Healio Special Report: Health Care and Politics
Healio Special Report: Health Care and Politics
April 22, 2019
3 min read

HHS, CMS announce proposed ‘historic’ changes to primary care physician processes, payments

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Alex M. Azar II
Alex Azar

Mindful that primary care physicians often face enormous administrative burdens and significantly lower pay than specialists, which in turn can lead to burnout, HHS Secretary Alex Azar, JD and CMS administrator Seema Verma, MPH, recently announced the CMS Primary Cares Initiative.

The leaders said that the plan provides greater physician flexibility in treating patients, allows innovation, focuses on outcomes and disease prevention. It also “radically elevates the importance of primary care in America ... puts patients more in control .... and moves primary care to where physicians are paid for outcomes rather than procedures and puts patients ahead of paperwork,” Azar said at a press conference announcing the initiative.

There are two options under the CMS Primary Cares Initiative — Primary Care First and Direct Contracting — that physicians can choose from, according to Azar.

“Primary Care First will allow smaller primary care practices to be paid a simple, flat stream of revenue for each patient. When a patient stays healthy and out of the hospital, these practices will get paid a bonus. But if the patient ends up sicker than expected, these practices will bear responsibility for the extra spending, up to a certain share of their practices’ revenue,” he said.

“The other path, Direct Contracting, is more ambitious and aimed at larger practices,” Azar continued. “Just like in Primary Care First, when patients have a better experience and stay healthier, these practices will make more money. But if patients end up sicker, Direct Contracting practices will bear the risk for the extra health spending, not just at their own practice but throughout the system,” he added.

Both models will be closely monitored for potential fraud, and physicians will not be able to “cherry-pick” their patients, leaders at the press conference said.

Azar said the CMS Primary Cares Initiative is expected to ultimately enroll 25% or more of traditional Medicare beneficiaries and 25% of providers in arrangements that pay for keeping patients healthy, rather than having to undergo procedures.

The initiative also “lays the groundwork not just for better care and lower costs in the $700 billion Medicare program and the $580 billion Medicaid program, but will also help drive innovation toward a new, patient-centered approach in our entire $3.5 trillion health care system” he noted.

Verma said the current health care system is simply not financially feasible in the long term, necessitating the overhaul.

“Health care spending in America is on an unsustainable path. ... Our system [currently] creates perverse incentives to create more care. ... We need to change the trajectory of health care cost growth and make health care more affordable, not only to make health care more accessible, but to ensure the solvency of Medicare and Medicaid,” she said.

Azar cautioned that implementing the CMS Primary Cares Initiative will take time.

“[These changes] are not going to happen overnight. Much more work lies ahead. [But] we will look back on today as a historic turning point in American health care,” he said.

Primary Care First will be tested for 5 years and is slated to start in January 2020. A second application round is planned for participants starting in January 2021. In addition, CMS is seeking public comment on one Direct Contracting payment model option with an expected performance period launch in January 2021, according to an HHS press release.

Societies speak out

Both AMA and the American Academy of Family Physicians cheered the HHS and CMS initiatives.

“Many primary care physicians have been struggling to deliver the care their patients need and to financially sustain their practices under current Medicare payments. The new primary care payment models announced today will provide practices with more resources and more flexibility to deliver the highest-quality care to their patients,” Gerald E. Harmon, MD, and immediate past chair, AMA Board of Trustees, said in a statement.

AAFP president John Cullen, MD, put the initiatives into some historical context.

“For more than 20 years, the AAFP and our primary care colleagues have worked to create a delivery system that encourages innovation in primary care delivery and that rewards comprehensive, continuous, patient-centered care rather than simply episodes of care. Throughout this time, the AAFP has provided family medicine’s perspective and input. That effort is ongoing, and we’ll continue to work with CMS and [Center for Medicare & Medicaid Innovation] to build a stronger foundation of primary medical care that is patient-centered and focused on value and outcomes,” he said in a statement.

“For decades, research has demonstrated the relationship between primary care and improved outcomes, better overall health and longer life expectancy. Recent research has shown how little investment Medicare makes in primary care. Today marks an important step toward recognizing the importance of primary care by developing payment models that value primary care,” Cullen added. – by Janel Miller

For more information:

More information on the Primary Care First payment model is available at: https://www.cms.gov/newsroom/fact-sheets/primary-care-first-foster-independence-reward-outcomes, https://innovation.cms.gov/initiatives/primary-care-first-model-options/ and https://innovation.cms.gov/Files/x/primary-cares-initiative-onepager.pdf.

More information on the Direct Contracting payment model is available at: https://www.cms.gov/newsroom/fact-sheets/direct-contracting, https://innovation.cms.gov/initiatives/direct-contracting-model-options/ and https://innovation.cms.gov/Files/x/dc-geographicpbp-rfi.pdf

Disclosures: Azar is HHS secretary, Verma is CMS administrator, Cullen is AAFP president. Healio Primary Care Today was unable to determine Harmon's relevant financial disclosures prior to publication.