Patients Need Access to Affordable Primary Care. Are Value-Based Payments the Answer?

Some health policy analysts believe having better access to primary care providers would make us healthier and could make individual services more affordable. They say it would not only help us to keep better tabs on our personal health, but could also save us from quite a few costly hospital visits in the future.

It sounds simple, but others predict such a system would not necessarily cut aggregate spending or total hospital visits. Either way, designing reforms to bring us better access to primary care is harder than it seems.

Primary care physicians are on the front lines of patient interaction with the health care system. They want to provide the best care possible for their patients. But they have limits: their time is already stretched among current patient duties and billing obligations.

Part of the problem is how doctors are often paid. Right now, we largely have a one-size-fits-all model centered on “fee-for-service.” This means that physicians are compensated based on the quantity of care and not the quality of outcomes. In some cases, the comprehensive care a patient needs may simply not make financial sense for doctors or patients to take on, so something that could have been manageable can turn into an expensive hospital stay, adding to the overall cost burden.

Enter a new Centers for Medicare and Medicaid Services (CMS) proposal: value-based care.

What is CMS Primary Cares?

The value-based care proposal is called “CMS Primary Cares.” It is a voluntary program, designed by the CMS Innovation Center, that looks to provide new payment options for providers who accept Medicare patients. The five-year program will launch in 26 states next year.

CMS claims the program will “reward value and quality by offering an innovative payment structure to support delivery of advanced primary care.” The goal is for primary care physicians who participate to be paid on the quality of patient outcomes rather than the quantity of service. (This is much harder than it sounds.) Doctors who use innovative tools to focus on individual patient needs and keep them healthy will be rewarded for those outcomes.

Under the CMS plan, there are five options.

Two of them are geared towards smaller practices, under the “Primary Care First” umbrella. One is geared towards providers who treat the general population. The second is for physicians who work with “high needs populations”—people who are seriously ill or have chronic conditions. This is intended to account for the fact that it can be harder to make people healthy than it is to keep them healthy, although designing the right mechanism to achieve this outcome is no small task.

The final three plans are for larger medical practices and are called “Direct Contracting” payment model options. A fact sheet explains that these plans are “aimed at reducing expenditures and preserving or enhancing quality of care for beneficiaries in Medicare fee-for-service (FFS).” It replaces the “Next Generation ACO” plan and provides three different payment options (respectively called the professional, global, and geographic plans) that either allows providers to share financial risk with the government, keeps all risk (and therefore reward) within a practice, or allows providers to assume financial risk and reward for all patients within a region.

Each of these payment options structures risk and reward in a particular way. But in all cases, the goal is to “improve quality, improve patient experience of care, and reduce expenditures” by the mechanism of “increasing patient access to advanced primary care services.”

What Do Supporters Say?

Healthcare is not just diagnosis and treatment. In addition to genetics, personal history and behavior, environment, and socioeconomic circumstances, a patient’s health will be influenced by things like their doctor-patient relationship, communication among providers, and the comprehensiveness of treatment plans.

Supporters say that too many medical procedures are reimbursed on a fee-for-service basis, so providers get paid based on the number of procedures and tests that are done rather than the overall health outcome. As such, critics argue there can be more of an incentive to maximize quantity of services than there is to actually improve a patient’s health.

Value-based care attempts to align financial incentives with improving health. Different states have experimented with value-based care programs, and the federal government issued goals to transition to value-based compensation in recent years.

Advocates for plans like CMS Primary Cares believe it better correlates payment with health outcomes and can lead to lower costs, greater patient and doctor satisfaction, and less administrative burden. It makes sense that CMS would look to reforms that could get health costs under control, as our aging population will need more care.

What Might Go Wrong?

Value-based payment, as envisioned in the CMS plans, relies heavily on accurate quality measurements to ensure that patients receive the treatment they need. However, those quality metrics are notoriously difficult to design, and patients may be harmed if performance indicators crucial to their health are not incorporated in the metrics.

CMS administrator Seema Verma agrees, and she recently announced a project to upgrade health data collection and sharing processes. These efforts might take some time to bear fruit, if they do at all, and in the meantime value-based payments will continue to be based on less reliable proxies.

Previous CMS initiatives that sought to provide Medicare patients with enhanced primary care have, in the aggregate, failed to increase primary care physician wages and lower overall spending. It will take time until physicians that enroll in one of the new options manage to deliver the expected cost savings and quality improvements.

Secretary Azar expects as many as 25 percent of primary care physicians that currently cater to the Medicare population to apply under the new system, but enrollment may not meet expectations. The Direct Contracting option comes with asymmetric risks—ranging from a 10 percent loss in revenue to an increase of 50 percent—which could motivate physicians to enroll. However, the physicians targeted by CMS Primary Cares are in charge of high-need patients, which may make it difficult for them to meet the performance criteria imposed by CMS—especially if performance measurements involve additional administrative tasks that further constrain doctors.

More Than a Payments Problem

Overreliance upon fee-for-service has long been considered an outdated model that leads to overutilization and cost increases. Some hope or believe an outcome-based payment system could be a great improvement.

But as Mercatus senior research fellow Robert Graboyes pointed out to us, transitioning all healthcare payments to another expert-chosen model could just create more problems in the opposite direction. Sometimes, fee-for-service might be appropriate. Other times, flat fees make more sense. Providers may know best about their patient’s risk and variability—or they may need the ability to experiment with payment methodologies to discern those factors. Policy should allow them more deference.

If the objective is to make primary care services more readily available, we should ask ourselves whether our current system has the capacity to accommodate a shift from hospital-delivered care to primary care services.

Primary care doctors are already unable to meet demand for their services, and medical school tuition makes high-paying specialty medicine careers more appealing to students. Add burdensome electronic health records (EHR) requirements and restricted scope of practice for non-physician professionals, and it becomes obvious that much more needs to happen before patients enjoy the levels of primary care the HHS wants them to.

Beyond new payment schemes, we need reforms on the delivery side that can remove barriers to access and lower prices in a reliable and safe way. In our next piece, we’ll explain exactly what those might look like.

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