“driven by an increasing focus on “total-cost value-based care” — a model in which health care providers are paid to manage the total cost of care for their patients and the size of each patient’s capitated budget may be increased on the basis of the patient’s health risks and the provider’s performance on quality metrics. Though potentially beneficial for certain well-insured patients, the trend of corporate investment in primary care could threaten equitable access to care, raise health care costs, and reduce physicians’ clinical autonomy. [..]
As Medicare and commercial payers move toward total-cost value-based payments, such as capitation, and away from fee-for-service reimbursement, primary care practices may hold the key to increased profitability of health care under value-based payment systems. Primary care practices can generate substantial profits by growing their population of patients covered by Medicare Advantage (and other lucrative payers), maximizing the “budget” for each patient’s care using risk adjustment and quality bonuses, minimizing their health expenditures with utilization management, and referring patients to other product and service offerings, such as pharmacy. Primary care providers are health care’s front door not just for patients, but also for investors who see those patients as a revenue stream. Primary care practices offer corporate investors access to these patients and their data, both for risk-coding advantages and as potential customers for other lines of service. [..]
The organizational structures of CPCPs [corporate-owned primary care practices] vary with the market segment or payment model they are targeting (e.g., Medicare Advantage, Medicare or commercial accountable care organizations [ACOs], or direct contracting under the new ACO Realizing Equity, Access, and Community Health [REACH] model), but they all benefit from increasing the risk-adjusted payments they receive by engaging in more intensive and strategic risk coding, and they have market incentives to do so. CPCPs may also have resources that facilitate intensive coding practices — including proprietary coding software, robust beneficiary data, and additional administrative staff — that are less available to independent primary care physicians.
Perhaps the biggest draw for investors is the growing Medicare Advantage market, which accounts for nearly half of Medicare spending. The program’s risk-adjusted payments attract corporate investors to primary care practices serving Medicare Advantage patients, since such practices can aggressively code beneficiaries’ diagnoses to draw higher payments. Indeed, between 2006 and 2011, risk scores for Medicare Advantage beneficiaries were 6 to 16% higher — translating into approximately $650 more per beneficiary — than they would have been under traditional fee-for-service Medicare.
Although One Medical is known for concierge-style practices for well-insured workers, it recently entered the Medicare Advantage market by acquiring senior-focused Iora Health, which made it an attractive investment target. Because Medicare Advantage contracts give CPCPs control of the entire capitated payment for each patient, about half of One Medical’s 2021 net revenue came from its Medicare Advantage members, who made up only 5% of its patient population. [..]
For patients and physicians, the proliferation of CPCPs could have certain benefits for primary care delivery. Patients, especially those enrolled in commercial insurance, Medicare Advantage, or a Medicare ACO, may have greater and more convenient access to newer models of primary care delivery than they would with a hospital-based or independent primary care service. For physicians, partnering with a CPCP provides access to capital for investing in information technology and supplemental services that could improve patient care. Working for a CPCP could relieve physicians of the administrative burden of managing a practice, reduce the size of their patient panels, compensate them well, and provide better work–life amenities, such as flexible scheduling or reduced work hours. [..]
Since most CPCPs focus primarily on lucrative Medicare Advantage and commercially insured beneficiaries, younger Medicaid or uninsured patients may be left behind. Underserved, low-income patients could have less access to essential primary care services if more physicians choose to work for CPCPs, which offer greater pay and benefits, rather than for safety-net or rural facilities. Furthermore, CPCPs’ success depends on growth and consolidation, and massive integrated primary care networks can exert market power to raise prices and limit access. CPCPs may also pose privacy threats to patients if they cannot adequately silo protected health information from other segments of their business.
Clinicians face risks of burnout and moral distress if the CPCP pressures them to intensify coding to maximize risk scores and boost quality bonuses while reducing staffing levels and clinical autonomy. CPCPs may also use strict noncompete and nondisclosure agreements that limit physicians’ ability to leave or speak out about these practices.”
Full article, S Shah, H Rooke-Ley and ECF Brown, New England Journal of Medicine, 2023.1.7