Payment and the Future of Primary Care

Primary care has been on a roller coaster. It was pushed to the forefront in the mid-1990s by managed care, and as a result its scope and authority increased (1). But the backlash against managed care and its transformation to a less restrictive model with less emphasis on primary care dealt a serious setback to primary care. It is most timely that Annals is publishing this supplement examining primary care's future (2).

As an economist who has been systematically studying changes in the financing, organization, and delivery of health care, I believe that a key factor in the future of primary care is how its services are paid for. To augment the valuable contribution of the papers in this issue to our thinking about the future of primary care, I have set out my thoughts about the likely developments in physician payment and how they will shape primary care. I first discuss recent developments and the outlook in the overall level of payment for evaluation and management services in relation to procedural services. I then examine the extent to which traditional fee-for-service payment will support the directions for primary care sketched out in the papers in this supplement.

Over the past decade, payment rates for primary care services have increased significantly compared with other physician services because of implementation of Medicare's resource-based fee schedule in 1992. This fee schedule, known as RBRVS by many physicians, replaced a system in which payment rates were based on prevailing charges in the community. The new system is based on measurement of the time and “work” involved in providing different services and variation in the costs of practice across geographic locations.

Data from the Medicare Payment Advisory Commission and the Centers for Medicare & Medicaid Services (formerly …