Can Expanding Primary Care Reduce Costs and Improve Outcomes?

Primary care clinicians are in a unique position to be able to build relationships with patients and uncover the root causes of medical conditions, even when those causes go far beyond traditional healthcare. Focusing on the complete needs of an individual, also known as whole person care, has proven to be a successful strategy for improving health outcomes and even lowering the overall cost of care for many patients. However, traditional fee-for-service payment models are rarely set up to bill for these non-traditional treatments and so clinicians and practices must either forgo successful treatment options such as chronic disease management and acute care in-home services, or rely on outside funding such as private grants to make them financially viable.

Under a recently announced plan from the Centers for Medicare and Medicaid Services (CMS), primary care practices may now have new options. CMS held an event at the headquarters of the American Medical Association to announce a series of new payment models that are aimed at reforming primary care for Medicare beneficiaries. These models will transition primary care from fee-for-service to value-based care and are designed to provide flexibility and financial incentives to encourage primary care practices to expand their services and improve quality. In the words of Adam Boehler, Deputy Administrator for Innovation & Quality for CMS, the goal of these payment models is “to keep patients healthy and at home.”

Primary Care First

The first two payment models are aimed at small clinics and are known as Primary Care First (PCF) and Primary Care First-High Need Populations. Under these low risk high reward PCF programs, practices will move away from fee-for-service in exchange for adopting a per patient flat fee, also known as capitation, and the ability to earn bonuses based on the health outcomes of their patients. Along with bonuses, there is also a risk of clinics being penalized when patient outcomes are poorer than anticipated. These penalties may be up to 10% of practice revenue, but potential bonuses can add up to 50% and so the financial risks are intended to be much lower than the possible benefits.

The second version of PCF, High Need Populations, is specifically targeted at individuals who are classified as Seriously Ill Patients (SIP) and are in need of primary care. Because the potential costs and risks are greater, the capitation rates are higher for these individuals. However, to qualify to focus on SIP cases a practice must show that they have experience working with high risk individuals and have the relationships with community providers to help individual patients access all of the resources they need.

Clinicians and practices must meet a set of criteria to be eligible to participate in these payment models. First, they must live in one of the twenty-six test regions across the country. They must also have primary care services account for at least 70% of their billed revenue. Because data sharing is such a critical piece to expanding care and partnering with community providers to address diverse needs, eligible practices must also participate with their local Health Information Exchanges and be capable of sharing data via an Application Programming Interface (API). CMS will begin taking applications in the next few weeks so that the PCF payment models can begin testing in January 2020.

Direct Contracting—Population Based Payment

In additional to PCF, CMS introduced another series of payment models known as Direct Contracting (DC). These payment models have been developed, in part, using feedback from Accountable Care initiatives and are meant to be adopted by larger clinics and healthcare organizations that have the resources to absorb more risk, in exchange for potential rewards. DC payment models use a form of Population-Based Payments, meaning that participating providers, known as DC Entities (DCE), agree to accept responsibility for the health of a group of patients in exchange for a predetermined fee.

The first DC payment model, Professional PBP, is designed as a lower risk-sharing program. Primary care will be funded through a capitation model that is risk-adjusted and designed to encourage providers to enhance their primary care services. Under this model, the DCE is responsible for 50% of any losses along with being eligible for 50% of any savings.

The second DC payment model, Global PBP, is a much higher risk arrangement with participating organizations being responsible for 100% of losses, but with the chance of earning 100% of any savings. This model has two different payment options. The first is the Primary Care Capitation model that is also found under the Professional PBP option. The second, which is known as Total Care Capitation, will include payment and responsibility for all services and not just primary care.

A third option, Geographic PBP, is currently being developed and CMS is seeking public input. Under the potential Geographic PBP model, a participating DCE would assume responsibility for the total cost of care for all Medicare beneficiaries in a defined region.

While the adoption of each of these payment models is voluntary, CMS hopes to have 25% participation among providers who serve high numbers of Medicare beneficiaries. The expectation is that by adopting these models, primary care practices will have the financial incentive to develop innovative strategies to expand care and improve quality. These programs are also designed to reduce administrative burdens by simplifying payment and reporting models so that, as stated by Health and Human Services (HHS) Secretary Alex Azar, providers can “focus on the patients in front of them rather than the paperwork we send them.” Though their success remains to be seen through the upcoming testing cycle, the ultimate goal of these models is to enhance primary care in order to reduce the costs and negative outcomes associated with frequent hospitalizations and emergency room usage.

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