AAFP Tackles Tough Issues Related to Care Management Fees

Policy Statement, Issue Brief, Cost Calculator Highlight Work

August 22, 2016 03:56 pm Sheri Porter

Family physicians have always known they add tremendous value to the health care system -- after all, they're the physicians trained to treat patients from head to toe and from cradle to grave -- and who aim to keep them healthy and out of the hospital.  


In recent years, the situation has become more complicated with the exploding popularity of blended payment models that often include, among other things, a per-member, per-month (PMPM) care management fee. That fee is designed to pay physicians for patient care that falls outside of a normal office visit, but the amount varies among payers and is almost universally considered too low by physicians.

In response, the AAFP shifted into high gear to address some tough issues related to care management fees, beginning with a major overhaul of its care management fee policy. The policy defines care management from an AAFP perspective and lists eight elements considered to be "core activities" covered by a PMPM care management fee within the context of the patient-centered medical home (PCMH).

Specifically, those all-important core activities are dedicated physician time, dedicated nonphysician time, patient education, advanced technology, medication management, risk stratification and management, integrated coordinated care across the health care system, and care planning.

Story Highlights
  • This summer, the AAFP is addressing issues related to care management fees with an overhaul of its policy statement, as well as creation of an issue brief and a cost calculator for physicians to use.
  • The brief was created by an outside consultant, and authors determined that the value of care management to insurers in terms of savings was $16.73 per-member, per-month.
  • Insurers' cost in payments to physicians for providing those cost-saving services was just $4.90 per-member, per-month.

Just this month, the AAFP released an issue brief(7 page PDF), Valuation of Care Management Performed by Primary Care Physicians, which was created for the Academy by Discern Health, a Baltimore-based consulting firm.

Authors highlight the benefits of care management and, after conducting an extensive literature review, conclude that the "benefits of care management provided by primary care practices exceeds current payments by insurers."

Kent Moore, the AAFP's senior strategist for physician payment, has been involved in these efforts. He told AAFP News that the AAFP's support for the PCMH model -- and payment reform to support that model -- has been solid for years. And now, finally, programs such as CMS' Comprehensive Primary Care (CPC) and CPC Plus, as well as numerous private payer initiatives, are actually paying physicians care management fees.

"It became important to define what we meant by care management and to determine what it was potentially worth in terms of its value to the health care system," said Moore -- hence, the updated policy statement and commissioning of the issue brief.

"This paper provides some evidence and documentation for what care management, as defined by the AAFP, is potentially worth to a payer," said Moore. He noted that Discern also developed a cost calculator (see sidebar below) to help individual practices compute what it costs them to provide such care.

"Family physicians now have some data to make a more informed and intelligent business decision about whether or not they want to accept the care management fees being offered to them by public and private payers and, if not, what they think that fee should be," said Moore.

Issue Brief Highlights

Issue brief authors note that the nation is transitioning to value-based payment and cite HHS' goal to shift 50 percent of traditional fee-for-service Medicare payments to alternative payment models by 2018. (HHS' initial goal of a 30 percent shift by 2016 was reached ahead of schedule.)

Calculate Care Management Costs With Free Tool

The AAFP commissioned Discern Health to create a paper that addresses the gap between the value of care management to insurers and the per-member, per-month payment that physicians typically receive for providing those services to patients. In conjunction with that effort, Discern also created a cost calculator available free to AAFP members to help them estimate their care management costs.

"The idea behind the calculator is that family physicians who are interested in providing care management services have a way to figure out the business proposition," said Discern Health Project Director Ben Peck, Ph.D. "If physicians know how much is it going to cost them to provide this service, then they have some sense of what they need to ask for when they negotiate payment with insurers," said Peck.

Furthermore, 40 percent of private sector health plan payments to physicians are now designed to encourage clinicians "to deliver higher quality care, compared to just 11 percent in 2013," say the authors.

They cite numerous studies that demonstrate the value of care management and list the top benefits. For instance, implementation of care management services within a practice can

  • reduce total cost of care delivery to a patient;
  • decrease utilization of high-cost services;
  • enhance the quality of care; and
  • improve experiences of care for patients, physicians and staff members.

Then they illuminate the downside to this arrangement.

"There is a significant difference between the typical cost of care management for health insurers and the benefits health insurers can expect from care management," say the authors.

They calculate the value of care management to insurers in terms of savings as $16.73 PMPM but insurers' cost in payments to physicians for providing those cost-saving services as just $4.90 PMPM.

"Given the significant gap between the benefits health insurers are receiving and what they are paying physicians to offer care management, should physicians receive additional payment for the care management services they are providing?" the authors ask. "If so, how can physicians and health insurers work together to set appropriate payment rates and enhance the value of the overall system?"

Take-home Messages

Ben Peck, Ph.D., a project director at Discern Health, led the work that culminated in the issue brief. In an interview with AAFP News, he said the takeaway message for family physicians is they can have an impact by creating strong care management programs within their practices.

"The evidence indicates that care management delivered by primary care physicians can both improve the quality of care and reduce the total cost of care," said Peck.

The key message for payers is this: "Care management is worth investing in, and payers who collaborate effectively with primary care physicians will see a reduction in total costs of care and an improvement in quality," he added.

"Insurers must realize that success in care management is not guaranteed -- and it's not going to necessarily be immediate with every practice they work with -- but over time, investments in care management will pay off."

Next Steps

There's plenty more work ahead. Peck said future research will focus on understanding which elements of care management make the biggest impact.

"What is it that really improves quality for patients and reduces total system costs? Is 24-hour-a-day, seven-days-a-week access to your doctor the most crucial element? Is it the ability to create a registry of all patients with diabetes and then follow up with them? The list goes on and on," he said.

"Getting a better sense of what is the most crucial element or elements -- because there are likely to be more than just one that are going to drive improvement -- is going to be the next step for us."

Related AAFP News Coverage
Leader Voices Blog: Academy is Working to Define, Value Care Management