CMS Offers New Risk-Based Payment Methods to PCPs

Ken Terry

April 23, 2019

In an effort to bolster primary care, move away from fee for service, and reduce the growth in healthcare spending, the Centers for Medicare & Medicaid Services (CMS) has launched a program that will allow primary care physicians and their organizations to select from a menu of voluntary, 5-year payment options.

CMS officials and Alex Azar, secretary of the Department of Health and Human Services, made very dramatic pronouncements about the importance of the new Primary Cares program for fee-for-service Medicare at a press conference on Monday. "I believe we'll look back at what we're announcing today as an historic turning point in US healthcare," Azar said.

Despite the rhetoric, the demonstration basically builds on existing CMS programs, including Comprehensive Primary Care Plus (CPC+), the Medicare Shared Savings Program, and the NextGen Accountable Care Organization (ACO) program.

However, the government officials made it clear that they have very ambitious goals for the demonstration, which will find out whether primary care incentives can cut the total cost of care. CMS aims to enroll at least 25% of traditional Medicare beneficiaries and 25% of fee-for-service Medicare providers in Primary Cares, Azar said. Moreover, he noted, "This program is designed to encourage state Medicaid programs and commercial payers to adopt similar approaches."

Seema Verma, administrator of CMS, drew a direct contrast between her agency's approach and the Medicare-for-all proposals that are increasingly popular among some Democrats. "We need to change the trajectory of healthcare cost growth and make care more affordable, partly to ensure the solvency of Medicare and Medicaid," she said. "While some have called for a government takeover of our healthcare system, I believe in solutions founded in choice, competition, and innovation."

Two-Pronged Approach

The Primary Cares program, which is voluntary, is divided into two parts: Primary Care First, aimed at individual primary care practices, and Direct Contracting, designed for larger organizations that have had considerable managed care experience. Both sides of the program focus on getting providers to take financial responsibility for care.

Of the five payment options involved in Primary Cares, four will launch in January 2020; the fifth will launch in mid-2020. Applications for all options will be available this spring.

Primary Care First is based on "the underlying principles of the CPC+ model design," according to CMS. Primary Care First will focus on "advanced primary care practices ready to assume financial risk in exchange for reduced administrative burdens and performance-based payments."

What this means is that qualifying practices will receive primary care capitation plus a set fee for each patient visit. On the basis of the risk-adjusted total cost of care for the Medicare beneficiaries who have selected a particular doctor or midlevel practitioner in the program, that provider will receive a payment adjustment. If the provider's patients have good outcomes, the provider can get a bonus of up to 50% of revenue. If the patients don't do so well, the provider loses 10% of revenue. Participants will regularly receive CMS data to evaluate their own performance on utilization, patient experience, and quality measures.

Participants in Primary Care First will also be able to select the Seriously Ill Population (SIP) option. CMS will offer SIP patients who lack a primary care practitioner or care coordination SIP-enrolled providers, who may either concentrate on those patients or provide care for them as well as non-SIP Medicare patients.

Adam Boehler, director of the Center for Medicare & Medicaid Innovation (CMMI), which is running the program, said at the news conference that the Primary Cares demonstration is focused on complex, high-risk patients and that the goal is to "keep them healthy and at home."

Moreover, he said, performance measurement will be based on the risk-adjusted frequency of hospitalizations. It's clear that primary care providers who join the program will be judged not only on their own performance but also on how their decisions affect downstream care.

To qualify for Primary Care First, a primary care provider must

  • Be located in one of the 26 states selected for the demonstration, which include the 18 states where CPC+ participants reside;

  • Be certified in internal medicine, general medicine, geriatric medicine, family medicine, or hospice and palliative medicine;

  • Provide primary care services to a minimum of 125 attributed Medicare beneficiaries;

  • Practice in a group in which at least 70% of revenue is through primary care;

  • Have experience with value-based payment arrangements;

  • Use a 2015-edition certified electronic health record;

  • Attest to having certain advanced primary care capabilities.

Direct Contracting

The direct contracting branch of the program includes three options: full professional risk, global risk for a patient panel, and global risk for a geographically based patient population. CMS is requesting information from the public before it introduces the latter option.

The organizations expected to participate in this side of Primary Cares include NextGen ACOs and other organizations that hold Medicare Advantage risk contracts but have not previously participated in CMMI demonstrations. To qualify, they must provide services to at least 5000 Medicare patients.

Under the professional risk arrangement, participants will share in 50% of savings and losses, and primary care physicians will receive monthly capitation. Organizations that take on global population-based payment will get 100% of the savings and accept all of the losses. They can choose capitation payments just for their primary care doctors or for all services.

Patient-Driven Competition

Patients are expected to drive competition among practices and larger organizations involved in Primary Cares by selecting particular primary care providers. However, CMS has not said how it will inform Medicare beneficiaries about provider performance.

Asked at the news conference why primary care providers would want to participate in the new payment program, Boehler said that it would give providers more time with patients, simplify their lives by reducing billing requirements, and offer them a substantial financial upside. In Primary Care First, he noted, a primary care physician who now earns $200,000 a year could make as much as $300,000.

Russell Kohl, MD, a member of the board of directors of the American Academy of Family Physicians (AAFP), said at the meeting that the AAFP appreciates the fact that HHS has made primary care "a foundational element in the health system of the future.... We look forward to testing the new [payment] models."

It is unclear how many primary care doctors will sign up for Primary Care First, at least initially. Most physicians are reluctant to take financial risk, and relatively few doctors have enrolled in CMS's advanced alternative payment models, despite the 5% annual bonus they've been offered for doing so.

In addition, the physicians most likely to participate in Primary Care First are those currently enrolled in CPC+, who won't be allowed to switch to Primary Care First until 2021. Still, the promise of financial rewards may be sufficient to lure some other primary care doctors.

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