What is PMPM (Per Member Per Month)?

Last reviewed May 12, 2026

Definition

Per Member Per Month (PMPM) is a payment structure in which a payer reimburses a provider a fixed amount for each attributed or enrolled patient each calendar month, regardless of how many encounters occur within that month. Medicare uses PMPM for care-management reimbursement, including the APCM codes G0556, G0557, and G0558, and PMPM is the dominant payment structure across value-based contracts including Medicare Advantage capitation and ACO REACH.

How PMPM works in APCM

Under APCM, a primary-care practice bills Medicare one HCPCS code per enrolled patient per calendar month, at the rate corresponding to the patient’s assigned tier:

G0556 (Tier 1) — Patients with one chronic condition or new APCM patients. Lowest PMPM rate.
G0557 (Tier 2) — Patients with two or more chronic conditions.
G0558 (Tier 3) — Qualified Medicare Beneficiaries with two or more chronic conditions. Highest PMPM rate.

The same code is billed each month the patient remains enrolled in APCM at the practice, producing a predictable monthly payment per attributed patient. The CY2025 and CY2026 Physician Fee Schedule Final Rules publish national PMPM rates for each tier, adjusted geographically through the standard Medicare Geographic Practice Cost Index. Practices should consult the most recent Final Rule and CMS PFS lookup tools for current rates by locality.

PMPM versus fee-for-service per-encounter billing

Traditional Medicare fee-for-service reimburses providers per encounter — each office visit, procedure, or service is a billable event with its own CPT/HCPCS code, documentation requirements, and payment. PMPM differs structurally:

Trigger for payment — Fee-for-service: a specific encounter or service. PMPM: patient enrollment and the elapse of a calendar month.
Volume relationship — Fee-for-service: revenue scales with visit volume. PMPM: revenue scales with the size of the attributed panel, not with visit count.
Care-team economics — Fee-for-service: care provided by non-billing staff (medical assistants, care coordinators) generates no direct revenue. PMPM: non-encounter care-management activity is the reimbursed work product.
Documentation focus — Fee-for-service: documentation supports the specific service billed. PMPM (in APCM specifically): documentation supports patient enrollment, tier assignment, and the practice’s overall care-management capability, rather than time-tracking for each monthly bill.

PMPM does not replace fee-for-service in primary care — practices continue to bill E&M encounters and other services. APCM PMPM sits alongside the encounter-based revenue stream, reimbursing the care-coordination layer that historically went uncompensated.

PMPM across other Medicare contexts

PMPM is not unique to APCM. It appears throughout Medicare and adjacent value-based programs:

Medicare Advantage capitation — Plans pay contracted provider groups a risk-adjusted PMPM amount per attributed member, with the provider group bearing some or all of the medical cost risk.
ACO REACH (formerly Direct Contracting) — Participating ACOs receive PMPM payments and bear total cost of care responsibility for aligned beneficiaries.
Primary Care First — A CMMI model that pays participating primary-care practices a population-based PMPM in lieu of certain fee-for-service E&M codes.
Commercial value-based contracts — Many commercial payer arrangements with primary-care groups include a PMPM care-management or population-health component.

The mechanics — fixed amount per attributed patient per month — are the same across contexts; what differs is the scope of services the PMPM covers, the risk arrangement, and the attribution methodology.

PMPM in APCM is narrow, not capitated

A common point of confusion is conflating APCM’s PMPM with full primary-care capitation. APCM PMPM reimburses care-management activities specifically. It does not transfer total-cost-of-care risk to the practice, does not replace fee-for-service E&M billing, and does not function as a primary-care capitation rate. Practices billing APCM continue to bill Medicare for office visits, procedures, and other services under the standard fee schedule. APCM PMPM is an additive revenue stream tied to a specific, defined set of care-management responsibilities.

Primary sources

Centers for Medicare & Medicaid Services. CY2025 Medicare Physician Fee Schedule Final Rule — APCM PMPM rate establishment.
Centers for Medicare & Medicaid Services. CY2026 Medicare Physician Fee Schedule Final Rule — APCM PMPM rate updates and BH add-on codes.
CMS Innovation Center model documentation for ACO REACH and Primary Care First.
Medicare Advantage capitation rate methodology (CMS Rate Announcement, annual).

For the framework that uses PMPM, see What is APCM?. For the predecessor billing structure, see What is CCM?. For the behavioral health overlay, see What is BHI?.