Is Fee-for-Service Compatible with Comprehensive Primary Care?

On May 28, 2024, the Primary Care Collaborative (PCC) held a webinar exploring how policymakers can reform Medicare payment structures to strengthen and improve access to high-quality, comprehensive primary care.

Speakers included Amol S Navathe, professor at the University of Pennsylvania Perelman School of Medicine and Vice Chair of MEDPAC; Cristina Boccuti, Vice-President of Health Security at the AARP Public Policy Institute; Melanie Matthews, the CEO of PSW; and was moderated by Peter Long, Executive Vice President of Strategy and Health Solutions at Blue Shield of California and member of PCC's Board of Directors.

The conversation began with an exploration of the existing Medicare Fee Schedule and how it undermines patients’ access to high-quality primary care.

There was a consensus among the speakers that, while the current Medicare Fee Structure was designed with the noble intention of standardizing documentation and paying for vital health care services under Medicare, it has failed to evolve in an increasingly complex health care system and now contributes to major challenges in providing patients with comprehensive primary care.

Panelists noted the existing fee-for-service payment structure often encourages fragmented care, especially for those with multiple chronic conditions. Speakers also emphasized that the current Fee Schedule fails to account for many activities clinicians need to perform during and after visits to manage patients’ health effectively—and that attempts to address that shortfall have led to the creation of an overwhelming amount of billing codes that ultimately become an even larger documentation burden on clinicians.

The panel also noted that the current fee-for-service structure often also forces patients with chronic conditions to repeatedly pay cost-sharing for visits—a challenge that not only places unfair financial burdens on those patients, but that also may discourage them from seeking necessary care. Speakers agreed that any solution to the fee schedule also needs to adjust upfront costs for patients.

The conversation then shifted to potential solutions for reforming how Medicare pays for quality of care.

PSW’s Melanie Matthews explained that alternative payment models that already exist in Medicare have demonstrated there’s a smarter, more effective way to pay for primary care—but that there needs to be a larger, more systemic shift toward population-based payment models.

Panelists then discussed the potential of hybrid payments—an approach that the Primary Care Collaborative and it’s Better Health – NOW Partners have advocated for, helping lead to the launch of the new ACO PC Flex model by the CMS Innovation Center.

Lawmakers have increasingly shown interest in this approach as well, with the introduction of a bipartisan bill by Sens. Whitehouse (D-RI) and Cassidy (R-LA) and the release of a white paper on payment reform by the Senate Finance Committee.

The panelists agreed that a hybrid approach that melds some traditional fee-for-service compensation with population-based payments could provide primary care practices the flexibility and financial support needed to build full primary care teams and give clinicians more breathing room to focus on providing care rather than billing.

Peter Long noted that Blue Shield of California—a private payer—had implemented a hybrid approach in many of their contracts, and that early results suggested hybrid payments can help stabilize and provide financial security to primary care practices.

Ultimately, speakers agreed that committing to developing and explore more alternative payment approaches—especially hybrid payments—held a lot of promise and were an important step to bolstering patients’ access to primary care, although they were unlikely to be a panacea.

Resources

• What to know About How Medicare Pays Physicians - Kaiser Family Foundation
• Medicare Stumbles Managing a Costly Problem—Chronic Illness - KFF Health News
• Dr. Navathe’s and Melanie Matthews’ testimony before the Senate Finance Committee, April 11, 2024
• Medicare Physician Fee Schedule Reform: Structural Topics and Recommendations to Strengthen the System for the Future - HMA

This webinar is made possible with support from: