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HHS Announces 5 New Primary Care Payment Models to Encourage Value-Based Care

Allison Inserro
At the American Medical Association headquarters Monday, HHS Secretary Alex Azar and CMS Administrator Seema Verma announced 5 new Medicare primary care payment models designed to eventually incentivize the entire healthcare system to transition to value-based care, particulary for patients with chronic conditions. 
This story has been updated.

At the American Medical Association (AMA) headquarters Monday, HHS Secretary Alex Azar and CMS Administrator Seema Verma announced 5 new primary care payment models designed to incentivize the entire healthcare system to transition to value-based care, especially for patients with complex, chronic, and high-need conditions. 

The CMS Primary Cares Initiative is designed to transform primary care by paying providers for outcomes rather than services in Medicare fee for service (FFS), Azar said. The new models are voluntary, Verma added. The plan is supported by the AMA, the American Academy of Family Physicians (AFP), and the Physician-Focused Payment Model Technical Advisory Committee.

The models were developed by the Center for Medicare and Medicaid Innovation (CMMI), which is run by Adam Boehler. In some models, doctors would get paid a flat stream of revenue for keeping patients healthy and get a bonus for when they do well; in other models, there would be more risk, but they could also potentially receive more rewards, he said.

Officials expect 25% of providers to join 1 of the 5 models and 25% or more of beneficiaries to use providers participating in the new models. Beneficiaries would still be able to choose their own providers.

“This initiative is specifically designed to encourage state Medicaid programs and commercial payers to adopt similar approaches,” said Azar, who called it “the pivotal, hockey stick moment in paying for value in American healthcare.”

Administered through CMMI, the CMS Primary Cares Initiative will provide primary care practices and other providers with 5 payment model options under 2 paths: Primary Care First (PCF), focused on individual providers, and Direct Contracting (DC). DC, which is similar to accountable care organizations, Medicare Advantage plans, and Medicaid managed care organizations, would give organizations full responsibility for the cost and care for their patients.

The 5 payment model options are: 
  • PCF
  • PCF—High-Need Populations
  • DC—Global
  • DC—Professional
  • DC—Geographic
Both models under PCF incentivize providers to reduce hospital admissions and total cost of care. PCF will be tested for 5 years and is scheduled to begin in January 2020. A second application round is also planned for participants starting in January 2021. The models seek to improve patients’ experiences of care and outcome-based clinical quality measures, such as managing diabetes, controlling high blood pressure, and screening for colorectal cancer.

PCF is aimed at smaller primary care practices, who will be paid a fixed amount for each patient. Practices will get a bonus for keeping patients out of the hospital and will bear the cost for extra spending incurred by admissions, up to a certain share of their practices’ revenue.

Under PCF, Boehler said there is a downside risk of 10% and a potential upside risk of 50%, based on the ability of providers “to keep patients healthy and at home.” He claimed that doctors who earn $200,000 today could earn $300,000 under the new system.

He said a request for applications will be released within the next month or so.

The DC payment model options focus on an aligned population of Medicare FFS beneficiaries. Boehler said the first option, called DC High-Need Populations, is based on past efforts, such as Next Generation ACOs. In this model, organizations would share 50% of both the gains and the losses of total cost of care. This would also include predictable monthly payments for enhanced primary care services.

Under the Global option, providers would have 100% responsibility for savings and losses.

Azar said the models were created with stakeholder input after analyzing many submissions, including from the AFP, the American Academy of Hospice and Palliative Medicine, and the Coalition to Transform Advanced Care.

In her remarks, Verma referenced rising healthcare costs as well as the Social Security Board of Trustees’ annual report on the long-term financial status of the Social Security Trust Funds. There are different components to the annual government report, and on Monday, the trustees reported that the Hospital Insurance (HI) Trust Fund portion—otherwise known as Medicare Part A—will be depleted in 2026, the same year projected in last year’s report. Revenues will be enough to pay 89% of HI costs.

HI pays for inpatient hospital services, skilled nursing facility and home health services following hospital stays, and hospice care. Part B and Part D will remain adequately financed into the indefinite future because by statute, they must be financed each year from general revenues and beneficiary premiums each year, the report said.

CMS also said the models could create new coordinated care opportunities for beneficiaries who are dually eligible for Medicare and Medicaid, specifically those in Medicaid managed care and Medicare FFS.

Through the PCF payment model options, high-need patients with serious illness who do not have a primary care practitioner or care coordination and indicate an interest in receiving care from a practice participating in the model will be assigned to a provider.

An estimated 117 million adults in the Medicare program have 1 or more chronic health conditions, and 1 in 4 adults have 2 or more chronic health conditions.

In addition, CMS is seeking public comment on 1 DC payment model option with an expected performance period launch in January 2021. The Geographic Population-Based option is aimed at organizations willing to assume responsibility for the total cost of care and health needs of a population in a defined target region.

One of the stakeholders, the AMA, praised the program.

“Providing adequate financial support for high quality primary care must be an essential element of any strategy to improve the quality and affordability of our country’s healthcare system,” said Gerald E. Harmon, MD, immediate past chair of the AMA Board of Trustees. “Many primary care physicians have been struggling to deliver the care their patients need and to financially sustain their practices under current Medicare payments.  The new primary care payment models announced today will provide practices with more resources and more flexibility to deliver the highest-quality care to their patients.”

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