Opinion
VIEWPOINT
Bruce E. Landon, MD, MBA, MSc Department of Health Care Policy, Harvard Medical School, Boston, Massachusetts; and Divisions of General Medicine and Primary Care, Beth Israel Deaconess Medical Center, Boston, Massachusetts.
Structuring Payments to Patient-Centered Medical Homes There is increasing recognition that the prevailing model of primary care practice that evolved in the United States under the current fee-for-service (FFS) reimbursement system is dysfunctional. Models of enhanced primary care such as the patient-centered medical home (PCMH) are being introduced nationally and are considered a foundational element of new global payment arrangements, such as accountable care organizations. Under these types of arrangements in particular, but in primary care more broadly, primary care practices are expected to reorient toward providing enhanced services designed to both optimize patient experiences and health, which requires a fundamental change in the way primary care practices are reimbursed for their services. Primary care payment reform serves 2 overarching purposes. First, the primary care system, which currently accounts for approximately 5% to 7% of overall spending,1 is in need of additional resources, both to increase compensation levels to attract and retain physicians and to support additional staff and other resources needed to optimize the delivery of primary care. Without additional resources, it is unlikely that the current and certainly evolving primary care model will be sustainable into the future. Second, and more important, primary care payment reform is needed to change the incentives inherent in the current FFS payment system to support enhanced models of care. The design of such incentives will be important if the incentives are to lead to a change in the culture and practice of primary care as envisioned under the PCMH. However, current reimbursement models in PCMH initiatives around the country are unlikely to achieve this second important aim. This Viewpoint discusses current models, identifies their fundamental weaknesses, and proposes a path toward optimizing primary care reimbursement.
Reimbursement Models for the PCMH
Corresponding Author: Bruce E. Landon, MD, MBA, Department of Health Care Policy, Harvard Medical School, 180 Longwood Ave, Boston, MA 02115 ([email protected] .harvard.edu).
Reimbursement models under current payersponsored PCMH initiatives have coalesced around a 3-tier payment approach that maintains traditional FFS payments but then adds a fixed per-member-permonth payment as well as the potential for additional payments based on the quality of care achieved, shared savings, or both. In a recent nationwide survey of payersponsored PCMH initiatives, the majority of 114 PCMH initiatives had adopted this type of model, with only 2 fully jettisoning the FFS system.2 Although this form of payment will meet the first purpose of payment reform by providing additional resources for primary care, the incentives required to drive behavior change may not be sufficient to produce the changes necessary to improve quality, reduce waste, and control costs.
The fundamental flaw most directly results from the continuation of the FFS payment system under which the primary care system of today evolved. Fee-forservice payments produce incentives to provide as many brief face-to-face visits as possible to maximize productivity and income. But these payments do not support non–visit-based services such as electronic communications, population health management, or the incorporation of additional team members. The flaw in current approaches is the assumption that primary care clinicians will use higher FFS payments or additional permember, per-month payments to support uncompensated services rather than keep more of these payments in the form of increased take-home pay or invest in resources to make practice more tolerable. More important, because the underlying FFS incentives are unchanged, the path to improved financial performance continues to be providing additional face-to-face visits, making it highly unlikely that underlying behavior will change. Although payments for additional billing codes such as those for care coordination and additional bonuses in the form of quality incentives have the potential to alter these incentives at the margin, they do little to alter the fundamental dynamics of the underlying incentives. For instance, current quality incentives focus on relatively easy-to-achieve process measures such as rates of cancer screening and the management of selected chronic medical conditions. Bottom-line–oriented practices will invest in resources to optimize performance on these metrics, but the likelihood that these investments will lead to improved care more generally is low because most efforts will be very specific and targeted. Most studies of pay-for-performance programs have shown relatively small effects, even on the measures included in the bonus program.3 Results of current PCMH programs appear to bear out these concerns. Programs in Pennsylvania and elsewhere that have been built on the existing payment system have not led to an appreciable change in either quality of care or spending, although physician satisfaction and take-home pay both show improvements.4-6 Although simply putting more resources into a failing primary care system to preserve the system and attract new physicians may be considered a worthwhile goal, doing so is not sufficient to support overall systemic change.
One Possible Path Forward The optimal payment system for primary care will need to meet several requirements. First, it should support non–visit-based services including telephone and electronic encounters and messaging, population health management, and quality-improvement activities. Sec-
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Copyright 2014 American Medical Association. All rights reserved.
