This is the Healthcare Delivery Providers, part of the Healthcare Marketplace Specialization. This is Module 4.1.3 Primary Care, Payments. The learning outcomes for this lecture, we will discuss how primary care physicians and clinics get paid, and discuss some of the newer emerging payment models. Relative value unit, accountable care organizations, fee for service, pay for performance. Predominant model for payment for primary care physicians is still the fee for service model, which pays for every single service or procedure that is performed. And there is obviously a direct volume relationship so the more patients that that are seen, the more procedures that are performed, the more times diabetic patients is bought into the clinic to be seen, the more the compensation for that physician and for that clinic. Here's the basics of how a fee for service payment is derived. It depends upon what are called the evaluation and management codes and documentation. These depend upon a standardized set of codes and it's a very long list of codes called Current Procedural Terminology, or CPT codes. These depend directly on the type of patient. So, if it's a new patient, it's a heavier weight because the physician will need to start from scratch. Or if it's an established patient that, that physician has already seen, the weightage is lower. It also depends upon the type of setting the patient is being seen in. So either is it the office? Is it during a home visit? Is it during an urgent care visit? And then the level of the E&M code depends upon the complexity of the patient. So the history, increased weightage for a comprehensive history. Examination findings, how many different body parts were examined, and then obviously, the medical decision making. So the more complex the patient and the condition and the diagnosis, the higher the fee. We have looked at this very complicated equation before, and I don't want you to dig into the details of it, but understand the overarching view and the philosophy. So each CPT code has a relative value unit which is standardized measure of how much time and intensity the physician spent in taking care of that patient. And then those RVUs are divided up into either facility or non-facility parts. And the work RVU, for example, has the time spent, the skill of the physician, the training of the physician, and then the intensity of a service. Also, the RVU has other parts and components in it. For example, the rent of the clinic, the equipment in the clinic, supplies, and the other staff and their salaries, all increase the RVU weightage. Also a part of the RVU is to pay for malpractice protection, and these are professional liability expenses. Then, the RVUs are changed and modified, and adjusted by geographical cost index of a practice, and then finally multiplied by a conversion factor, which then converts the RVU into a dollar figure that is then paid to the physician practice. Let's do a quiz. Some of the other services that primary care providers and practices have started providing as a way to increase revenue or become more comprehensive in what they offer. Might be ancillary services like medical spa, might be x-ray services. Sometimes they dispense medications called point of care dispensation of medications. Lot of the clinics have lab services to do basic labs and other counseling services for either psychological counseling or diabetes or other medical conditions counseling. As we've discussed before, the fee for service model is rapidly changing. So a newer payment model or an alternative payment arrangement might be an ACO, Accountable Care Organization, which is made up of building blocks of primary care. And it has a very different payment methodology based upon risk and reward for reduction in cost and improvement in quality for the attributed population. And all of those savings or share on the gains hopefully will trickle down to the primary care practices that make up that ACO. There are many other types of pay for performance. Metrics and incentives that come directly from payers either governmental payers or commercial private health insurances. And then there was a recent reform just last year in Medicare payments which is pushing the Medicare payment to physicians to start including what is called the Merit Based Incentive Payments. And also pushing to continue to move with increasing percentages towards alternative payment models, again, to recognize quality performance, reduction in cost. And then there will be sticks and carrots to incentivize the primary care providers. Summary, the fee for service method is still the dominant method for primary care based upon relative valued units, a complicated equation and calculation, but it again, trickles down into the intensity of services which is directly related to the patient's complexity of illness. As we have discussed, there are newer models of payment that are rapidly evolving, trying to push towards performance in outcomes in population health.
