Exploring Capitated Payment for Primary Care in California

March 28th, 2024
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A significant challenge in the pursuit of a high-performing health care system in the United States is the diminishing allocation of resources toward primary care. Experts argue that both the amount and structure of primary care spending has a significant negative impact on patient outcomes. Hybrid payments that include capitation offer a promising alternative to traditional fee-for-service models, focusing on quality over quantity to enhance patient outcomes and system efficiency.

The Case for Capitation

The traditional fee-for-service payment model encourages quantity over quality of care, creating inefficiency within the health care system. By transitioning to a blended payment model that includes capitation, primary care practices can reduce their administrative burden and improve patient outcomes. Capitation provides the flexibility to invest in staff, improve clinical quality, adapt to shifts in patient preferences and most importantly incentivizes quality, not quantity, of patient visits. During the COVID-19 pandemic for example, capitated payment models enabled primary care practices to swiftly adapt to changing patient access preferences, a flexibility not afforded by fee-for-service models.

Understanding the Regulatory Environment

Regulatory oversight for health coverage in California is complex, determined by the characteristics of what entity is paying for care — the purchaser — and whether the coverage is fully insured or self-insured. Clear regulatory guidelines are crucial to ensuring the successful implementation and functioning of any new payment model. An exploration conducted by PBGH’s California Quality Collaborative and its partner Integrated Healthcare Association found that while self-funded plans in California can use capitation for primary care payments under specific conditions, the regulatory guidelines under the federal Employee Retirement Income Security Act (ERISA) of 1974 and the Knox Keene Act (KKA) of 1975 for implementing such payment models are not clearly defined.

An analysis of California’s regulatory framework to determine if self-funded plans can legally pay primary care providers through a capitated model did not yield a straightforward answer. It did, however, clarify the contexts in which capitation is feasible in California. These include scenarios within arrangements where employers partially cover costs through capitation, direct contracts between employers and providers, and through third-party administrators engaging with providers operating under specialized regulatory conditions or assuming financial responsibility for patient care.

Stakeholder Perspectives

The transition to a capitated payment model impacts different stakeholders in the health care industry in unique ways. Self-funded employers, third-party administrators, primary care providers and consumer advocates all have varied considerations when debating the merits of capitated payments. While some see the shift as a potential market differentiator, others may worry that it could not only limit patients’ access to diverse services but also potentially diminish consumer protection safeguards, such as ensuring comprehensive care coverage.

The Path Forward Through Collaboration

Strengthened collaboration among stakeholders, including health plans, primary care providers and purchasers will likely illuminate a clearer path toward a capitation model that advances health care quality, reduces disparities and ensures financial stability. By addressing regulatory uncertainties and fostering a broader dialogue among key decision-makers, we can work toward a hybrid payment model that values and incentivizes quality, supports widespread transformation of primary care delivery and ultimately delivers better health outcomes for all.

For a more detailed look into capitated payment for primary care in self-funded health insurance arrangements in California, read our latest issue brief.

Empowering Care: The Role of Alternative Payment Model Design in Advancing Equity

January 25th, 2024
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Alternative Payment Models (APMs), incentivizing clinicians to provide high-quality, cost-efficient care beyond traditional fee-for-service payments, hold immense potential to revolutionize health care delivery, expanding access, improving outcomes and addressing health disparities. However, to unleash their transformative power, APMs must be thoughtfully designed to prioritize health equity and mitigate unintended negative consequences. Factors such as poverty, institutional racism, education, economic opportunities, insurance coverage and the living environment significantly influence health equity. When capitated payments and performance incentives fail to account for the necessary resources to provide adequate care, practices serving populations with higher medical and social risks may face financial challenges, ultimately impacting health outcomes negatively.

Multi-Stakeholder Alignment

Multi-stakeholder collaboration is pivotal in aligning the design and implementation of a payment model that champions health equity. Through the California Advanced Primary Care Initiative, PBGH’s California Quality Collaborative (CQC) and partner Integrated Healthcare Association (IHA) bring together health care payers to collectively strengthen primary care delivery. The initiative aims to facilitate the delivery of high-performing, value-based care, reducing costs while enhancing quality and equity. CQC and IHA collaborated with health plans to develop a common hybrid primary care payment model, incorporating key recommendations from subject matter experts in payment model design and health equity intended to strengthen health equity in APM design and implementation, regardless of geography. The payment model is comprised of three key elements: direct patient care payment, population health payment and performance-based payment.

