Federal health officials on Monday unveiled a new primary care experiment that seeks to pay doctors for providing stepped-up services that keep patients healthy and out of the hospital, an effort they say will transform basic medical services for tens of millions of American patients.

The initiative, called CMS Primary Cares, includes five new payment options for small and large providers, allowing them to take varying levels of financial responsibility for improving care and lowering costs. It broadly seeks to change how primary care is delivered in the U.S. by rewarding doctors for improving management of patients with chronic illnesses such as diabetes and high blood pressure, and averting expensive trips to the hospital.

Health and Human Services Secretary Alex Azar called the program “an historic turning point in American health care” that is projected to enroll a quarter or more of the 44 million Americans served by traditional Medicare.


“This initiative will radically elevate the importance of primary care in American medicine,” Azar said, adding that it will “move [the nation] toward a system where providers are paid for outcomes rather than procedures, and free up doctors to focus on the patients in front of them, rather than the paperwork we send them.”

The effort to implement value-based care is a popular talking point in American medicine, but has yet to be fully implemented. This new initiative is the most sweeping attempt to date to change primary care, an area that accounts for about 3 percent of costs but influences the trajectory of illnesses that account for a much greater percentage of expenses.


Whether this experiment will induce large numbers of providers to participate, or result in significant changes, remains to be seen. Participation is voluntary, so officials will have to convince large numbers of primary care physicians that it will benefit them. They projected Monday that a quarter of primary practices will join. The federal Centers for Medicare and Medicaid Services will allow primary care practices to apply for the new programs this summer, with the goal of implementing them in 2020.

The initiative may spur physicians to increase the use of technology, telehealth services, and remote patient monitoring to deliver stepped-up care to patients. It does not expressly say that Medicare will pay providers for responding to weekend emails or text messages from chronically ill patients, or for doing online or in-home visit to address emergent problems as soon as they arise. But those are the kinds of measures health officials want to encourage primary care doctors to take.

“Providers will have greater flexibility to spend these resources how they want, allowing them to come up with innovative ways to care for patients — and receive significant savings if they keep patients healthier than expected,” Azar said.

The need for reforming America’s system of paying for health care was reinforced by recent CMS projections that U.S. spending on medical services will grow 5.5 percent annually over the next eight years, reaching nearly $6 trillion by 2027. That would equate to 19.4 percent of the nation’s total economic output.

But transforming to a value-based system of care is especially difficult because it requires setting a clear and universal definition of what value is, and then figuring out how to measure it. The task also requires adjusting for variability among providers’ populations of patients — some doctors take care of sicker patients, overall, than others — as well as differences in the size of their practices and the underlying social and economic needs of their patients.

Past attempts to reform primary care payments have generated widespread complaints from physicians who argued that the government failed to recognize the cost of collecting and reporting a wide array of new data on patients, which made it all but impossible for smaller practices to participate. For example, participation in Comprehensive Primary Care Plus required many practices to update their electronic health systems, but did not provide them with adequate funding to do so.

The new payment programs unveiled Monday create two basic pathways called Primary Care First and Direct Contracting. Here’s how they work:

Primary Care First

The model, designed for small practices, will include a monthly per-patient payment to providers to cover the total cost of caring for patients, eliminating the need to manage fluctuations in revenue. Providers would be paid a bonus for keeping patients healthy, but could lose a certain share of their practice’s revenue if they get sicker. It also creates a payment option that authorizes higher payments for practices that specialize in care of high-need patients with chronic conditions.

The program will be tested for five years and is scheduled to begin in January 2020.

“Providers will be eligible for significant payments if their patients stay healthy and at home,” said Adam Boehler, director of Medicare’s innovation institute. He said the model creates a risk that participants could lose 10 percent of their revenue, but gain as much as 50 percent, with performance to be measured based on “risk adjusted hospitalizations.”

Boehler added that doctors who earn $200,000 today could earn up to $300,000, depending on their ability to keep patients healthier.

Direct Contracting

This model is designed for larger provider organizations and serves as a replacement for a program known as Next Generation ACO (Accountable Care Organization). It includes three payment options with varying levels of financial risk.

One option allows for a provider to share financial risk with the government by receiving a fixed monthly payment for total costs or a portion of anticipated primary care costs, while another option allows a provider to take full risk for managing the monthly payment. If the practice keeps patients healthy and out of the hospital, they profit. If not, they lose money and must cover the extra costs of caring for their patients.

“It’s 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,” Boehler said. “When you pay for quality outcomes, instead of volume, you transform a health care system that caters to special interests into a market-based system in which providers compete for the right to take care of each patient.”

