How States Are Increasing Their Investment in Primary Care

Primary Care Spending Targets

Strengthening primary care in the United States has been a prominent health policy topic for more than 13 years, tracing back to the publication of “Joint Principles of the Patient-Centered Medical Home.” There have been waves of efforts since then by federal and state government, health insurers, and provider organizations to transform primary care delivery, as well as change how primary care is reimbursed. Increasingly, states are creating “primary care spending targets” to increase the proportion of health care spending on primary care.

States are investing in primary care for two reasons: 1) research indicates that countries with health systems that invest more heavily in primary care relative to other types of care compare favorably on multiple performance dimensions, and 2) primary care physicians continue to be among the lowest paid physicians across all specialties, making it difficult to attract new physicians to primary care. In this post, we provide an update on which states have implemented primary care spending targets—and outline some of the challenges in standardizing measurement.

So far states have varied in their approaches. (See presentation on state definitions.) Primary care spending targets can be statutory or regulatory requirements of state agencies and/or insurers or serve as voluntary aspirational goals. State policies to date include:

  • Rhode Island’s regulatory requirement that commercial insurers approximately double primary care as a percentage of total spending over five years (2010–2014) ─ without causing overall spending to increase. Rhode Island insurers attained the specified level (11%), and since that time have been required to maintain the elevated level of primary care spending.
  • Oregon’s 2017 statutory primary care spend requirement targeted to health insurance carriers and Medicaid coordinated care organizations requiring primary care spend to equal 12% of their total health care spend by 2023.
  • Connecticut’s five-year annual voluntary targets to increase primary care spending to 10% of total health care spend from 2021–2025, which are being developed per a January 2020 executive order from Governor Lamont.
  • Pennsylvania’s five-year annual voluntary targets, which will be created as part of a process outlined in legislation proposed by Governor Wolf.

Several additional states have established or are establishing processes to measure and report primary care spending as a percentage of total health care spending; this information may serve as a first step toward creating a target.

When developing primary care spending targets (regulatory or voluntary), experience shows that there are several design questions that need to be considered. Rhode Island and Oregon have differed in how they addressed a number of these questions.

  1. What is the data source? For states with All-Payer Claims Databases (APCDs), they are an attractive option. However, APCDs are typically missing non-claims-based payments and most self-funded employer claims. Therefore, states can instead opt for payer reporting of aggregate data or a hybrid model if they don’t want to accept the limitations of an APCD-only methodology.
  2. What services comprise primary care? While office-based visits (and now telemedicine visits too) comprise most of a primary care practice’s revenue, there are a wide array of other services, such as home visits for newborn care or preventive dental services for children, that may be delivered depending upon scope of practice.
  3. Who is a primary care provider? This question can produce passionate discussion about inclusion of OB/GYNs and of integrated behavioral health clinicians, along with several other specialties.
  4. Should spending be calculated on a paid or allowed basis? The paid amount is the actual payment to a provider, while the allowed amount also includes copays and other cost sharing. Opinions can vary based on the degree to which the measure is being used to determine insurer accountability or to assess the overall spend level.
  5. What non-claims-based payments should be included in the calculation, and how should they be measured? Non-claims-based payments, such as incentive payments and care management infrastructure payments, often represent a sizeable percentage of primary care practice revenue. There is currently no standard practice for capturing and reporting non-claims-based payments. Distribution of non-claims-based payments to integrated delivery systems, independent practice associations, and multi-specialty medical groups present a particular challenge because it is hard to identify what percentage of payments can be attributed to primary care. The Milbank Memorial Fund recently convened a work group to advise on the development of a standard methodology.

As more states measure primary care spending as a percentage of total health care spending, there will be an opportunity to standardize measurement methodologies to support comparisons across states. Two national studies provide Medicare and commercial data by state (a national Medicaid study is under development). This standardization won’t be easy to achieve as local stakeholder engagement, legislative directives, and state policy objectives can result in differing methods across states—and pose formidable barriers to cross-state alignment. Still, we know that national organizations like the Centers for Medicare & Medicaid Services and the National Committee for Quality Assurance have successfully advanced standardized measurement and reporting requirements ─ for health plan performance, for example ─ so standardization for a core definition of primary care spending is possible.

The real challenge is determining whether primary care spending targets help to achieve the larger policy aim: strengthening primary care. Setting targets and measuring performance is only a means to that end. Figuring out whether these targets strengthen primary care will be difficult but also critical to know as more states move in this direction.