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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.

  • What you are seeing in the comments are so much more accurate than the promotions in the media, by associations and government, and articles in the “literature.” It is folly to attempt to measure complex human beings and the even more complex relationships between human being patients and their human being health care delivery team members. I have tried to work with health journalists in this area for the past few years, but there is little headway. Many of the releases about such articles are worse than the articles – as is also demonstrated in the literature.

    As noted, social and other associations (income, job, education, housing, relationships, situations, conditions) shape the person from birth. The persons are influenced by previous generations. This is particularly true in the United States with little economic mobility. It may be most true where populations are most behind.

    At best, clinical interventions explain about 20 – 30% for about 4 to 9 per cent of the variance explained. This is what the science demonstrates using regressions. In more detailed analysis, the clinical factors completely go away because they explain so little.

    But it is worse than just costs, meaningless burdens for providers, chaotic change, and profits for consultants and corporations. The new performance based designs discriminate against the populations and providers that already have the greatest disparities and challenges.

    Hong in JAMA demonstrated the discrimination in payment via pay for performance directed against providers caring for populations with inherently poor outcomes. They were also unable to consistently come up with a design to compensate for these penalties.

    My own research demonstrated readmission penalty levels at the highest levels (1 – 2% penalty year 2) for 14% of hospitals where workforce is lowest and populations have the worst outcomes (diabetes, premature death, smoking, COPD) as compared to 9% of rural hospitals, 5% for average overall, and 3% for urban hospitals. These are hospitals already paid least, getting paid less, having the most challenges, facing the most rapid cost increases, and getting the least support. There are numerous modes of discrimination present and all getting worse by design.

    Time after time you see 2 things in research about outcomes.
    1. Improvements are often about increases in access to care (homebound elderly, those near death, perhaps the only studies that demonstrate improvements in cost, quality, and access plus other benefits)
    2. Perceived improvements boil down to studies that compare a population that has better social and other factors versus one that does not such as urban vs rural hospitals, higher vs lower volume hospital, and female vs male physicians as their distributions, volumes and other factors are different). BMJ publishes some of these and acknowledges that there are controversies that are worth publishing for discussion – except that they are in error about medical error.

    You also see studies that demonstrate no difference as in NP vs MD comparisons – which you should expect when the same or similar populations are compared. This was also a bad study due to data collected for other purposes, old data, and the NP clinic changed locations during the study.

    This is also the problem with resident work hours restrictions. These restrictions needed to be done because residents were being abused as cheap labor. Residents are still being abused. Studies demonstrate no changes in outcomes before and after work hours because the population did not change. This does not mean that it is OK to abuse them again – but those desiring cheap labor are winning again. Studies of the same patient population as in before and after work hours restrictions would be expected not to demonstrate differences. Given their difficult circumstances and situations, not much is likely to intervene – short of generations of efforts not in health care.

    Which is the real tragedy

    When so much goes for overspending on health, prisons, and military – little is left for generation to generation improvements in infants, young children, child development, parenting, economic development, early education, housing, and other factors that would need to be addressed together for improvements in health, education, economic, and societal outcomes.

    Winner take all – our money. And all but a few are losing.

  • This smells of weird assumptions. Notice how they talk about doctors “keeping people healthier than expected,” as if medical care has a solid, 100% 1:1 relationship with health. What about people who fall or remain ill even though they’ve done everything “right?” Will this program encourage those “bad” patients who dare challenge the myth of all-powerful MEDICINE!!! be berated and abandoned, or even — as is now the case for fat patients — hated, mythologized and exploited before being entirely written off as “doomed?” Any program that ascribes this much power to mere medical care is destined to result in the abuse and exploitation of patience. It’s just institutionalized victim blaming. Any system that does not acknowledge that two people can do exactly the same things and still have entirely different levels of health and illness is doomed to foster further exploitation and abuse.

  • This is risk sharing by another name. Mr Azar and Dr Veerma are trying to put lipstick on the pig and pretend it is not a pig. Family practitioners and internists need to be compensated for spending time with their patients and listening and inquiring and examining. paying for cognitive services the CMS can not quantitate and non practicing and never practicing MD PhDs with business degrees certify as appropriate for populations ignores that these are individuals. They especially ignore the fact that a sore throat in an eighteen year old healthy individual is a different disease than one who is 82 years old and on six prescribed medications for chronic issues . Holding primary care docs responsible for outcomes when they have no control over the level of the patients health literacy, what they eat, drink , smoke , inject into their bodies. They have no control over their activity level, what toxins and risks they incur at work and in daily living but we are asked to take risk on outcomes.
    Primary care docs need to be compensated for listening, inquiring , examining, coordinating care and thinking and researching . They have been saying this for years and are ignored. If the insurers and CMS want to collect data for metrics let them hire scribes to follow us around , record what we say and hand it to us for review and signature. If they want high health literacy than restore at all levels of schooling age appropriate health, hygiene and nutritional lessons along with age appropriate physical education activity. Mr Azar and Dr Veerma are interested in cost control above all and outcomes payment to PCPs is one more attempt to disguise their inability to control costs by fairly compensating PCPs.

