NAM examines how to get more of America’s health care spending to primary care

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New data, new experts and new policy reviews all could contribute to greater valuation of primary care — and maybe more money for physicians providing high quality primary care to patients, according to a new report.

“Improving Primary Care Valuation Processes to Inform the Physician Fee Schedule” was published by the National Academies of Sciences, Engineering and Medicine (NASEM). A subgroup of NASEM’s Standing Committee on Primary Care used it to examine the process and data that the U.S. Centers for Medicare & Medicaid Services (CMS) use to valuate primary care in the Medicare Physician Fee Schedule (MPFS).

The goal: to “develop a report recommending alternative methodologies and processes for data collection and potential sources of input that more accurately capture all aspects of delivering high-quality primary care.”

The analysis goes directly to physician pay. Doctors and other clinicians participating in Medicare Part B bill Medicare and the MPFS specifies payments for them. Payment includes professional fees, diagnostic tests and radiology services, the report said.

Medicare sets those values with input from the Relative Value Scale Update Committee, known as the RUC, overseen by the American Medical Association (AMA). The RUC argued the NASEM report is not accurate in characterizing its role in determining valuations for health care services, according to a statement sent to Medical Economics.

The NASEM report also marks another step in public deliberation about federal physician reimbursement. Since the November 2024 election, The Washington Post and The Financial Times have reported that Health and Human Services Secretary Robert F. Kennedy Jr. has considered potentially changing the way Medicare reimburses physicians.

What does the report say?

The NASEM report cites various studies supporting the claims of many primary care advocates. Primary care “is the foundation of a high-performing health care system” in the United States with benefits to patient longevity and outcomes.

It’s also subject to “widespread systemic underinvestment,” especially when compared with other high-income countries.

To change that, the NASEM analysis had four recommendations for ways to improve the valuation process that CMS uses for primary care reimbursement in the MPFS:

• CMS should consider a range of data sources that are directly observed. Examples could be electronic health record audit log data, time-motion studies, or reported data. Those should be analyzed using approaches such as time-driven activity-based costing, and artificial intelligence (AI).
• Using that data and analysis, CMS should consider the full range of value-enhancing activities and services needed for high-quality primary care. That includes the full efforts in interprofessional primary care teams and nonencounter-based activities.
• CMS should invite other expert and technical advisory organizations to contribute to the annual valuation process. Right now CMS largely depends on the RUC.
• Each year, CMS should evaluate Advanced Primary Care Management (APCM) payments, which were included as part of the 2025 MPFS. There are three new G-codes tiered by patient medical and social complexity and involving 10 service elements. The CMS evaluation should include what practices are using them, what patients are opting for APCM services, and potential unintended consequences.

‘A number of issues’

The NASEM report outlined “a number of issues” in the relationship of the RUC and the MPFS.

• As of 2025, the RUC has 32 members total and 29 voting members. CMS is not required to accept the RUC’s recommendations, but does 85% to 90% of the time, according to the NASEM report, citing studies from 2012 and 2023.
• Conflicts of interest: Physicians may know best about the services provided, but also stand to gain or lose financially based on their recommendations. That could create potential influence of self-interest.
• Inaccurate reflection: Primary care is underrepresented, with 19% of RUC seats, but constituting 24.4% of the physician workforce and 35% of all patient visits.
• Lack of transparency: RUC members and attendees sign nondisclosure agreements and vote by secret ballot to determine service values. RUC survey data, recommendations, minutes and voting sometimes are made public, but not always. The RUC and AMA are nongovernmental organizations with no legal requirement to make their proceedings public.

Paying for primary care

Apart from those issues, the NASEM report noted the RUC valuations may not accurately capture the time and effort needed for good medicine. Studies have shown time likely is underestimated for primary care physicians and their teams providing patient care, and time likely is overestimated for procedural, surgical and testing services that other specialists put into their patient care. NASEM noted the Government Accounting Office and the Medicare Payment Advisory Commission both have raised concerns about RUC data.

The NASEM report noted the MPFS reimbursement largely depends on physician visits. But in primary care, “much of the work needed to deliver and sustain high-quality primary care happens outside of, or around, traditional visits,” the report said. Other clinicians may handle some tasks, and time spent in EHRs — not face-to-face with patients — adds up.

Where does RFK Jr. stand?

Robert F. Kennedy Jr.
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The report could fuel public debate about federal physician reimbursement. NASEM formed its primary care committee in 2024, before President Donald J. Trump took office. The NASEM report did not mention the current administration; it came out shortly after the White House welcomed Kennedy to lead HHS and Mehmet Oz, MD, MBA, to oversee CMS.

Since the November 2024 election, The Washington Post, The Financial Times and other news outlets have reported on Kennedy scrutinizing the physicians and the process that determine what Medicare pays doctors.

Kennedy and Oz did not touch on physician reimbursement during his Senate Finance Committee hearing. But health care finance — down to physician pay — is part of the administration’s Make America Health Again (MAHA) movement. The White House has publicized the president’s executive order about increasing price transparency for health care. CMS has announced the end of the Primary Care First and Making Care Primary alternative payment models as a way to align CMS’ portfolio with MAHA.

40 years of medical and financial calculations

The NASEM report included a history of physician payment of the late 20^th and early 21^st centuries.

In 1985, federal lawmakers approved the Consolidated Omnibus Budget Reconciliation Act that directed HHS to develop a resource-based relative value scale for medical services. It also created a Physician Payment Review Commission to advise Congress on Medicare payments.

The recommended fee schedule was created and included in the 1989 Omnibus Budget Reconciliation Act for implementation starting in 1992. That bill also required budget neutrality within the fee schedule for payment adjustments. In 1991, AMA established the RUC, “an independent, multispecialty panel of volunteer physicians” who provided insights on resources needed to deliver health care services, the report said.