Recommendations to Advance Equity

Element 1: Direct Patient Care Payment

Element 2: Population Health Management Payment

Element 3: Performance-Based Payment

APMs, with intentional design considerations for health equity, can uniquely contribute to addressing health disparities. Direct investments and dedicated support are crucial elements, ensuring that practices serving rural or underserved areas have a viable path to success within the payment model. Multi-stakeholder alignment and ongoing collaboration are key to driving cooperative changes and improving the delivery of care. The journey toward APMs requires collective efforts and guidance from diverse stakeholders, from payers and providers to community-based organizations and those receiving care.

For a more detailed look at the recommendations, read our latest issue brief.

From Data to Delivery: Measuring Advanced Primary Care in California

January 11th, 2024
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The health care delivery system in the United States faces significant challenges, ranking poorly in quality, efficiency and outcomes among peer countries. Despite high spending on health care, primary care, a crucial element for better population health, is underfunded in the U.S. In California, over 65% of physicians work in solo or small practices and primary care providers often lack resources and technology, contributing to subpar patient outcomes.

Through the California Advanced Primary Care Initiative, PBGH’s California Quality Collaborative (CQC) and partner Integrated Healthcare Association (IHA) are working to understand and address these issues to help strengthen the state’s primary care delivery system. To that end, CQC and IHA executed a pilot project in California, bringing together four large health care purchasers — Covered California, California Public Employees’ Retirement System (CalPERS), eBay and San Francisco Health Services System — and 13,055 primary care practices.

Measurement Pilot Goals

The measurement pilot’s goal was to test the effectiveness of a measure set outlining key attributes of high-quality, comprehensive and patient-centered care and to test the use of existing IHA data to measure the performance of individual primary care practices. This data includes a significant portion of the commercial market and some Medicare Advantage and Medi-Cal data from health plans and providers in California. This would then help determine how well primary care practices performed when assessed against these rigorous patient care measures.

Key Findings

The analysis evaluated the performance of practices and observed which practices scored highest, average and lowest for each measure. This provided a picture of how practices are doing in California and helps identify measures where data collection can be improved.

The measure set was developed through a multi-stakeholder process that included input from purchasers, health plans, providers and patients. Measures focus on outcomes, represent both adult and pediatric patients and avoid redundancy. The measure set also aligns with other existing measurements where possible to reduce the reporting and administrative burden for providers.

Summary of the results for each measure:

Recommendations for the California Health Care Delivery System

Examining how individual practices performed on the Advanced Primary Care Measure Set revealed the following needs within the California health care system. Each of the identified opportunities for improvement listed below can be addressed by leveraging partnerships between payers, purchasers, providers and data exchange organizations.

  1. Expansion of Clinical Data Exchange: Enhance reporting capabilities and foster payer/purchaser collaboration to reduce administrative hassles for providers, such as logging into multiple interfaces to view and assess data. Refer to the California Advanced Primary Care Initiative for an example of multi-payer alignment work.
  2. Comprehensive Views of Practice-Level Data for Providers: Interoperability of systems, standard data specifications and alignment of formats can facilitate bringing data together for improved insight. Full views of performance with more of a provider’s population included will result in clear goals for enhancing patient care and reducing disparities.
  3. Improved Performance: Focus on practice-level improvement for key primary care quality indicators with low scores, especially the quality indicators with the overall lowest scores in this pilot (blood pressure control, depression screening and childhood immunizations).
  4. Additional Resources: Boost care delivery quality by providing shared tools, technical assistance programs such as CQC’s Practice Transformation Initiative and team support for practices.

For a more detailed look at the results and recommendations, read our latest issue brief.

Advanced Primary Care Key to Reducing Health Inequities

June 14th, 2023
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Robust, comprehensive primary care – a critical foundation for a more cost-effective, high-functioning health system – is equally important in helping boost health equity, a new report states.

The report, produced by the California Health Care Foundation, underscores the variety of ways in which advanced primary care can advance equity in care access and quality for underserved populations. Yet it also warns of significant barriers that continue to thwart primary care’s potential in California and nationwide.

In the face of these obstacles, employers can take steps today to strengthen primary care and reduce health care inequities. Actions can include expanding primary care locations, pushing insurers to strengthen financial support for primary care and increasing telehealth capabilities.

