In the past, CMS payment reforms have led to similar changes among payers and insurers in the private sector, and many industry groups praised the new initiative as a positive step.

The federal government took a major step in promoting value-based care (VBC) this week as U.S. Health and Human Services Secretary Alex Azar announced the Primary Care Initiative, which will give providers more flexibility and financial incentives to coordinate care for patients.

The April 22 announcement took place at the offices of the American Medical Association (AMA), which had gathered more than 200 medical society representatives to discuss primary care issues. Azar, whose department runs the Centers for Medicare and Medicaid services (CMS), was joined at the announcement by CMS Administrator Seema Verma and Adam Boehler, director of the Center for Medicare and Medicaid Innovation (CMMI).

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“For years, policymakers have talked about building an American health care 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,” Azar said. “Building on the experience of previous models and ideas of past administrations, these models will test out paying for health and outcomes rather than procedures on a much larger scale than ever before. These models can serve as an inflection point for value-based transformation of our health care system, and American patients and providers will be the first ones to benefit.”

Rewarding good outcomes

Promoters of VBC have been calling for payment reform as a crucial step in moving away from the old fee-for-service model. The new CMS initiative has multiple models to reward providers for emphasizing quality over quantity when it comes to health care delivery.

The first two models are called Primary Care First and are designed for smaller practices. This approach will feature performance-based payment and will seek to reduce hospitalizations and manage patients with chronic conditions through their primary care providers. Providers will take on more risk with patients under these models, but will be eligible for additional payments if their patients stay healthy. These models will be tested for five years beginning in January 2020.

In addition, the initiative will feature three Direct Contracting (DC) models, which are designed for larger health systems, and will also feature risk sharing between CMS and providers. “The payment model options available under DC create opportunities for a broad range of organizations to participate with CMS in testing the next evolution of risk-sharing arrangements to produce value and high quality health care,” a CMS release said.

Blazing a trail

In the past, CMS payment reforms have led to similar changes among payers and insurers in the private sector, and many industry groups praised the new initiative as a positive step.

“One of the most encouraging aspects of the announcement today is the emphasis on the patients who account for the greatest proportion of healthcare costs, those with serious illnesses and multiple chronic conditions,” said Mary Grealy, president of the Healthcare Leadership Council. “We strongly support the continued movement toward coordinated care for this patient population and the new payment models' incentives for providers to treat these high-need patients.”

Gerald Harmon, MD, immediate past chair of the board of trustees for the AMA, said the CMS program would give much-needed support to the nation's primary care physicians. “Many primary care physicians have been struggling to deliver the care their patients need and to financially sustain their practices under current Medicare payments,” he said. “The new primary care payment models announced today will provide practices with more resources and more flexibility to deliver the highest-quality care to their patients.”

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