Primary care physicians are facing challenges that threaten their very existence, and despite pivoting to virtual health and making other changes, they face a massive drop in volume and revenue. As a result of the financial cliff, some physicians are pushing for a new way to pay for primary care.
“I am convinced that when we get on the other side of the pandemic, the care delivery system is fundamentally going to change, but it is going to be a really painful trip getting through the pandemic,” says Tom Banning, Texas Academy of Family Physicians CEO, who has been working on what he calls a “Marshall Plan” to save primary care.
Dallas-based Merritt Hawkins surveyed physicians and found that 21 percent of physicians have been furloughed or experienced a pay cut, 14 percent plan to change practice settings as a result of COVID-19, 18 percent plan to retire, temporarily close their practices, or opt out of patient care, and 16 percent have or will cut reduce staff. Around one-third of physicians (32% percent) said that they will change practice settings, leave patient care roles, temporarily shut their practices or retire in response to COVID-19.
“Even prior to the COVID-19 pandemic, physicians were expressing dissatisfaction in their jobs and experiencing high rates of burnout and mental health issues caused by stressors like regulatory burdens and EHR use,” said Dr. Gary Price, President of The Physicians Foundation via release. “The pandemic is straining physicians further and we need to prioritize providing solutions that will ease the financial and emotional burdens they are feeling as a means to improve their wellbeing now and after the crisis is resolved. It is the least we can do for the health care workers who are risking their lives to take care of everyone else.”
Banning says that the pandemic-induced drop off in office visits has shown that the fee-for-service model has been a failure for primary care physicians, and wants to move away from it. Much of what a primary care physician does can be budgeted ahead of time with a payment on the front end rather than billing for treatment after the fact. Caring for chronic conditions, regular check ups, and other problems can be accounted for easier than other service lines.
Banning and others advocate for what is called a prospective payment which is a monthly rate to manage a patient’s care under a defined set of services. This would include care management and navigation, making sure patients get efficient and necessary care, rather than just racking up bills by doing more than is needed. “It would unburden the physician from having to document and look for billable fee-for-service events and allow doctors to connect to their patients,” Banning says.
Conversations are moving toward taking primary care out of the insurance calculation and having payers directly pay a monthly fee, much like is done with direct primary care. The monthly fee would be based on past data, and would be paid up front to manage a patient population. Employers, providers, and state leaders are working up the financial modeling to see if it would be feasible. “We have dipped our toe in [to value-based or prospective payments] and done stuff with ACOs, but it has never really moved the needle,” Banning says. “The crisis has unfortunately given us an opportunity to fundamentally change and advance value-based payment and total cost of care payments in ways that we haven’t before.”
Value-based care and prospective payments would provide incentive to providers to provide the most cost effective care and not do unnecessary treatment or procedures, while providing a consistent revenue stream for physician offices benefitting the patient, provider, and payer. But there has been some resistance.
Health systems, insurance companies, and large employers are not set up to pay things this way, offering a few obstacles. But Medicare has been using a form of prospective payment for years. “If the federal government can figure out how to do it, don’t tell me that fortune 20 company doesn’t have the capabilities to figure it out,” Banning says.
Insurance companies and employers could do a 12 month review of claims they have paid out, divide by 12, and have an estimate of what a prospective payment would look like. But that is easier said than done, Banning concedes.
Another sticking point is that employers would have to change their plan design, but Banning says it shouldn’t change the amount of money being paid by employers and insurance companies, but rather changing how and when it will be paid.
Additionally, most insurance companies and their plans are governed by federal legislation, meaning any movement from the state can only impact state insurance plans. A federal move would have a much greater impact. Finally, payers might be difficult to convince, because with everyone staying home from the doctor they are paying out much less in claims than they usually would. With nearly every industry struggling, asking them to pay more than they currently are is a tough task.
But while avoiding the doctor in the short run might save patients and payers money, there is evidence that putting off medical care is leading to more intense and costly health problems down the road. Providing consistent care management and avoiding trips to the hospital is exactly why prospective payments might save money in the long run. Not making this move “misses the longer play,” Banning says.
Other threats to independent primary care exist as well, Banning notes. Private equity firms and hospital networks are waiting for these practices to be desperate for a bailout, and will make an offer to a practice that has revenue decimated by the pandemic. “They are hoping to buy up practices in a fire sale on the other side of this” he says. “They are sitting on large amount of capital that they could easily deploy and vertically integrate.”
There has been evidence of this success. Banning says that local and nationwide physician groups using the prospective payment model have shown a reduction in 27 percent of specialty referrals and more than 30 percent reduction in hospital costs as well as a better use of drugs spend. Despite paying more for primary care services, savings come from a reduction in more expensive treatment “It all resulted in significant savings that more than cover the cost of what they are paying,” Banning says.
While Texas has been behind the curve in prospective payment, groups like Catalyst Health network are showing that it can be done. California has been doing this sort of payment for years now, and there are various groups around the country making it work.
“Everybody we are talking to gets it,” Banning says. “The insurers are large bureaucratic slow movers, but we have seen in the market, once somebody moves, they all tend to follow.”
To read more about the ‘Marshall Plan” from the Texas Academy of Family Physicians plan to reshape the way primary care is paid for, click here.