High-quality primary care is a critical tool to advance health equity within Medicaid, which includes many enrollees who identify as people of color. This population experiences long-standing health inequities due to factors including structural racism and historic underinvestment in safety-net institutions. To support higher-quality, more equitable primary care, there is growing consensus that payment reform is necessary. Medicaid primary care population-based payment (PBP) models—advanced value-based payment (VBP) approaches that pay provider organizations through upfront, flexible payments tied to quality incentives—offer a key means to improve primary care. At least five state Medicaid programs are actively pursuing such models, and many others are well-positioned to adopt primary care PBP approaches.
Primary care PBP models can be a powerful tool for advancing health equity when designed to specifically incentivize and support more equitable primary care delivery. The traditional fee-for-service payment models’ use of billing codes tied to discrete services is ill-suited to pay forthe ongoing preventive care, chronic condition management, and care coordination functions of primary care and can be challenging to adapt to evolving models of care. In contrast, primary care PBP models provide upfront (usually monthly) payments based on the number of patients a provider serves—as opposed to the number of services a provider performs. By moving further away from a fee-for-service architecture than other VBP models, primary care PBP allows provider organizations freedom to implement health equity-focused strategies,such as including community health workers in care teams, that are not typically paid for under fee-for-service.
Despite this opportunity, the promise of primary care PBP models in Medicaid to advance health equity will not be fully realized unless such models include explicit health equity incentives and adequate investment in primary care to support improvements in care delivery. State policy makers implementing Medicaid primary care PBP models should ensure that provider organizations have the right financial incentives to work toward more equitable care delivery and significantly reducing health disparities.