Unlocking Health Equity through Advanced Primary Care

Long-standing racial and economic discrimination in health and social policy has fostered pervasive health gaps for people of color. These disparities range from greater disease burdens and more mental health problems for racially minoritized populations to increased mortality and shorter life expectancies. Historically marginalized racial and ethnic groups also contend with less insurance coverage and reduced access to care.

The good news is that the key components of advanced primary care are particularly well-suited for reversing systemic health care inequities, according to the California Health Care Foundation report. Primary care’s capabilities and resulting benefits include:

Advanced primary care’s power to mitigate health inequities highlights the wider benefits it can produce. Adults who regularly see a primary care physician have 33% lower health care costs and reduced odds of dying prematurely than those who see only a specialist. Every $1 increase in primary care spending produces $13 in savings.

Despite these critical advantages, primary care remains woefully under-resourced, accounting for 35% of health care visits yet only receiving 5.4% of all spending on health care in the U.S. Reimbursement for Medicaid services for low-income, at-risk populations is significantly less than Medicare and commercial rates. As a result, many young doctors burdened with student debt opt for better-paying specialties, exacerbating an already severe primary care clinician shortage.

Employers Can Take Steps to Bolster Primary Care and Advance Health Equity

Notwithstanding these challenges, employers can take steps today to accelerate advanced primary care to help reverse inequities and improve overall employee health, including:

Transforming Health Care Through Primary Care

Given advanced primary care’s unmatched ability to both address inequity and transform our health system, consensus is building around efforts to overcome longstanding financial barriers and dramatically strengthen the nation’s primary care infrastructure.

The California Health Care Foundation report, for example, calls for a new paradigm that includes programs to increase recruiting and training of primary care physicians, increased primary care spending, improved Medicaid reimbursement and expanded primary care hours and locations. Employers can play an essential role in pushing payers to invest in primary care, as well as encourage providers to use the investment to realize and extend the many benefits advanced primary care offers.

Ultimately, it is about increasing equal access to high-quality primary care for all. Having access is equity.


Special thanks to Rishi Manchanda, M.D., co-author of the CHCF report.


4 Key Employer Health Trends for 2023

January 4th, 2023
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With the pandemic’s grip finally easing, employers are shifting their focus toward key objectives that can support sustained improvements in health care quality and meaningful reductions in cost. Here, the top four trends for large health care purchasers to watch as we head into 2023.

1. Improving health equity

COVID-19 exposed major disparities in the U.S. health care system and helped fuel an employer commitment to tackle the systemic inequities faced by underserved and minority communities. Employers understand that by focusing on health plan design, care access and social determinants of care, they can make important strides toward providing more equitable and cost-effective care.

In the coming year, more large companies will be looking to cover preventive medications and services, supporting pregnancies through doula services, developing data capabilities to identify and help address social determinants, improving remote chronic disease management, and making benefits and health care simpler to access and navigate for underserved populations.


2. Strengthening primary care

Employers realize that robust primary care provides the foundation for a healthy workforce and is an essential starting point of high-value health care system. Studies show that advanced primary care, or primary care systems that incentivize integrated and coordinated care, can lower overall health utilization, improve outcomes and reduce costs.

Key strategies employers are expected to target to bolster primary care include supporting consistent advanced primary care standards for payers, providers and health care purchasers to incentivize high-quality, lower-cost primary care. Other employer efforts are likely to focus on working with policymakers to advance the development and application of alternative payment models that support and enable advanced primary care. Equally important will be the continued evolution of tools and systems that enhance consistent access to behavioral mental health in the primary care setting.

To support purchasers in their efforts to identify and work with top-performing primary care practices, PBGH recently issued a first-of-its-kind collective request for information (RFI) on behalf of members to identify provider practices that meet established standards of advanced primary care and that are willing to partner — the results of which will be used in network design and/or in direct contracting arrangements.


3. Taking fiduciary responsibility for health care

The Consolidated Appropriations Act (CAA) of 2021 imposes fiduciary obligations for employers who self-insure under the Employee Retirement Income Security Act of 1974 (ERISA). That means self-insured employers will need to demonstrate that the health care services they purchase for employees are cost-effective and high-quality. As a result, employers will be working to harness newly available hospital price information to drive cost-effective, quality care. Critical to these efforts will be tools that can make newly transparent price data meaningful and actionable. In addition, collective employer efforts to identify specific examples of overpricing will likely emerge to support negotiating leverage with hospitals and providers. Ultimately, employers’ new fiduciary obligations may spawn a shared national database with companion analytics that purchasers can use for evaluating pricing variation to help determine fair prices.


