Overview of Primary Care Payment Models
| Description | Prospective vs retrospective | Financially discourages volume of services? | Financially encourages high quality of care? | Party that primarily bears the financial risk? | Risk adjusts for patient complexity? | Key Example | |
|---|---|---|---|---|---|---|---|
| Fee-for-service (FFS) | Paid for each individual service rendered | Retrospective | No | No | Insurers | No | Medicare |
| Patients (via cost-sharing: co-pays, deductibles) | |||||||
| Traditional capitation (full-risk capitation, global payment) | Paid to cover all services within a specific period of time | Prospective | Yes | No, except for outcomes related to use | Primary care practices | No | Medicare Advantage HMOs |
| Pay-for-performance (P4P) exists in addition to underlying model (generally FFS or capitation) | Paid for achievement of (or improvement in) a quality measure | Both exist (most models retrospectively; however, can be paid prospectively and subsequently reconciled) | Potentially (depends on quality metrics) | Yes, for services being measured via quality metric | Depends on underlying payment model | Potentially | Medicare Physician Group Practice Demonstration Project |
| Primary care practices, if targets not met | |||||||
| Bundled payment (episode-of-care) | Paid for all services rendered for a given episode of care | Mixed (generally retrospectively triggered and prospectively paid) | Yes (but does not discourage volume of episodes) | No, except for outcomes related to utilization | Primary care practices, organizations | No | CMMI's Bundled Payments for Care Improvement |
| Shared savings | Paid based on spending below a predetermined benchmark over a period of time (contingent on meeting certain quality targets) | Mixed (prospective at level of the ACO, but providers often still paid via FFS) | Yes | Yes | ACOs | Potentially | Medicare Shared Savings Program ACOs |
| Blended FFS and capitation | Paid a predetermined amount intended to cover medical home services for a specific period of time in addition to FFS | Mixed | No (to the extent that FFS is the predominant payment mechanism) | No | Depends on underlying payment model | Potentially | Medicare Comprehensive Primary Care Initiative |
| Comprehensive (primary) care payment | Paid a risk-adjusted amount to cover all primary care services for a specific period of time; includes component of P4P | Prospective | Yes | Yes | Primary care practices | Yes | Iora Health |
| Direct primary care | Paid outside of third-party insurers (often directly from patients) a predetermined amount to cover all primary care services for a specific period of time | Prospective | Yes | No | Primary care practices for primary care expenses | No | Qliance |
| Patients for other aspects of care (and insurers if patients have third party insurance) |
ACO, accountable care organization; HMO, health maintenance organization; CMMI, Center for Medicare and Medicaid Innovation.