#2 – Primary Care at a Crossroads: Challenges, Changes & the Value-Based Model in North Carolina

Primary care is evolving in North Carolina. Host Robert Shaw talks with Dr. Tom Wroth, CEO of Community Care of North Carolina (CCNC), about the state of primary care in North Carolina and its intersection with value-based care. They discuss primary care challenges, changes over the last decade, the impact on patient care, independent medical practices’ benefits, and how the shift to a value-based care payment model is reshaping primary care. 

Dr. Roth shares insights on how CCNC—the nation’s largest and longest-running medical home system—has reduced healthcare costs while improving outcomes. Learn how value-based care is reshaping primary care and why independent practices may offer better value, continuity and comprehensive care for patients.

Host - Robert Shaw, Partner, Smith Anderson
Guest – Dr. Tom Wroth, MD, MPH, CEO, Community Care of North Carolina

Smith Anderson is a full-service business and litigation law firm serving regional, national and global companies. Our team of experienced health care lawyers are committed to guiding medical professionals, hospitals, health care facilities and industry organizations through the attendant changes and evolving regulatory environment. We advise on health care policy, legislative advocacy, executive strategy, mergers and acquisitions, privacy and data security, litigation and the complex business requirements of organized medicine. We have been integrally involved in launching innovative health care delivery initiatives such as clinically integrated networks, joint ventures between health systems and practitioners, Community Care of North Carolina and Accountable Care Organizations (ACOs) nationwide.

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Transcript

Episode 2: Primary Care at a Crossroads: Challenges, Changes & the Value-Based Model in North Carolina

[Host]

Hello and welcome to Pulse on Carolina Health. I am your host, Robert Shaw. I am pleased to welcome Dr. Tom Wroth, the Chief Executive Officer of Community Care of North Carolina, a statewide network of independent physician groups and longtime leader in value-based care in North Carolina. Our topic today is the state of primary care in North Carolina and how it intersects with value-based care. Dr. Roth, thanks very much for being on our podcast. 

[Guest]

Well, thanks for having me, Robert. I've been looking forward to it.

 [Host]

Great. First, if you want to tell a little bit about yourself, how you got into value-based care and your medical background.

 [Guest]

Sure. Yeah. So, I'm a family physician by background and practicing now almost 25 years and getting out of into practice about five years in, started to really just see how fragmented and difficult the system was for providers and patients and got involved at that time in some community projects that Community Care of North Carolina was doing at the time and really started to link with other practices that were working on quality improvement at that time. And then just slowly got more and more involved with CCNC and its mission and then now almost full-time, still practicing a little bit half day a week.

 [Host]

It's good to continue to be a practicing physician in addition to your executive duties. One thing that we often find is a challenge in learning about health care, especially value-based care, is that we are awash in jargon and acronyms. And just thought it may be helpful just to level set on what is Community Care of North Carolina that's often referred to as CCNC and Community Care Physician Network, CCPN.

 What are they and how are they related?

 [Guest]

Yeah, great. So Community Care of North Carolina or CCNC, we've been around a long time in North Carolina and our mission has always been to build and support better community-based health care delivery systems and the focus has been on independent practices across North Carolina. These are really the backbone of any healthy health care delivery system and we are tightly tethered to an organization called Community Care Physician Network or CCPN and this is a network of independent practices across 97 counties in North Carolina, many of them about half in rural areas, some small practices, some large, really ending up being an important delivery system for payers in North Carolina. So we really work to help, we'll talk more about independent practice and those challenges but really want to help them be successful with payers and with some of the administrative burdens that are out there and some of the other problems like workforce challenges.

[Host]

Yeah, let's drill down a little bit on what you're seeing on the ground in this area. What's the state of primary care in North Carolina? How has it changed over the last decade or so?

[Guest]

Yeah, well, I think it's really helpful to think about what's happened since COVID because it seems like that was sort of a stress test on the health care delivery system and really since then, that system has struggled. So the three main challenges are really around, on the financial side, there's been increased costs and challenges with revenue. On the administrative side, care has really gotten more complex.

 There's more issues like prior authorizations and the complexity of caring for people with chronic conditions. And then there's been a lot of workforce challenges also. This can be front desk staff, nursing staff, and also the physicians and other providers that provide care in the community.