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Opinion Viewpoint
ond, this payment system should be flexible to encourage the incorporation of additional team members in the care delivery process as envisioned under the PCMH, as well as population health management activities. Medical assistants, nurses, care managers, and patient educators will all need to be supported under the system. Third, incentives should not encourage or discourage visits. Rather, when appropriate, overall incentives should support visitbased care and allow for non–visit-based care. Fourth, the payment system should be consistent with the overall goals of the health care system by promoting the delivery of recommended services and reducing the use of wasteful services. Given the choices available,7 a payment method that might best meet the above criteria is a primary care capitation model—a single risk–adjusted per-member-per-month payment designed to cover all primary care services.8 But primary care capitation has been tried in the past, without achieving the goals noted above. Even with relatively robust quality incentives and payments, the resulting strategy might be for the primary care practice to do as little as possible within the practice, so as to maximize reimbursement and profit by freeing up capacity to take on more patients. Default strategies that clinicians might adopt to take on more patients (and thus garner more revenue), which are counter to the goals of the PCMH, might be referrals to specialists for routine problems that could be handled in primary care or increased frequency of testing for which practices ARTICLE INFORMATION Conflict of Interest Disclosures: The author has completed and submitted the ICMJE Form for Disclosure of Potential Conflicts of Interest and none were reported. Additional Contributions: I thank Michael Chernew, PhD (Harvard Medical School), and Russell Phillips, MD (Harvard Medical School), for comments on an earlier version of this article. REFERENCES 1. Phillips RL Jr, Bazemore AW. Primary care and why it matters for U.S. health system reform. Health Aff (Millwood). 2010;29(5):806-810.
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will not be held financially accountable. Thus, a crucial additional feature is the incorporation of some form of accountability for overall spending and quality. This goal could be accomplished through participation in accountable care organization or global payment models or through the incorporation of shared savings programs directly into PCMH initiatives. Accountable care organizations in particular also have the ability to change their internal payment arrangements to meet similar goals. These additional incentives could encourage primary care practices to actively engage and manage their patients’ costs, outcomes, and experiences. Moreover, by eliminating the underlying FFS model, the incentives that led to the current dysfunctional system would be removed, allowing a more sensible model of primary care to evolve. Moving to such a system will not be without challenges. To change practice, the majority of patients served in a practice will have to be included in the model. The prevalence of preferred provider organization models among the commercially insured and Medicare’s freedom of choice policies will be major limitations to achieving alignment across payers. In addition, risk adjustment methods to adjust payment will require empirical testing. Nonetheless, it is becoming increasingly clear that a perpetuation of the FFS incentives inherent in current reimbursement models for the PCMH will not support the necessary evolution of the primary care system.
2. Edwards STBA, Hong J, Landon BE. A national survey of patient centered medical home initiatives. Abstract presented at: AcademyHealth 2014 Annual Research Meeting; June 8-10, 2014; San Diego, CA.
multipayer patient-centered medical home on health care utilization and quality: the Rhode Island chronic care sustainability initiative pilot program. JAMA Intern Med. 2013;173(20):1907-1913.
3. Petersen LA, Woodard LD, Urech T, Daw C, Sookanan S. Does pay-for-performance improve the quality of health care? Ann Intern Med. 2006; 145(4):265-272.
6. Jackson GL, Powers BJ, Chatterjee R, et al. Improving patient care: the patient centered medical home: a systematic review. Ann Intern Med. 2013;158(3):169-178.
4. Friedberg MW, Schneider EC, Rosenthal MB, Volpp KG, Werner RM. Association between participation in a multipayer medical home intervention and changes in quality, utilization, and costs of care. JAMA. 2014;311(8):815-825.
7. Berenson RA, Rich EC. How to buy a medical home? policy options and practical questions. J Gen Intern Med. 2010;25(6):619-624.
5. Rosenthal MB, Friedberg MW, Singer SJ, Eastman D, Li Z, Schneider EC. Effect of a
8. Ash AS, Ellis RP. Risk-adjusted payment and performance assessment for primary care. Med Care. 2012;50(8):643-653.
JAMA October 22/29, 2014 Volume 312, Number 16
Copyright 2014 American Medical Association. All rights reserved.
Downloaded From: http://jama.jamanetwork.com/ by a Ndsu Library Periodicals User on 05/19/2015
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VIEWPOINT
Bruce E. Landon, MD, MBA, MSc Department of Health Care Policy, Harvard Medical School, Boston, Massachusetts; and Divisions of General Medicine and Primary Care, Beth Israel Deaconess Medical Center, Boston, Massachusetts.
