In Brief: In search of value, payers want to redefine the role that PCPs play in patient care.
Primary care periodically enjoys 15 minutes of fame. Flashy headlines herald the arrival of the latest primary care disruptor (Iora, Babylon, Carbon, etc.), the pundits go wild, and then…the excitement dissipates. Amazon’s recent acquisition of OneMedical has restarted the hype cycle.
But in the background, many payers have already been executing on a vision to transform their operating models from focusing primarily on healthcare spending to also focusing on healthcare delivery—starting with primary care. Despite Amazon being lionized as an industry disruptor, payers are better positioned to shift the value proposition of primary care services. Health plans have already built the scale and capabilities to holistically view the patient journey and, as a result, they have a deep understanding of how and where value can be generated within the delivery system.
To capture that value, payers are placing primary care at the center of their vision, with lofty ambitions of redefining the role of a primary care provider (PCP). Payers will be placing increased expectations on PCPs and aligning those expectations with incentives to drive value while also rolling out capabilities to support PCPs’ interactions with their patients.
Primary Care Providers Generate Tremendous Value for Payers and the Patient Populations They Serve
From the payer standpoint, primary care can be a source of tremendous value. Payers are realizing that by making investments in primary care to improve access and foster a stronger patient-provider relationship, they can mitigate unnecessary spending and keep members within their networks.
A Healthier Population
Payers want their patient populations to be as healthy as possible; investing in their members’ health leads to fewer high-cost claims. To that end, studies have shown primary care’s beneficial impact on preventive medicine, population health, and the quality of care. Further, the capacity to manage chronic conditions and prevent them from worsening is best achieved through primary care.
A Positive PCP-Patient Relationship
Payers that enable PCPs to have a highly functioning relationship with their patients provide the best situation for improving and sustaining member health. Positive experiences are vital to ensuring members stay with their current healthcare insurer, and at the center of a good member experience is the relationship and trust a member has with their PCP. Member retention and decreased churn are critical to high-performing and financially strong health insurers aiming to grow membership and enhance their reputation. A mutually beneficial patient-provider relationship also helps to ensure fluid care coordination, which helps keep patients within payer networks.
Lower Cost of Care
Primary care is ideally positioned to lower total costs by managing a patient’s journey through the delivery system. The setting where patients receive care has a substantial impact on both quality and total cost. One study showed that claims for patients receiving care at a hospital outpatient department were 21% higher than they would be for an office visit—and 258% higher for a chest radiography. PCPs can be the principal directors of a patient’s care delivery journey, ensuring that their patients seek care at the most appropriate site of service possible, increasing positive health outcomes and lowering costs.
Primary care improves performance in other ways as well, such as referring patients only to high-performing, low-cost providers that are in network; using thorough documentation to accurately code patients, thus impacting risk adjustment revenue; and preventing unnecessary visits to the emergency room, decreasing care delivery waste.
Ultimately, these capabilities and strategies reduce patient and health plan payments in the short term and lower premiums in the long term.
Payer Investments and Strategies to Create Alignment with PCPs
In many ways, PCPs share and can extend health plans’ foundational goals—improving care and utilization management, achieving cost containment, and enhancing the overall member experience. Payers recognize this and are continuously investing both time and resources to create the proper care alignment and ensure services are appropriately directed to PCPs.
Figure 1 outlines several strategies payers are using to create the proper alignment with primary care practices services, ranging from tighter alignment (direct investment, vertical integration) to looser alignment (informal collaboration, improved patient experience) strategies.
FIGURE 1: Payer and PCP Alignment Strategies
Figure 2: PCP and Specialist Copays since 2006
Source. AAMC
Opportunities for PCPs to partner and align with payers will continue to grow. The key for PCPs is to determine which form(s) of alignment make sense for their organization. Looking to be acquired may or may not be a long-term strategic consideration, but expanding value-based care contracts, participating in new products, and supporting community wellness initiatives are all immediate opportunities for PCPs to align with payers while supporting their patients.
Payer Obstacles in Primary Care
Despite the effort made by payers, obstacles that prevent members from seeing their PCPs remain.
Physician Shortage
The first obstacle is the shortage of PCPs. The Association of American Medical Colleges estimates that by 2034, the healthcare system will be short between 17,800 and 48,000 PCPs. One driver is the significant wage gap between PCPs and specialists. In 2021, specialists were making on average about $100,000 more than PCPs. With the median medical school debt for the class of 2021 being $200,000, it makes sense that students are seeking higher-salary positions. Payers and products are increasingly emphasizing the use of primary care, but until medical students are incentivized to seek careers in primary care, access will continue to be a problem.
Lack of Referrals
In addition to the growing shortage of PCPs, not all health plans require referrals, which often leads to members skipping the primary care visit and going straight to a specialist. If members don’t have a good relationship with their PCP, it’s even less likely that they’ll get a referral or have a conversation before seeing a specialist. A PCP’s relationships with other network providers can also be a hindrance. If a provider is not well engaged in their network, members who do consult with their PCP might not get a quality referral.
Consumer Choice
Aside from physician staffing and operational challenges, payers may also face obstacles in the form of consumer choice. Consumers (e.g., employers, members) change health plans frequently, so to the extent payers and providers move toward vertical integration, members may end up changing their PCP at that same frequency, which would marginalize each payer’s PCP value proposition. With that in mind, it is important that both payers and PCPs co-brand and market their partnerships so that consumers can clearly see the relationship between their health plan and PCP. This can also create added stickiness for both parties that will ultimately drive long-term value.
Developing a Successful Primary Care Strategy
Payers want PCPs to be at the center of the patient’s care plan and overall member experience. Done correctly, a PCP’s unique relationship with patients, health plans, and specialists unlocks tremendous value for all stakeholders in a patient’s journey.
However, payers are no longer passive stakeholders in primary care services and are actively looking to increase their value by investing in their delivery. Despite the obstacles facing primary care, payers have the size and scale to structure networks and design products that meet consumer demand while minimizing the impact of physician shortages. Said more directly, payers can transform the primary care market and will do so at the cost of providers if the appropriate alignment strategies are not in place.
It is important for PCPs to proactively assess their internal capabilities, capacity, and overall strategy to reconcile with the demands of the market, or else risk being replaced by new or expanded services that can be offered by their payer partners. The payer-PCP alignment strategies detailed above are excellent starting points for PCPs to assess their care model, operations, and payer partnerships to maximize value for the provider group and health system.
Edited by: Matt Maslin
Published September 28, 2022