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October 1, 2015

From 2010 to 2020, the number of individuals over the age of 65 is forecast to increase from 40.3 million (13 percent of the total population) to 56 million (16.8 percent). The aged account for a disproportionate 34 percent of healthcare expenditure, with Medicare spending per beneficiary increasing with each age cohort (65–74: $7,859; 75–84: $12,805; over age 85: $13,788). Medicaid spending also rises per cohort. Higher spending is consistent with an increase in the number and severity of co-morbid chronic conditions and the high cost of end-of-life care. Hospital care represents the single largest category of spending at 35 to 40 percent of the total. 

Spending among the elderly is highly concentrated. In Medicare Fee-For-Service (FFS), 5 percent of beneficiaries account for 39 percent of expenditures, and 25 percent of beneficiaries account for 82 percent of the total. Conversely, 75 percent of beneficiaries account for 18 percent of expenditures. The vast majority of high cost beneficiaries, 71 percent, have five or more chronic conditions.

Importantly, both the Wagner Chronic Care Model (CCM) and Patient-Centered Medical Home (PCMH) approach recognize the centrality of primary care physicians (PCPs) to manage and coordinate the care of aging patients with multiple chronic conditions across the entire continuum. The Center for Medicare and Medicaid Services (CMS) also recognizes their importance as it institutes payment reform.

In this article, we discuss the worsening primary care physician shortages (by state), accelerating Medicare payment reform and the challenges associated with hospital investment in primary care. Without sufficient and compensated PCPs, value-based payment reform will not reach its potential.

Medicare Payment Reform Acutely Hindered by Shortage of Primary Care Physicians (pdf)