Steven Strongwater, M.D.

Save Primary Care by Abandoning Fee-for-Service


The COVID-19 pandemic unearthed the weakness of fee-for-service (FFS) reimbursement. Transitioning to global budgets (e.g. per member per month reimbursement) for primary care providers will align patient, provider and national interests to improve the health of the country and reduce spending – which now consumes more than $3.6 trillion per year. Though a great deal of emphasis and attention has been on hospitals caring for patients with COVID-19, value-based primary care (VBC) reimbursement that incentivizes better care, prevention and lowers costs is the key to keeping the nation healthier. A near term shift to VBC supports the Biden administration’s priority of improving healthcare without sacrificing choice and could gain support from a broad base of consumers, payers and providers. 

Many primary care providers are working in both FFS and value-based contracts. This is confusing and wasteful, placing clinicians in the middle of two approaches that often oppose one another. Fee-for-service relies on sickness and encounters for revenue, incentivizing providers to reactively care for people and potentially recommending unnecessary visits and tests, rather than prioritizing ways to prevent illness in the first place. Value-based approaches improve the quality of care for patients, and promote investment in tools and programs that improve access to care such as telehealth and recently approved hospitalization at home programs. Clinicians in value-based environments provide better preventive care (e.g. vaccinations), more timely access and improved care coordination.  Primary care providers prevent hospitalizations, help patients recover, facilitate screenings and vaccinations and manage a growing range of chronic conditions. By better coordinating primary care with specialty services, rather than working separately from one another (which is what typically happens in fee-for-service) patients have a better experience. 

A Premier analysis among patients with common chronic conditions found that about 30 percent of their emergency department visits could have been prevented or treated in a less expensive setting, costing $8.3 billion. Legislation that requires payers to invest in primary care lowers total cost of care as demonstrated in Rhode Island, which decreased total health care spending by over 14 percent and saved $88 million as a result. Additionally, global budgets could dramatically reduce administrative complexity, lowering costs and concurrently, reduce physician burnout, a national crisis driving PCPs to leave medicine.

Our elected leaders cannot let the foundation of our health care system – primary care – crumble. By challenging the fee-for-service status quo and aligning policies to fortify primary care, we can ensure a healthier future for our country – and at a lower cost too. Failing to address the basic healthcare economic model will inevitably and needlessly lead to rising healthcare costs. It is time to abandon fee-for-service reimbursement for primary care providers and move to global budgets.