A Comprehensive Strategy for Primary Care Payment Reform in Medicare

This article first appeared in The Evidence Base. It is co-authored with Farzad Mostashari and Mark McClellan.

Strengthening primary care has been a core goal of health care payment reform over the past several years. Primary care physicians are the cornerstone of the health care delivery, directing billions of dollars of follow-on care. With better support, the models presume, primary care doctors could guide their patients toward a better health, direct them to the right care when needed, and in so doing, bring down unnecessary medical costs. Moreover, especially if coupled with payment reforms that can support better coordination with specialist practices, these reforms can provide an alternative to health system employment and health care consolidation, thus buoying competition in local markets.

The most recent effort toward this goal lies at the heart of the recently announced Comprehensive Primary Care Plus (CPC+) program. This program doubles down on the kinds of “medical home” payment and delivery reforms that were the hallmarks of previous Medicare initiatives, most notably the Comprehensive Primary Care Initiative, which in its first two years showed significant improvements in some dimensions of quality – but so far has generally failed to show reductions in overall costs significant enough to offset the per-member per-month (PMPM) payments to primary care practices to support their reforms. While some medical home payment reforms have shown both savings and outcome improvements, overall results have been mixed particularly in Medicare, with the result that the CMS actuaries have not yet “certified” any such medical home model as leading to overall spending reductions.

Given the importance of primary care, this hypothesis is certainly worth evaluating carefully. But given the limited impacts demonstrated so far on specialty care utilization and spending, and the limited direct incentives in the model to coordinate efficiently with specialty care, this is not a robust enough evaluation strategy. If the CPCI and CPC+ models do not show significant benefits, primary care providers in Medicare may still end up without a viable, national path forward.

Given the importance of better evidence on effective methods of supporting primary care practice, there is at least one more model that should be evaluated now as a possible path for smaller, independent physician practices – what we call CPC+ACO. This approach is also needed as part of the recently unveiled MACRA regulations. The key distinction is that the CPC+ACO model focuses directly on the potential for a well-developed independent primary care practices to take on accountability for managing the total cost of care. Including this pathway would create a more comprehensive set of primary care reforms in the administration’s current efforts to support delivery-system reforms, and is a logical extension of the accountable care organizations (ACOs) in the MSSP.

To begin, let’s review the CPC+ program as proposed. It supports primary care physicians in improving access, care management and coordination, and patient engagement by paying physicians monthly management fees tiered to the patient’s level of need instead of the “one-size fits all” Chronic Care Management fee. The program offers a choice of two “tracks” reflecting different levels of investment and resulting capability expectations. Track 2 provides a higher tier of support, along with partial capitation of primary care payments to allow for more flexibility in how primary care is best delivered. The final component is a “performance-based payment” of $2 or $4 PMPM tied to utilization and quality measures. CMS plans to enroll up to 5,000 practices in the program in 20 geographies for a five-year evaluation period. The model does not require practices to manage overall costs, but the model will only be made permanent and expanded if it demonstrates improved outcomes and/or lower overall Medicare spending.

CPC+ is intended to provide a much more attractive path for smaller primary care practices that wish to progress towards alternative payment models while still remaining independent. The regular care management payments would defray the up-front cost barrier that many small independent primary care practices view as a major barrier to effectively manage population health and manage the total cost of care outside of their offices.

The current CPC+ program asks physicians to choose between participating in shared savings programs, like ACOs, and the CPC+ model. Consequently, the current plan for implementation may have an significant negative effects on leadership of accountable care organizations (ACOs) by primary care practices. Many small, independent primary care practices have formed physician-led ACOs in the Medicare Shared Savings Program (MSSP), working together while remaining independent. Some early evidence supports that these independent ACOs are among those most likely to be successful. Even though these practices are working to implement many of the the same types of panel management capabilities as required in CPC+ in order to improve outcomes and reduce overall spending, they get no assistance in meeting the cash flow required to provide necessary care management and panel management using traditional Medicare payments.

