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Strengthening Primary Care by Changing How We Pay For It

The Center for Medicare and Medicaid Innovation announced plans to test a new approach to paying primary care providers to better support and sustain high-quality, patient-centered care.

Image of female provider speaking with patient.
(The Good Brigade/ Getty Images)

Primary care plays a vital role in an efficient, high-performing health care system. Studies find that better continuity in primary care is associated with reduced mortality, health care expenditures, and hospitalizations. However, the predominant payment system in the United States, fee-for-service (FFS), pays according to the amount of care delivered rather than the health of the patient. In other words, it does not support high-quality, patient-centered primary care. 

Recognizing this challenge, the Center for Medicare and Medicaid Innovation (CMMI) recently launched the ACO Primary Care Flex Model (ACO PC Flex) to test an alternative approach for paying primary care clinicians in accountable care organizations (ACO) — that is, groups of clinicians who come together to deliver care and are held accountable for quality and costs. This alternative approach would pay primary care clinicians prospective, monthly payments that reflect the patient population they care for (i.e., population-based payments). The model aims to give primary care clinicians more stable and flexible payments to enable them to deliver care that is tailored to the needs of patients. This aligns with reforms that AV and a diverse set of stakeholders have previously called for to better support primary care within ACOs and shift payments further away from FFS

What are the specifics of ACO PC Flex? 

In ACO PC Flex, primary care clinicians within certain ACOs will receive monthly, per-patient payments to provide care management and core primary care services. The ACO PC Flex approach enables primary care physicians to work with a team of staff – such as care managers – to deliver coordinated and patient-centered care. 

  • Eligibility — Participation is voluntary and will include up to 130 low-revenue ACOs from the Medicare Shared Savings Program (MSSP), Medicare’s largest and only permanent ACO program. Low-revenue ACOs tend to be made up of physicians from smaller, independent practices, including those in rural areas. These ACOs have historically demonstrated greater savings but often lack the capital needed to transform care delivery.
  • Payment details — Participating ACOs will receive a one-time upfront payment of $250,000 to cover start-up costs and enable them to provide more robust care management. Ongoing, the ACOs will receive a prospective, population-based payment instead of FFS reimbursement for most primary care services. A small set of an ACO’s primary care services may still be reimbursed through FFS. This new hybrid, prospective payment structure will increase primary care funding for most participants.

Why does changing how we pay for primary care matter? 

The current FFS model incentivizes a focus on office visits and is limited to a narrow set of billable services. This restricts clinicians’ ability to comprehensively address patient needs. ACO PC Flex reflects stakeholder calls for enhanced primary care investment and for reforms that enable more flexibility, including recommendations from the National Academies of Science, Engineering, and Medicine (NASEM) in its landmark 2021 report on high-quality primary care.

Tracking technical details will be important 

Forthcoming details of ACO PC Flex will be important for its success and for scaling this payment approach beyond ACOs. Key questions include: 

  • What is the degree of FFS vs. population-based payment? While CMMI has indicated that prospective payments will be used in lieu of FFS for most primary care services, they have not yet released full information on which primary care services, if any, will remain in FFS. The structure of payments can encourage staffing model changes and care delivery that can improve efficiency.
  • How will payments be determined? The population-based payment will include a base” payment derived from average primary care spending in an ACO’s county and an enhanced” payment intended to fund more comprehensive primary care services. The county base rates will be increased for counties with entrenched patterns of inappropriately low spending compared to their region. This approach differs from basing payment on a physician’s historical spending levels which can introduce bias in geographical areas that have historically had less access to and use of health care services, perpetuating inequities. Given the model’s goals to increase primary care investment and offer greater services for underserved populations, it will be important to monitor how base payments and enhanced payments impact an ACO’s overall spending and the additional primary care services offered to patients.
  • What oversight is needed for appropriate flow of funds to primary care clinicians? ACO PC Flex will require participating ACOs to submit information on their intended use of the new payments. CMS will provide guidance on the recommended use of additional funding to ensure an appropriate portion of payments are passed from the ACO to primary care clinicians. This will be important for ensuring this payment approach achieves its goals of supporting more comprehensive primary care and better sustaining clinicians.

What’s next?

Eligible ACOs in the MSSP can apply for ACO PC Flex from May through August 2024, with the performance period beginning in January 2025. This model is a key step towards strengthening primary care and driving innovation in the MSSP. There is great potential for larger scale implementation of this payment approach across the MSSP and the wider Medicare physician fee schedule in the future.