Primary Care Payment Reform: Go Hybrid

Multipayer Primary Care Network
Focus Area:
Primary Care Transformation
Delivery System Reform Population Health

Like one of those impressive but forlorn polar bears pacing back and forth on a shrinking ice floe, much of primary care practice seems trapped in a fee-for-service payment system that’s bobbing in the ever-expanding sea of our health care economy. And like the bear’s ice floe, primary care’s base may be slipping away as the portion of health care dollars going to primary care in the United States continues to decline.

In the warmer open waters surrounding primary care lurk potential threats: specialty care’s alluring higher reimbursements, rapacious health system consolidation, and the octopus of electronic health records documentation. The long-term environmental trends are also hostile; they emphasize health care as a transaction that rewards economic and political power and penalizes those without.

The cure for the bear’s woes is more room to roam. The new National Academy of Sciences, Engineering and Medicine (NASEM) report from its Committee on Implementing High-Quality Primary Care makes several clear recommendations about how to ensure primary care makes it to higher ground. The report declares that high-quality primary care is a common good because of its ability — unique among health care services — to improve population health and reduce health disparities. It calls for “paying for primary care teams to care for people, not doctors to deliver services,” and recommends four actions for realizing this objective, which are both modest and sweeping:

  1. Payers should evaluate and disseminate payment models based on their ability to promote the delivery of high-quality primary care, not short-term cost savings.
  2. Payers using fee-for-service models for primary care should shift toward hybrid reimbursement models, making them the default over time. For risk-bearing contracts, payers should ensure that sufficient resources and incentives flow to primary care.
  3. CMS should increase overall portion of health care spending for primary care by improving Medicare fee schedule and restoring the Relative Value Scale Update Committee (RUC) to its advisory nature.
  4. States should facilitate multipayer collaboration and increase the portion of health care spending for primary care.

The result — in the committee’s thinking — is a national primary care payment strategy led by Medicare and Medicaid that looks like this:

Source: National Academies of Sciences, Engineering, and Medicine 2021. Sponsor Briefing Presentation on Implementing High-Quality Primary Care: Rebuilding the Foundation of Health Care. April 2021.

That middle box — the one the committee wants to make the default for all primary care payment in the United States — looks like the Comprehensive Primary Care Plus (CPC+) model that the Center for Medicare and Medicaid Innovation (CMMI) has been running for four years — the one they just pulled the plug on with, allegedly, the largest losses of any CMMI payment model, according to a February 2021 New England Journal of Medicine article by former CMMI director Brad Smith.

Why would the committee make such an endorsement?

The Good, Not the Perfect

The main problem for primary care is a payment system that undervalues its work and encourages the wrong services. Thus, the NASEM committee’s top payment priority is to get as much of primary care off that shrinking piece of ice as quickly as possible. Carefully designed, elegant payment models, such as CMMI’s Primary Care First, are a worthy goal but too big a change for most of those pacing primary care clinicians. A hybrid payment system — with upfront dollars, which come with a patient empanelment requirement and encourage team-based care, and reduced fee-for-service payments — is a much easier step.

Play Fair

In the short run, primary care payment reform does not save money, and asking the providers who comprise 4% of the delivery system to bring the other 96% to heel is an unreasonable lift, the NASEM committee concluded. Just like better diagnostic technology or improved surgical procedures, improved primary care is a goal in itself. We can document and should insist upon and reimburse good primary care because of its unique capacity to improve the health of populations and reduce inequities. And payers should play fair by subjecting all health services to cost effectiveness tests, not just primary care.

Think Long

CPC+, the most widely tested hybrid primary care payment model, racked up the supposedly biggest losses of any CMMI payment model for two reasons. First, it is indeed big; CPC+ was the largest payment model that CMMI has tested. (On a practice basis, the uncompensated investments amount to only 1.5% to 2.8% of total per beneficiary expenses, according to the year three CPC+ evaluation report.) More importantly, the losses in the NEJM article were five-year projections, based on the first two years of performance. This expectation is likely inaccurate, given the findings of the evaluation of CPC Classic, which showed decreases in inpatient care and emergency room visits increasing with the duration of the model.

The one-to-three percent CPC+ investment in primary care is entirely appropriate in the long run. Medicare spends less than 5% on primary care currently, and the US lags Organization for Economic Co-operation and Development (OECD) countries in primary care investment, the committee found. State-level studies in Arkansas, Ohio, and Oregon indicate that in the 6-to-10-year timeframe, investments made through CPC-inspired multipayer primary care transformation can earn that money back.

If short-term budget considerations are such that additional monies are not available, subjecting all services in the health care economy to the standard of improving population health and equity would justify the redistribution necessary to accomplish this. That very reasoning drove state level actions in Oregon and Rhode Island to increase primary care spending rates without increasing overall spending.

A hybrid payment methodology alone, however, will not rebuild primary care as the foundation of the US health care system. Just as hybrid engines will ultimately give way to all-electric ones, a hybrid payment model for primary care is likely a transition to more sustainable, comprehensive population-based payments.

Even with that, the health care economy remains averse to what primary care does well: improve population health and reduce inequities. In the long run, our pacing trapped bear needs a change in the health care environment — one the NASEM committee found is based on a commitment to everybody in the United States having a usual source of care, training primary teams where people live and work, redesigning health information technology, and implementing ways to hold government and other actors accountable for this work.

These larger changes are matters of public awareness and commitment. For primary care, as for our polar bear, we must ensure they do not come too late. Meanwhile, it is time to go hybrid.