Consequently, by requiring physicians who want to transform their practice to choose CPC+ instead of an ACO to get up-front support in doing so – and on top of that by not requiring them to show impacts on population health outcomes and spending – this policy likely will slow the adoption of accountability for total cost of care by primary care providers. Accountability for population health and spending is not only something that primary care practices have shown they can do; it is integral to the Secretary’s goal of 50 percent of payments in such alternative payment models in Medicare by 2018. The CPC+ model will also create incentives for ACO primary care providers to exit the MSSP in order to participate in CPC+ regions where it is available. Since it will take some time to sort out the specific opportunities for primary care practices, the CPC+ program will also necessitate a slowdown in the decision making process for primary care providers and deter enrollment and growth of physician-led ACOs in 2017– not only in selected regions, but more broadly due to uncertainty about the regions and practices selected. Consequently, the CPC+ program as proposed would act as a strong headwind for physician practices interested in moving from “Category 2” fee-for-service payments with quality and value adjustments (including PCMH payments such as those in CPC+) to “Category 3” models in which payment is directly aligned with population health improvement goals.

Further, as noted above, the evidence is at best mixed that CPC+ will succeed as designed. While it provides more refined and in some ways greater support than CPC, the CPC+ practices will have no specific incentive to lower the total cost of care. If many practices do not actually execute CPC+ care in a manner that lowers total cost of care, thereby increasing health care costs for beneficiaries, the pilot may well end up raising total Medicare spending, which in turn would result in its termination – necessitating yet another pilot in a few years to help primary care physicians move to better care models. If private payors experience higher health care costs with this model, it is likely that their support would end before the end of the CPC+ program, and the result would undermine their desire to participate in future primary care initiatives.

All of these concerns could be addressed by including a CPC+ACO option for small physician practices in the CPC+ pilot. Including MSSP providers from the CPC+ would provide an opportunity to evaluate a key primary care payment reform strategy that has not yet been fully developed or tested: a combination of care management fees/capitated primary care with shared savings (instead of performance based payments). Private-sector payment reforms (e.g., the Massachusetts Blue Cross Alternative Quality Contract and others) suggest that this would be more successful at reducing spending while improving quality, increasing the odds that the CPC+ pilot will result in permanent options that work for a broader range of primary care provides.

The kind of fee restructuring included in CPC+ would be very helpful for physician-led ACOs. Many of these smaller physician groups would prefer to switch to a CPC+ fee model, in which the enhanced PMPM and patient support fees would give the practices the advance resources they need to implement reforms in their practices to achieve population-level health improvements and Medicare spending reductions. This would also create a better opportunity for synergies with private payers: many commercial health plans link participation in innovative direct payment programs with shared savings and even some shared-risk accountability for overall savings. Monthly care management fees in conjunction with shared savings and risk are becoming more common.

In light of this evidence, we believe that the CPC+ program would gain substantially more adoption, bring in more commercial partners, have a greater impact on lowering total cost of care, and accelerate the Administration’s policy of moving more physicians to value-based care if there was a CPC+ACO arm in the CPC+ pilot. This would allow physicians in existing Medicare shared savings programs to be eligible to participate in CPC+ pilots, and CPC+ practices to create and join new ACOs. These CPC+ACO practices could receive shared savings/ shared risk payments as part of an ACO, instead of performance-based payments, to prevent “double counting” in the performance-based payments.

Not testing primary care payment reform models in CPC+ in conjunction with shared savings payment reforms based on total cost of care is a clear and important gap in Medicare’s payment reform strategy. Especially given the strong commercial interest in CPC+ACO models, CMS needs to determine as soon as possible whether and how such payment reforms can be effectively combined to drive improvements in care; adding an ACO arm to this pilot would do that. Finally, CMS also should modify the timing of practice applications to CPC+ so that primary care practices do not have to choose between enrolling in shared savings programs and CPC+.

Of course, the CPC+ACO model may not work in Medicare despite the success and growing popularity with commercial payers. But given the importance of developing better evidence on compelling sustainable payment reform models for primary care, the goal should be to establish a a comprehensive pilot that pursues the full set of potential alternative primary care payment arrangements. To do that, the CPC+ pilot should include the evaluation of payment reforms that integrate reformed primary-care payments with population health accountability and shared savings opportunities. That way, we can increase the likelihood of finding models that work for primary care practices, get more primary care physicians on a sustainable path to higher-value care, and create a stronger health care system for all.

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