Mainstreaming Value-Based Care
3 New Medicare Proposals That Better Patient Care and Unlock Potential Income Opportunities for Physicians
Town Hall Ventures’ Take on a New Value-Based Care Proposal
By Andy Slavitt & Andie Steinberg
Introduction
There has been much noise and some disruption as advanced primary care providers struggle with recent adjustments to Medicare Advantage (MA) reimbursement. In healthcare’s latest addition to the cadre of mysterious acronyms, you cannot go far without hearing talk of “V28”, an adjustment to certain risk codes used to determine MA reimbursement. But, for those focused on patient care, managing population health, and reducing total cost of care by increasing quality, the news is not all bad – far from it. The “value” in value-based care is only growing stronger.
In fact, physician practices serious about providing better care at a lower cost to Medicare patients have a meaningful opportunity with the recent release of the CY 2025 Medicare Physician Fee Schedule proposed rule: additional payments from Centers for Medicare and Medicaid Services (CMS) for taking better care of traditional (non-MA) Medicare patients. In fact, depending on the acuity mix of patients in a practice, a physician practice’s revenue can increase by as much as 5%, with much of that flowing to the bottom line. In the case of a physician practice with a large panel who sees a mix of dual eligible and chronic Medicare patients, this could drive hundreds of thousands of additional dollars. For value-based physicians who anticipate a reduction in Medicare Advantage reimbursement from payers, this is a welcome relief.
Putting the math aside, we believe it is crucial to pay attention to the signals behind this policy. Based on our analysis and conversations with leaders at CMS, we see this as a significant step towards mainstreaming value-based care, a concept that was the exclusive province of providers who participated in special innovation programs…until now. While traditional Medicare has previously incorporated value-based care potential through models like the Medicare Shared Savings Program (MSSP) and Accountable Care Organizations (ACOs), these changes integrate these principles more deeply and broadly into traditional fee-for-service (FFS) settings. Physicians should no longer need to see their Medicare Advantage and traditional Medicare patients as being part of two entirely different models with varied objectives and incentives. Instead, these changes encourage the integration of and investment in population health, prevention, early intervention, and care coordination across an entire practice. Moreover, implementation should be relatively manageable for providers already practiced in providing high-value care.
The proposed rule also presents opportunities to advance health equity and make telemedicine more accessible. Let’s dive into three provisions, along with the potentially transformative implications for healthcare founders, builders, providers, and, most importantly, patients.
1. Advanced Primary Care Management (APCM) Codes
How it Works:
There are 3 proposed new codes aimed at providing comprehensive care management services in primary care settings. Practitioners who are responsible for the patient’s primary care and serve as the continuing focal point, including primary care physicians and non-physician practitioners such as nurse practitioners, physician assistants, and clinical nurse specialists, would be eligible to code for APCM. Certain specialists functioning as primary care providers, such as OB-GYNs or cardiologists, would also bill for APCM services if they are fulfilling the role of the primary care practitioner.
To qualify for these codes, practices would need to offer a range of comprehensive care services such as 24/7 access to care teams, 7-day follow-up after a patient is discharged from the hospital, medication reconciliation, secure patient messaging, and systematic needs assessments to identify and address patients' health and social needs.
Beginning in 2025, payments to providers would be made on a monthly basis on top of the visit fees and are stratified into three levels based on the patient's chronic conditions and social determinants of health:
GPCM1: $10 per month for patients with one or more chronic conditions.
GPCM2: $50 per month for patients with two or more chronic conditions.
GPCM3: $110 per month for dual-eligible patients with two or more chronic conditions.
For a practice with 500 traditional Medicare patients, this could represent a significant income opportunity. If 35% of those patients have one chronic condition, 45% with two or more chronic conditions, and 20% are dual-eligible, there could be a total of $24,000 additional revenue per month, or just shy of $300,000 per year. But, as with many new programs, CMS is not banking on significant uptake from physician practices. CMS estimates claims will be submitted for ~200,000 people, or 0.5% of the Medicare population.
The new APCM codes are an important addition, offering a pathway to adopt VBC principles without the need for risk-bearing arrangements, which is particularly beneficial for smaller practices and Managed Services Organizations (MSOs) that lack the resources or cash flow flexibility to engage in full-risk models. The ability to bill for comprehensive care management services may make FFS more favorable relative to MA in the current environment, especially for dual-eligible and rural populations.
