The Centers for Medicare & Medicaid Services just announced Primary Cares, a group of initiatives set to begin in January 2020, with the goal of enhancing primary care in hopes of mitigating higher specialist and hospital costs down the road.

While the initiatives are voluntary, CMS estimates nearly 11 million Medicare beneficiaries will receive care under Primary Cares’ value-based payment models, presenting many significant implications for stakeholders including seniors, providers, payers, and pharmaceutical companies.

Under Primary Cares, primary-care providers can choose to participate in one of two program tracks—Primary Care First or Direct Contracting—both of which are based on the existing Comprehensive Primary Care Plus alternative payment model. While both tracks replace fee-for-service reimbursement with capitated payments, specifics such as the level of provider risk vary:

Primary Care First:

  • Targets small primary-care groups or single-provider offices.
  • Focuses on either regular patient population or “seriously ill patient” population.
  • Pays participants on a per-member, per-month fee.
  • Shared-risk rate of 10 percent for losses incurred.
  • Shared-savings rate has yet to be determined but is expected to be attractive to providers.
  • Providers’ performance based on a reduced set of quality measures emphasizing outcomes, such as reducing unnecessary hospitalizations, and on patient satisfaction over “process” measures, such as whether a certain test was ordered under specified circumstances.

Direct Contracting:

  • Targets risk-savvy provider organizations, including large primary-care practices and integrated delivery networks.
  • Pays participants on basis of either per-member, per-month (professional track) or global payments.
  • Shared-risk and shared-savings rates of 50 percent for the professional track.
  • Shared-risk and shared-savings rates of 100 percent for the global payment model.

With more Medicare providers on the hook for patient outcomes, drug manufacturers should expect physicians to more proactively manage and monitor seniors’ drug regimens, which should promote adherence and improve sales. Additionally, the decision by CMS to de-emphasize process measures in Primary Cares could provide physicians with more decision-making autonomy and leeway to diverge from clinical guidelines and protocols that might otherwise dictate which drugs should be prescribed.

The new payment models, which only apply to traditional Medicare, appear to threaten managed Medicare carriers by offering seniors a level of service currently unavailable in traditional Medicare. To date, Medicare Advantage is the only option for seniors interested in receiving more highly coordinated care, enhanced benefits, or access to providers who do not participate in traditional Medicare.

If successful, the new payment models could erode those incentives, which have helped drive strong and steady gains in managed Medicare enrollment

Potential threats include:

  • The models are specifically designed to attract providers that participate in Medicare Advantage networks, but not traditional Medicare. If CMS is successful in accomplishing this, more seniors will gain access to their preferred providers without signing up for an Advantage plan.
  • Direct Contracting Entities will be able to offer benefit enhancements and additional services currently only available through Medicare Advantage (e.g., adult diapers; dental, vision, and chiropractic care; broad access to online visits; and fitness programs such as SilverSneakers).
  • Since CMS will not curtail DCE-aligned beneficiaries’ ability to see any Medicare provider they choose, the new payment models could allow seniors to have their cake and eat it to, i.e., enjoy enhanced benefits without the usual trade-off: being limited to a payer’s provider network.

More broadly, the new Medicare risk payment models will accelerate the adoption of direct contracting, a practice that allows employers (or, in this case, a government program) to circumvent insurers and remove them from their lucrative perch at the intersection of patients and physicians.

While not a perfect comparison, payer-managed Medicaid enrollment in Massachusetts fell from 46 percent in 2017 to 41 percent in 2018 following an overhaul of the MassHealth program that added an option to enroll in direct-contract, primary-care accountable care organizations.

The continued push for providers to be financially liable for losses comes as many providers have been hesitant to have skin in the game, focusing on shared-savings agreements. However, CMS estimates upwards of 25 percent of primary-care providers will participate in Primary Cares, which may act as an alternative to the revamped Medicare Shared Savings Program’s higher risk-sharing tracks. This may be particularly appealing to small groups and solo physician practices.

Sarah Wilson is a Principal Analyst with DRG and Brandon Gee is a senior analyst with DRG. Follow both on Twitter @SarahWilsonDRG and @bsgeeDRG.


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