4. Reforming pharmacy benefit managers (PBMs)

A key legislative objective for purchasers in 2023 will be passage of legislation similar to the last Congress’s Pharmacy Benefit Manager Transparency Act of 2022. Comprehensive federal legislation would empower the Federal Trade Commission to increase drug pricing transparency and hold PBMs accountable for numerous unfair and deceptive practices that increase consumer costs and limit access of prescription drugs. In addition to expected action from Congress, a Federal Trade Commission investigation into PBM business practices is underway. Employers, meanwhile, will increasingly be looking to new market entrants that promise more transparent PBM services and put employers in control of their data to gain greater control over rising drug costs and employee access to quality care. PBGH is working across multiple channels to raise awareness about the extent to which PBMs have distorted the prescription drug supply chain – actions which put lives at risk, constrain employee access to medications and add billions of unnecessary costs to employers’ health care expenses.

8 Steps to Implementing Advanced Primary Care

September 29th, 2022
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Robust primary care is essential to the ability to transform health care in the U.S. Adults who regularly see a primary care physician have 33% lower health care costs and 19% lower odds of dying prematurely than those who see only a specialist. Additionally, every $1 increase in primary care spending produces $13 in savings, and if everyone used a primary care provider as the principal source of care, the U.S. could save $67 billion annually. As part of its pioneering work to define and promote the adoption of advanced primary care, PBGH’s California Quality Collaborative’s primary care improvement efforts led to almost 50,000 hospital bed days avoided, emergency room utilization sharply reduced and total savings of about $186 million in California.

Despite these outsized benefits, misaligned financial incentives, chronic under-investment, infrastructure barriers and a lack of integration with other elements of care — including behavioral health — continue to severely constrain primary care’s impact on the health of American workers and families.

That’s why PBGH is spearheading the development and implementation of ‘advanced primary care.’ Our approach emphasizes bolstering existing primary care to treat more health needs within the primary care practice and refer to only the highest quality specialists when appropriate, increase patient access, integrate behavioral health screening and management, improve care coordination and expand tools and systems that can support population-based care for patients.

A new report highlights eight key takeaways from a discussion with representatives of large employers and public health care purchasers based on their experiences implementing advanced primary care.

1. Changing payment is crucial

Care delivery change requires payment change. Capitated payment – with some flexible incentives – will enable practices to meet clinical and health goals. A model predominantly based on fee-for-service or volume-based payment is antithetical to the core tenants of advanced primary care. Read about how Washington State Health Care Authority is tackling primary care payment reform.

2. Update operating systems or find new ones

Health plan operations are built to pay fee-for-service and are very challenged to pay differently. Whole Foods took a bold approach by creating its own system rather than relying on health plans. Learn how.

3. Align around standardized measures

Purchasers should align to adopt a set of priority standardized measures by which to assess care and service. Through a multistakeholder consensus process, PBGH has selected a set of evidence-based clinical and outcome measures that collectively signal and reflect the desired outcomes of advanced primary care. See how Covered California is using these measures.

4. Redefine your investment priorities with payers and partners

The cost benefits of advanced primary care must be emphasized in negotiations with payers. But this does not mean paying more overall. The expectation is that total cost remains flat. Read about eBay’s perspective on investment in primary care.

5. Hone your message

Despite studies that have repeatedly shown how strengthening primary care can improve outcomes, reduce costs, enhance the patient and provider experience and improve health equity, those benefits are not always apparent to health plans, organizational leadership or even employees. CalPERS’s experience with mandatory primary care provider selection offers important lessons for other purchasers.

6. Think nationally and act regionally

Employers should take the lead in their communities and regions when it comes to enlisting like-minded purchasers in support of advanced primary care. This can include national employers with even a modest presence in the community. Read about The Boeing Company’s approach to this.

7. Identify a trusted authority that can help foster standardization and adoption

A neutral convener can play an important role in helping achieve consensus around common measures and definitions, and likewise serve as a focal point for payer, purchaser and provider discussions regarding implementation and payment challenges. Washington and California offer examples of how regional multistakeholder groups play a key and needed role in implementing national change.

8. Just do it

There is a tendency in health care to focus for too long on discussion and planning without pursuing or engaging in the practical or implementing change. It’s important to start the process of implementing advanced primary care. Read about steps The Wonderful Company is taking on behalf of its employees.