For physician practices, this may mean implementing new systems and workflows that support continuous, coordinated care. It involves training staff, utilizing health information technology, and possibly expanding capabilities to meet comprehensive care requirements. The difference here is that these efforts align closely with what patients truly value, resulting in a more rewarding experience for both providers and patients.
Recent research from United States of Care shows this is what patients consider to be high value. Shifting the focus from what health policy experts define as value to what patients truly seek, seems like a positive and long-overdue step. This research also indicates that patients do not understand or resonate with the term “value-based care”. These enhanced services aim to provide patients with more accessible, proactive, and personalized care, improving overall health outcomes and satisfaction.
The days of “succeeding” by being good at risk-coding patients alone has passed. While reimbursements will change over time, and programs will stop and start, the signal is consistent. Those paying the bills, whether government or commercial, want to encourage care providers and patients to invest in prevention and coordination and eliminate extraneous expenditures. Orient your practice towards these principles and it will be better for patients and more satisfying for providers.
Who Should Pay Attention:
Smaller Practices & Providers in Rural and Underserved Areas can benefit from higher reimbursement rates, allowing them to invest in necessary care coordination and infrastructure to better serve their communities.
Managed Services Organizations (MSOs) can use these codes to support smaller affiliated practices by providing shared resources and infrastructure.
Patients with Complex Needs (multiple chronic conditions or dual-eligibles) can receive more coordinated and comprehensive care, improving their overall health outcomes.
Care Management Organizations: Healthcare startups and organizations enabling providers delivering comprehensive care management may see an uptick in demand among providers who currently lack care management capabilities. APCM codes may spark interest to partner with technology-enabled service providers with solutions for medication management, care coordination, SDoH tracking, post-discharge management & care transitions, telehealth capabilities etc.
Additional Considerations:
While the enhanced reimbursement rates from APCM codes provide significant income potential, there may be associated costs for practices that have not been delivering value-based care:
Staffing: Additional clinical and administrative staff may be required to meet the care management and coordination needs.
Technology: Investment in electronic health records (EHRs), secure communication platforms, and care management vendors (discussed above).
Training: Providers and staff need training to effectively implement and manage the new care coordination and communication protocols.
Practices should assess their patient demographics to identify potential beneficiaries for APCM services and evaluate existing care management capabilities to determine gaps in their ability to provide APCM services.
2. Prepaid Quarterly Shared Savings in MSSP and Health Equity Benchmark Adjustments (HEBA)
How it Works:
CMS is proposing to make quarterly prepayments to physician practices that are part of Accountable Care Organizations (ACOs) and focused on improving health equity and delivering high-quality care to patients in greater need. ACOs are groups of doctors, hospitals, and other healthcare providers who come together to provide coordinated high-quality care and deliver better outcomes.
The proposed prepayments represent new upfront cash flow opportunities for practices that focus on improving health equity, encouraging investment in essential infrastructure, staffing, and services that enhance care delivery for underserved communities. These prepayments are designed to help ACOs better serve their patients without having to wait for end-of-year savings distributions.
In 2024, CMS introduced Advance Investment Payments (AIP), offering upfront payments ($250,000) to eligible ACOs to support their participation in the Medicare Shared Savings Program (MSSP) in the beginning of the performance year. These payments must be spent on increased staffing, healthcare infrastructure, or addressing social determinants of health. Now, the prepaid quarterly shared savings outlined in the CY 2025 PFS propose to build on that by providing ongoing quarterly payments to ACOs. While 50% of the payments must be used for direct beneficiary services (i.e. meals and transportation), the rest can be allocated to staffing and infrastructure to serve underserved beneficiaries.
With the new Health Equity Benchmark Adjustments (HEBA) for ACOs, benchmarks are adjusted based on the proportion of an ACO's assigned beneficiaries who are enrolled in the Medicare Part D low-income subsidy (LIS) or are dually eligible for Medicare and Medicaid. This proposal ensures that ACOs are not financially disadvantaged by lower benchmarks that do not reflect the true cost of care (think of this as RAF for Medicare FFS).
At Town Hall Ventures, we’re dedicated to partnering with mission-driven and heroic founders and teams to provide better care to underserved communities. Caring for historically marginalized populations with limited access to healthcare calls for a heightened level of commitment and dedication. These initiatives by CMS aim to support physicians to deliver care to any community using government resources to get there. This proposal represents a step towards creating a more inclusive and equitable healthcare environment.
