Should primary care practices consider more complexity in their payment model portfolio?

Fast Company

15-07-2025

It's a hell of a starting point: The work of providing primary care is already overwhelming. But trying to get paid for that work in the traditional fee-for-service (FFS) payment system has become unsustainable. From verifying ever-changing insurance eligibility to choosing from the library of 69,832 ICD-10 and 11,000 CPT codes to organize into a superbill—often with complex rules about billing for additional services, depending on the type of visit—every single patient encounter is an administrative gauntlet. Then there's the patient copay and coinsurance to process, along with weeks or months of delay to see what is ultimately reimbursed by the insurance company.
All this complexity is paired with reimbursement rates that are not just falling behind inflation but declining over time. A recent study found Medicare reimbursement for physicians decreased by approximately 33% since 2001 when adjusted for practice cost inflation, and an additional 2.8% reimbursement cut went live at the start of 2025. It's no wonder that physicians in independent practices have said that 'rising administrative burdens' and 'low and falling payment rates' are a major threat to their success.
Despite all these hurdles, independent practices are finding new ways to succeed—ways that, ironically, often involve leaning into more complexity, not less.
For one primary care physician I'll call Dr. R, embracing new models isn't optional if she is going to continue providing care to 3,000 families in Hawaii seven days a week. She already moved almost half of her practice's revenue from FFS to capitation (per patient flat fee), but sharply declining reimbursement rates—combined with steep increases in costs like rent, supplies, and staffing—have put her practice in a difficult position. She's getting squeezed, and she says her practice needs to be testing new models and new income streams.
As an economist, I view this as a strategy of portfolio diversification. A medical practice can add complexity to its revenue by taking on alternative reimbursement models, such as membership fees, while also testing participation in a value-based payment program. This portfolio diversification is increasingly key to financial sustainability for primary care practices, which have been especially undervalued in the transactional FFS models compared to specialties. Primary care's value comes from cognitively complex, relationship-driven care, sometimes for decades and across generations—an approach much more aligned with membership, capitation, and rewarding for outcomes than reimbursing for services delivered in 15-minute increments.
Dr. R is not alone. Many of my company's primary care customers are testing new models. In a survey of our customers, clinicians reported that getting help with 'alternative payment models' was the top request (34%) to respond to instability in the sector today. According to the AMA, more independent practices are moving away from a full FFS approach.
This complexity is something that startup medical practices have also been testing for a while. There has been a rise in dual-focus healthcare companies—those that work to gather cash payments from patients while also building their insurance-taking business. This creates some financial flexibility for a medical practice, but also becomes another thing to manage. As a builder of an electronic health record (EHR) platform, I can attest that diversification of practice revenue creates technical challenges for which most EHR billing platforms are not well-designed.
My company is in the unique position of serving primary care customers across a diverse set of payment models: a large segment of the 'direct primary care' (DPC) market, thousands of fee-for-service practices, groups exploring concierge or hybrid models, and a variety of value-based care innovators. DPC is a type of primary care payment model that skips insurance and collects regular membership fees either from patients or their employers. This model emerged in 2016, with membership growth now estimated at 36% a year. Concierge programs are another approach, where the practice still bills insurance but also charges a membership fee for services not covered, such as text replies and expanded access. Blended practices are exploring new ways to support a mix of some or all of those payment options across their patient populations.
In order to succeed in this reimbursement complexity, practices need several things, including legal advice on compliance for their payment portfolio and support in both their EHR and billing workflows. We're getting closer to that today— artificial intelligence (AI) approaches are helping alleviate billing administration so practices can build an extremely diversified reimbursement portfolio for their patients. The goal of technology should be that the clinician focuses on the complex and nuanced work of caring for the patient, while their systems make sure they get paid, no matter the model.
Today, Dr. R told us she is thinking about adding on a small concierge fee, enabling families to access a nurse practitioner on staff for after-hours care and lactation support. She's trying her best to work within our broken healthcare system to keep her practice running and her young patients able to receive medical care.
Financial stability and success for independent medical practices matter tremendously. Their survival is crucial to the US healthcare system. These are the practices serving socially vulnerable populations, preventing unnecessary patient hospital admissions at higher rates, and delivering on patient outcomes improvements with less clinician burnout. This complex, blended revenue approach can help, and I think not a moment too soon.