Family Physicians Are 'Linchpin' of Health Care Reform Efforts

Making Investment in Primary Care Vital to Health Care Future

September 21, 2012 08:15 pm James Arvantes

Although the overall increase in health care costs in the United States has slowed recently, there still is an overwhelming consensus that the cost of health care in this country is unsustainable and more must be done to improve the quality of care. In response to this growing crisis, public and private payers have launched scores of innovative health care delivery and payment models designed to reward the value of health care services instead of the volume of services.

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"It is pretty hard to think about increasing value in the health care system without having a larger role for the family physician," says Len Nichols, Ph.D., director of the Center for Health Policy Research and Ethics and professor of health policy for the College of Health and Human Services at George Mason University in Fairfax, Va.

"We all agree that family physicians are among the most valuable people on the planet," he adds.

Nichols, like other analysts, describes primary care as the "linchpin of patient engagement." Most of the emerging payment and delivery models attempt to strengthen and incentivize primary care as a way of controlling costs and improving care, he says.

In fact, many of the nation's largest health payers have launched initiatives, such as the patient-centered medical home (PCMH), in local, regional and statewide markets, either separately or in conjunction with state programs to form multipayer collaboratives. These private payers include UnitedHealthCare, CIGNA, WellPoint Inc., Aetna, Humana, and Blue Cross and Blue Shield.

story highlights

  • Primary care and family medicine are becoming more important as the nation shifts from a volume-based to a value-based health care system.
  • Innovative payment and delivery systems have underscored the ability of primary care and family medicine to improve care, enhance access and better control health care costs.
  • Despite the growing importance of family medicine, compensation for family physicians continues to lag behind that of subspecialists.

On the public side, 41 states now have adopted policies and programs to "advance medical homes," an increase of 10 states from a few years ago, according to the National Academy for State Health Policy(

The ability of primary care to deliver on the promise of improved care, greater access and better controlled costs is well known and documented, fueling increased interest and investments in primary care. North Carolina's Medicaid managed care program, Community Care of North Carolina( (CCNC), serves as one of the most potent examples of how a primary care-based delivery model can restrain growth in health care costs and improve care.

CCNC uses physician-led networks and the PCMH to provide care to the state's Medicaid patients. The program started with nine pilot projects covering 250,000 Medicaid enrollees in 1999 and has since expanded to 14 physician-led networks, 4,500 primary care physicians, and more than 1,400 medical homes that cover the entire state and provide care to 1.1 million enrollees.

According to North Carolina officials, CCNC has saved the state more than $1 billion in Medicaid costs during the past several years, emerging as an influencer of quality initiatives in North Carolina and a model for other states to consider.

Key Investments

Another driver for health care reform that recognizes the importance of primary care is the Patient Protection and Affordable Care Act, which provides a framework for moving forward by boosting payments for primary care physicians and making key investments in the nation's primary care infrastructure.

For example, the Affordable Care Act created the CMS Center for Medicare and Medicaid Innovation(, (CMMI) to develop and test innovative health care payment and delivery models that slow Medicare and Medicaid cost growth, as well as costs for the Children's Health Insurance Program.

During the past several months, the CMMI has launched various innovations, including the Comprehensive Primary Care initiative, a pilot program that has CMS working with commercial and state health insurance plans to support primary care practices that deliver coordinated and seamless care based on the tenets of the PCMH.

The voluntary initiative is scheduled to begin as a demonstration project in seven health care markets across the country. The 500 participating primary care practices will be paid based on a blended payment model that combines fee-for-service (FFS) with a per-patient, per-month care coordination fee ranging from $8 to $40. Participating practices also have an opportunity to participate in shared savings from the project.

The ongoing shift from a volume-based to a value-based system has underscored some fundamental flaws in the nation's prevailing FFS payment system. A straight FFS system encourages more procedures, tests and treatments rather than rewarding physicians for the value of services, according to Paul Grundy, M.D., M.P.H., IBM's global director of health care transformation and co-chair of the Patient-Centered Primary Care Collaborative.

That is why the AAFP advocates for a blended payment model that incorporates FFS and other components, such as a monthly care coordination fee, to reward the provision of cognitive services. Within the context of health care reform, the blended payment model becomes a catalyst for change, a necessary bridge from the straight FFS world to an integrated delivery system that rewards improvement of the care provided.

Payment Disparities

Despite the growing importance of primary care in the U.S. health care system, however, compensation for primary care physicians lags far behind most subspecialties, which is why new ways of delivering care must be accompanied by new payment models.

"A family physician makes a third, a fifth of what some proceduralists make," says Nichols. "There is an imbalance between the value we ascribe to the family physician and what they get paid."

But Grundy and other analysts are convinced that the income gap between primary care physicians and subspecialists is narrowing. The average annual salary of family physicians has increased more than any other medical specialty or subspecialty during the past few years and now exceeds $200,000 a year, according to Grundy.

"I think that is a result of the fact we are valuing primary care more," Grundy says.

In fact, WellPoint Inc. recently increased payment rates for primary care physicians and now is compensating physicians for electronic visits and telephone consultations.

In addition, in the proposed 2013 fiscal year Medicare physician fee schedule, CMS proposed paying physicians for nonface-to-face consultations for the first time.

"Those primary care practices that are stepping up to the (PCMH) are, by and large, being rewarded in most markets," says Grundy.

That is not to say, however, that compensation rates for primary care physicians are fair or accurate or that they will be in the future. Many of the payment distortions and disparities result from flaws in the Medicare fee schedule, says Robert Berenson, M.D., a senior fellow at the Urban Institute.

According to Berenson, Medicare "widely overpays for interpreting tests and performing minor procedures." Then private payers base their payment policies on the Medicare fee schedule, thereby perpetuating the payment distortions.

"There is a growing consensus in the public and private policy community and in the health plan community that we need to increase the viability of primary care," Berenson says. "That means increasing payment for primary care. The recognition of the problem is there, and the will is there. It now is a question of implementation in the context of those who want to preserve the status quo and those who will fight the change."

Berenson acknowledges that "it is very tough being a primary care doctor right now." But, he adds, "There are some real prospects for change. It is now up to policymakers to support (primary care)."