[Host]

Well, there are a lot of headwinds, for sure. What do you think is the single biggest hurdle that these independent practices are facing these days?

[Guest]

Yeah, it's probably hard to choose, but I really would have to say payment is a big challenge. In the past, you could rely on the fee-for-service system to sustain the practice, but now a practice really needs to be doing well in some of these ancillary areas like value-based care or providing other services that help sustain them. And again, it's kind of simple math.

The costs have gone up. I saw a statistic, 32% in the last five years. This is supplies and staff and other things.

And on the revenue side, there's been some declines in the fee-for-service funding. And so practices are getting into value-based care, but not all of them are seeing the returns. And that's really what Community Care of North Carolina is trying to do is help them be successful in that area.

[Host]

I'd like to get a little more into how that transformation is going between the fee-for-service system and the new value-based care models and the future of reimbursement. But I'd love to talk a little bit more about why independent provider ownership matters first. So the healthcare industry is rapidly evolving and we're seeing different models for healthcare delivery.

For example, non-profit health systems that are continuing to grow, and of course we have the small ones as well, and everything in between. For-profit health systems are starting to make a move into North Carolina. Private equity-backed healthcare providers have been a feature of our landscape for probably 20 years now.

And then we have publicly traded providers, the HMO systems that are starting to come back into North Carolina in the last year or two. And then increasingly health insurance company-backed or invested providers. You have clinically integrated networks, CCPN is one of those, and then you have independent medical providers that you're serving as well.

So it's just a big, a very diverse landscape in terms of the types of ownership and delivery models and organizational models. Within that ecosystem, what are some of the benefits of independent medical practice?

[Guest]

Yeah, that's a great description of the ecosystem. And just to kind of highlight one piece, I think what's really changed in the last say five years is the entrance of the payers and private equity into supporting primary care. So those are new.

We're learning more about sort of how those models work and what they look like. But, you know, I think one of the biggest benefits, if you're an economist, independent practices are much cheaper financially than hospital-based practices or private equity-based practices. There was an article that came out of the JAMA network last month that showed that for hospital-based practice, primary care practices, the costs are 11% higher.

And for private equity-funded practices, 8% higher. So just from a, you know, there's a crisis of the cost of health care out there. And if you're a payer or a purchaser or an employer or a person, a patient, independent practices are a better value.

On the quality side, you tend to see a more continuity of care with a team or with the physician. And independent practices tend to be a little bit more nimble and do other procedures and other ancillary things. So tend to be more of a one-stop shop.

So when you go to a complicated health system and you see your primary care doc for maybe a skin rash or a mole or something like that, you're going to tend to get referred into that system. Whereas a robust independent practice will do the skin procedure right there and take care of things.

[Host]

And also, as you were referring to before, a lot of the members of CCNC or CCPN are in rural areas plugged into their communities. Talk a little bit about the benefits of, you know, a locally owned and locally run entity as part of that local community.

[Guest]

Well, it's good to kind of take a step back and think about what is high-quality, robust primary care. And they always talk about the four C's. It's first contact.

So in that community, you can get access to care and get an appointment when you need it for what your priorities are. It's comprehensive, as we talked about, getting everything done, one-stop shop in one place. It's coordinated.

So in a small community like that, the physician be able to communicate with the mental health providers or specialists or others. But the secret sauce is really the continuity, is having this trusted relationship with a primary care provider over time. That really seems to be the key piece that leads to better health outcomes, lower costs, those sorts of things.

Someone that really knows you.

[Host]

We talked a little bit about the headwinds that providers face and some of the benefits that they have to this larger ecosystem. How are Community Care North Carolina and Community Care Physician Network helping to address those challenges and help these practices engage with the modern healthcare industry?

[Guest]

One of the main things is we really help with payers and payer relationships. So we sit in between the practices and the payers. And because of the strength of Community Care Physician Network, we're able to have, really try to influence the policies and other things that the payers are doing.

On the revenue side, as we talked about, we try to really bring value-based partnerships and contracts to the practices. And this can be a really important piece of revenue. Up to 10% to 12% of a practice's revenue could be from shared savings or quality bonuses, those sorts of things.

We're as a group able to look down and see who's having problems with reimbursement, who has high denial rates, and then work with those practices and work with the payers to solve those problems. And we talked before about just overall administrative burden. So we're trying to give the practices one platform to work across commercial payers, Medicaid and Medicare to do this kind of work.

