Independent Primary Care: Getting More Value for the Healthcare Dollar

by Julian Malinak
Independent Primary Care: Getting More Value for the Healthcare Dollar

I believe independent primary care practices should — and will — lead the way to transform how we pay for healthcare. At Canvas, we strive to be the premier technology partner for these practices.

My background is in the “transform how healthcare is paid for” world (or at least try to transform it!). At CMS, the federal agency that runs Medicare and Medicaid, I worked in the newly-created CMS Innovation Center. The Innovation Center was given a powerful mandate by the Affordable Care Act to test and scale ideas to realize more value from the taxpayer’s healthcare dollar. I worked mostly on Accountable Care Organizations (ACOs), payment models that reward provider organizations for reducing total cost of care. (Cost savings tend to come from reductions in hospital and post-acute care spending).

I think of healthcare value in two big buckets:

1. Better Care and Population Health. This is the work that ACO models are trying to incent: averting a hospital visit by managing an illness in a less expensive office setting, for example.

2. Pricing. Spending less on a given unit of services: decreasing the rates paid by a commercial payer to a dominant health system, for example.

Pricing is all too often left out of the discussion about healthcare value. It’s a complex, critical topic for independent primary care practices and any American who consumes healthcare, so I’ll leave that for a separate blog post.

For now, back to bucket 1. What’s special about independent primary care in this regard?

Independent primary care practices tend to be better stewards of healthcare resources

J. Michael McWilliams and his colleagues published an excellent study in 2016 looking at the early performance of Medicare ACOs. They put it best:

[…]we estimated substantially greater savings for independent primary care groups than for groups integrated with hospitals when comparing spending changes in ACOs with local concurrent changes. There are both theoretical considerations and previous observational studies that would support the pattern of savings that we observed. In particular, independent physician groups have stronger incentives to lower inpatient and hospital outpatient spending than groups integrated with hospitals because their shared-savings bonuses are not offset by forgone profits from reductions in hospital care. Our findings suggest that financial integration between physicians and hospitals, which may increase commercial health care prices, is not necessary for ACO success.

This incentive-based explanation aligns with my experience at CMS. It’s not that health systems shouldn’t join these programs and try to succeed. Many are doing admirable work, and a few are really transforming the way they operate. But Medicare beneficiaries and taxpayers appear to benefit from a strong independent practice presence.

Generally, independent primary care practices seem to be somewhat better at driving positive care outcomes patients care about. They have lower rates of preventable hospital admissions, for example. This should make us skeptical of health systems that justify acquisition of independent practices with claims about quality improvement.

The smartest insurers will make payment models that work for independent practices

I think of new payment models that touch primary care broadly in two categories:

  1. Those that provide per-member-per-month or similar reimbursement outside of the traditional visit-based model but which is not tied to total-cost-of-care risk. Medicare’s Chronic Care Management fee or the Comprehensive Primary Care Plus model’s care management fees come to mind.

  2. Those that provide reimbursement tied to total-cost-of-care risk — ACO contracts and related risk arrangements from Medicare Advantage or commercial contracts. You earn money in an ACO based on the total spend of your panel relative to some benchmark, adjusted in various ways for performance on quality metrics.

The former type tends to be preferred by providers, particularly independent practices, for understandable reasons: a relatively steady revenue stream to manage your panel decreases the grind of relying solely on visit-by-visit revenue. The latter type tends to be preferred by payers for understandable reasons: you incent providers based on performance on the big cost and quality metrics you really care about.

Independent primary care-led ACOs have long made sense to me given the incentive alignment inherent in them. And I worry that without a larger total-cost-of-care incentive, the per-member-per-month reimbursement models might reward spending less time with patients and referring excessively for the sake of taking on a larger panel. The primary care clinicians I know and work with wouldn’t respond in that manner given their duty to patients, but it does seem like a potential incentive in some of those models.

Regardless of theoretical incentive alignment in risk models, however, it’s crucial for independent practices to have access to reliable revenue streams as they move away from fee-for-service. When we talk to practices, the more compelling reimbursement models pitch for Canvas understandably often relates to earning more through chronic care management, wellness visits, and similar add-ons. We’re excited to help them earn this revenue.

I believe the right move for most payers is to have payment models that combine non-visit-based revenue with total-cost-of-care risk. Although it’s overly complex to sustain in the long-term, CMS moved in the right direction by allowing practices to simultaneously participate in the Comprehensive Primary Care Plus model and Medicare Shared Savings Program. We’re excited to see what’s next.

What does this all have to do with software, and in particular with Canvas? Across this new payment landscape, there is a higher-than-ever clinical and financial return to the right software used in the right way. Here are just a few examples that we’re thinking about here:

  • Closing care gaps to reduce total cost of care and improve quality
  • Enhancing accurate and appropriate HCC risk coding
  • Automating aspects of chronic care management service documentation

Beyond all these, what we are trying to do at Canvas is give clinical teams the contextual information and cognitive space to care for their patients better and not spend time doing clerical work.

We’re only at the beginning of this journey. If you have any questions or, better yet, want to see Canvas in action, get in touch.

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