HHS announces new primary care delivery and payment models

May 13, 2019
Area(s) of Interest: Practice Management Public Payors Payor Issues and Reimbursement 

The U.S. Department of Health and Human Services (HHS) recently unveiled five new voluntary Medicare primary care payment models.

HHS Secretary Alex Azar said the new models would “radically elevate” the importance of primary care in the U.S. health system, lay the groundwork for better care and lower costs. The plans, he said, would allow physicians to “focus on the patients in front of them rather than the paperwork we send them.”

Under the new models, Medicare would reward practices for providing more convenient access to care and would start paying for services such as enhanced chronic disease care management, acute care in-home services and palliative care. Practices would receive an upfront payment for managing the care of their patients, in addition to flat fees for primary care office visits and a  performance-based payment for physicians who keep patients healthy and prevent unnecessary hospitalizations. The models will also reduce the administrative burdens on practices. 

HHS is encouraging state Medicaid programs and commercial insurers to take similar approaches. 

Primary Care First: This model is designed for small practices and provide a monthly population-based payment with a flat primary care visit fee. Practices would be responsible for downside risk of up to 10% of revenue. Practices would assume financial risk in exchange for reduced administrative burden and a performance-based bonus of up to 50% of revenue if their patients stay healthy and out of the hospital. The model provides higher payments to practices that provide disease management services for the chronically ill. 

Primary Care First—High Needs Populations: This model is similar to the general Primary Care First model but will focus on patients with complex and chronic needs and seriously ill populations and make higher payments based on those conditions. This model would include primary care clinicians that provide hospice or palliative care services.  

Direct Contracting Models: HHS announced three direct contracting models for larger organizations with at least 5,000 Medicare beneficiaries and experience taking on full financial risk with Accountable Care Organizations, Medicare Advantage plans or Medicaid managed care. This includes a “geographic” model on which CMS requested additional input.  These models would contract directly with CMS either on a shared-risk basis for a portion of anticipated primary care costs or full risk for total cost of care.

The Primary Care First models are to be tested for five years beginning in January 2020, with applications available soon.  The direct contracting models will also be launched in January 2020 and applications will be released in June. A second application round is planned for 2021.

The California Medical Association (CMA) is encouraged that CMS recognizes the need to improve access to primary care through innovative physician-led models. CMA supports the promotion of primary care supported by coordinated care systems and chronic disease management programs. The viability of these new models will depend on whether payments are appropriately adjusted for differences in the health and socioeconomic status of patients seen by each individual practice. And whether the payments are adequate to support practices, particularly independent practices. CMA believes it is crucial that the financial risk requirements be reasonable and administrative burdens truly reduced.



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