Medicare Seeks Savings And Innovation With A Switch In Doctors' Pay

The Obama administration is recruiting as many as 20,000 primary care doctors for an initiative it hopes will change the way physicians get paid and provide care.

The program, which was announced Monday, will be run by the Centers for Medicare and Medicaid Services. The aim is to stop paying doctors based on the number of billable services and visits provided to Medicare beneficiaries and instead to tie payments to overall patient health and outcomes.

"We think there will be a high level of interest across states and regions among primary care providers," said Dr. Patrick Conway, the chief medical officer at CMS. "The model aligns with how doctors and patients want to practice medicine."

Under the five-year project, CMS will recruit primary care doctors into two separate payment tracks. Both will include a monthly payment to doctors for each Medicare beneficiary, but the amounts will vary.

The fee for doctors in the first track will average $15 a beneficiary; the physicians will also still be paid for each service they provide. The fee for the second track will average $28; doctors will receive lower fees than those in the first track for each service. (In both tracks, the monthly payments will be higher for patients with more complex health problems.)

The idea is that doctor groups will use the payments that aren't tied to specific services to develop different ways to provide care, including telephone and video consultations. They might also use care managers to help patients with their medications and chronic illnesses.

The payment change "really allows them to move away from a visit-based, fee-for-service structure," Conway said on a conference call with reporters.

Doctors who want to participate in the program have to commit to offering patients preventive care, support for chronic illnesses and 24-hour access to health care and health information.

Conway says CMS expects the second track, with lower fees for itemized services, to save Medicare about $2 billion over five years.

The project is based on a pilot program set up under the Affordable Care Act to test new ways to deliver and to pay for health care. The goals are to improving care and cut costs.

Fee-for-service systems encourage too much medical intervention, says Robert Berenson, a fellow at the Urban Institute who has written about medical payment systems. But, he adds, programs that only pay a flat fee for care and result in physicians or hospitals cutting back too much.

"This is an attempt to balance paying for visits at a reasonable rate and then reimbursing substantially for all the other activities that are necessary to provide care," he says, such as phone calls and coordinating with other doctors.

The CMS program is similar to successful health care payment systems in Denmark and the Netherlands that combine fees for itemized services and flat fees per patient.

Berenson says, however, that CMS's goal of including 20,000 doctors may be too high. CMS would be better off working out the glitches in the approach with a smaller number of physician practices before rolling it out more widely.