Primary Care First Could Be a Pathway to Profitable Palliative Care

A rising number of hospices are offering community-based palliative care, but virtually none are making a profit or breaking even from those services. New payment models such as Medicare’s recently announced Primary Care First initiative, could give palliative care providers a shot, though not a guarantee, of profitability in the long term if they navigate the system effectively, are open to collaboration, and keep their operations efficient.

The U.S. Centers for Medicare & Medicaid Services (CMS) unveiled Primary Care First in April. Hospices and palliative care organizations are eligible to participate in the payment models provided they meet the program’s criteria. The program will be implemented in phases beginning in January of 2020, initially in 26 regions around the country, though CMS eventually expects to expand the program.

Eligible providers have two payment options under the program: A general payment option and a Seriously Ill Population payment option designed to serve patients with complex, chronic needs, through which providers focused on caring for those seriously ill populations would receive increased payments. Eligible providers can choose to participate in one of those options or both simultaneously. 


Participating health care providers would also receive a bonus for reducing avoidable hospitalizations, an area in which community-based palliative providers have a strong track record. A growing body of research indicates that palliative care reduces hospitalizations as well as hospital readmissions.

“That’s where I think the opportunity lies,” said Brad Stuart, the chief medical officer at the Coalition to Transform Advanced Care, in Washington, D.C., and co-author of a Health Affairs study that helped inform the new payment models. “You can really score a large increase if you achieve certain metrics that CMS has already specified. There is only one metric in year one, and that is you have to reduce avoidable hospitalizations.” 

Hospices and palliative care organizations will be able to receive payments through Primary Care First’s general payment option if they are located within one of the designated regions, provide primary health care to more than 125 Medicare beneficiaries in a particular location, and can meet the stipulations of the agency’s Primary Care First Participation Agreement, among other requirements.


Alternatively, hospice and palliative care clinicians can participate exclusively in the Seriously Ill Population payment option, either directly as an organization or by partnering with a primary care practice.

This kind of collaboration could be a pathway to eventual profitability for palliative care programs if they are strong negotiators, though likely by slim margins.

“This will be an opportunity for agencies in the community that are already helping [primary care practices] with this, for instance hospices and palliative care organizations. These payments are a step towards the right direction in terms of making palliative care profitable,” Stuart told Hospice News. “If [an organization’s] creative thinking only extends to taking these payments then I don’t believe there is a potential for big profit, but I do think that palliative care can be profitable to the degree that the palliative care organizations are able to contract and collaborate, especially now with primary care practices.” 

For example, Stuart explained, a palliative care provider can enter a partnership with a primary care practice in which the practice receives the Primary Care First payment, and the two health care organizations negotiate to share the seriously ill population payment and the bonus for reducing hospitalizations.

“Palliative care providers can help the primary care practice achieve the bonus because they know how to keep people out of the hospital and have the numbers to prove it,” Stuart said. “That way you could imagine a scenario where everybody wins.”

Whichever approach a palliative care provider takes, efficiency and cost controls must be a priority for any program to remain financially viable whether under Primary Care First or the current fee-for-service system.

While participation in the new payment models or collaboration with participating primary care practices could yield new revenue streams, profitability remains a possibility rather than a guarantee, and if a program does turn a profit it will likely be small. 

“The [Primary Care First] payment is not generous. I think there is a way to make it work, but it’s not like palliative care organizations are going to be swimming in money for participating in this. So practices should really get smarter about how to be as efficient as possible,” Allison Silvers, vice president of payment and policy for the Center to Advance Palliative Care told Hospice News. “Examining their staffing models and if possible restratifying their patient population so they can prioritize visit volume according to need rather than having consistent visit volume for every patient are things they should consider, as well as getting smarter about the types of support they can provide telephonically or through telemedicine.”