New HHS Models Seek to Shift Primary Care to Value-Based Payments

April 22, 2019
Two-pronged Primary Cares Initiative has risk models for large and small practices

The U.S. Department of Health and Human Services announced on April 22 a new set of voluntary value-based payment models for primary care physicians under the label “Primary Cares.” Adam Boehler, director of the CMS Innovation Center, called it “a clear sign that we are changing the status quo. These are sweeping models that will shift one-quarter of this country to outcomes-based payment. It is time to dismantle the old, broken fee-for-service system that we have today and replace with one that pays for outcomes and quality.”

Speaking at a press conference at the American Medical Association offices in Washington, D.C., Boehler stressed that a strong focus on primary care is essential to an effective healthcare system broadly. “Despite being only 2 to 3 percent of spend, primary care providers have an enormous influence over downstream costs,” he explained. “Our current payment systems do not recognize the central role primary care providers play. We are going to change that today.”

 The newly announced effort has two prongs: The Primary Care First Initiative creates an opportunity for providers to leave behind fee for service and be paid for keeping their patients healthy and at home. The second is Direct Contracting, which allows sophisticated organizations to take full accountability for their patients at a local level.

 Both paths are voluntary and they emphasize a focus on complex, high-needs patients, Boehler said. He then described the details and timelines.

 The Primary Care First Initiative is made up of two model options. Both options allow physicians to move away from fee for service and potentially eliminate their revenue cycle operations, he said. “CMS will make monthly population-based payments along with a simple, flat primary care visit each time a provider sees a patient. Providers will be eligible for significant payments if their patients stay healthy and at home. There is downside risk of 10 percent, which is about the equivalent of the revenue cycle cost today, he noted. “There is an asymmetrically upside potential of 50 percent. The performance will be measured on risk-adjusted hospitalizations. For example, doctors who earn $200,000 today could earn up to $300,000 if patients if their patients stay healthy at home,” Boehler added. This model is scheduled to be in January 2020 and we expect to release a request for applications in the next few months.

 Direct Contracting creates three payment options for providers to take risks and earn rewards based on quality outcomes. “This model improves on prior efforts, including Next Generation ACOs, and they are tailored for larger organizations that have experience taking accountability,” Boehler said.

 The first option is called the Professional option: This offers providers the opportunity to share in 50 percent of the savings and the losses on risk-adjusted total cost of care, Boehler said. Providers in this option will receive predictable monthly payments for enhanced primary care services. The second option is the Global option: “This will offer providers the opportunity to take full 100 percent accountability for savings and losses,” he added. “Providers will also receive predictable monthly payments for primary care services or monthly payment for all healthcare services if they chose to pay claims.”

 CMS is seeking input on a third option, called the Geographic option, which is designed similarly to the Global option, but participants will be able to assume responsibility for total cost of care for all Medicare beneficiaries in a targeted geographic region. “We are seeking public input to further refine the design of this model,” Boehler said. “This model is very important to our focus on empowering local communities to take care of patients.” Both the Global and Professional options are expected to begin in January 2020, with requests for applications in June 2019. CMS expects to launch the Geographic option in mid-2020, with comments from stakeholders helping to finalize the design.

Both Primary Care First and Direct Contracting focus on complex, chronic and seriously ill patients. They support approaches such as home-based models dedicated to serving this patient set. He said the efforts draw from hot-spotting models and from proposals form the Physician-Focused Payment Model Technical Advisory Committee (PTAC), as well as the American Academy of Hospice and Palliative Medicine, the Coalition to Transform Advanced Care, and the American Academy of Family Physicians.

 “It is time that we empower providers so that they can focus on patients,” Boehler said. “This is why providers went to medical school in the first place. It is time that we put patients in the driver’s seat, so that providers can compete for their loyalty through a combination of service, price and overall experience. When you pay for quality outcomes instead of volume, you transform a healthcare system that caters to special interests into a market-based system in which providers compete for the right to take care of each patient. The patient is the empowered consumer.”

 HHS Secretary Alex Azar led off the press conference, calling it a historic moment. “I believe we will look back at what we are announcing today as a historic turning point in American healthcare. Today’s announcement is a culmination of years of work by many at HHS and throughout American healthcare,” he said. “When I announced last year that moving to a value-based healthcare system would be one of my priorities as secretary, I was well aware that I was the fourth HHS secretary to take this issue seriously dating back through secretaries Burwell, Sebelius, to Secretary Leavitt, who first laid out the idea of paying for value rather than procedures. It is only thanks to the efforts of my predecessors that we get to take this major step forward.”