California Providers and Health Plans Sign Agreement to Expand Investment and Increase Access to Advanced Primary Care

July 26th, 2022
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Coalition of Large California Payers Commit to Accelerating Widespread Adoption of Advanced Primary Care with The Goal of Reducing Costs and Improving Quality and Equity

As part of a new multi-stakeholder initiative, six health care organizations serving California have signed a memorandum of understanding (MOU) to increase investment in and access to ‘advanced primary care,’ a model that emphasizes comprehensive, person-focused care, integration of behavioral and physical health services and high-quality outcomes. The agreement outlines a new initiative that strengthens the primary care delivery system throughout the state by enabling primary care practices to transform to a high-performing, value-based care model that reduces costs and improves quality and equity.

Known as the California Advanced Primary Care Initiative, the effort is jointly led by California Quality Collaborative (CQC), a program of the nonprofit coalition Purchaser Business Group on Health (PBGH), and the Integrated Healthcare Association (IHA). CQC and IHA convened the state’s largest payers to collectively adopt a model to transform primary care statewide.

The six organizations committed to the California Advanced Primary Care Initiative include Aetna, Aledade, Blue Shield of California, Health Net, Oscar and UnitedHealthcare. The initiative is a first-of-its kind agreement that represents a voluntary joint effort among payers to standardize the way they finance, support and measure the delivery of Advanced Primary Care.

“This initiative builds upon a long history of stakeholder collaboration to improve the care and health of Californians and moves us from vision to action with aligned priorities to scale high-quality primary care throughout the state,” says Crystal Eubanks, senior director of CQC.

“This initiative reflects our understanding that the impact of any one payer alone is limited,” says Peter Long, executive vice president of Strategy and Health Solutions at Blue Shield of California. “That’s why Blue Shield is committed to partnering with our peer payers and providers to scale delivery of high-quality primary care across the state. Ultimately, we know this is what is best for our members, and we all must work together to make this vision a reality.”

California Advanced Primary Care Initiative stakeholders committed to pursuing the following goals in the MOU:

  1. Transparency: Report primary care investment and adoption of value-based payment models that support the delivery of advanced primary care and performance on the advanced primary care measure set jointly developed by CQC and IHA, a list of metrics that enable purchasers, health plans and providers to identify primary care practices in a given market that are delivering the best results for patients.
  2. Payment: Adopt an agreed upon value-based payment model for primary care providers that offers flexibility, supports team-based care delivery and incentivizes the right care at the right time.
  3. Investment: Collaboratively set increased primary care investment quantitative goals without increasing the total cost of care.
  4. Practice Transformation: Provide technical assistance to primary care practices to implement clinical and business models for success in value-based payment models, integration of behavioral health and reduction of disparities.

“Primary care is the heart of all health care,” says Jeff Hermosillo, California Market President, Aetna. “This innovative initiative will help ensure accessible, affordable and high-quality primary care to improve the well-being of all Californians. Working together with our peers, providers, plan sponsors and members, we are committed to primary care that makes a difference in people’s lives.”

“Health Net is proud to be part of this groundbreaking collaboration that will support physicians in providing high-quality, coordinated care for millions of Californians. As a practicing primary care doctor, I am especially heartened by the opportunity to better integrate behavioral and physical health, a key strategy for effectively addressing our behavioral health crisis.” says Todd May, M.D., vice president, medical director of Health Net’s commercial business.

CQC and IHA have been collaborating since 2019 to develop shared standards of advanced primary care, including common definitions of practice attributes, a performance measure set, methods to identify quality at the practice level and a value-based primary care payment model.

“I am so inspired to see payers collaborating together in a new way toward this timely, crucial cause that will elevate primary care and improve patient lives in California,” says Dolores Yanagihara, vice president of Strategic Initiatives at IHA.

Strengthening Primary Care: A Pilot with Four Large Purchasers

June 10th, 2022
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Extensive research and pilot programs have shown that easily accessible, person-centered and team-based primary care that integrates behavioral health and other supports can significantly improve patient outcomes and experience. It can also increase population health, reduce overall costs and serve to improve equity in our health care system.

It is for these reasons that PBGH’s California Quality Collaborative (CQC) has been working for over a decade to improve primary care. That work has culminated in the development of shared attributes and measures that enable purchasers, health plans and providers to identify primary care practices in a given market that are delivering the kind of care research tells us will bring about the best results for patients.

