As we approach another Medicare ACO performance year (now in the ACO REACH model, following the sunset of Direct Contracting), we are providing a revised overview of Primary Care Capitation (PCC) in an easy-to-understand format. We encourage all new and returning Participant Providers to read this blog post to ensure they’re ready to hit the ground running in 2023.
For many primary care providers (PCPs), managing traditional Medicare fee-for-service (FFS) patients under a CMS-calculated budget is value-based care in its simplest form. The ACO REACH (ACO) Model builds upon this basic structure and introduces a mechanism to provide PCPs with increased revenue stability and more predictable cash flow for their aligned Medicare patients: Base Primary Care Capitation (BPCC).
If you’re a PCP joining a REACH ACO in 2023, there is a lot to learn about how capitation will impact your monthly revenue in advance of the January 1st start date. In this post, we will address providers’ most Frequently Asked Questions regarding BPCC.
Note: Capitation is the remittance to providers of a stable reimbursement that is not directly tied to the volume of healthcare services provided. In other words, rather than receiving compensation for each patient visit or procedure (fee for service), providers get a set reimbursement based on their assigned population. For a quick refresher on the various forms of capitation in ACO REACH (previously Direct Contracting), read this overview.
BPCC is calculated by looking at the proportion of the Total Medical Expenditures (TME) that is attributed to the primary care services that a PCP provided to their Medicare FFS patients over a specific period of time (e.g. for performance year 2023, it is based on the first three quarters of 2022). This proportion is then applied to the anticipated TME for the provider’s beneficiaries (i.e. the benchmark) for the upcoming performance year to create a nominal dollar capitation rate. The result is a per-beneficiary-per-month (PBPM) amount for each beneficiary aligned to the ACO’s participating PCPs.
| Illustrative BPCC Example | Amounts | Comments |
|---|---|---|
| 2022 Historical Primary Care Costs | $21,000,000 | For primary care codes (PCC) only |
| 2022 Historical Total Medical Expenditures (TME) | $600,000,000 | For all at-risk Part A and Part B claims |
| PY 2023 BPCC Rate | 3.5% | Divides the PCC costs by the Historical TME |
| PY 2023 Benchmark (PBPM) | $1,500 | The amount each beneficiary is expected to cost each month in 2023 |
| PY 2023 BPCC Amount | $52.50 | The BPCC rate multiplied by the benchmark = 3.5% x $1,500 |
| 2023 Aligned ACO Beneficiaries | 35,000 | Number of benes aligned to the ACO for 2023 |
| 2023 Total Monthly BPCC Amount | $1,837,500 | Monthly amount paid by CMS to the ACO for PCC for all aligned patients |
| 2023 Total Annual BPCC Amount | $22,050,000 | Annual amount paid by the CMS to the ACO for PCC for all patients |
Short answer: Yes, because the monthly BPCC amount is based on historical spend. In other words, it’s based on how PCPs billed in the year prior.
Long Answer: It is intended to sufficiently fund each PCP’s aligned panel of ACO beneficiaries based on the 2022 performance year medical expenditures. Remember, the BPCC is paid on a PBPM basis, (e.g. $52.50 PBPM), so if a PCP has more patients attributed to them in 2023 (e.g. 100 patients) compared to 2022 (e.g. 80 patients), their capitated payments will reflect the increase in patients (e.g. $52.50 BPCC amount * 100 patients * 12 months).
- The count of currently aligned beneficiaries (e.g. the number of currently aligned 2023 patients will change over time with the addition of voluntarily aligned patients or monthly patient exclusions);
- The regional rate based on movement of beneficiaries during PY2023 (e.g. a patient move from County A to County B, since benchmark rates vary by county);
- The risk score of beneficiaries during PY2023 based on updated diagnostic codes (e.g. a patient acquires or resolves a new condition, which increases or decreases the benchmark);
- CMS' estimate of the rate of inflation of healthcare expenditure and utilization of healthcare services (the "USPCC trend").
- Billing: PCPs should continue billing CMS as they normally would for all claims for all ACO patients. No changes here. It is critical to continue submitting FFS claims to maintain the capitation rates in future performance years.
- Reimbursement: Instead of being reimbursed by CMS for primary care claims, CMS will “zero out” their claims, meaning PCPs will receive $0 from CMS for their primary care services provided to ACO aligned beneficiaries, if the PCP selected 100% BPCC. If a PCP selected 10% BPCC, for example, CMS will reduce their claims by that amount.
- Capitation: On a monthly basis, the ACO will pay each PCP a capitated payment for aligned beneficiaries, whether or not a PCP sees some, all, or none of their aligned beneficiaries. For example, if an ACO patient does not see her PCP during a given month, the ACO will still reimburse the PCP the capitated amount for that patient.
- Shared Savings Revenue: PCPs have the opportunity to bear and capture value from the REACH ACO risk model by sharing in the cost savings that they generate from high-quality, cost-effective care. While shared savings are not paid out monthly like BPCC, PCPs will be rewarded about six to nine months after the performance year ends (e.g. Q3 2024).
The value of capitation is to provide PCPs with more consistent, predictable monthly revenue so they can dedicate more of their time to managing the patients who need them most. Paying PCPs a stable capitated payment each month will reduce unnecessary utilization, increase quality of care, and lower the overall cost of healthcare. Dedicating more time to the highest-risk patients will lead to better patient outcomes, especially in the costly post-acute care setting (e.g. reduced skilled nursing facility utilization).
ACO REACH is the most innovative Medicare model ever launched by CMS. Requiring capitation is necessary to encourage PCPs to shift away from traditional FFS compensation to value-based payment arrangements and will benefit patients tremendously.
- Provide Annual Wellness Visits as early in the year as possible.
- Provide preventative primary care services for high-risk patients with multiple chronic conditions.
- Voluntarily align Medicare FFS patients.
For more help unpacking how Medicare’s ACO REACH model works, check out these resources. Follow Pearl Health on LinkedIn or Twitter for regular insights in your newsfeed.
