May 02, 2019

HHS Announces New Medicare Payment Models for Primary Care

On April 22, 2019, the Department of Health and Human Services (HHS) announced five new payment models intended to allow primary care physicians (PCPs) to transition further from fee-for-service (FFS) payments to Medicare payments based on criteria that reward quality of care and clinical outcomes improvement.

HHS Secretary Alex Azar characterized the announcement as “historic turning point” because he said it moves the Center for Medicare and Medicaid Innovation (CMMI) in a new direction in the development and release of new payment models which could benefit all clinicians.

The rollout involving Azar, Seema Verma, administrator of the Centers for Medicare and Medicaid Services (CMS), and Adam Boehler, director of the CMMI, was held at the Washington, D.C. headquarters of the American Medical Association.

Gerald E. Harmon, MD, immediate past president of the AMA Board of Trustees, Russell Kohl, MD, vice-speaker of the American Academy of Family Physicians Board of Directors, and Kavita Patel, MD, member the Physician-Focused Payment Model Technical Advisory Committee also spoke.

Azar predicted the new models would serve one of every four Medicare beneficiaries and providers and would be designed to offer PCPs a simple flat revenue stream that would earn a bonus when a patient stays healthy and a risk when the patient becomes ill.

Boehler announced PCPs could select to participate in a model under one of two new pathways, each involving shifts away from FFS. Primary Care First would reimburse PCPs according to a monthly formula involving a 10 percent downside risk and up to a 50 percent incentive.

Designed for organizations with 5000 or more Medicare FFS beneficiaries, Direct Contracting will create three options requiring larger providers to accept varying degrees of financial risk. With the Professional Option, Medicare will share 50 percent of savings and losses. With the Global Option, the provider will accept 100 percent accountability for savings and losses, but also predictable payments for primary care. HHS is seeking provider input for its proposed Geographic Option, an initiative designed for discrete geographic regions.

The Centers for Medicare and Medicaid Services will begin accepting applications in June 2019, according to Boehler. He stressed that HHS is shifting the status quo by admitting the time has come to dismantle FFS and replace it with a system that pays for outcomes and quality.

A link to a video provides access to the formal announcement and press conference. HHS also posted a transcript of Azar’s remarks.