Alternative Payment Models for Independent Primary Care Physicians

This is a three-part series on the critical components you must address to maintain a thriving independent practice. Part 1 reviews the importance of embracing your patients, and part 2 explains how technology can support you.

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While embracing your patients and utilizing technology are important components of running a practice, financial stability cannot be ignored. Many independent primary care physicians have turned to alternative payment models to provide the funds they need to keep things running smoothly. Here’s a quick review of available alternative payment models as well as an alternative practice model.

Exploring Alternative Payment Models

Value-Based Care

The Centers for Medicare & Medicaid Services (CMS) defines value-based care as those programs that “reward health care providers with incentive payments for the quality of care they give to people with Medicare.” CMS began emphasizing value-based, quality health care over the quantity of provider visits in 2008. Since then, programs like MACRA and CPC+ have set forth reporting requirements and reimbursement payments.

We think a better definition of value-based care is where your practice is responsible and accordingly compensated for the population health of both publicly and privately insured patients. When done right, it can be a great way to improve the financial performance of your practice.

Value-based care provides payment bonuses to doctors who provide high-quality care for Medicare patients.


The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) repeals the Medicare Sustainable Growth Rate and replaces it with a new program known as the Quality Payment Program (QPP). Beginning on January 1, 2017, qualified providers now participate in one of two tracks: either Advanced Alternative Payment Models (Advanced APMs) or the Merit-Based Incentive Payment Program System (MIPS). Bonuses for participating in MIPS or APMs can be significant.

MIPS Advanced APMs
  • Payment track for ~95% of physicians
  • Payment track for ~5% of physicians
  • Replaces Meaningful Use (MU), PQRS, and Value-based Payment Modifier (VM)
  • Exempt from MIPS incentives and penalties
  • Adjustments to Medicare payments based on performance, varying by program year:
    • 2019: +/- 4%
    • 2020: +/- 5%
    • 2021: +/- 7%
    • 2022: +/- 9%
  • 5% annual payment bonus between 2019 and 2024
  • Additional incentive from $500 million pool to provide positive adjustments
  • Multiple payment structures

The right technology solutions, like Elation, enable practices to achieve success with quality programs like MACRA by committing to the health IT requirements needed to support practices.

If a practice invests in technology that is built around making reporting and participation easy, physicians can save time and painlessly receive the financial incentives from these programs. Elation’s platform gets at the heart of care coordination and reporting at the point of care. More specifically, the EHR’s built-in quality measures dashboard makes it easy to track your progress on quality measures. At the same time, Elation provides clinical decision support and reminders at the point of care. Both features, along with 24/7 support to answer any MACRA-related question, enable and empower independent physicians to take advantage of MACRA while providing phenomenal care.

Primary Care First

Primary Care First (PCF) is an exciting initiative announced by CMS in 2019 that begins in 2020. PCF will offer providers a simple “flat stream of revenue” for each patient. When a patient stays healthy and out of the hospital, the practice will receive a bonus. But if a patient ends up sicker than expected, the practice will bear responsibility for the extra spending up to a certain share of its revenue.

Primary Care First provides a “flat stream of revenue” for each patient and gives doctors bonuses if they keep patients out of the hospital.

PCF is geared toward smaller primary care practices that are centered around comprehensive care management and coordination for Medicare beneficiaries and high-risk, seriously ill patients.

  • Physicians need a minimum of 125 Medicare beneficiaries to qualify for participation.
  • Providers are incentivized for keeping patients out of hospitals (i.e., performance is measured against hospital utilization).
  • There’s a 50 percent potential upside and 10 percent potential downside. So, doctors who earn $200,000 today could earn up to $300,000, depending on their ability to keep patients healthier.
  • Must be using a 2015 CEHRT platform with API data exchange capabilities and a connection to a regional Health Information Exchange (HIE) to facilitate care coordination. (Such capabilities are provided by Elation EMR.)

Direct Care

Direct care is a medical practice model rather than an alternative payment model created by CMS — but because it offers another financial alternative for practices, we felt it made sense to include it with APMs.

Direct care is a medical practice model where providers contract directly with patients. For almost all of America’s history, Americans paid their providers directly for care. It was only in the 20th century that health insurance outpaced out-of-pocket pay as the primary revenue source for medical practices. But since the turn of the 21st century, direct care has made a resurgence.

In 2005, there were fewer than 150 physicians practicing in direct primary care, concierge, and other direct care models. This number grew five times in the next five years, to 756 in 2010, and then even more rapidly to an estimated 6,500 direct-care physicians across the country by the end of 2015.

Download the complete Direct Care Playbook

For physicians, adopting a direct-care model can improve work-life balance, reduce practice overhead, bring higher per-patient revenues, and maintain physician autonomy.

For patients, direct care can mean a greater degree of access to, and time with, physicians. Improved communication and more regular, engaged care lead to fewer unnecessary tests, less frequent hospital visits, and lower total cost of care.

Although not a CMS directed payment model, this model can help independent practices stabilize their finances to help them remain independent.

Alternative Payment Models Give You Financial Freedom

Alternative payment models are just one of the factors that allow independent primary care physicians to have thriving practices. New payment models and changing reimbursement rates provide the financial stability you need. Plus, combining these new payment models with the right technology and optimized practice schedules will help you have a thriving practice in no time.

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