Beyond demonstrations: implementing a primary care hybrid payment model in Medicare

Abstract

The National Academies of Sciences, Engineering, and Medicine's (NASEM’s) 2021 report on primary care called for a hybrid payment approach—a mix of fee-for-service and population-based payment—with performance accountability to strike the proper balance for desired practice transformation and to support primary care's important and expanding role. The NASEM report also proposed substantial increases to primary care payment and reforms to the Medicare Physician Fee Schedule. This paper addresses pragmatic ways to implement these recommendations, describing and proposing solutions to the main implementation challenges. The urgent need for primary care payment reform calls for adopting a hybrid model within the Medicare fee schedule rather than engaging in another round of demonstrations, despite legal and practical obstacles to adoption. The paper explores reasons for adopting a roughly 50:50 blend of fee-for-service and populationbased payment and addresses other design features, presenting reasons why spending accountability should rely on utilization measures under primary care control rather than performance on total cost of care, and proposes a fresh approach to quality, emphasizing that quality measures should be parsimonious, focused on important outcomes with demonstrated quality improvement.