Who Should Pay Attention:
ACOs Serving High-Need Populations such as dual-eligible and low income beneficiaries can benefit from the upfront financial resources & adjusted benchmarks that more accurately reflect the cost of care to support healthcare in underserved communities.
Managed Services Organizations (MSOs) focused on ACOs are well-positioned to provide necessary infrastructure and support via leveraging the prepared shared savings and HEBA adjustments.
Additional Considerations:
While the enhanced financial support from prepaid shared savings and the Health Equity Benchmark Adjustments provide opportunities, ACOs must carefully consider the associated obligations:
Repayment Obligations: Prepaid savings are not grants but advances on expected shared savings. ACOs must achieve the required savings to repay these amounts. Failure to do so could result in financial penalties.
Administrative and Care Coordination Costs: Ongoing expenses, including care coordination, data management, and regulatory compliance, require ACOs to invest in additional staff and technology.
ACOs should evaluate their patient populations to determine eligibility for HEBA uplift and identify areas where prepaid savings can have the most significant impact. Developing a comprehensive plan to use prepaid savings and benchmark adjustments to shore up care coordination, technology infrastructure, and other areas can drive quality improvements and cost savings. These considerations beg the “buy or build” question: ACOs must consider whether partnering with vendors or building the infrastructure themselves is more financially sound and impactful on care delivery and outcomes.
3. Expanded Telehealth Definition and Commitment to Audio-Only Telehealth
How it Works:
The new proposed rule extends telehealth flexibilities beyond its current statutory deadline of December 2024, including a revision of the definition of telecommunications to include audio-only telehealth visits. This initiative is particularly aimed at expanding care delivery modalities for patients without reliable internet access, ensuring that telehealth remains a viable option for a broader range of beneficiaries.
This expansion is especially relevant for managing chronic conditions, mental health services, and substance use disorders (SUD), where consistent follow-up and accessible care are essential.
Who Should Pay Attention:
Mental Health and SUD Treatment Providers now have the flexibility to use audio-only telehealth for initial intake and periodic assessments in opioid treatment programs which can significantly improve access to services for patients with substance use disorders.
Practices & Patients, particularly in Rural or Underserved Areas, can benefit from the increased accessibility of healthcare services, reducing the need for long distance travel and overcoming the limitations posed by internet connectivity.
Telehealth Platforms and Startups may see increased demand from providers looking to partner with telehealth vendors that offer secure HIPAA-compliant audio services. This policy update broadens market reach for startups focusing on user-friendly, low-bandwidth telehealth solutions.
Additional Considerations:
While the expanded telehealth definition offers significant opportunities, staff and providers can benefit from appropriately training and establishing protocols to effectively conduct audio-only visits, including ensuring patient privacy and comprehensive care delivery through this medium. Patient education and engagement will be a critical component here too; providers should construct outreach strategies to inform patients about the availability and benefits of audio-only telehealth services.
Despite ongoing negotiations in Congress for a two-year extension of telehealth services, there has been limited progress in both the House and the Senate. Therefore, CMS is moving forward where it has the authority. This expansion supports the growth of telehealth platforms and services, creating opportunities for startups and healthcare providers to innovate and reach a wider patient base.
Conclusion
We read the CY 2025 Medicare Physician Fee Schedule proposal by CMS to represent a significant shift towards making value-based care priorities more accessible within a fee-for-service payment framework. The proposal offers potentially meaningful payment opportunities for better care without the traditional risk, regulatory loopholes, and delayed payments traditionally associated with qualifying for value-based payments. This should make what we think of as value-based care more mainstream. By supporting advanced primary care management, incentivizing investments in underserved communities, and expanding telehealth access, CMS is paving the way for a more inclusive and effective healthcare system, presenting opportunities for healthcare early-stage founders & builders, as well as providers, to innovate and contribute to a more accessible, equitable and effective healthcare landscape.
At Town Hall Ventures, these initiatives reinforce our commitment to health and prevention while driving innovation, growth, and adoption of advanced tools, data and technology infrastructure, AI, and comprehensive healthcare solutions. Rather than being a silver bullet for increased revenue, these measures are designed to reward practices that make meaningful improvements in areas that matter to patients.
If you would like to provide feedback on the proposals before CMS finalizes them, you can do so here.
Town Hall Ventures is eager to collaborate in navigating these changes and explore potential new opportunities in healthcare. Please reach out to begin a dialogue about how these proposals may impact your practice, healthcare business, or new ideas.
We can be reached at steinberg@townhallventures.com.
