Strengthening Primary Care Delivery Through Payment Reform

Research Report

Strengthening Primary Care Delivery Through Payment Reform

Abstract

After decades of efforts at physician payment reform, policy makers and clinicians are still searching for improved ways to pay physicians. That quest has been focused especially on primary care clinicians in order to support delivery innovations while increasing the primary care practice’s emphasis on population health, social determinants of health, and team-based care delivery. The COVID-19 crisis has also introduced unprecedented challenges for primary care practices along with greater urgency to pay for telehealth and related approaches, substituting non-visit based communication for the dominant mode of reliance on in-person office visits.

The National Academies of Science, Engineering, and Medicine charged a consensus committee to develop an implementation plan for primary care recommendations, using the National Academies’ 1996 and 2012 reports on primary care as a starting point. The study launched in January 2020; though the final report was delayed by the coronavirus pandemic, the pandemic also highlighted challenges in primary care and heightened the urgency of meaningful action. The consensus report, Implementing High-Quality Primary Care: Rebuilding the Foundation of Health Care, was published in May 2021.

Our paper was commissioned by the consensus committee and submitted in June 2020 to inform their report. Our paper reviews what is known about different methods for how third-party payers (both private and public) pay primary care health professionals and, in some cases, intermediary organizations to which health professionals may belong. The paper initially reviews the international literature on the impact of a strong primary care component in health systems on cost and quality. The paper next presents a lengthy review of the common payment methods used to pay for primary care, including the Medicare Physician Fee Schedule, approaches in the most common government programs, and more recent developments in alternative payment models for primary care and commercial payment innovations. We highlight pros and cons of different approaches using perceived experience and empirical analysis. The paper concludes by identifying the core design issues in crafting a hybrid payment model relying on both fee schedule and primary care capitation.

Research Area: 

Centers

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