Together with the Integrated Healthcare Association (IHA), PBGH brought together four large health care purchasers in California to pilot this set of performance measures that emphasize patient experience and outcomes. The PBGH/IHA partnership, known as the Advanced Primary Care Measurement Pilot, began in January 2022, and participating purchasers include Covered California, California Public Employees’ Retirement System (CalPERS), eBay and San Francisco Health Services System.

Partnering to Better Primary Care in California

Our already weak primary care system has been further hampered by the pandemic, and these purchasers recognize that the time to strengthen it is now. The four participating purchasers have aligned by incorporating the same Advanced Primary Care attributes and measures into their health plan contracts. The goal is to identify the primary care practices throughout the state performing at the highest levels and delivering high-quality patient care.

The set of performance measures being tested through the pilot reflect the shared standard of Advanced Primary Care as defined through a multi-stakeholder process led by PBGH’s California Quality Collaborative that included input from purchasers, health plans, providers and patients.

The outcome will be an increase in understanding of where patients are getting the highest quality primary care. The pilot will give purchasers and health plans information to help them make decisions about their provider networks, resource distribution and consumer incentives. This information can be used to better connect patients to practices delivering Advanced Primary Care and incentivize improvement for other providers, increasing the availability of Advanced Primary Care.

How the Pilot Works: Existing Data for a New Purpose

Data already available through IHA is being used, so health plans and providers do not have to report anything new. The existing data will be used for a new purpose – to assess individual practices.

Performance information can be diluted when data from multiple practices is combined. By looking at each individual practice separately, we can gain the best understanding of which practices are delivering the best primary care and which ones need improvement.

The data will also be aggregated across purchasers and health plans for the first time to provide a more complete view of each individual practice’s performance, rather than looking at small segments of patients in a vacuum. This will allow for a better assessment of whether a practice has the systems in place to consistently provide high-quality care for everyone

Currently, ways to account for socio-economic and demographic differences in the performance analysis is being explored. This lens is crucial to ensure decisions made around the pilot promote equity and do not inadvertently increase the challenges vulnerable communities already experience in accessing high-quality care.

The analysis will include data from January through December 2022, and results and findings are expected mid-2023.

Employers Are Driving Innovations in Primary Care

February 24th, 2022
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Employers know that primary care is essential for a healthy workforce and employees’ access to a high-value health care system. Evidence shows that improved primary care translates into healthier, happier patients and lower overall health care costs:

Large employers are increasingly working with existing direct contracting partners and new vendors to enhance primary care, which includes the integration of behavioral health care among other things.

Four approaches reflect the ways large employers are currently working to improve primary care for their employees:

1. Developing a common set of advanced primary care standards to enable employers to speak with one voice. The development of the advanced primary care model is as much about streamlining the practice of primary care as it is about improving outcomes, enhancing the patient experience and reducing costs. Simple and consistent definitions of optimized primary care across all payer contracts would reduce, if not eliminate, the bewildering array of sometimes-conflicting value-based requirements contained in multiple payer contracts. That fact could mitigate clinician burnout by easing the administrative burden while allowing more time for the actual provision of care.

It is, therefore, essential that employers send a common signal to the market. For that reason, PBGH worked last year with members through an employer-led initiative to create a Common Purchasing Agreement. This enables employers to communicate their priorities and engage payers and providers to make changes to care delivery and payment that meet their priorities.

2. Integrating behavioral health into primary care. Behavioral health integration is an integral part of advanced primary care and a key feature of the Common Purchasing Agreement mentioned above. Nearly seven in 10 patients in need of behavioral health treatment seek care via primary care practices. Evidence shows that integrating behavioral health services into primary care can enhance mental health care access and coordination, improve outcomes and reduce costs. Behavioral health integration, a feature of advanced primary care, allows patients to access mental health care screening, services and treatments through their primary care provider, just like any other specialty care. Employers are highly focused on these efforts, which address an issue that has reached crisis level in this country.

3. Requiring members to choose a primary care provider. Patients benefit from an ongoing primary care relationship with improved care access, greater care continuity and better health outcomes. This in turn reduces employee absenteeism, enhances productivity and lowers overall health care spending for employers. That’s why some employers are taking additional steps to ensure their members are connected to a primary care practice. Methods to do so include mandating that members select a primary care physician and/or team, using benefit design incentives to support the use of primary care over specialty care (when appropriate) and increase education about the importance of having a primary care provider.

