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Published: July 29, 2019

Three Pathways Toward Achieving Value-Based Payment

Authored by Conrad Amenta, Director, Health Policy for California Academy of Family Physicians

Payment reform is an integral component of CAFP’s strategic plan. At the core of our payment reform activities is a desire to see family physicians paid in a way that reflects the value that they produce for patients and health care systems. This is represented by true value-based payment (VBP).

Though the details of various VBP proposals differ, CAFP believes true VBP must be:

  • Prospective: up-front payment covers investments in upstream primary care.
  • Risk-adjusted: payments reflect the complexity of the patient population.
  • Incentivizing: include bonus payments for performance measures that are evidence-based, clinically relevant, and aligned across payers.

As VBP grows in popularity, CAFP has fought to shape how family physicians may participate in different models. Our strategies have included:

1) Put forward a specific model with the goal of creating alignment between federal and state plans

In recent months, there’s been exciting movement in the VBP space. The Center for Medicare & Medicaid Innovation’s (CMMI) Primary Care First Model(1) (PCF) was developed to reflect and expand upon the principles of Comprehensive Primary Care Plus (CPC+). PCF was developed in close collaboration with AAFP based on their Advanced Primary Care Alternative Payment Model(2). In both models, primary care practices would receive three types of payments:

  • a monthly capitated payment
  • a population-based risk-adjusted payment
  • a performance-based adjustment providing an upside of up to 50 percent of revenue as well as a small downside (10 percent of revenue) to reduce costs and improve quality. This would be assessed and paid quarterly.

In short, where past proposals have over-relied on ‘pay for performance’ bonuses, penalties that leave underlying incentives unchanged, and increase administrative burden, PCF is an important step to directly addressing these flaws. 

In the 2019-20 California State Budget, Medi-Cal Managed Care will pilot its own VBP system. CAFP submitted a letter(3) to the California Department of Health Care Services advising them that overreliance on pay-for-performance measures, when combined with myriad other payment plans, can distort appropriate behavior and lead to administrative burden. In an ideal world, California would introduce VBP that reflects the PCF initiative, as the Center for Medicare and Medicaid Services (CMS) intended the program to “encourage other payers – including Medicare Advantage Plans, commercial health insurers, Medicaid managed care plans, and State Medicaid agencies – to align payment, quality measurement, and data sharing with CMS in support of Primary Care First practices."

2) Demonstrate the value of primary care

CAFP is a longtime supporter of the Patient-Centered Medical Home (PCMH). PCMH is a care model, not a payment model, but PCMH and VBP are co-dependent; each strengthens and perpetuates the other.

While statewide payers have remained hesitant to financially support the PCMH, those who have seen the value of the model first-hand have not hesitated to re-invest. In 2011, CAFP partnered with the Fresno Unified School District (FUSD) and Santé Community Physicians to create a PCMH pilot for FUSD’s employees. Eight years later, the project has expanded and is still going strong. The effort has saved several million dollars in health care costs, dramatically improved health care outcomes, and the FUSD recently renewed its investment in the project. 

As one way to get us closer to VBP, additional partnerships between payers and PCMH-accredited practices should be funded. The state insurance exchange, Covered California, should also consider requiring that payers contract with a certain number and/or percentage of PCMH-accredited practices.

3) Require health plans spend a minimum percentage on primary care

In a scenario in which payers choose not to consider either true VBP or the PCMH, California can do what other states have done and require that payers report the percentage of their revenue dedicated to primary care. For those payers behind in their support for primary care, many states have mandated that they spend at least a certain percentage to support such care.  This pathway combines a mandate (e.g., legislation and regulation), with flexibility (i.e., payers can get to the threshold in many different ways and their work is supported by a primary care collaborative to share best practices). 

Oregon has such legislation in place and produces an annual report describing their progress(4). CAFP sponsored a bill in 2017 (AB 2895)(5) modeled on Oregon's legislation  which requires payers to report their primary care spend. While the bill stalled in the legislative process, CAFP successfully advocated for the use of state funds to develop an all-payer claims database, a key piece of infrastructure to measure health plan spending. Delaware(6) and Colorado(7) have followed suit. Rhode Island’s Insurance Commissioner mandated the same reporting and spending via regulation(8). Finally, the Milbank Fund authored a report in 2017 exploring voluntary frameworks for the reporting of primary care spending by private payers(9). 

In each of these scenarios, requiring that payers report and spend more of their revenue on primary care has resulted in greater investment in VBP models. Should the evidence of VBP and primary care not be sufficient, mandates should follow.


Health care stakeholders from consumers to payers to employers are realizing that paying for value is synonymous with paying for primary care. As such, it is essential that value-base payment be designed in a way that supports primary care. CAFP will take every opportunity to fight for VBP that is prospective, risk-adjusted and incentivizing.



  1. https://innovation.cms.gov/initiatives/primary-care-first-model-options/
  2. https://www.aafp.org/dam/AAFP/documents/advocacy/payment/apms/PR-PTAC-APC-APM-41417.pdf
  3. https://cafponcloud.egnyte.com/dl/7xxEJWbGWu
  4. https://www.oregon.gov/oha/HPA/ANALYTICS/Documents/SB-231-Report-2019.pdf
  5. https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201720180AB2895
  6. https://www.pcpcc.org/2019/01/11/pcpcc-applauds-delaware-report-recommending-increased-investment-primary-care
  7. http://www.leg.colorado.gov/bills/hb19-1233
  8. http://www.ohic.ri.gov/documents/Primary-Care-Spending-generalprimary-care-Jan-2014.pdf
  9. https://www.milbank.org/2017/07/getting-primary-care-oriented-measuring-primary-care-spending/

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