Industry Voices—A look at how providers could fare in CMS' new primary care payment models

The Center for Medicare & Medicaid Innovation strikes again with an innovative program designed to reduce Medicare program expenditures while improving the quality of care. 

The Centers for Medicare & Medicaid Services innovation center announced its latest initiative, called Primary Cares, that is set to begin in January 2020. The Primary Cares Initiative accommodates primary care practices to assume financial risk in exchange for performance-based payments with two main tracks: Primary Care First and Direct Contracting, via five payment model options focused on care for chronically and seriously ill patients.

Primary Care First

The Primary Care First tracks will test whether sharing financial risk and tying provider payments to quality performance will reduce total Medicare spending, improve care quality, and advance patient outcomes. There are two payment models: PCF and PCF-High Need Populations (which receive a higher payment rate and have additional network requirements).

The PCF tracks are based on a per-patient monthly payment that includes risk share and up to 50% surplus share.  Any performance-based payment is based on meeting baseline quality standards. Any primary care practice that provides primary care health services to a minimum of 125 attributed Medicare beneficiaries at a single location can participate.

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However, participation is limited to practices that focus predominantly on primary care, have experience with value-based payment and shared savings or risk contracting, which are located in one of the 27 selected PCF regions. Additional technological and advanced primary care delivery capabilities are required. This model creates opportunities for primary care practices who have demonstrated performance under a Medicare accountable care organization (ACO) model and moves the needle toward the development of infrastructure and advancing providers' capabilities to successfully accept and manage financial risk.

The Primary Care First tracks also offer more options for providers who seek to take advantage of non-traditional FFS payment models. 

For practices already participating in the existing Comprehensive Primary Care Plus (CPC+) model design, this may be a good alternative that maintains the same patient-doctor centric principles. Specifically, the PCF model is best suited for providers who care for seriously ill beneficiaries, including those in hospice or palliative care. The model will reduce administrative burden, increase financial payments if providers can improve quality and reduce total costs of care, with limited downside risk. 

Direct Contracting

The voluntary direct contracting payment model options are attractive to large provider organizations with advanced, risk-based contract experience, such as sophisticated risk contracting Medicare Advantage provider groups, managed service organizations (MSOs) and ACOs. The payment options are geared toward reducing costs and promoting quality of care for Medicare fee-for-service beneficiaries.

Particularly, the model offers primary care providers a risk-adjusted per beneficiary per month payment (referred to as a population-based payment by CMS). The payment ranges from a portion of expected primary care costs to the total cost of care with global risk responsibility. Two model options have been announced, and a third one is proposed with a request for public comments: professional PBP, global PBP and the potential geographic PBP.

As an analogous model to Medicare Advantage without the health plan intermediary, the PBP model provides large sophisticated groups with the ability to directly contract with CMS. However, this is not without complexity and risk. The Pioneer ACO model showed us the challenges associated with government data lags. Even though the Medicare Advantage plans have delegated some of the risk functions, historically, the health plans have maintained the majority of the necessary infrastructure for administering global risk.

Moving forward, provider groups need to make significant investments to create similar health plan capabilities within their organizations. Furthermore, there are lingering questions on how to assign members and perform referral management—necessary tools for assuming risk. CMS will maintain its goal of engaging and empowering beneficiaries through an “enhanced voluntary alignment,” but it is unclear whether this enhanced alignment model between the beneficiary and the PCP will be strong enough to mitigate unnecessary costs. Because beneficiary enrollment in these programs and participation in enhanced benefits is voluntary, providers will likely struggle with managing their PBP beneficiaries who retain all rights of traditional Medicare. Assuming it is permitted under the model, it will be important to build a network structure that allows for thoughtful care coordination with an engaged preferred network. 

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This model also requires providers to make significant investments in financial analytics and other traditional payer activities. These competencies take several years to build and require the right people, processes, and technology. For example, new Medicare Advantage plans that have the benefit of member assignment and health management organization networks still start with medical loss ratios above 85%. Therefore, these types of models will be best suited for highly sophisticated groups with significant market share. Alternatively, innovative primary care groups who already take on significant risk managing complex Medicare populations are well suited to participate in DC models.

This program is the first official structure where primary care physicians will be permitted to assume risk with a traditional Medicare patient’s healthcare and without an ACO structure. This has significant long-term implications, including reducing more sophisticated providers’ reliance on the health plan to participate in managing population health. It may also serve as a catalyst to encourage providers to participate in Direct Contracting as a way of moving more traditional fee-for-service members into a risk-based, value-based incentive payment model.

However, there remain significant questions about how the model will actually reduce administrative burden and generate better health for beneficiaries. This is especially true when high-performing providers, who already participate in Medicare Advantage, will likely see expanding MA panel density as a more desirable and less risky strategy. There are also questions as to how quickly CMS can share the necessary data with providers participating in DC; often this level of data sharing is highly integrated within the plan and between the plan and high-performing providers accepting risk. 

Finally, it is unknown how larger markets with multiple DC providers will create network adequacy, engage members in referrals and actually reduce administrative burden in the absence of these traditional health plan functions. If executed properly with providers, CMS' DC models are a promising incentive to providers in their journey to better manage the health of populations.

Early projections related to eligible primary care providers who qualify for these models vary, but some suggest 25% of primary care providers will elect to participate. Given the depth and breadth of capabilities required as well as expertise within a provider organization to succeed in risk-based models, there are likely fewer than 25% of providers who qualify and can succeed. 

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While it may be too early to identify the winner in the Primary Cares initiative, it clearly creates opportunities to strengthen primary care services while mitigating associated burdens and risks. Looking to the future, these DC models may just be the right catalyst for national innovation in two significant ways: a new path to move to more full-risk models and a rapid spread of high performing super-MSOs, with a broad geographic scope and strong infrastructure to succeed in DC on behalf of providers. 

Kathleen Premo is a member of the Health Care and Life Sciences practice at Epstein Becker Green. Creagh Milford is a physician executive who serves as the Chief Medical Officer for Healthcare Highways, a healthcare innovation company based in Dallas, Texas. Epstein Becker Green 2019 Summer Associates Sanchita Bose and Lauren Petrin assisted in writing this article.