Sixty years ago, we relied on typewriters, rotary phones and slide rules to get work done. As we have replaced these tools with better, more advanced technology, our work environment has changed dramatically. Yet how we reimburse primary care in Medicare remains stuck in the fee-for-service approach used since President Lyndon Johnson signed the federal health insurance program into law in 1965. It’s time that Congress updates the rules of the road.
Over time, these antiquated payment policies have eroded the viability of our local primary care practices and clinics. Today, nearly 30% of Americans lack access to a usual source of care and 22% of Americans (74 million) live in areas with a shortage of primary care clinicians. While we spent nearly five trillion a year on health care overall, only 4.7 cents of our health care dollar got to primary care.
It is easy to understand why.
The 60s-style fee-for-service model leaves nearly one-third of all current primary care activity uncompensated, often because it doesn’t align neatly with a billing code or discrete procedure or test. The resulting payment imbalance has led to an ever-greater number of ever-more expensive services while shortchanging the personalized engagement with their primary care clinicians that Americans need the most.
Even while more primary care-focused care curbs overall health care costs. In an analysis of the Medicare Shared Savings Program, Congressional Budget Office (CBO) concluded that primary care visits can reduce spending on more costly services by helping to “manage their patients’ chronic conditions or provide preventive screenings.”
Clearly, we need modern, innovative payment solutions that take us beyond 60s-era fee-for-service. Medicare should be enabling primary care to transition to a hybrid payment model – combining monthly per member (capitated) payments combined with volume-based payment for specific pre-defined services. This allows primary care teams to serve more patients, provide more time for care, and provide a more comprehensive set of services. It’s a virtuous cycle that will result in better health outcomes and greater savings.
This January, Medicare took a step toward hybrid payment for primary care with new Advanced Primary Care Management (APCM) services. Primary care can now access payment for an important bundle of care management and telehealth services that CMS has long undervalued – with less burdensome billing and documentation for clinicians.
And now, CMS’s new leadership is innovating further on primary care payment in Medicare. The latest physician fee schedule proposed rule begins to tackle some of the underlying imbalances in today’s system with “efficiency adjustments” and “site of service differentials” intended to better invest in community-based primary care. As importantly, officials have signaled their interest in charting a viable path beyond fee-for-service for Medicare primary care, proposing to build on the APCM with behavioral health integration and potentially preventive care and beneficiary cost-sharing relief.
Private and public sector initiatives are already blazing that path. Today, with employer support, two dozen independent practices are taking part in a hybrid payment demonstration project with three participating private insurance health plans. With new investment and incentives for strong performance on a common set of outcome measures, practices can prioritize time with patients, and leaders are receiving regular coaching on practice transformation. At the CMS Innovation Center, the new ACO PC Flex model encourages Accountable Care Organizations to provide enhanced hybrid payments to primary care.
But to reverse the erosion of Americans’ health, alternatives to FFS must become more robust and the rule — not the exception.
Congress must devote political willpower to systemic change. Certainly, lawmakers should offer support for smart CMS regulatory proposals today. But if people’s health is to matter more than future volume-based revenue, there’s no substitute for legislative action. Last year, Congress began this work with bipartisan hearings, bold legislation and a white paper. With America’s health at stake, it’s time they got back to it.
History looms large in this discussion. Since its inception, traditional Medicare has been beholden to a fee-for-service model. To put that in context, in 1965 teen stars like the Monkees sang the most popular songs on the music charts. Those teens are now in their late 70s. It is well past time for Medicare’s payment approach to update the music.