codes do not provide the flexibility providers may need to treat high-cost, complex patients. Alternative payment models may be a more effective method for evaluating payments for new services and testing models that do provide that flexibility.

Medicare alternative payment models for primary care

Since the Affordable Care Act, CMS created several alternative payment demonstrations targeting primary care. The demonstrations tend to grant providers flexibility through end-of-year bonuses, supplemental monthly payments, or a combination of both reimbursement structures.

The first primary care alternative payment model was the Independence at Home (IAH) demonstration, which reimbursed primary care providers for making home visits to frail Medicare beneficiaries. Providers billed Medicare under the PFS, but they could earn shared savings payments if the practice reduced total costs of care while meeting quality standards.

Researchers noted that the key difference between the IAH demonstration and new chronic care management codes is that the demonstration only reimburses providers for treating a specific population of Medicare beneficiaries. The beneficiaries had to have at least two chronic conditions, need help with at least two functional dependencies, and a non-elective hospital admission and acute or sub-acute rehabilitation service in a year prior to enrollment in the demonstration.

The IAH demonstration significantly reduced costs, generating $13.3 million in net savings the first year and $2.7 million the second year.

The bonuses offered to providers helped to produce net program savings. However, only about one-half of the participating practices earned shared savings during the two-year demonstration and the top-performing organizations saw their shared savings payments fall as the program matured.

The Multi-Payer Advanced Primary Care Practice (MAPCP) demonstration used a different approach for primary care payments. The model promoted patient-centered medical home adoption by providing primary care practices with supplemental monthly payments on top of Medicare, Medicaid, and some private payer revenue.

CMS designed the monthly payments to cover practice expenses associated with patient-centered medical home adoption, such as care manager salaries, EHR upgrades, and extended office hours. The payments were about $10 per beneficiary per month (PBPM) on average.

The demonstration resulted in net losses and care quality was not better than that of practices outside the model.

Low monthly payments may have spurred net financial losses in the MAPCP demonstration. Participating providers stated that demonstration payments were not high enough to cover the operating costs of a patient-centered medical home.

CMS responded to MAPCP criticisms by developing the Comprehensive Primary Care Initiative (CPCI). The multi-payer initiative reimbursed primary care practices a monthly payment for patient-centered medical home adoption, as well as comprehensive primary care functions, including risk-stratified care management, 24/7 care access, and care coordination activities.

Monthly payments under CPCI were significantly higher than payments in the MAPCP. On average, practices received $20 PBPM during the first two years, then $15 PBPM in the third and fourth years.

Practices could also earn shared savings by the second year of the demonstration if all practices in a region reduced spending and met care quality benchmarks.

CPCI generated net savings overall and more regions earned shared savings payments as the demonstration progressed. The demonstration also slightly decreased emergency department use and improved patient experience, but had little effect on care quality.

CMS built on the CPCI through the Comprehensive Primary Care Plus (CPC+) model. The CPC+ model also departs from its predecessor by containing two payment tracks. Under the first track, providers receive fee-for-service payments for office visits plus a $15 PBPM payment on average.

The second track includes more generous PBPM payments, averaging $28 PBPM. Track 2 practices also receive reduced E/M fee-for-service payments for office visits, but they earn upfront quarterly payments for E/M services.

Both tracks also include pay-for-performance bonuses in lieu of regional shared savings. CMS awards the incentives payments at the beginning of the year and recoups them if practices fail to meet quality targets.

“CMS’s switch from tying bonuses to total-cost-of-care spending targets to tying them to performance on clinical quality, patient experience, and utilization measures suggests an evolving view that models that do not involve specialists and hospitals may have a hard time influencing all of a patient’s health care spending,” researchers noted.

Upfront incentive payments should also help practices implement the necessary practice transformation to keep, rather than gain, payments.

The CPC+ demonstration launched in 2017. CMS has yet to see if the primary care alternative payment model will generate net savings and improve care quality. But the federal agency is hopeful, calling the model “the future of primary care.”