Skeptical, At Best: Will the New CMS Physician Payment Models Make a Difference?

I just read in the American Medical Association (“AMA”) report that for the first time there are more employed physicians than self-employed physicians in the U.S. In 2018, the AMA study found that 47.4% of all physicians were employed. And it is not surprising that family physicians, or primary care physicians (“PCPs”), as a whole, represent the greatest percentage of the employed physician universe. Health care systems have focused their attention on employing PCPs since these physicians generally are tasked with providing the important aspects of care coordination. PCPs are the ones who generally serve as the first line of communication with the patient, order initial tests, refer patients for consults and determine whether patients need hospitalization. In other words, the PCP is the key cog in the wheel.

And so it is not surprising that CMS has and continues to focus on PCPs when it comes to introducing new payment models to incentivize physicians to control costs. CMS continues to attempt to shift from a fee-for-service model to a value-based model offering significant upside (and now downside) risk through CMS’ newly-announced payment models called Primary Care First. While the intent is in the right place, query whether the results of these new offerings will amount to much in terms of cost savings or improved quality.

PCPs may be the key cog, but unless there are some significant changes made to these payment model offerings, I question whether these models will have even a minimal positive impact on reducing health care costs. I put forth three reasons why I am skeptical, at best.

First, employed PCPs are generally paid a flat annual salary, an hourly rate or an amount based on production (e.g., per wRVU). While their employment contracts sometimes include a “quality bonus” opportunity, those are usually based on patient satisfaction or achieving certain dashboard-type metrics. And, those bonuses are limited and insubstantial as compared to their “salary.” So, to the extent that the PCP’s employer elects to participate in an innovative payment program, the PCP performing the services doesn’t necessarily benefit (at least not to any significant behavior-changing extent). The incentive isn’t often shared with the PCP. I have seen provisions specifically stating as much when “meaningful use” funds were available; the contract expressly stated that any meaningful use monies were the sole property of the employer. So, unless PCP contracts are revised to share these types of payments with the PCP, why should the PCP’s approach to patient care change? Why should he/she care about the cost of health care?

Second, while the focus of these CMS programs is clearly on PCPs, perhaps CMS is missing an important fact. The highest cost of care to the Medicare program is with respect to care provided to patients with complex medical problems. When a patient’s medical condition becomes complex, the PCP is often replaced with a specialist – a cardiologist for patients with complex cardiac problems; an endocrinologist for patients with complex diabetes; an orthopod or rheumatologist for patients with complex arthritis – you get the point. Consideration should be given to opening up more of these innovative payment programs to specialists, or possibly to permitting PCPs and specialists to join together in the care of these patients under these model programs to a more significant extent. There’s a good chance that the cost of care would be better managed when the physicians who are actively caring for patients with complex medical problems have incentives.

Third, what about the patient? There is absolutely NO incentive for a patient to help decrease the cost of medical care. Medicare beneficiaries tend to use health care resources more than younger, healthier consumers, however, they have no financial skin in the game. What if CMS offered the Medicare beneficiaries incentives to help decrease the cost of care? Give a financial incentive to the patient. Share it with his/her physician. Patients participate in decision-making about their care and treatment, but they aren’t consulted as to the costs associated with treatment alternatives. I am sure that if patients had hands-on information and could personally benefit financially if they helped to decrease their individual healthcare costs, they would not only learn why health care costs are so high, but they would also have a positive impact on decreasing them.