And then one of the kind of newer directions, Robert, is really helping with back-office supports for practices. So practices really need help with revenue cycle management, with recruiting, with accounting, finance, all those kind of back-office pieces as well.

[Host]

When you refer to shared savings as a portion of the total reimbursement, that's what brings in this concept of value-based care. So again, it's a vague concept, it's jargon. What does that term, value-based care, mean to you?

And how does Community Care Physician Network, that clinically integrated network that you operate, approach value-based care?

[Guest]

Yeah, it's a great question. It's something you hear all the time. You hear just the term BBC and BBC purchasing, all of that.

But it really is trying to balance outcomes and cost and quality. And so the way I look at it, if you're contracted with a payer, it's really gain-sharing with the payer. If we're able to help a practice improve quality outcomes, that's eventually going to lead to better cost or able to keep patients out of the ER from an unnecessary hospitalization and therefore driving the cost down, the payer benefits.

And so the idea is to share some of that with the practice that's doing the work in the community. And we basically, we create tools to help the practice with that. So we bring the data in from the payer and provide, let's say, lists of patients that have gaps in care so that we can call them and bring them in for care.

Or we identify folks that are in the ER today for different reasons or coming out of the hospital and help them navigate back to the primary care setting so that we can keep them healthy.

[Host]

And who does the care coordination in this system? Is that a CCPN function? Is it third party?

How do you handle that approach?

[Guest]

You know, you kind of before talked about the importance of community-based primary care. So care management, it's really important these days that it comes from the practice, from the community. Traditionally, it could be done at the health plan level, could be done in another state, those sorts of things.

So we embed nurses, social workers, care coordinators, others in communities, in practices to do that work. And, you know, you think about it, you get a phone call from someone that you don't know versus, hey, I'm calling from Dr. Shah's office. You're much more likely to engage with a person that's calling from your primary care team.

[Host]

And another thing that is a consistent part of value-based care models is the importance of primary care conceptually as well as formally as part of the model. So it helps us a little bit with the mechanics of why primary care is important to a value-based care model that most of these payers are offering. It's sometimes referred to them as the primary care physician being the quarterback in this delivery model.

Help me out with that concept.

[Guest]

Yeah, I think if you're, let's say you're the payer, you're the insurer, the, you know, one concept is that if we can get patients or people tightly linked to primary care, we know that the health outcomes and the costs are better. And so in these value-based care models, they attribute patients to different primary care practices because the primary care provider and that team has the most influence on the downstream costs. They decide, you know, whether the patient needs to be hospitalized often or decide which direction to go on pharmaceutical, you know, on drug costs, things like that.

They decide whether to refer to a specialist. So all of those things, health care is expensive and it's complicated and it's discoordinated, but a strong primary care team can really have an influence on those things and improve the quality and kind of bend the cost curve.

[Host]

How does data analytics and software and predictive systems help with that objective?

[Guest]

Yeah, there's, and you know, it's interesting to think about the use of AI in the future and not sure we're ready to kind of put our finger on the scale with that yet, but a lot of, you know, a primary care practice could have a panel of 2,000 to 6,000 people on it. And you're really trying to find the people that are going in and out of the hospital or ER or going to more expensive settings that maybe don't need to do that. So there's a lot of great predictive modeling where you can find the folks that are starting to, the risk is starting to rise and you can kind of engage them and help them meet their health care goals through a care management approach and avoid the expensive settings or the expensive procedures, those sorts of things.

[Host]

Is that something that CCNC and CCPN are assisting the member practices with?

[Guest]

Yeah, absolutely. So we basically, we take the data in from the payer and we've been doing this a long time now, about 20 years, and we've come up with what's called an impactability score, which really tells us which groups of patients with patterns of different chronic conditions, patterns of different drug use, and maybe hospital and specialty use, which of those patients are really sensitive to a care management approach, to a more robust team wrapped around them. And it's really been shown to be effective and to also save the payer money. And that's where we can get into some of the game sharing with the practices.

[Host]

So we've had probably close to 15 years, not quite that much, since the Affordable Care Act was passed and implemented. So a bunch of different value-based care models that have come from this sort of latest generation of value-based care. I'm sure our older listeners probably say, well, I remember that in the 90s and didn't quite get off the ground then, but getting off the ground a little bit more now.