Structuring Payments to Patient-Centered Medical Homes There is increasing recognition that the prevailing model of primary care practice that evolved in the United States under the current fee-for-service (FFS) reimbursement system is dysfunctional. Models of enhanced primary care such as the patient-centered medical home (PCMH) are being introduced nationally and are considered a foundational element of new global payment arrangements, such as accountable care organizations. Under these types of arrangements in particular, but in primary care more broadly, primary care practices are expected to reorient toward providing enhanced services designed to both optimize patient experiences and health, which requires a fundamental change in the way primary care practices are reimbursed for their services. Primary care payment reform serves 2 overarching purposes. First, the primary care system, which currently accounts for approximately 5% to 7% of overall spending,1 is in need of additional resources, both to increase compensation levels to attract and retain physicians and to support additional staff and other resources needed to optimize the delivery of primary care. Without additional resources, it is unlikely that the current and certainly evolving primary care model will be sustainable into the future. Second, and more important, primary care payment reform is needed to change the incentives inherent in the current FFS payment system to support enhanced models of care. The design of such incentives will be important if the incentives are to lead to a change in the culture and practice of primary care as envisioned under the PCMH. However, current reimbursement models in PCMH initiatives around the country are unlikely to achieve this second important aim. This Viewpoint discusses current models, identifies their fundamental weaknesses, and proposes a path toward optimizing primary care reimbursement.
Reimbursement Models for the PCMH
Corresponding Author: Bruce E. Landon, MD, MBA, Department of Health Care Policy, Harvard Medical School, 180 Longwood Ave, Boston, MA 02115 ([email protected] .harvard.edu).
Reimbursement models under current payersponsored PCMH initiatives have coalesced around a 3-tier payment approach that maintains traditional FFS payments but then adds a fixed per-member-permonth payment as well as the potential for additional payments based on the quality of care achieved, shared savings, or both. In a recent nationwide survey of payersponsored PCMH initiatives, the majority of 114 PCMH initiatives had adopted this type of model, with only 2 fully jettisoning the FFS system.2 Although this form of payment will meet the first purpose of payment reform by providing additional resources for primary care, the incentives required to drive behavior change may not be sufficient to produce the changes necessary to improve quality, reduce waste, and control costs.
The fundamental flaw most directly results from the continuation of the FFS payment system under which the primary care system of today evolved. Fee-forservice payments produce incentives to provide as many brief face-to-face visits as possible to maximize productivity and income. But these payments do not support non–visit-based services such as electronic communications, population health management, or the incorporation of additional team members. The flaw in current approaches is the assumption that primary care clinicians will use higher FFS payments or additional permember, per-month payments to support uncompensated services rather than keep more of these payments in the form of increased take-home pay or invest in resources to make practice more tolerable. More important, because the underlying FFS incentives are unchanged, the path to improved financial performance continues to be providing additional face-to-face visits, making it highly unlikely that underlying behavior will change. Although payments for additional billing codes such as those for care coordination and additional bonuses in the form of quality incentives have the potential to alter these incentives at the margin, they do little to alter the fundamental dynamics of the underlying incentives. For instance, current quality incentives focus on relatively easy-to-achieve process measures such as rates of cancer screening and the management of selected chronic medical conditions. Bottom-line–oriented practices will invest in resources to optimize performance on these metrics, but the likelihood that these investments will lead to improved care more generally is low because most efforts will be very specific and targeted. Most studies of pay-for-performance programs have shown relatively small effects, even on the measures included in the bonus program.3 Results of current PCMH programs appear to bear out these concerns. Programs in Pennsylvania and elsewhere that have been built on the existing payment system have not led to an appreciable change in either quality of care or spending, although physician satisfaction and take-home pay both show improvements.4-6 Although simply putting more resources into a failing primary care system to preserve the system and attract new physicians may be considered a worthwhile goal, doing so is not sufficient to support overall systemic change.
One Possible Path Forward The optimal payment system for primary care will need to meet several requirements. First, it should support non–visit-based services including telephone and electronic encounters and messaging, population health management, and quality-improvement activities. Sec-
jama.com
JAMA October 22/29, 2014 Volume 312, Number 16
Copyright 2014 American Medical Association. All rights reserved.