  • Perhaps we should allow physicians to practice medicine and influence policy instead of making them jump through hoops for insurance companies. We ignore the professionals who spent years honing their skills and allow insurance companies to influence treatments and to influence politicians.

  • If the monthly per-patient payment to providers in “Primary Care First” is sufficient to allow you to run a decent patient panel at the same time cutting down on the billing paper work, etc. I would be willing to consider

  • A plan almost certainly devised by CMS attorneys and administrators. Did they ask any physicians for their input?
    Holding physicians responsible for their patients health and keeping them out of the hospital, really?
    Making physicians financially culpable for their patients health? It’s getting better!

    How do you apply a business model/ computer algorithm to a complex biological system ie the human body? Am still trying to figure it out!

    Either way, as a surgeon I can say that this payment model is not going to apply just to primary care but to all specialities.
    You don’t need to read through CMS entire proposal to know that this is an ill conceived idea and fatally flawed…. just like other parts of the health care system today.

  • It is hard to stop a Bandwagon, but a Bandwagon rolling the wrong way needs to come to a halt. Pay for Performance has had its 15 years, and has been found lacking. It never had a chance as outcomes are about genetics (20%), social/environmental (40 – 50%), and other. Clinical interventions explain such a small portion that they really do not exist in outcomes importance.

    “In summary, we found low-strength, contradictory evidence that P4P programs could improve processes of care, but we found no clearevidence to suggest that they improve patient outcomes.” from The Effects of Pay-for-Performance Programs on Health,Health Care Use, and Processes of Care: A Systematic Review, Annals of Internal Medicine 1/10/17.

    This was more than just an article. It was a comprehensive review. Even more important, the studies reviewed were written by authors that in the large part wanted to demonstrate the benefits from pay for performance. Despite the best intentions, pay for performance has fallen short.

    Those immersed in P4P and value based design will have to make some difficult choices. Resistance is likely. This also will delay what must happen. What must happen is a move away from disruption of those who deliver care, especially care where needed.

    And while we are on the topic of micromanagement, why not review micromanagement of costs – that obviously has not reduced health care costs. In fact, the cost of the micromanagement is as much as the costs saved. This was the finding of the Congressional Budget Office Review

    You might want to review the managed care to Dartmouth assumptions to Orsag to ACA to understand how this micromanagement got way out of control. These designers based their findings on populations that overutilize – not the half of Americans left out. They based their findings on about 20% of the population. Their studies have been questioned as have the experts themselves.

    Consider the real winners – corporations and consultants. More corporations and consultants were added to the ever bigger health care pie – and the smaller portion about delivering care got even smaller. This is what happens with micromanagement of costs plus micromanagement of quality plus powerful wins and small, less organized loses.

    The experts seized upon health reform that did not reign in costs, did not reign in insurance, did not help people in most need of help to address health care needs, and did not reign in big medicine. Costs were increased. Insurance did even better. Most Americans did worse. Big medicine is doing even better as small health care has specifically been disabled by rapid change, higher costs of digitalization and regulation, lower revenue, and suppliers that have to make up costs using them – while the largest get discounts.

    Thanks to the health care design.

  • “Providers would be paid a bonus for keeping patients healthy…” Isn’t that what they’re supposed to be paid to do now? If they do a good job they should get a raise, like the rest of us. This sounds like an incentive to do their job and possibly a bonus for keeping their patients from extended care they may need.

    • No physician in the world has the ability to keep a patient healthy.

      This is about punishing those doctors who dare to provide care to the sickest, neediest and most disadvantaged members of our society.

      It’s a disgrace.

  • Just another financial scheme to keep patients from accessing specialty care which is necessary for there treatment.

    If implemented, the Senate, Congress and all government officials should be required to participate. That would be a universal leap.

  • “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.” – taken from this article…….. What a great idea! This could really work if we were dealing with anything other than human beings with their own genetic, physical, and mental complexities, educational and societal diparities, geographic and cultural challenges, etc., etc., etc. These are people, not machines. We cannot just proscribe a plan for health that everyone will be expected to follow like little robots when there are so many mitigating factors for everyone who lives and breathes on this earth. Many “complex and chronically ill patients” are designated as such because they have been denied health care in the past due to misguided political interests that believe excellent health care is only for those that can afford to pay for it. Instead of starting with incentivizing doctors, start with providing basic healthcare to all citizens, provide them early on with the information and skills they need to stay healthy throughout their lives and then help them stay that way.

    As a practice administrator for 27 years, I have only seen “value based programs” add to the cost of medicine, by requiring additional personnel and technology to make sure all the buttons get clicked and the beans get counted. Has it truly improved the quality of care that good doctors provide? I think most would deny that. Most doctors are dedicated to their calling and will do their very best for patients regardless of “value-based programs,” whatever that means.

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