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Medicare Primary Care Bonus Payment Program

Bonus Payment Program Overview

What percentage of Medicare revenue must a general internist derive from the above select primary care services to qualify for the bonus?

For the purposes of this program, physicians should think of Medicare revenue as their Medicare “allowed charges” as this is the term used in the law. An allowed charge includes the amount that Medicare paid for a service plus the amount for which the beneficiary is liable, including deductibles and copayments. Medicare allowed charges generated from providing the select primary care services—defined as the evaluation and management (E/M) service CPT codes referenced above—must equal at least 60 percent of the total Medicare allowed charges for an individual primary care physician for that physician to qualify for the bonus. Specifically, the “denominator” of total Medicare allowed charges is payments for all fee schedule services minus allowed charges for hospital and emergency department E/M services. The facility-based E/M services specifically excluded from the denominator calculation are, by CPT service-type and code range:

  • Observation care services, CPT 99217-99220;
  • Initial/subsequent inpatient hospital care services, CPT 99221-99233;
  • Hospital discharge services, CPT 99238-99239;
  • Same-date observation or hospital admission and discharge services, CPT 99234-99236; and
  • Emergency department services, CPT 99281-99285.

In sum, the formula CMS will use to calculate whether each primary care physician meets the 60% minimum threshold needed to qualify for the bonus is:

CMS will determine who qualifies for the bonus at the individual physician level, meaning that the agency will run the above calculation for each individual physician with a Medicare specialty designation of general internal medicine (and with the other eligible specialty designations). Multiple general internists (and other eligible primary care physicians) in the same group practice can receive the bonus.

ACP advocacy played a significant role in realizing a reasonable formula for calculating the percentage of primary care allowed charges. In its proposed implementation of this bonus program, CMS originally stated it would establish the allowed charges denominator as the charges derived from all Medicare Part B services, including ancillary procedures and hospital visits. This would have had the effect of unfairly excluding many office-based general internists who derive revenue from in-office laboratory services and other ancillary procedures, or who bill for hospital visits to their patients, since they would have fallen short of meeting the requirement that 60% of their total Medicare allowable charges be exclusively from the designated primary care services (office, nursing home, home, and custodial care visits) described above.

CMS changed its approach based on comments from ACP and others on its proposal and established final rules that limit charges to those paid under the fee schedule and subtracting out the hospital and emergency department E/M services. The agency was persuaded by the College’s comments that services that are not paid under the Medicare physician fee schedule (i.e. laboratory tests and certain other non-physician ancillary procedures) should be excluded from denominator (that is, not count against physicians in establishing that they meet the 60% threshold for designated primary care services described above) CMS made this change based on: the precedent established through past CMS implementation of other incentive payment programs; and the potential for unfairness because some physician practices bill these services, e.g. in-office laboratory tests, in the name/identification number of the practice—all points that ACP made in its comments on CMS’s original, more restrictive proposal. CMS also agreed that hospital visits should not be included in the denominator (that is, count against physicians in establishing eligibility for the bonus), supporting ACP’s view that physicians should not be penalized in the bonus calculation for treating their patients in the hospital, which is a traditional hallmark of primary care.

CMS also agreed to the ACP request that it make the formula it is using to calculate who receives the bonus available so that physicians can use it to assess whether they qualify. Physicians can calculate their percentage of primary care service allowed charges to see if their own data supports the CMS determination regarding their qualification.

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