The CMS Primary Cares Initiative is a new set of payment models that will transform primary care to deliver better value for patients throughout the healthcare system.

The models were developed by the Innovation Center under the leadership of Adam Boehler and are part of Secretary Azar’s value-based transformation initiative. The newly announced effort has two prongs: The Primary Care First Initiative creates an opportunity for providers to leave behind fee for service and be paid for keeping their patients healthy and at home. The second is Direct Contracting, which allows sophisticated organizations to take full accountability for their patients at a local level.

Both paths are voluntary and they emphasize a focus on complex, high-needs patients.

CMS anticipates that the Initiative could result in nearly 11 million fee-for-service Medicare beneficiaries becoming part of value-based payment relationships. Primary care practices with an interest in risk would be well-advised to consider whether and to what extent to participate in the Initiative.

The model involves a potential downside-risk of 10%, and an upside risk or bonus of 50%, depending on patients’ outcomes, and performance would be measured on “risk-adjusted hospitalizations” or “the ability to keep patients healthy at home,” Boehler said. “For example, doctors that earn $200,000 today could earn up to $300,000 if their patients stay healthy.”

The Initiative will provide primary care practices and other providers with five new payment model options under two paths: Primary Care First and Direct Contracting.

The five payment model options are:

  1. Primary Care First (PCF)
  2. Primary Care First – High Need Populations
  3. Direct Contracting – Global
  4. Direct Contracting – Professional
  5. Direct Contracting – Geographic

CMS anticipates these five payment model options administered under the Primary Cares Initiative could:

  • Provide better alignment for over 25 percent of all Medicare FFS beneficiaries – nearly 11 million Medicare beneficiaries would potentially be included (a collective 5 million beneficiaries in the DC payment model options and a collective 6.4 million in PCF payment model options);
  • Offer new participation and payment options and opportunities for an estimated one in four (25 percent) primary care practitioners as well as other healthcare providers; and
  • Create new coordinated care opportunities for a large portion of the 11-12 million beneficiaries dually eligible for Medicare and Medicaid, specifically those in Medicaid managed care and Medicare FFS.

All five payment model options focus on supporting care for patients who have chronic conditions and serious illnesses. Through the PCF payment model options, high need patients with serious illness who do not have a primary care practitioner or care coordination and indicate an interest in receiving care from a practice participating in the model will be assigned to a model participant. Participating practices that choose to care for Seriously Ill Patients (SIP) patients will be required to provide care to clinically stabilize the patient. All payment model options include enhancements to encourage participation of providers who are focused on care for these populations.

The Primary Care First (PCF) Model

The Primary Care First (PCF) payment model options will test whether financial risk and performance based payments that reward primary care practitioners and other clinicians for easily understood, actionable outcomes will reduce total Medicare expenditures, preserve or enhance quality of care, and improve patient health outcomes. PCF will provide payment to practices through a simplified total monthly payment that allows clinicians to focus on caring for patients rather than their revenue cycle. PCF also includes a payment model option that provides higher payments to practices that specialize in care for high need patients, including those with complex, chronic needs and seriously ill populations (SIP).

“Practices may limit their participation in Primary Care First to exclusively caring for SIP patients, but in order to do so, such practices must demonstrate in their applications that they have a network of relationships with other care organizations in the community to ensure that beneficiaries can access the care best suited to their longer-term needs.”

The two options for Primary Care First model would let primary care clinicians move away from fee-for-service and allow them to scrap their current revenue cycle operations. CMS would pay monthly population-based payments along with a simple flat fee for primary care visits.


To be eligible for PCF, the primary care practice must:

  • Be located in one of the selected PCF regions*
  • Include primary care practitioners (MD, DO, CNS, NP, and PA), certified in internal medicine, general medicine, geriatric medicine, family medicine, and hospice and palliative medicine.
  • Provide primary care to at least 125 attributed Medicare beneficiaries at a particular location;
    Have primary care services account for at least 70% of the practices’ collective billing based on revenue. If the practice has multiple specialties, 70% of the practice’s eligible primary care practitioners’ combined revenue must come from primary care services;
  • Have experience with value-based payment arrangements or payments based on cost, quality, and/or utilization performance;
  • Use 2015 Edition Certified Electronic Health Record Technology (CEHRT);
  • Attest on the application to advanced primary care delivery capabilities;
  • Be able to meet the requirements of the Primary Care First Participation Agreement.

* These regions are: Alaska (statewide), Arkansas (statewide), California (statewide), Colorado (statewide), Delaware (statewide), Florida (statewide), Greater Buffalo region (New York), Greater Kansas City region (Kansas and Missouri), Greater Philadelphia region (Pennsylvania), Hawaii (statewide), Louisiana (statewide), Maine (statewide), Massachusetts (statewide), Michigan (statewide), Montana (statewide), Nebraska (statewide), New Hampshire (statewide), New Jersey (statewide), North Dakota (statewide), North Hudson-Capital region (New York), Ohio and Northern Kentucky region (statewide in Ohio and partial state in Kentucky), Oklahoma (statewide), Oregon (statewide), Rhode Island (statewide), Tennessee (statewide), and Virginia (statewide).

Primary Care First (PCF)

Care Delivery

  • Practices have capabilities to deliver advanced primary care.
  • Practices focused on care for complex chronic or seriously ill patients have associated special patients have associated specialized capabilities.


