Payment Reform Must Begin With Medical Homes, Positive Incentives

Ensure access to high quality primary care patient care, and the money will follow. That mantra, recited often to physicians, also applies to any value-based purchasing system Congress envisions for Medicare, said AAFP Speaker Tom Weida, M.D., during testimony before the House Energy and Commerce Subcommittee on Health.

Weida rushed from the closing moments of the AAFP Congress of Delegates to Capitol Hill, where he presented testimony on Sept. 28.

Implementing pay for performance, or P4P, in a systematic and reasoned manner will lay the foundation for reforming the health care system in a way that both serves the patient and restrains cost, Weida told the subcommittee. Money saved in a patient-centered system will compensate for the initial investment in a well-planned P4P program, he said.

“We share the subcommittee’s concerns that the current system is flawed, outdated and unsustainable,” he said. “For this reason, the AAFP supports the restructuring of Medicare payments to reward quality and care coordination. Such a restructuring must be built on a fundamental reform of the underlying fee-for-service system and a revaluing of the services offered by all physicians providing care.”

Moreover improved payment for primary care services can help rectify the growing shortage of family physicians, who are the bedrock of an efficient, effective health care system, he added during questioning.

"Everyone holds out the ideal about having a choice about your physician," said Rep. Lois Capps, D-Calif. "I think that may be a moot point, with the knowledge that there's been such a decline in physicians, family physicians especially. I was astonished to read that the number of medical graduates going into family medicine has fallen by more than 50 percent since 1997. I think that's fairly remarkable.

"How does Medicare payment play into this decline," she asked Weida. "How does the decrease in primary care relate to the increase in spending?"

Noting the AAFP's Family Physician Workforce Reform report (PDF file: 12 pages / 123 KB. More about PDFs.) calls for increasing the family physician workforce to 139,531 by 2020, Weida answered, "A lot of that is predicated on reimbursement of payment and hassles of payment.

"What we do know … is that in states that have more primary care, their health care quality is better and their costs are less, and this is Medicare data. That can amount to as much as a $2,000 per year per beneficiary difference between states with the best ratios (of primary care to patient population) and states with the worst. That's a tremendous difference."

A new physician payment system should be built on a medical home that coordinates care and eliminates expensive duplication, miscommunication and fragmentation, he said. Congress can ensure the expansion and survival of medical homes by providing compensation that covers the cost of patient services, care coordination and the electronic health records, or EHRs, needed to collect and report the data on which P4P relies.

To that end, the AAFP recommends that the government

“The program must provide incentives -- not punishment -- to encourage continuous quality improvement,” Weida said. “… physicians are being asked to bear the costs of acquiring, using and maintaining health information technology in their offices, with benefits accruing across the health system -- to patients, payers and insurance plans. Appropriate incentives must be explicitly integrated into a Medicare pay-for-performance program."