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Navigating Payment Reform

Changing How We Pay for Primary Care

Article · November 20, 2017

Changing how America pays for primary care is a crucial key to unlocking transformation across the entire health care delivery system. A new white paper from the Health Care Payment Learning & Action Network (LAN) outlines a value-driven payment approach for primary care.

Primary care accounts for more than 55% of the 1 billion physician office visits each year in the United States, and decisions made by primary care professionals influence up to 90% of total health care costs, through referrals to other doctors, clinical testing and procedures, and patient hospitalizations. Yet direct spending on primary care comprises only a tiny portion of national health care spending.

Because primary care is often the first point of contact for patients needing treatment and diagnoses for common illnesses and conditions, it serves as an entry point to the health care system. Primary care is the foundation necessary to address social determinants of health, which account for so much of health outcomes. With health care delivery, total costs, and patient outcomes tied so closely to the actions of primary care professionals, commensurate rewards will contribute to the health of our country.

The Dual Role of Primary Care

The ideal role of primary care in the health care system is twofold:

  • Establish trusting partnerships between patients and clinicians that enable the delivery of high- quality, patient- and family-centered care that is readily accessible.
  • Serve as effective stewards of health care resources through planned care, population health management, and care coordination with specialty and other services (e.g., social services).

At present, primary care in the United States faces significant challenges in fulfilling its dual role. These challenges are in part attributable to payment policies that encourage fragmented, uncoordinated care and barriers to access driven by administrative constraints and the misplaced incentives of pure fee-for-service payment. Primary care teams also face overwhelming administrative requirements, which consume approximately one-sixth of physicians’ work hours, deprive primary care teams of time with patients, and contribute to professional burnout.

Principles and Recommendations for Value-Driven Payment in Primary Care

Consistent with the overarching mission and vision of the LAN, the major goal of its Primary Care Payment Model (PCPM) Work Group is to put forward a payment model — established through multi-stakeholder deliberations — that public and private payers (i.e., Medicare, Medicaid, and commercial plans) can use to align payments to primary care practices. We seek to inform health care stakeholders about how value-based arrangements in PCPMs can drive delivery system transformations that strengthen primary care’s capacity to achieve better care, smarter spending, and healthier people, and to offer recommendations for structuring these types of arrangements.

In our recently released white paper on PCPMs, the Work Group sets out 7 principles and 19 recommendations for implementing alternative payment models (APMs) in primary care. The principles outline general characteristics of transformative primary care delivery and payment that PCPMs must promote to achieve significant improvements in care, while the recommendations identify specific payment mechanisms that drive delivery changes in a way that advances the principles.

By providing the right incentives and support, we can help primary care lead the way on health care transformation. Key principles and recommendations for transforming primary care through PCPMs include:

  • The preferred form of payment for primary care employs risk-adjusted, comprehensive prospective payment, including some retrospective reconciliation, based on the patients empaneled or attributed to the primary care practice.
  • PCPMs should enhance primary care teams’ collaboration and coordination with specialists, hospitals, emergency departments, and other providers to deliver timely, appropriate, and efficient care. Similarly, payers and primary care teams will need to partner to ensure the success of PCPMs.
  • To effectively incentivize practice transformation, PCPMs should apply across multiple payers and cover the majority of a practice’s patient population.
  • Practices should demonstrate success on metrics of patient access, quality of care, comprehensiveness of services, responsiveness to patients, and effective stewardship of resources, as stipulated in the model design.

Under alternative payment models, primary care practitioners take a front and center role as stewards of the effective and efficient delivery of services. Aligning payments from all payers will create a more stable and predictable environment for primary care practices. This will allow them to make sounder investments in infrastructure and workflows that improve primary care delivery. The new primary care payment models allow for a comprehensive and team-based approach that can be tailored to fit a variety of practice organizations and structures, all contributing to better health and outcomes while shepherding limited financial resources wisely.

This post originally appeared in NEJM Catalyst on March 28, 2017.

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