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Payment Reform for Primary Care: Where does the CAFP’s Primary Care Investment Strategy fit in?

By Stephanie Gold, MD

The Primary Care Investment Strategy

The CAFP is pursuing a Primary Care Investment Strategy (PCIS) with the aims of:

1) accurately measuring how much is being spent on primary care in Colorado

2) increasing spending on primary care to a target of 15% of total health care spending

3) requiring increasing amounts of primary care spending to be non-fee-for-service

The goal of this strategy is to better support primary care practices with adequate resources, building on the evidence from effective payment models as well as successful work in other states (see the blogs from Drs. Carr and Morris).

The Current State of Payment Reform for Primary Care

While there has been much national attention and work on payment reform, primary care physicians are not yet feeling a sense of relief from the burdens of the system. Why? Despite these national efforts, the actual amount of payments going to primary care is insufficient, and most payments are still retroactive reimbursements, largely in a fee-for-service (FFS) model.

The FFS system, by providing reimbursements linked to specific services, incentivizes seeing as many patients as possible – leading to the feeling of being on a hamster wheel in primary care. Newer payment models for primary care are emerging, such as pay-for-performance, shared shavings, blended FFS and capitation, direct primary care, and comprehensive primary care (risk-adjusted primary care capitation with pay-for-performance). For a description of these models and a detailed review of the evidence, see http://farleyhealthpolicycenter.org/starfieldbibs/. These models are intended to link care to value rather than volume, and while there is not a clear answer for what model is best for primary care, the evidence provides helpful lessons about what works.

What lessons can we take away from the evidence on payment models?

  1. More resources for primary care are needed

Practice transformation for advanced primary care models like the Patient-Centered Medical Home (PCMH) requires investment to support adequate resources for team-based care, population health management, and non-face-to-face services. Studies have shown it costs around $4-16 PMPM to support the PCMH, and practices aren’t getting that money through FFS reimbursements – less than a third of PCMH activities have the ability to generate additional FFS revenue.[1]

  1. Investments need to be provided to practices up-front

Possibly the most important lesson for primary care from the payment model evidence is that money is able to be used flexibly to better meet patient needs when it is provided up-front and not linked to the delivery of specific services. If a practice receives money up-front to take care of patients, they can direct how that money is used, including in ways not recognized by FFS.

  1. Multipayer collaboration is key

Payment reform efforts have also been more effective when they are uniform across payers. If you have 10 payers covering your practice’s patient panel, if only one of them is providing an incentive do deliver care differently, it may not be enough of an investment to allow for changes.

Making the promise of payment reform a reality for primary care

The Primary Care Investment Strategy approach is based in these lessons from payment reform: provide greater, up-front investment in primary care, and make that investment uniform to cover all patients. Up-front investment, provided through non-FFS reimbursements, allows for the flexibility primary care physicians need in patient care. Increasing the percent spend on primary care ensures that investment is adequate.

More primary care can improve outcomes and lower costs – it’s time that the health care system reflects this with appropriate support.

For more information on the PCIS, contact Ryan Biehle at ryan@coloradoafp.org.

[1] Magill MK, Ehrenberger D, Scammon DL, et al. The cost of sustaining a Patient-Centered Medical Home: Experience from 2 states. Ann Fam Med. 2015;13(5): 429-435.