A third option is designed to allow the provider to accept the full financial risk of caring for patients in a defined geographic region. The program is designed to focus on large organizations with experience in managing the needs of their local populations, as opposed to national providers that may deal with patients across many markets. Officials said they are still soliciting public feedback on details of the model and will seek to launch it in the middle of 2020.

  • Sure, let’s find more ways to kick the can down the road as costs continue rising, practitioners are reduced to cogs, and insurance industry dictates care. “Freedom!”

  • I find it insulting that people in our government would think that we physicians, who have spent our lives taking care of patients, would bring patients in for more care rather than better care. We got in to medicine to help people not get rich. There are always some bad apples in any profession but don’t put the majority of us in the same category as them.
    Also 80% of what is needed to keep a patient healthy must come from the patient not us. We can instruct them in what they need to do to get and stay healthy but if they don’t do it we can’t make them.
    I wonder how our government workers would like to be available 24 hours a day seven days a week for when their constituents need to talk to them. There is a reason that primary care is losing so many providers. Our government needs to wake up and look at the real problem otherwise they are going to have a major health care crisis.

  • This is a capitated plan under another newly invented name. More family practice providers will now leave than were leaving before. No provider can “control” all patients behaviors. My family member already works seven days a week due to all of the regulations and reports required. This is yet another cut in pay….again.

  • Family physicians were asked to visit with these top CMS officials a few months back, as arranged by AAFP. They reported back that they were encouraged about the changes to come from CMS as discussed with them, despite their previous skepticism. They are crushed by the result. Many cannot participate and there is no real improvement in revenue plus the risk as indicated. Their financial designs are tearing them and their practices apart. They are already picking up second jobs to prop up their practices so that they can continue to belong to a community – communities that they are driven away from by design.

    Even these supportive family physicians have changed their tune. We warned them over recent years and even when they posted about this prior to the meeting. We gave them our observations, those of us suffering design inequities for decades. We warned them of promises made but not kept. But they hoped and we all got burned again.

    They are upset with CMS and even more upset with the AAFP and other primary care proponents that continue to promote various innovations and performance based designs that hurt family physicians the most because 35 to 50% of the family physicians remaining in primary care are
    1. in places already paid the least for the basic services that they do (35% of FM) plus lowest collections
    2. in places with populations that inherently have lower outcomes and deficits of local workforce (35%)
    3. in places with least local support resources and the most complex populations across diseases, conditions, environments, and situations (50%)
    4. in places with concentrations of the worst public and private plans with practice finances made worse by digitalization, regulation, and innovation
    5. in small practices (50%) and practices long ignored by CMS (70%)

    MD DO NP and PA are departing primary care, even for the fewer that enter. Their replacements have less and less primary care experience due to massive expansions and due to departures from primary care. Their primary care experience is lost from this workforce.

    There are some who will see this as another physician complainer, unwilling to change. This is not about physician lack of acceptance. This is about abuse by design. This is about the financial design failing basic health access where most of the population resides, where 90% of local services are lowest paid generalist and general specialty services paid lower and penalized more by costs and fines and even lower revenue.

    This is about people who are increasingly frustrated with primary care because they feel that there is little time and less effort spent with them. Clearly time for interactions with patients, team members, and team member families has been disrupted – by the new designs.

    Why not talk about disruptions and disruptive change? The ones that matter most to the practice of primary care where needed. These are places with disruptions that have more impact. Mold in Annals of FM described these usual disruptions that are not compensated – losses of key personnel, changes of billing or location or ownership or EHR. Not compensated are the tens of thousands more per year per primary care physician deducted from practice budgets for HITECH, MACRA, and PCMH for those who can afford these. The corporations and consultants get their increasing cuts – leaving less for those who actually attempt to deliver the care.

    About 50% of Veterans live in these 2621 counties lowest in workforce with 40% of US. They have been promised access locally, but this has long been exposed as a promise with continued restrictions and a failure to fund this program. Another Broken Promises to Veterans would be a good program name. Broken Promises to Basic Health Care team members and to most Americans is the theme.

    Yes, there is lower penetration of innovation and disruption to these practices. This is inevitable because of the financial design made disruptive. Also the physicians are aging more rapidly in these places – because of fewer replacements. Also general surgeons, general ObGYN, general orthopedics and others are fading from the nation overall, with the oldest in these practices (AMA Masterfile 2013 version compared to 2005)

    The designs for payment are archaic and pay less for basic, cognitive, office services – about 70% of US services overall and 90% where shortages are found impacting most Americans.

    Not compensated is also $100,000 per lost primary care physician per year for turnover costs – made worse in amount and frequency by the financial design. NP and PA turnover costs are also increasing and they always had higher frequency of turnover. There is so much that is hidden, resulting in designs that offer little.

