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Medicare Puts the Spotlight on Primary Care

Written by Travis Broome, VP of Health Policy

On Monday, April 22nd Secretary Alex Azar stood at the podium of the American Medical Association and said 

“This initiative will radically elevate the importance of primary care in American medicine.”

The initiative he was talking about comprises two new value-based primary care models collectively known as the CMS Primary Cares Initiatives. Aledade believes that excellence in primary care combined with excellence in population health leads to better quality and lower costs. Achieving excellence in primary care in today’s health care system means more primary care that meets the needs of patients, not less. Excellence is defined by how well a practice meets the needs of its patient, not how many 10 minute appointments a physician can fit into a day. Excellence is measured by improvements in quality and lower costs. 

The models represent an opportunity to move payment of primary care services away from a 10-minute appointment to a more flexible payment structure giving practices more freedom to both meet the needs of their patients and run a financially successful practice. When coupled with accountability for total cost of care, they represent opportunities to make people’s lives better and reduce the burden on the Medicare trust fund. We believe Medicare took a big step towards value-based care today.

Primary Care First

This 5-year model is an evolution of the current Comprehensive Primary Care Plus (CPC+) model. Track 1 and Track 2 of CPC+ augmented fee for service with additional payments to provide more comprehensive services, such as care management. In contrast, Primary Care First seeks to replace fee for service and provide enhanced payments based on performance. Traditional fee for service payments would be largely replaced with three payment streams:

  • Per-Visit Payment: A flat, per-visit rate for each traditional office visit
  • Population-Based Payment: A prospective, risk-adjusted payment for each attributed Medicare beneficiary.
  • Performance-Based Adjustment: Quarterly incentive payment for performance on risk-adjusted acute hospitalizations, with an upside of up to a 50% increase in practice revenue, and a downside of down to a 10% decrease in practice revenue.

Practices would still submit claims for purposes of calculating co-insurance and risk adjustment. But breaking the link between the claim and payment allows practices to redesign their patient interactions (e.g., extended, at home, telephonic, virtual, or group) without fear of financial ruin or compliance penalty. There is also a sub-track in the model focused on hospice and palliative care. 

Practices in 26 regions can apply for January 2020 this summer or January 2021 next summer (practices already in CPC+ can switch for 2021). The regions include all existing CPC+ markets plus new markets: AL, AK, CA, CO, DE, FL, Greater Buffalo region, Greater Kansas City, Greater Philadelphia, HI, LA, ME, MA, MI, MT, Northeast NH, NJ, ND,  North Hudson-Capital region, Ohio and Northern Kentucky, OR, OK, TN, RI, VA. 

We believe that this model will be most impactful when it is coupled with participation in an accountable care organization (ACO) responsible for total cost of care. Given the great alignment between Primary Care First goals and Medicare Shared Savings Program goals, the payments enable the work of the ACO even more so than the current Comprehensive Primary Care Plus (CPC+) model. CMS has not yet detailed how the details of that combination would work. We urge CMS to allow the programs to come together as they currently do in CPC+. The ACO would be accountable for payments in Primary Care First as they are responsible for the total cost of care. There are many details about both models still to be released by CMS and we look forward to seeing these interactions soonest.

Direct Provider Contracting

This model is an evolution of the Next Generation ACO model. It is much more complex than the Primary Care First and most of the crucial details (It’s all about the benchmark) are still to come. Here is what we know.

There are two versions of the model

  • Primary care services for ACO participants are paid for with fixed, capitated payments to the ACO equal to 7 percent of the total cost of care, and the ACO is responsible for 50 percent savings and losses on total cost of care.
  • Primary care services, plus other services for which the ACO can negotiate contracts, are paid for under capitation, and the ACO is responsible for 100 percent of the savings and losses on total cost of care.

The first version is not immediately interesting to us today because we can already get 75% of the savings and only 40% of the losses under Enhanced. However, we will be sure to look at the details as they become available.

The second version does offer more of the savings, but with a vastly increased downside. There is also the possibility of capitation for improved cash flow, even if most of it is passed on to other health care providers (this is a feature that was included in the Next Gen ACO, which allows the ACO to negotiate payment rates with providers/services outside of the ACO). The details of how much money, how you contract, how you pass it on to providers are all as of yet unavailable. 

What little we know about the benchmark is that it will be a blend of historical and regional benchmarking, similar to MSSP. However, the regional methodology will be driven by more established Medicare Advantage (MA) rate setting methodology rather than the methodology used for MSSP.

The model is based on MSSP-like attribution methodology but CMS has also placed a heavy emphasis on supplementary voluntary alignment. CMS expects that most organizations would seek out voluntary alignment where a beneficiary chooses a physician in the ACO on To allow for that to occur, ACOs apply to be in the model this summer for January 2020; however, 2020 is Performance Year 0. The responsibility for total cost of care (and Advanced APM status) begins 2021.

Giving the ACO responsibility for paying for primary care creates even more options for excellence in primary care and population health. With that responsibility also comes accountability for total cost of care in the model itself. When taking on that accountability for total cost of care, an ACO must understand how that total cost of care is calculated. It does indeed become all about the benchmark as we explained when we considered the Next Generation ACO model. We are intrigued by the idea of using MA rates for at least a portion of the benchmark. We encourage CMS to be flexible and supportive of different mechanisms to pay for primary care and to maintain tight links to MA policies wherever possible. We are eagerly looking forward to learning more about this model.

CMS Primary Cares

In conclusion, we have always acknowledged that we are building value-based health care models on a fee for service chassis. There is massive infrastructure already in place for fee-for-service that allows for the trillions of dollars in health care to flow between people and organizations in health care. These models do not replace that infrastructure nor do they really bypass it. What the models do is give primary care physicians the financial flexibility to put the needs of the patient ahead of what the code description thinks the patient needs. At Aledade, we look forward to putting that flexibility to work for better quality and lower costs supporting practices in the move to value as we have over the last 5 years for more than 400 practices.