Medicare's Evolving Approach to Paying for Primary Care

Patients complete paperwork in a waiting room.

An analysis explores the two reform methods the Centers for Medicare & Medicaid Services is using to address underpayment for primary care in Medicare: new primary care billing codes and demonstrations.

The Issue

Lower incomes for primary care practitioners relative to specialty practitioners contribute to shortages of primary care physicians in many areas of the country. The Centers for Medicare & Medicaid Services (CMS) is addressing this and working to improve care through a two-pronged reform strategy that aims to modernize Medicare payment for primary care.

Key Findings

CMS is using two distinct strategies to address underpayment for primary care:

  • New billing codes incentivize specific activities that CMS already knows it wants clinicians to engage in.

  • Demonstrations test whether CMS can achieve favorable outcomes by paying for promising new care delivery approaches.


Medicare is the nation’s largest and most influential insurer, and how CMS decides payments has a large impact on practitioners. CMS is using new billing codes and demonstrations to achieve higher value in care, and this two-pronged approach allows CMS to incentivize specific activities known to work while testing promising new services.

About the Urban Institute

The nonprofit Urban Institute is dedicated to elevating the debate on social and economic policy. For nearly five decades, Urban scholars have conducted research and offered evidence-based solutions that improve lives and strengthen communities across a rapidly urbanizing world. Their objective research helps expand opportunities for all, reduce hardship among the most vulnerable, and strengthen the effectiveness of the public sector. Visit the Urban Institute’s Health Policy Center for more information specific to its staff and its recent research.