Table 3.

Overview of Primary Care Payment Models

DescriptionProspective vs retrospectiveFinancially 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 renderedRetrospectiveNoNoInsurersNoMedicare
Patients (via cost-sharing: co-pays, deductibles)
Traditional capitation (full-risk capitation, global payment)Paid to cover all services within a specific period of timeProspectiveYesNo, except for outcomes related to usePrimary care practicesNoMedicare 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 measureBoth exist (most models retrospectively; however, can be paid prospectively and subsequently reconciled)Potentially (depends on quality metrics)Yes, for services being measured via quality metricDepends on underlying payment modelPotentiallyMedicare 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 careMixed (generally retrospectively triggered and prospectively paid)Yes (but does not discourage volume of episodes)No, except for outcomes related to utilizationPrimary care practices, organizationsNoCMMI's Bundled Payments for Care Improvement
Shared savingsPaid 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)YesYesACOsPotentiallyMedicare Shared Savings Program ACOs
Blended FFS and capitationPaid a predetermined amount intended to cover medical home services for a specific period of time in addition to FFSMixedNo (to the extent that FFS is the predominant payment mechanism)NoDepends on underlying payment modelPotentiallyMedicare Comprehensive Primary Care Initiative
Comprehensive (primary) care paymentPaid a risk-adjusted amount to cover all primary care services for a specific period of time; includes component of P4PProspectiveYesYesPrimary care practicesYesIora Health
Direct primary carePaid outside of third-party insurers (often directly from patients) a predetermined amount to cover all primary care services for a specific period of timeProspectiveYesNoPrimary care practices for primary care expensesNoQliance
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.