Downloaded From: http://jama.jamanetwork.com/ by a Ndsu Library Periodicals User on 05/19/2015
1633
Opinion Viewpoint
ond, this payment system should be flexible to encourage the incorporation of additional team members in the care delivery process as envisioned under the PCMH, as well as population health management activities. Medical assistants, nurses, care managers, and patient educators will all need to be supported under the system. Third, incentives should not encourage or discourage visits. Rather, when appropriate, overall incentives should support visitbased care and allow for non–visit-based care. Fourth, the payment system should be consistent with the overall goals of the health care system by promoting the delivery of recommended services and reducing the use of wasteful services. Given the choices available,7 a payment method that might best meet the above criteria is a primary care capitation model—a single risk–adjusted per-member-per-month payment designed to cover all primary care services.8 But primary care capitation has been tried in the past, without achieving the goals noted above. Even with relatively robust quality incentives and payments, the resulting strategy might be for the primary care practice to do as little as possible within the practice, so as to maximize reimbursement and profit by freeing up capacity to take on more patients. Default strategies that clinicians might adopt to take on more patients (and thus garner more revenue), which are counter to the goals of the PCMH, might be referrals to specialists for routine problems that could be handled in primary care or increased frequency of testing for which practices ARTICLE INFORMATION Conflict of Interest Disclosures: The author has completed and submitted the ICMJE Form for Disclosure of Potential Conflicts of Interest and none were reported. Additional Contributions: I thank Michael Chernew, PhD (Harvard Medical School), and Russell Phillips, MD (Harvard Medical School), for comments on an earlier version of this article. REFERENCES 1. Phillips RL Jr, Bazemore AW. Primary care and why it matters for U.S. health system reform. Health Aff (Millwood). 2010;29(5):806-810.
1634
will not be held financially accountable. Thus, a crucial additional feature is the incorporation of some form of accountability for overall spending and quality. This goal could be accomplished through participation in accountable care organization or global payment models or through the incorporation of shared savings programs directly into PCMH initiatives. Accountable care organizations in particular also have the ability to change their internal payment arrangements to meet similar goals. These additional incentives could encourage primary care practices to actively engage and manage their patients’ costs, outcomes, and experiences. Moreover, by eliminating the underlying FFS model, the incentives that led to the current dysfunctional system would be removed, allowing a more sensible model of primary care to evolve. Moving to such a system will not be without challenges. To change practice, the majority of patients served in a practice will have to be included in the model. The prevalence of preferred provider organization models among the commercially insured and Medicare’s freedom of choice policies will be major limitations to achieving alignment across payers. In addition, risk adjustment methods to adjust payment will require empirical testing. Nonetheless, it is becoming increasingly clear that a perpetuation of the FFS incentives inherent in current reimbursement models for the PCMH will not support the necessary evolution of the primary care system.
2. Edwards STBA, Hong J, Landon BE. A national survey of patient centered medical home initiatives. Abstract presented at: AcademyHealth 2014 Annual Research Meeting; June 8-10, 2014; San Diego, CA.
multipayer patient-centered medical home on health care utilization and quality: the Rhode Island chronic care sustainability initiative pilot program. JAMA Intern Med. 2013;173(20):1907-1913.
3. Petersen LA, Woodard LD, Urech T, Daw C, Sookanan S. Does pay-for-performance improve the quality of health care? Ann Intern Med. 2006; 145(4):265-272.
6. Jackson GL, Powers BJ, Chatterjee R, et al. Improving patient care: the patient centered medical home: a systematic review. Ann Intern Med. 2013;158(3):169-178.
4. Friedberg MW, Schneider EC, Rosenthal MB, Volpp KG, Werner RM. Association between participation in a multipayer medical home intervention and changes in quality, utilization, and costs of care. JAMA. 2014;311(8):815-825.
7. Berenson RA, Rich EC. How to buy a medical home? policy options and practical questions. J Gen Intern Med. 2010;25(6):619-624.
5. Rosenthal MB, Friedberg MW, Singer SJ, Eastman D, Li Z, Schneider EC. Effect of a
8. Ash AS, Ellis RP. Risk-adjusted payment and performance assessment for primary care. Med Care. 2012;50(8):643-653.
JAMA October 22/29, 2014 Volume 312, Number 16
Copyright 2014 American Medical Association. All rights reserved.
Downloaded From: http://jama.jamanetwork.com/ by a Ndsu Library Periodicals User on 05/19/2015
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