Medicare FFS Revenue: How much will be capitated under ACO REACH?

Rebecca Kee

Rebecca Kee

Data Analyst, Pearl Health

Patrick Mauro

Patrick Mauro

Advisor & Data Scientist, Pearl Health

Proportion of E&M Revenue Attributable to Claims-Aligned Patients
Healthcare Costs Female Doctor Calculator Medical Costs

Abstract

There are several payment mechanisms under ACO REACH, one of which is Primary Care Capitation (PCC). This is the payment mechanism through which most primary care providers will be reimbursed. PCC applies only to Evaluation and Management (E&M) services provided to aligned beneficiaries and replaces some or all of a provider’s E&M fee-for-service (FFS) revenue. Providers will continue to receive FFS payment for non-primary care services outside the scope of the PCC payment.

As a primary care provider, you may be wondering: What portion of my FFS revenue can be attributed to E&M services? 

We break down total FFS revenue along various dimensions below.

Key Findings

Data

First, since PCC only applies to E&M services, we need to understand what qualifies as an E&M service in order to calculate how much FFS revenue will be replaced by PCC in ACO REACH.

Below is a summary of some of the most commonly billed E&M service codes that are included in PCC for ACO REACH.

Table 1: Most commonly used E&M services and billing codes
Service
Codes

HRA Administration

9616x

Home Services

9934x

Office / OP Visit

9920x, 9921x

Prolonged Care for Outpatient Visit

99354, 99355

Annual Wellness

G0402, G0438, G0439

Telephonic

9942x, 9944x

Chronic Care Management (CCM)

99487, 9489, 99490, G0505

Care Management Home Visit

G0076 – G0087

Domiciliary Rest Home/Custodial Care; Homecare Oversight

9932x, 9933x

Behavioral Health Integration (BHI)

99484, 9949x

Professional Service in Non-SNF

9930x, 9931x

Virtual Check-In

G2010, G2012, G2252

Advance Care Planning

99497, 99498

Depression/Alcohol Abuse

G0442, G0443, G0444

Transitional Care Management

99495, 99496

Professional in Teaching Amendment

G0463

Second, we must define the E&M rate, using the ratio below: 

FFS Revenue Attributable to E&M Services only
Total FFS Revenue

We computed the E&M rate along several dimensions using the Medicare Physician & Other Practitioners by Provider and Service 2019 Public Use File (henceforth referred to as the “Medicare PUF”) and present our findings below. We focus on the E&M rate in non-facility settings only, as non-facilities are typically primary care offices, whereas facilities include hospitals, skilled nursing facilities, hospice care, and other settings where specialty services that are not attributable to primary care are performed.

Findings

Portion of Total FFS Revenue Replaced by PCC

The chart below illustrates the non-facility E&M rates across different types of providers. Because PCC applies only to E&M services, the proportion of FFS revenue attributable to E&M services among Primary Care Specialists serves as a proxy for the portion of FFS revenue that will be replaced by PCC.

See a more detailed breakdown of our findings in Figure 1.

Figure 1: Non-facility E&M rate by provider type
Non-facility E&M rate by provider type

Notes: Among Primary Care Specialists, about 71% of non-facility FFS revenue can be attributed to E&M services. To see the full list of provider specialties classified as Primary Care Specialists, please see the Global and Professional Direct Contracting Model Financial Operating Guide Overview (page 43).

Breakdown by Region

In the chart below, we see that Primary Care Specialists in the Northeast, for example, have higher non-facility E&M rates, on average, than other regions. Since PCC applies only to E&M services, these regional variations in E&M rates will result in differences in how much of the total FFS revenue will be replaced by PCC.

Figure 2: Non-facility E&M rate among primary care specialists, by geographic region
Non-facility E&M rate among Primary Care Specialists, by geographic region

Notes: The chart above shows how non-facility E&M rates among Primary Care Specialists vary by region. Our analysis shows the following breakdown: Northeast (76.02%), Midwest (72.27%), West (69.74%), South (68.50%). To see how these regions are defined, please see U.S. Census Bureau’s Census Regions and Divisions of the United States.