    The design is broken for all, not just physicians. It is mostly broken where most Americans most need care.

    So fix primary care and shortages by addressing the financial design. Overutilization is not a problem for most Americans missing access. Health policies based on overutilization are a nightmare – meaningless, abusive, and discriminatory not to mention lacking in scientific evidence basis for actual improvement.

    America is a place with excesses and deficits – too much for few and too little for most. Most have barriers to access shaping underutilization across their location, their insurance plan, and what the financial design shapes (shortages).

    The system that does not allow most Americans to access care as it should be accessed – is Bad Value. The system that makes the financial design worse and closes off their small hospitals, small ERs, and small practices – is discriminatory and results in lesser access and worsening outcomes across economics, jobs, and health outcomes.

    Bad value is also the one way to beat the system. The only primary care doctors that I have seen that are happy in recent years, are those that have been taken over. The larger practices and systems are very selective. They cherry pick those that are likely to be profitable – especially if they can benefit from more high cost services from referrals.

    If you happen to have a smaller practice that has OK finances, patient populations, plans, and outcomes – you will attractive for a merger or acquisition. This merger will beat the financial design. As part of the larger to largest practices or systems, you will get a 10 – 25% boost in revenue at no additional cost. you will see the same patients and this will result in the same outcomes – because outcomes are about patients, not primary care.

    This change to more paid for no change in outcomes is, of course, the opposite of value based. But the joy is not likely to last. Physicians and team members will initially be very happy as they can attract more and better team members and may enjoy a boost in salary and benefits. More to share the load is a reduction of the burden (the opposite of the current design). This is also the result of the better financial design. But then there will be a focus on profits, fewer team members, and lack of improvements in benefits and salary. You have given up independence and local influence.

    On the other hand, about 60 – 70% of primary care could be boosted by improved payments for no additional costs and burdens. There should be no extra coding, no software change, no rapid change, no retraining involved. The costs of making the change should be zero. This would result in more team members, better team members, more primary care delivery capacity.

    Instead we have designs where investments in team members are eaten up by corporations and consultants – and HHS continues to lead us to even more.

  • I wonder if this is anything like capitated payments for mental health care. In that system, we were given $125.00 per patient, and the sooner one could get the patient out of treatment, the more the provider could make. This was not about better care and “keeping patients healthy”. To the contrary, it was about putting providers in a no-win situation.

  • While this is important, all of these policies neglect the fact that 88% of what keeps us healthy is not medical care. If we really want to cut costs, we need to provide more funding for public health to address upstream issues that make us sick in the first place. The fact that we have a sick care system is why we rank so low in health status among high income countries.

    • Could not agree more! Proud that my company is forward thinking and promoting true HEALTH care to BE and STAY healthy.

  • Physicians are not insurers.

    It is an unbridgeable conflict of interest for physicians to be held at risk for the cost of medical care their patients require.

    Deeply unethical. Why in the world do our medical societies support this?

  • While at the surface, such an approach is meritorious, there arises a possible conflict of interest relative to the quality of care, when the physician is in essence paying for the care. While not infrequently highlighted, in the rush to install “value based” care models is the fact pcps are being paid to keep people out of the hospital–even if they actually should have been hospitalized. On the patient end of value based care–you get what you pay for—

  • My new Medicare advantage plan has found a way to cut overhead — it took 3+ months to send out info on covered primary care doctors, despite repeated calls. Yet it expected me to pay premiums the whole time!! I complained to my state’s COO supervising dept.

  • It sounds so good, payments tied to keeping patients healthy!!1, but the reality is that they DO NOT HAVE the metrics to judge this. Yes, you can measure common sense medicine for the masses, but the metrics should truly be reflective of the long term longevity and the ongoing cost of medical care for the patients in the practice.
    By this I mean, you can measure how often patients come in for checkups, but you can not measure the quality of the visit. You can measure vaccination rates, but you can not account for the patient that has been anemic for 2-3 years and goes without a “meaningful” workup for this.
    So lets all be happy the government is looking after our well being, while in effect the pencil pushers are just devising ways to justify their salaries.

    • I am totally up to support the intent to improve health care for the patient. How can PCP be penalized for hospitalization and uncontrolled diabetes while insurance is not covering for Insulin and other meds. Costs of these are so high that patient can not afford and they stop meds. In my experience even if care manager calls the patient weekly, some of the patients have other priorities and they do not have time to talk or follow through with recommendations like diet modification and exercise etc. Where is the patient accountability in this whole equation of improving health care and outcomes?

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