Putting Primary Care First?

Focus Area:
Primary Care Transformation


With the release of its new primary care payment models last month, the Center for Medicare and Medicaid Innovation (CMMI) continues to act on the abundant evidence showing that a strong health care delivery system must be built on high-performing primary care. Whether these models will prove successful will depend in part on how much assistance primary care physicians need in efforts to rebalance the delivery system.

The New Model

Packaged as part of a larger initiative (confusingly) named Primary Cares, the payment model called Primary Care First (PCF) consists of three components: a risk-adjusted per-person capitation payment, a flat fee of $50 per visit, and a performance incentive based on inpatient utilization rates. The incentive ranges from potential loss of up to 10% of payments to the practice to a gain of 50%. Incentive payouts or losses will be based on performance relative to a currently unnamed benchmark.

CMMI has calculated the revenues from the first two items to be equal to what practices are receiving now, so there is only a financial gain for practices if they save money on administration or collect incentive money. CMMI therefore appears to be targeting primary care practices that are already operating as patient-centered medical homes and want to see if they can make some extra money. Importantly, primary care practices in CMMI’s accountable care organization (ACO) models can also sign up for PCF, ensuring that resources and attention in those ACOs go to their primary care practices.

Paying for Capacity Versus Outcomes

PCF represents a clear departure from CMMI’s Comprehensive Primary Care Plus (CPC+) Track Two payment model, which offers increasingly larger per capita payments to primary care practices able to demonstrate sophisticated care management capacities for complex populations. This gets to perhaps the existential question in efforts to build a delivery system based on high-performing primary care: What is the right balance between upfront resources that allow practices to build capacity and payments based on the achievement of desirable outcomes?

That remains an ideological question. On one side are the believers in primary care, who point to the piddling amount paid to primary care in the United States. The U.S. devotes just 2% to 4% of Medicare spending to primary care, according to a newly published study, supported by the Milbank Memorial Fund, in JAMA Internal Medicine. This is far less than in other countries. Surely the U.S. health system can scrape together some money and devise standards primary care practices must meet to receive enhanced payments.

On the other side are the economists, who believe humans respond to the incentives provided. They have great confidence— borne from experience—in the ability of doctors to accept more money for as little change as possible. Seven years of patience with CPC Classic and CPC+ is enough, they maintain. Show us improvement on the outcomes that matter, and we will be happy to show you the money. For his part, CMMI Director Adam Boehler has been outspoken in his desire to reward outcomes rather than continually pay for potential capacity building.

The reality is at neither extreme but may be closer to the first. Some regional health plans—in their Medicare Advantage, commercial, and Medicaid populations—have been working for a long time now to “put primary care first.” To give practices a compelling reason to depart from business as usual, these plans have had to offer them a future distinct from absorption into larger hospital-driven delivery systems and help them learn how to deliver population-based care. As a result, the health plans have offered enhanced up-front payments and technical assistance to improve primary care, as well as performance-based payments at the back end.

CMMI can learn from these efforts. Medicare can also lead efforts to align payers, address freeloading self-insured employers, and develop Medicare benefits that encourage beneficiaries to select primary care practices. As K. John McConnell points out in a Milbank Quarterly opinion on Primary Care First, CMMI’s commitment to a well-resourced multi-payer initiative will be critical to its success. Medicare is big, but it is not the whole show. Other payers need to be enlisted.

Facing Resistance to Change

Another unavoidable factor is the economic and political power of hospitals and specialty care providers. Medicare and commercial ACO results show these entities have been more than content to participate in ACOs and simultaneously maximize procedure-driven revenues. CMMI’s new Direct Contracting Model, announced at the same time as Primary Care First, tries to learn from this experience by both accelerating the move to risk sharing and giving primary care an advantage in those arrangements.

However, not all primary care practices can or will be part of a larger risk-bearing entity. Creating stronger financial incentives for them is necessary but not sufficient. Moreover, for those primary care practices that become part of a bigger delivery system, the chances of hospitals and specialists voluntarily sharing their resources with primary care practices are rather remote. Delivery system rebalancing efforts will need more help from government. For this reason, six states have already passed laws or developed regulations to measure and increase the portion of health care expenses going to primary care.

Primary Care First should be seen in this light. The continued focus on comprehensive primary care is welcome and needed. But the forces of resistance are strong. And to put primary care first, it is likely necessary to pay primary care first.