Payment Designed for People: Introducing the Primary Care Outcomes Model

Early data shows that alternative payment methods (APMs) such as Alternative Quality Contract or Medicare Accountable Care Organizations (ACOs) have been associated with lower spending on healthcare and improved use of healthcare resources. However, both of these APMs have produced only modest cost reductions in Medicare spending.

Why? Because these models fail to leverage behavioral economics to maximize the impact of incentive dollars on changing physicians’ way of practice. Furthermore, they offer “relatively small rewards with delay and uncertainty while being complicated by too many metrics.”

In the beginning, savings generated by ACOs were greatest among independent primary care groups. This was largely due to the fact that behavioral economics principles were used to motivate change among independent physician practices.

However, a group of executives at Aledade think there’s a better idea: the Primary Care Outcomes Model. It would better align incentives for primary care providers and could maximize gains in Medicare savings.

The pillars of the primary care outcomes model are as follows:

  • Design together with PCPs. Rather than focusing on narrow quality measures and tasks, align primary care providers with goals and support them as they solve problems creatively.
  • Pay clinicians in real time. The Medicare Shared Savings Program does reward ACO providers who sufficiently reduce total cost of care by sharing those savings. However, providers don’t find out how well they’ve done on achieving savings until nine months after the performance year and the check comes months after their “grades” arrive. However, this flies in the face of the behavioral economics principle of immediacy, in which people respond most strongly to immediate feedback. Thus, a monthly payment model is suggested.
  • Pay more for primary care. Existing fee-for-service plans undervalue primary care, particularly when delivered by independent practices. In the Primary Care Outcomes Model, an outpatient office visit with participating PCPs for a complex patient—one with several illnesses to manage—would be reimbursed at a higher rate, as much as 50 percent higher for the most complex patients.
  • Restore meaning to quality measurement. Many providers see quality measurement requirements as a burden: too many targets, focused on less relevant areas. Instead focusing on a handful of broad-based and more clinically meaningful measures and providing easier electronic reporting processes allows providers more time with patients rather than paperwork.
  • Foster plan-provider coordination. The Primary Care Outcomes Model would shift how plans and providers work together. With primary care providers aligned on total cost of care, plans could work with them as partners rather than as adversaries.

The Primary Care Outcomes Model could substantially reduce costs compared to conventional ACOs. Not only that, but performance on quality measures could improve with focused improvement efforts. Building a model like this is crucial to resolving the crisis of spiraling healthcare costs.

Read more about the Primary Care Outcomes Model here.