The Pacific Business Group on Health and the California Medical Association are asking California state legislators to shore up vulnerable primary-care practices during the COVID-19 crisis.
The organizations are urging lawmakers to require health insurers to make $2.5 billion in prospective payments to independent primary-care providers for 2020 and 2021.
"These monthly payments would serve as a lifeline to primary-care providers who have suffered a serious loss of revenue during the COVID pandemic and, as a result, would otherwise be forced to close their practices or be acquired by large health systems," Bill Kramer, executive director for health policy at the Pacific Business Group on Health, said in his May 24 testimony delivered virtually before a state Senate subcommittee.
The groups also urged legislators to maintain requirements that health plans reimburse in-person and telehealth visits at the same rate. Over the longer term, they asked the state to establish a process led by the California HHS that would help transition primary-care practices to value-based reimbursement models.
The recommendations are part of the groups' Care for Californians Initiative. They are hoping their requests will be included in the state's budget bill, which must be passed by June 15.
The COVID-19 pandemic has threatened the viability of healthcare providers of all types and sizes, but none are as vulnerable as primary-care practices, which operate on razor-thin margins and often lack reserves to see them through an unprecedented slowdown in the use of healthcare services. Most providers are paid for each service or office visit they deliver to patients. When visits dried up, so did revenue.
According to the latest weekly survey by the Larry A. Green Center and the Primary Care Collaborative, conducted May 22-26, nearly half of primary-care practices have laid off or furloughed staff. Survey results showed 14% of practices have temporarily closed their doors, 1% permanently closed, and 56% reported a significant decrease in patient volume.
Primary-care providers and their advocates have argued that emergency federal funding available through the CARES Act and the Paycheck Protection Program was not sufficient.
The PBGH and the California Medical Association said requiring health plans to make emergency prospective payments, which aren't dependent on how many services a physician delivers, would help prevent primary-care practices from closing or being acquired by health systems, which could lead to higher healthcare prices. It would also help ensure that patients continue to have access to primary care.
Under their proposal, health plans would be required to use unspent premiums already collected to pay contracted primary-care providers a monthly prospective payment retroactive to March. The prospective payments would complement fee-for-service billing and decrease in the second year of the program.
For 2020, to the extent that health plans aren't already paying primary-care physicians on a capitated basis, prospective payments would be equal to 70% of the practice's monthly average fee-for-service payments per member paid in 2019, or 70% of the average primary-care capitation payment for providers that can be responsible for attributed patients—whichever is greater. For 2021, payments would be decreased to 50% from 70% based on the same formula.
In total, insurers would be required to pay a collective $1.5 billion in 2020 and $1 billion in 2021, which the PBGH said is the amount insurers were already planning to spend on primary care. The program would include a reconciliation process to ensure primary-care practices don't receive excessive compensation.
It would encourage self-insured employers to provide prospective payments but wouldn't require them to do so.
"Employers know that primary care is essential to a healthy work force and employees' access to a high-value healthcare system," PBGH CEO Elizabeth Mitchell said in a statement. "If we don't support primary-care practices, they'll either close or be bought up by larger healthcare systems or private equity groups. Historical evidence shows this will drive market consolidation and increase costs without any increase in quality or improvement in patient experience."
Insurers and many self-funded employers expect their spending on healthcare services to decrease this year because providers deferred non-urgent procedures and patients put off doctor's visits to stay home during the pandemic. Insurers, in particular, could receive a windfall in 2020 as they continue to collect premiums but spend little on medical claims.
Some health insurers already have begun tapping into that excess revenue to provide emergency payments to physicians and hospitals. California-based Inland Empire Health Plan, for example, is amending its contracts with hospitals to pay them on a capitated basis for three months. The insurer already pays its primary-care providers on a capitated basis.
In New York, Independent Health also began making emergency "global payments" to primary-care providers so that they receive cash flow similar to a typical month in 2019. Other insurers have offered loans to providers or sped up claims payments.