E&M Spend by Claims-aligned Beneficiaries 

Proportion of E&M Spend Attributable to Claims-aligned Beneficiaries

To arrive at this conclusion, we augmented our analysis of the Medicare PUF by estimating total FFS revenue and E&M FFS revenue from beneficiaries who are claims-aligned in performance year 2021, using 2019 claims data provided by CareJourney.

This data is additive because the Medicare PUF reports FFS revenue for all Medicare patients seen by a provider, but the CareJourney dataset allows us to filter for patients who would be claims-aligned to each provider.

For each provider, we computed the ratio of:

Total E&M spend by claims-aligned patients only
Total E&M spend by all patients
Where the numerator comes from CareJourney data while the denominator is based on the Medicare PUF. The distribution of this ratio is illustrated below.
Figure 3: Proportion of E&M revenue attributable to claims-aligned patients
Proportion of E&M Revenue Attributable to Claims-Aligned Patients
Count
Mean
SD
Min
Q1
Median
Q3
Max

107,112

1.038

4.663

0.018

0.636

0.819

0.908

348.047

Notes: On average, 81.9% of a provider’s E&M revenue can be attributed to their claims-aligned patients.

If patients who are not claims-aligned to a provider choose to voluntarily align to said provider, it could boost the provider’s E&M revenue by about 22% under ACO REACH, since the PCC only covers E&M services provided to aligned beneficiaries.

Proportion of E&M Spend Billed by Provider for Claims-aligned Beneficiaries

We estimated this for each provider by computing the ratio of

E&M spend by claims-aligned patients,
billed by aligned
provider
E&M spend by claims-aligned patients,
billed by any
provider

Where both the numerator and denominator are based on CareJourney data.

The distribution of this ratio is illustrated below in Figure 4.

Figure 4: Proportion of E&M revenue attributable to claims-aligned patients
Proportion of E&M Spend by Claims-Aligned Patients Captured by Aligned Provider
Count
Mean
SD
Min
Q1
Median
Q3
Max

223,668

0.429

0.171

0

0.303

0.424

0.537

1.363

Notes: On average, 42.4% of E&M spend for patients claims-aligned to a provider originates from the provider of alignment.

If patients claims-aligned to a provider choose to receive all or the majority of E&M services from their aligned provider, this would eventually boost said provider’s E&M revenue in the following performance year.

To illustrate this with an example:

Table 2: Example patients and E&M spend
Patients claims-aligned to Dr. Diane Chambers
Billed by Dr. Diane Chambers
Billed by Dr. Sam Malone

Patient 1

$2,000

$1,500

Patient 2

$2,500

$600

Total E&M Spend

$4,500 (A)

$2,100 (B)

The ratio would be calculated as: 

A
A + B

Using the example above, this means that if Patients 1 and 2, who are claims-aligned to provider Diane Chambers, received all their E&M services from Diane Chambers instead of also seeing provider Sam Malone, Diane Chambers would receive an additional $2,100 (B) in PCC revenue the following year.

In this post, we explained how much Fee-for-Service (FFS) revenue will be replaced by Primary Care Capitation (PCC) in the ACO REACH Model. In future posts, we’ll continue to use data science to provide insights in value-based care.

About Pearl Health

Pearl Health’s mission is to democratize access to value in healthcare. Pearl empowers primary care physicians to deliver better quality care for their patients at a lower cost via a physician enablement technology platform and a value-based payment model, starting with Medicare’s ACO REACH Model. Pearl’s technology provides simple financial reporting, visibility into patient panel health, and recommendations to allocate time and resources to deliver care to patients who need it most.

Learn more at www.pearlhealth.com, and follow us on LinkedIn and Twitter.

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