4. Helping employees identify and use only the highest quality primary care providers. Using quality measures, such as the PBGH advanced primary care measure set, purchasers and health plans can identify high-performing provider practices. Once those practices have been identified, employers can drive plan members to providers able to demonstrate that they provide high-value care, or the providers identified can be rewarded for their superior performance.

Employers understand better than anyone that the quality of health care their employees can access has a profound impact on their work, lives and productivity. The last few years working through the unprecedented challenges brought about by the pandemic have only reinforced the importance of continuing to strive to reduce disparities in health care and increase access to high-quality and more affordable services.

The same principles of aligning payment incentives and employer voices in primary care provides a model for other care verticals, including maternity care, oncology and musculoskeletal disorders, to name a few. Employers will increasingly work with organizations able to help design and implement the standards necessary to ensure they’re buying the best health care services available for the millions of employees, consumers and families throughout the nation who rely on their employers for health benefits.

A Little Less Conversation, A Little More Action

November 18th, 2021
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“We’ve talked long enough. It’s long past time to take action. Our goal is to foster meaningful, widespread change in health care within three years.” – Elizabeth Mitchell, CEO of PBGH

Large employers and health care purchasers have increasingly begun to take actionable steps to strengthen primary care, the critical precursor to a high-quality, cost-effective health care system.

Extensive research and pilot programs over multiple decades have repeatedly shown that a robust, integrated and accountable approach to primary care—characteristics collectively defined as advanced primary care—can significantly reduce overall health care costs while improving patient outcomes and experience.

Efforts by the nation’s largest employers to transform health care reached a major inflection point this fall when nearly 200 employers gathered with their health plans and health care provider partners from across the country at the PBGH Primary Care Payment Reform Summit. The event created a platform during which employers collectively conveyed their readiness to implement tools designed to induce payers and providers to deliver the same levels of value and quality they routinely expect from other vendors, and their commitment to investing in advanced primary care with integrated behavioral health and a commitment to equity.

Here are 5 key takeaways from the summit about what large employers and purchasers want from their health care vendors:

1. Employers have long accepted poor value for their health care dollars in ways they never would for any other product or service.

Employer-sponsored health plans routinely pay 200-600% times the rates charged to Medicare and effectively provide most of the profit margin for both health plans and providers without visibility into the quality of care their employees receive. Years of provider and insurer consolidation means even the largest employers tend to lack enough employees in any market to exercise adequate leverage to compel greater transparency and accountability.

2. Purchasers feel they’ve given health care stakeholders ample opportunity to reform the care payment and delivery system.

Industry efforts to transform health care have largely failed due to a lack of shared alignment and goals, a fragmented care system, the continued reliance on fee-for-service and the industry’s resistance to change. Now purchasers are collectively taking action to improve value and quality. Read more about what purchasers are doing right now in the full report.

3. Point solutions are making fragmentation worse and threaten to further increase costs.

To better serve members and reduce costs, many employers are turning to third-party vendors for singular, or point, solutions that address specific care functions or services. While many of these new, often digital capabilities are useful in isolation, they’re collectively making worse the already substantial problem of fragmentation and complexity across the care continuum. Many are also backed by venture capital firms seeking maximum profit potential and hence have little incentive to reduce the overall cost of care.

4. Integrating behavioral health into primary care is vital.

Mental health has been a top priority for employers for many years, and the urgency has only increased during the pandemic. Mental health care is hard to access and of variable quality, but mental health care is primary care and needs to be part of advanced primary care practice. Evidence shows that integrating behavioral health services into primary care can enhance mental health care access and coordination, improve outcomes and reduce overall costs.

5. Achieving lasting change will require that purchasers pull together to achieve critical mass.

Employers today have an opportunity to leverage their immense buying power to promote fundamental change in how health care is accessed, purchased and delivered. But even the biggest purchasers in the country lack leverage in most markets. Change on this scale cannot occur unless purchasers work in concert in every region in the country. Only by collectively setting high standards and demanding change can employers hope to overcome the existing system’s enormous inertia.

The Time to Act is Now

Employers want to buy the best health care benefits on behalf of their employees. But they understand better than most how costly and dysfunctional our health care system has become. They provide the critical lifeline of health insurance to about half of Americans, and they grapple every day with ways to keep coverage affordable.

Read the full report A Little Less Conversation, A Little More Action: 5 Takeaways from the PBGH Primary Care Payment Reform Summit here.

See more about the PBGH Primary Care Payment Reform Summit here.