Medicare's transitional care payment--a step toward the medical home.

M health care experts believe that primary care is the foundation on which to build a high-performing health care system, with maximized quality and reduced costs.1 The Affordable Care Act (ACA), in an acknowledgment of primary care’s importance, includes a 10% payment bonus for primary care physicians participating in Medicare between 2011 and 2015. This fee-for-service payment incentive does not require primary care physicians to change the way they provide or document their services. Although 27% of Medicare beneficiaries are now in managed care (Medicare Advantage) arrangements2 and the Centers for Medicare and Medicaid Services (CMS) is testing other new payment models, fee for service is likely to remain the dominant Medicare payment model for years to come. Not only will it take time to test and implement new models, but even after they’re implemented, fee-for-service payment levels will probably be used as benchmarks for allocating risksharing payments in accountable care organizations. With the publication of its 2013 physician-payment rule, however, CMS took an important step in promoting a new method of enhancing payments for primary care services that will encourage a change in the structure and process of delivery.3 The first step of this transition is CMS’s adoption of new Current Procedural Terminology (CPT) codes under which it will provide bundled payments to physicians for managing patients’ transition back to the community after discharge from a hospital, rehabilitation facility, or skilled nursing facility. The transitional care payment will provide physicians with enhanced compensation, which will vary with the complexity of the patients’ needs, for specified non–face-to-face care-coordination services plus an office visit within 7 to 14 days after a discharge. In time, CMS expects to eliminate the requirement for the physician visit as a part of its plan to promote payment for care-coordination services delivered in advanced primary care practices. CMS’s overall strategy involves improving quality and reducing costs by investing in care coordination that could help reduce hospital-readmission rates. The ACA authorizes payment penalties for hospitals that have high readmission rates for Medicare beneficiaries. Physicians are not subject to these penalties, but the roles they and their staffs play in discharge planning and care coordination after discharge strongly affect the likelihood of readmission. CMS has had a dischargeday management code in place for hospital-based physicians since 1996. The new transitional care code permits a corresponding payment to community-based physicians who accept responsibility for coordinating discharge plans and ensuring that they’re reconciled with other ongoing care. For physicians of patients who need highly complex medical decision making after discharge, the new payment will provide approximately $55 beyond the $143 for the office visit for transitional care services during the 30 days after discharge. The emerging evidence on transitional care emphasizes the importance of several activities in reducing hospital readmissions. The most effective of these — particularly if initiated early and in combination — are structured hospital discharge planning, primary care input into discharge planning, reconciliation of hospital-prescribed medications with previous medications, early assessment of the follow-up needs and resources of patients once they’re home, and electronic discharge notifications and structured discharged summaries available for primary care physicians.4 Under the new payment rule, physicians who bill for the transitional care service will be required to assess the need for each of several specified transitional care services and then provide the indicated services (see box). Though these services can be performed without a face-to-face office visit, CMS chose to require such a visit, at least for now, for several reasons. First, despite the lack of solid evidence that such visits contribute to reducing readmission rates, the majority of physicians’ comments in response to the proposed new payment code emphasized the necessity of a visit. Second, CMS is concerned that without a visit, patients