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What new payment model options means for primary care practices

On April 22, U.S. Department of Health and Human Services (HHS) and Centers for Medicare and Medicaid Services (CMS) announced a new set of payment models as part of the long-running CMS Primary Cares Initiative.

Small and large providers can choose from five new Medicare and Medicaid payment options aimed at improving care and lowering costs. The goal is to transform primary care in the U.S., empowering patients and providers to drive toward better value. CMS intends to make this the next step in implementing value-based, primary care-focused payment models throughout the healthcare industry.

The five payment model options:

1. Primary Care First (PCF)

Designed for smaller practices, PCF will provide a simplified total monthly payment that enables clinicians to better prioritize patient care over revenue cycle. PCF will test whether performance-based payments that reward primary care practitioners will reduce total Medicare expenditures, preserve or enhance quality of care and improve patient health outcomes.

2. Primary Care First – High-need Populations

This option provides higher payments to practices that specialize in care for high-need patients, including those with complex, chronic needs and seriously ill populations (SIP).

Both PCF options reward providers for lowering hospital utilization and total cost of care by potentially significantly rewarding them through performance-based payment adjustments.

3. Direct Contracting (DC) – Global

4. Direct Contracting (DC) – Professional

5. Direct Contracting (DC) – Geographic

Designed for larger provider organizations, the Direct Contracting (DC) options offer varying levels of financial risk for the provider organization similar to more traditional capitation arrangements. Depending on the DC payment model option selected, the participant will receive a fixed monthly payment ranging from a portion of anticipated primary care costs to the total cost of care.

Practices can profit by focusing on the entire patient, keeping them healthy and out of the hospital. If this effort isn’t successful, they are at risk for the extra costs associated with caring for their patients.

These DC options are expected to engage a variety of organizations that have experience taking on financial risk and serving larger patient populations, such as Accountable Care Organizations (ACOs), Medicare Advantage (MA) plans and Medicaid Managed Care Organizations (MCOs).

What prompted this new model?

According to HHS Secretary Alex Azar, “For years, policymakers have talked about building an American healthcare system that focuses on primary care, pays for value, and places the patient at the center. These new models represent the biggest step ever taken toward that vision.”

CMS based the design of these payment model options on considerable stakeholder input.

Paying providers for outcomes rather than procedures aims to enable physicians to focus on patients. The initiative may encourage physicians to increase the use of technology, including population health management tools and telehealth services, to help deliver improved patient care. Use of efficient care tools, practices and services to maintain patient health enables potential savings.

Switching to a value-based system of care is challenging for many reasons, but the initial steps require setting clear definitions of what value is and how to it is to be measured. Providers have patient populations with varied characteristics including size and level of illness, which is why five options were created. These models, as part of the CMS Primary Cares Initiative, are a clear example of the continued migration from Fee-for-Service to Value-Based Care.

Allscripts encourages relevant clients to consider participation in the new programs, though we also caution that many of the details – such as the specifics about required measures – are not yet well-defined. More detail, including the regions in which the various programs will be rolled out, will be announced by the end of the summer.

To learn more about the five payment model options, read the full announcement.

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