11 Strategies for Payment Reform in Primary Care

Reforming payment structures for primary care "is absolutely essential to the implementation and sustained operation" of a medical home, according to the chairman of a payment reform task force for the Patient-Centered Primary Care Collaborative.

Allan H. Goroll, MD, professor of medicine at Harvard Medical School and PCPCC task force chairman, says payment reform is essential to sustain operation of the patient-centered medical home (PCMH), and a "blended strategy" may help minimize shortcomings of any single payment method. However, any reform would face considerable resistance because of fears of the unknown, Goroll says.

Goroll made his comments Tuesday during a meeting of the PCPPC held in Washington, DC, in which the medical home programs were touted. The PCPCC released a white paper that called for value-based insurance design (VBID) and the patent centered medical home (PCMH) to improve healthcare delivery.

The two health plan initiatives should be incorporated to help reduce costs, according to the PCPPC report's authors, who contend that "obvious synergies" between the two programs often go unnoticed because they are carried out separately.

"Although some medical home projects have gotten launched because you have dedicated physicians, and other healthcare providers, wonderful teams of ordinary people doing extraordinary things, their work is not sustainable nor is that model implementable on a wide-scale to others," Goroll says.

The task force is expected to issue a report soon for which he based his remarks on Tuesday, Goroll adds.

"The real question we face now is not that we can get the vanguard launched, but what is it going to take to move this from an interesting project to really transforming primary care in the US and hopefully healthcare?" Goroll says. "That's the backdrop of our payment reform task force."

PCPCC is a coalition of major employers, consumer groups, patient quality organizations, health plans, labor unions, hospitals, and clinicians who have joined together to develop and advance the patient-centered medical home. That is an approach to providing comprehensive primary care in a healthcare setting that facilitates partnerships between patients, their personal physician, and when appropriate, the patient's family.

VBID is an employer-driven design strategy to optimize use of higher value healthcare services and reduce use of lower value services. The PCMH is a supply-side mechanism to enable clinicians to delivery better quality care more efficiently, according to the report.

Goroll says a transition to a "new system can be challenging."

"Despite the promise of a much improved payment mechanism, payment reform will face considerable resistance—stakeholders have figured out the rules of the old system and change entails unknown risks," Goroll says.

Goroll also outlined the task force's proposed payment reform principles and recommendations:

• Payment reform is essential to establishment and sustained operation of the PCMH, especially regarding transformation and desired outcomes in patient experience, cost, quality, efficiency, safety, and professional satisfaction.
• There is no one-payment system that is universally "best for the PCMH. Choosing an approach to payment reform should be based on assessment of its ability to foster key PCMH objectives and outcomes."
• A blended strategy to payment reform can help minimize the shortcomings associated with any single method of payment. A thoughtful blending of methods helps to maximize benefits and minimize limitations.
• Risk adjustment, incorporating both biomedical and psychosocial factors, is key to payment reform, protecting practices from actuarial risk and reducing the incentive to shun complex or difficult patients.
• Pay for performance should foster accountability and transparency in cost, quality, and patient experience, and to the extent possible, be evidence-based and outcomes-focused.
• Bonus payments funded from cost savings, as with many models that rely on shared savings, have the risk of getting ratcheted down over time as wasteful and avoidable spending decreases. A portion of shared savings should be folded into the base payment over time to avoid reductions in total pay.
• PCMH sustainability depends on the breadth of payment changes in practices and their ability to fund the initial building and maintenance of the PCMH infrastructure and services; a substantial majority of the practice population needs to be covered by the payment reform, often necessitating multi-payer participation.
• Payment reform should improve practice environment, and enhance professional satisfaction and the attractiveness of a career in primary care.
• Payment reform should correct existing imbalances and distortion in physician payment and take into account value created by primary care, especially in the areas of cost, quality, care coordination, access, and patient centeredness.
• Payment reform should encourage patient-centered, coordinated care by all providers, not just those inside the PCMH.
• Administrative practicality is desirable, if not essential, though the transition to a new system can be challenging.

"Most discussion of the medical home model has focused on primary care practice reengineering and payment reform to align practioner incentives," said Andrew Webber, president and CEO of the National Business Council on Health, a national association of employer-based health coalitions. "Yet the role of consumers in advancing the medical home has been largely missing in the conversation to date."