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On Our Minds

Welcome to On Our Minds, the latest feature from the Farley Health Policy Center, where we will share commentary on policies affecting health, trends from findings in data and research, and the issues that matter most in our communities. We invite you to share your perspectives and input. Drawing on expertise from our evolving network, we’re eager to work with you, learn from you, build and share policy commentary that brings us together and continues to move us forward.

We Need Better Valuation for Primary Care: Four Steps to Achieve it

Lauren S. Hughes, MD, MPH, MSc, MHCDS, FAAFP and Stephanie Gold, MD, FAAFP

Despite primary care’s critical role in our health care system, it has long suffered from a lack of investment. Without policy solutions that invest in primary care, it is doomed to underperform and, eventually, fail. On February 28, 2025, the National Academies of Sciences, Engineering, and Medicine (NASEM) Standing Committee on Primary Care (Standing Committee) released a new report entitled, “Improving Primary Care Valuation Processes to Inform the Physician Fee Schedule.” Two Farley Center faculty members–Drs. Lauren S. Hughes and Stephanie Gold–served as co-authors of this consensus study, and a third–Dr. Mark Gritz–contributed as a reviewer.

The purpose of the is to advise the federal government on a variety of primary care policy issues through producing evidence-based publications and hosting public meetings. Currently, the Standing Committee is focusing on improving payment, workforce, and digital health, three essential elements for enhancing access to high-quality primary care in rural and urban communities nationwide.

Primary care, while often touted as the foundation of the U.S. health care system, has long faced chronic underinvestment, in large part due to historical distortions in payment relative to other specialties. The Medicare Physician Fee Schedule (PFS) set by the Centers for Medicare & Medicaid Services (CMS) plays a key role in determining rates of services for all payers; Medicaid and commercial insurers often pattern their payment schedules on the PFS.

CMS relies heavily on the Resource-Based Relative Value Scale process to inform annual updates to the PFS. The American Medical Association established the Relative Value Scale Update Committee (the RUC) nearly 35 years ago to advise CMS on PFS changes. Even though it is not required to do so, CMS typically accepts 85-90% of the RUC’s recommendations every year. The RUC is a 32-member, multi-specialty, volunteer group of physicians who review data and provide insight on resources required to deliver different types of health care services. Only 19% of the physician seats on the RUC are filled by primary care physicians.

Over the years, a number of concerns have been raised about the nature of the RUC and its relationship with the PFS; including member self-interest, under-representation of primary care relative to the overall physician workforce and the proportion of visits in primary care, and lack of transparency. The RUC is a non-governmental organization and is not subject to the Federal Advisory Committee Act policies, and procedures that ensure advice provided to the federal government is objective and accessible. Provider surveys, which are used to estimate the time and effort required to deliver various services, have also been called into question for low response rates and questionable, highly variable results.

The PFS may not give practices sufficient flexibility to meet patient and community health needs. CMS recently introduced the Advanced Primary Care Management (APCM) codes to better support high-quality primary care. The APCM codes represent a step in the right direction but still do not address the full scope of activities primary care provides, including work outside of discrete visits, such as education, care coordination, and communication with patients, nor does it encompass all members of the primary care team, such as pharmacists or behavioral health professionals.

In response to these concerns, a subgroup of the Standing Committee was convened in 2024 to “examine the current process and data inputs used by the Centers for Medicare and Medicaid Services (CMS) to valuate primary care … [and to outline] alternative methodologies for data collection and potential sources of input to more accurately capture the time, intensity, and complexity of the work required to deliver high-quality primary care.” The subgroup developed the following recommendations to improve valuation of primary care services and activities:

1. When valuating physician services and activities for the Physician Fee Schedule, the CMS should consider a range of data sources that are directly observed (e.g., electronic health record audit log data or time-motion studies) or reported (e.g., high-quality surveys) and that are analyzed using complementary approaches such as time-drive activity-based costing and large language modeling.
2. Using the data sources and methodologies in the first recommendation, the CMS should consider the full range of value-enhancing primary care activities and services that are required for high-quality primary care in its valuation process. This includes the efforts of the full interprofessional primary care team and nonencounter-based activities.
3. The CMS should invite other expert and technical advisory organizations beyond the Relative Value Scale Update Committee to contribute to the annual valuation process. This could entail CMS establishing a separate internal or external expert group or involving contractors or researchers to conduct independent analyses.
4. The CMS should annually evaluate APCM to better understand the accuracy of the valuation of APCM services, determine which practices are and are not using the new codes, assess the extent of beneficiaries giving consent to participate in APCM billing and the sociodemographic characteristics of patient populations receiving APCM services, and identify potential unintended consequences. It should take care to not rush to expand APCM payments without a clear understanding of the uptake issues above, and with full consideration of unintended negative consequences on other important CMS alternative payment models such as accountable care organizations.

The authors believe that implementing these four recommendations will improve the accuracy of primary care valuation in the short term. However, they acknowledge that longer-term changes, some that require Congressional action, may be needed to address the zero-sum-game dynamic that results from budget neutrality requirements, i.e. when valuation for some services increases, valuation must decrease for others.