Reengineering primary care payments
The remedy being most widely promoted is to change the way doctors are reimbursed – away from the predominant system today, under which doctors are paid a fee for every service they provide (commonly called “fee for service”).
Health economists and patient advocates have long advocated such a transition – primarily to eliminate or at least greatly reduce the incentive to provide excessive and unneeded care and promote better management of people with chronic conditions. Stabilizing doctors’ incomes was previously a secondary goal.
Achieving this transition has been slow for many reasons, not the least of which is that some early experiments ended up paying doctors too little to sustain their businesses or improve patient care. Instead, over the past decade doctors have sought safety in larger groups or ownership of their practices by large hospitals and health systems or other entities, including private equity firms.
A 2018 survey of 8,700 doctors by the Physicians Foundation, a nonprofit advocacy and research group found, for example, that only 31% of doctors owned or coowned their practice, down from 48.5% in 2012.
Dr. Fincher predicts the pandemic will propel more primary care doctors to consolidate and be managed collectively. “More and more know they can’t make it on their own.”
A 2018 survey by the American Medical Association found that, on average, 70% of doctor’s office revenue that year came from fee for service, with the rest from per-member, per-month payments and other methods.
The pandemic has renewed the push to get rid of fee for service – in large part because it has underscored that doctors don’t get paid at all when they can’t see patients and bill piecemeal for care.
“Primary care doctors now know how vulnerable they are, in ways they didn’t before,” said Rebecca Etz, a researcher at the Larry A. Green Center, a Richmond, Va., advocacy group for primary care doctors.
Dr. Charbonneau said he’s “absolutely ready” to leave fee for service behind. However, he’s not sure the company that owns his practice, Providence Health System – which operates 1,100 clinics and doctors’ practices in the West – is committed to moving in that direction.
Dr. Anderson is embracing a new payment model being launched next year under Medicare called Primary Care First. He’ll get a fixed monthly payment for each of his Medicare patients and be rewarded with extra revenue if he meets health goals for them and penalized if he doesn’t.
Medicare to launch new payment system
The Trump administration – following in the footsteps of the Obama administration – has been pushing for physician payment reform.
Medicare’s Primary Care First program is a main vehicle in that effort. It will launch in 26 areas in January 2021. Doctors will get a fixed per-patient monthly fee along with flat fees for each patient visit. A performance-based adjustment will allow for bonuses up to 50% when doctors hit certain quality markers, such as blood pressure and blood sugar control and colorectal cancer screening, in a majority of patients.
But doctors also face penalties up to 10% if they don’t meet those and other standards.
Some private insurers are also leveraging the pandemic to enhance payment reform. Blue Cross and Blue Shield of North Carolina, for example, is offering financial incentives starting in September 2020 to primary care practices that commit to a shift away from fee for service. Independent Health, an insurer in New York state, is giving primary care practices per-patient fixed payments during the pandemic to bolster cash flow.
Meanwhile, two of the nation’s largest primary care practice companies continue to pull back from fee for service: Central Ohio Primary Care, with 75 practices serving 450,000 patients, and Oak Street Health, which owns 50 primary care practices in eight states.
“Primary care docs would have been better off during the pandemic if they had been getting fixed payments per month,” said T. Larry Blosser, MD, the medical director for outpatient services for the Central Ohio firm.
A version of this article originally appeared on Kaiser Health News, which is a nonprofit national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation that is not affiliated with Kaiser Permanente.