Two steps forward, one step back, one step back. What models do you find most exciting and have the most potential that you've seen over this last sort of 10 years of exciting value-based care development?

[Guest]

Yeah, it's a great question. I would say the Make & Care Primary model is probably the most exciting. So that's a model that came out of CMS last year, and they chose eight states to do this 10.5-year program, and North Carolina is one of them. And what's interesting about the model is it uses the concept of primary care capitation payments. And capitation sounds like a bad word, but really what they do is they pay the practice prospectively for taking care of a panel of Medicare patients. And so what that does for the practice is it really takes them off that fee-for-service treadmill approach, and they can be much more holistic with the care they provide.

They can use that funding to really do more care management approaches, more proactive care, also get into telehealth and remote patient monitoring, other areas that we know can keep people healthy. So that kind of flexibility really, and there's a simplicity to it as well, really can help a primary care practice, I think. The other piece of that program is they really tried to hone in on the key quality measures and align the measures a little bit better.

Because that's part of the administrative burden of value-based care, is trying to manage 10 different measure sets. So that's been a good part of that program as well.

[Host]

Do you think that there's a potential for making care primary to become more of an all-payer model in which other payers, commercial payers, Medicaid, start to adopt it so there's this sort of single platform? I know that's sort of an issue in value-based care these days is a lot of different platforms, and how can we make it a little easier for the providers to understand what they need to be going for?

[Guest]

Yeah, and that's one of the goals, which is really exciting. So they convened our commercial payers in North Carolina and the Medicaid agency, and all of them are trying to design these prospective payment models for the primary care practices. So that's really part of it.

And so you could see a world where the practice has really been able to shift over to this model and kind of get off that fee-for-service treadmill, which doesn't have the most aligned incentives all the time.

[Host]

Yeah, I think that'll be a really interesting thing to watch over the next year or two, is to see as this all-payer concept starts to spread its wings a little bit. What do you think is on the horizon for your organizations, Community Care North Carolina, Community Care Physician Network, in value-based care supporting primary care practices?

[Guest]

Yeah, we're thinking about administrative burden and the complexity of all these programs, even value-based care. We're really trying to provide kind of one platform for a practice. So they're working with us on Medicaid, on commercial, on Medicare, and other things, and they have kind of a one-stop shop, one platform to use, one set of care managers.

So that's sort of one thing. We're very strong in the Medicare area. We work across all the Medicaid managed care programs, but we're really trying to develop partnerships and new programs in Medicare, which is really important to the practice.

So that's a future piece, and we're watching this Medicare primary program very closely, and really trying to get stronger data tools as well. I think that, you know, we didn't talk a lot about the burden of using the electronic health record, but the last thing a practice wants to do is look into other payer portals or portals of ours to get data. So we're trying to integrate more with the electronic health records as well.

[Host]

Very good. So how about just a last question for you? Appreciate your time and all of your insights.

Let's turn our future goggles on. What do you think primary care will look like in North Carolina 10 years from now?

[Guest]

It's a great question. So let's be optimistic. I think, you know, there's a couple of things to look at.

On the kind of business and financial side, I do think there'll be more kind of integration or consolidation models that a lot of small practices are really going to struggle to stay 100% independent. But we think that the key is that these folks will want to manage their own destiny and group together without the assistance of payers or other folks that may have other interests. So I think that consolidation models that are really independent in nature would be one thing.

We probably have to talk about technology and the use of AI. And I think there's a lot of hope there about AI reducing the administrative burden from things like prior authorization or the documentation that really works to burn out a lot of providers. So I think we're going to see a lot of new tools that will work around the edges and make things more efficient.

And really hoping that in the future that payers and, you know, purchasers like employers will realize how critical this primary care backbone is and come up with some new payment strategies to support this system. So hopefully there'll be new models like we talked about making care primary in the future as well.

 [Host]

Well, thanks so much, Dr. Roth, for talking with us today and for all that you do. We hope that everyone enjoyed the podcast and see you next time.

 [Outro]

The views expressed in this podcast are those of the individuals only. This podcast is not intended as legal advice and does not create an attorney-client relationship between you and Smith Anderson. If legal advice is sought, please contact qualified legal counsel.