By Krishnan Narasimhan M.D.
May 8, 2019
The road from fee-for-service payments to value-based care has been a bumpy one for the entire health system. Current models have not found the most effective way to pay and incentivize primary care.
At an April 22, 2019 event in Washington, DC, the US Department of Health and Human Services (HHS) and Centers for Medicare & Medicaid Services (CMS) announced new payment models that aim to transform primary care through value-based options. This Primary Cares Initiative 1 will also test financial risk and performance-based payments for primary care physicians. The voluntary initiative includes five new payment models under two paths—Primary Care First (PCF) and Direct Contracting (DC). These models will be rolled out in 20 states starting in 2020.
Why the focus on primary care?
At the event, HHS Secretary Alex Azar stated, “Primary care is a small slice of health spending overall, but it has a significant impact on downstream costs and quality.”
In fact, effective primary care has positive effects on overall health and reduces mortality and healthcare utilization. A recent study in JAMA Internal Medicine from Feb 18, 2019 found that every 10 additional primary care physicians per 100,000 population was associated with a 51.5-day increase in life expectancy. That increase was more than 2.5 times that associated with a similar increase in nonprimary care physicians.2
However, despite a significant evidence base, the US health system undervalues and underfunds primary care relative to specialty services. Per capita supply of primary care physicians actually decreased between 2005 and 2015.2
So, what does the Primary Care First model look like?
The PCF path provides the following to smaller primary care practices:3
- A flat monthly payment for each patient
- A population-based payment to provide more flexibility in the provision of patient care along with a flat primary care visit fee
- A performance-based adjustment providing an upside of up to 50% of revenue as well as a small downside (10% of revenue) incentive to reduce costs and improve quality, assessed and paid quarterly.
Who would want this model?
CMS is targeting advanced primary care practices ready to assume financial risk in exchange for reduced administrative burdens and performance-based payments.
The Direct Contracting Model is geared toward organizations with at least 50,000 Medicare fee-for-service beneficiaries and those with risk-based contract experience. Building on the Next Gen ACO model, providers will receive a fixed monthly payment that will range from a portion of expected primary care costs up to the total cost of care. Providers will also bear risk, ranging from shared risk with CMS to full financial risk.4
Will these models work?
A 2018 study in the Journal of the American Board of Family Medicine found that no current payment model demonstrated consistent benefits across the Quadruple Aim (a limited evidence base).5 However, there were recommendations for the following promising interventions:
- Implementing per-member-per-month–based models
- Validating risk-adjustment tools
- Increasing investments in integrated behavioral health and social services
- Connecting payments to patient-oriented and primary care-oriented metrics
The new models do incorporate these features in various aspects, so they are a step forward. A simplified revenue cycle with flat monthly payments and decreased administrative burden will appeal to many primary care physicians. Additionally, the proposed population-based payment increases freedom to provide care where the patient needs it (home, telehealth, community health worker).
However, there may be new administrative challenges in maintaining the appropriate data collection and infrastructure needed to achieve some of these goals and metrics. This has happened in the past for several well-intentioned government initiatives (meaningful use, anyone?). This is also a proving ground for how much financial risk primary care physicians, practices, and systems are willing to bear. The future has not been easy to predict for the value-based care transition, but it will be exciting to see how this effort in transforming the way primary care is paid for goes.
Stay tuned for more, and share your thoughts in the comment section below!
- Basu S, Berkowitz SA, Phillips Rl, et al. Association of primary care physician supply with population mortality in the United States, 2005-2015 Jama Intern Med 2019 Feb 18. doi: 10.1001/jamainternmed.2018.7624
- Park B, Gold SB, Bazemore A, Liaw W. How evolving United States payment models influence primary care and its impact on the quadruple aim. J Am Board Fam Med 2018;31:588–604
Krishnan Narasimhan M.D. is an academic family medicine physician and an associate professor in the Howard University Department of Family Medicine with a focus on health policy, health systems, access issues, primary care capacity, and medical education. He serves on the Board of Directors for Doctors for America and as president-elect of the DC Academy of Family Physicians. He has led multistate physician coalitions in the policy debate on health reform and primary care infrastructure. He has a health policy fellowship from Georgetown University.
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