  • Total Monthly Payment: Practices are paid to deliver advanced primary care in and outside of the office. Practices focused on caring for patients with complex chronic needs and the seriously ill receive increased payments to support their care for these patient populations.
  • Performance-Based Adjustment: Practices are motivated to reduce acute hospital utilization (AHU) to reduce total costs of care, while meeting quality and experience of care thresholds.

The Primary Care First- High-Need Populations

CMS will attribute Seriously Ill Population (SIP) patients lacking a primary care practitioner or care coordination to Primary Care First practices that specifically opt to participate in this payment model option. Practices may limit their participation in Primary Care First to exclusively caring for SIP patients, but in order to do so, such practices must demonstrate in their applications that they have a network of relationships with other care organizations in the community to ensure that beneficiaries can access the care best suited to their longer-term needs. Allowances to some of the eligibility requirements for the Primary Care First general payment model option (such as with respect to historical beneficiary attribution) will be made to facilitate participation in the SIP payment model option.

To participate in the SIP payment model option, practices that demonstrate relevant capabilities and care experience in their application will have the option when they apply to agree to be attributed and furnish services to the SIP patients that CMS identifies in their service area who express interest in the model. These practices will then be responsible for reaching out to these patients with a focus on ensuring that their care is coordinated and that SIP patients are clinically stabilized. Practices will also be allowed on a case-by-case basis to accept patients into SIP who are referred to the practice and deemed eligible by CMS.

Payment for SIP patients differs from that established under the general payment option for Primary Care First. Payment amounts for SIP patients will be set to reflect the high need, high risk nature of the population as well as include an increase or decrease in payment based on quality.

Clinicians enrolled in Medicare who typically provide hospice or palliative care services (e.g., those affiliated with a hospice, palliative care or similar organization) will be able to provide care for SIP patients either by participating as a practice in the Primary Care First general payment model option or by partnering with a Primary Care First practice participating in the general payment model option that includes these clinicians on their roster of participating practitioners.

Both models under PCF incentivize providers to reduce hospital utilization and total cost of care by potentially significantly rewarding them through performance-based payment adjustments based on their performance. These models seek to improve quality of care, specifically patients’ experiences of care and key outcome-based clinical quality measures, which may include controlling high blood pressure, managing diabetes mellitus, and screening for colorectal cancer. PCF will be tested for five years and is scheduled to begin in January 2020. A second application round is also planned for participants starting in January 2021.

Direct Contracting Model

Like the PCF payment model options, the Direct Contracting (DC) payment model options are also focused on transforming primary care, allowing healthcare providers to take greater control of managing the costs of care for an aligned population of Medicare fee-for-service (FFS) beneficiaries. While the PCF models are focused on individual primary care practice sites, the DC payment model options aim to engage a wider variety of organizations that have experience taking on financial risk and serving larger patient populations, such as Accountable Care Organizations (ACOs), Medicare Advantage (MA) plans, and Medicaid managed care organizations (MCOs). The DC payment model options are designed to create a competitive delivery system environment where organizations offering greater efficiencies and better quality of care will be financially rewarded. The payment model options include a focus on care for patients with complex, chronic needs and SIPs, as well as a voluntary alignment option that allows beneficiaries to align with the healthcare provider of their choosing.

The Direct Contracting track has three options — professional, global, and geographic — for more “sophisticated” organizations, Boehler explained, and entities can prospectively enroll patients in order to “encourage new entrants.” Boehler said these models are meant to improve on prior models such as the “Next Generation ACO” model.

How Direct Contracting Works

  • Professional. In the Professional Population-Based Payment (“PBP”) model, the participating provider will participate in 50% of shared savings and losses on the total cost of care (i.e. all Parts A and B) for aligned beneficiaries. In addition to the 50% shared savings and losses, participants will receive a capitated risk-adjusted monthly payment for enhanced primary care services, which is 7% of the total cost of care for enhanced primary care services (“Primary Care Capitation”).
  • Global. Participants in the Global PBP model will bear more risk than participants in the Professional PBP model, with financial responsibility for 100% of shared savings and losses on the total cost of care for aligned beneficiaries. In addition to the 100% shared savings and losses, participants will be able to choose among two (2) payment options: (1) Primary Care Capitation or (2) a capitated risk-adjusted monthly payment for all services provided by DC participants and preferred providers with whom the model participant has an agreement (“Total Care Capitation”).
  • Geographic. Participants in the Geographic PBP model will bear 100% of shared savings and losses on the total cost of care for aligned beneficiaries in a defined target region. Under this model, innovative organizations, such as health plans and healthcare technology companies, will have the opportunity to assume the care of a population in certain defined target region. CMS has issued a Request for Information in order to seek public comment and feedback on this payment option, and responses are due on May 23, 2019.

Depending on the DC payment model option in which an organization is participating, the model participant will receive a fixed monthly payment that can range from a portion of anticipated primary care costs to the total cost of care. Participants in the global payment model option will ultimately bear full financial risk, while those in the professional payment model option will share risk with CMS. This will provide prospective model participants a range of financial risk arrangements from which to choose while providing a more predictable revenue stream and reducing healthcare provider burden commensurate with level of financial risk.

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