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11 Strategies for Payment Reform in Primary Care

Joe Cantlupe, for HealthLeaders Media, March 31, 2010

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."


Joe Cantlupe is a senior editor with HealthLeaders Media Online.
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