Testimony: How Primary Care Improves Health Care Efficiency

Invited Testimony: U.S. Senate Committee on the Budget Hearing on “How Primary Care Improves Efficiency”

Chairman Whitehouse, Ranking Member Grassley, and distinguished members of the committee, thank you for the opportunity to testify today.

In 2005 I assumed the newly created role of health insurance commissioner for the State of Rhode Island. My job was to direct commercial insurers to improve the accessibility, quality, and affordability of the health care system.

I convened an advisory council of consumers and providers to look at the drivers of health care unaffordability in Rhode Island. They found a gravely out-of-balance health care delivery system that depended heavily on specialty care providers and underfunded primary care providers who — when adequately supported — deliver cost-effective preventive, urgent, routine, and chronic care.

These issues continue to bedevil the Medicare program and the U.S. health care system in general. Overall, the U.S. spends 50 percent more of its GDP on health care than any other country. In return, we have between the 45^th and 50^th longest life expectancy at birth.

In Rhode Island, we implemented a strategy to help rebalance our delivery system. This included a cap on the rate of growth in hospital prices and a requirement that insurers increase the portion of their health care spending going to primary care by one percentage point a year for five years.

By making delivery system rebalancing a priority, since then Rhode Island has:

• Catalyzed Medicare accountable care organizations and new ways of paying primary care practices
• Maintained one of the highest levels of primary care providers per capita in the country, which left the state better prepared to face the COVID-19 pandemic
• Supported a network of community health centers that serves one in six state residents
• Inspired 21 other states to report on or increase statewide primary care spending
• Improved its ranking on the Commonwealth Fund’s state health system scorecard to fourth

Most importantly, Rhode Island has greatly improved its health insurance affordability relative to neighboring states.

Yet these efforts amount to using sandbags to protect people from a relentless flood. Rhode Island is still subject to the primary care crisis facing the country. The Milbank Memorial Fund’s annual Health of U.S. Primary Care Scorecard, released last week, documented:

• Almost one in three Americans report that they lack access to a source of regular care. This figure is increasing, most dramatically for children.
• A declining number of primary care physicians per person
• The share of health care dollars going to primary care is less than 1 in 20 and dropping.
• A grim future: About one in seven physicians is practicing primary care five years after medical residency; not enough to replace those retiring, let alone to match levels found in other countries.

Medicare’s Role

Medicare’s physician fee schedule has created this unbalanced delivery system. How much and how it pays is not delivering value for the Medicare program or its beneficiaries. Medicare is the benchmark for all other payers, so this inefficiency has rippled through our entire health care system.

In 2021, the National Academy of Sciences Engineering and Medicine (NASEM) issued a report on “implementing high quality primary care.” It studied Medicare’s method of health care services valuation, and the role of the Relative Value Utilization Committee (RUC), an advisory committee appointed by the American Medical Association that assigns value to all physician services paid by Medicare. The NASEM report concluded:

• 90 percent of the RUC’s recommendations are accepted by the Centers for Medicare and Medicaid Services
• The fee schedule systematically devalues primary care services relative to other services
• The compensation gap between primary care and other physician specialties has widened, driving what specialty medical students choose and what graduate medical education programs hospitals offer¹

Given the five-to-one ratio of specialists to primary care physicians on the RUC, these findings are not surprising. The Government Accountability Office and numerous commentators have pointed out the conflicts of interest in this arrangement.²

How Medicare pays also contributes to the problem. Paying for each clinician service encourages the provision of care more highly valued by the RUC members – procedures and testing – and discourages lower-priced services and those with no fee valuation that are often used by generalists, such as patient education, care planning, and services delivered by non-licensed clinicians. Fee-for-service payments also discourage investments to improve care and leave providers financially vulnerable in times of reduced demand for in-person services, such as during the pandemic. 

This is a self-perpetuating cycle. A committee dominated by specialists systematically values specialty care over generalist care. Commercial payers follow suit. Specialists’ incomes increase, attracting a greater share of medical school students and further destabilizing our delivery system. Medicare and the country spend more on health and get less.

Recommendations

Given this, I offer four recommendations for Congress to improve the effectiveness and efficiency of the Medicare Physicians Fee Schedule:

1. Revise the Medicare Physicians Fee Schedule valuation process and the role of the RUC.
2. Direct CMS to report primary care spending levels annually across all its programs and models.
3. Implement a hybrid payment methodology — that is, a blend of per enrollee and fee-for-service payments — in the Medicare fee schedule for primary care clinicians and services.
4. Direct CMS to waive Part B cost sharing for all services provided by whomever the beneficiary has designated as their usual source of care.

Each of these recommendations is backed by research evidence, borne from experience in the private sector, innovative states, and Medicare, and supported by the 2021 NASEM report. Together these actions would improve Medicare’s ability to deliver on its commitment to financing effective and efficient care for all seniors, and help rebalance our highly unstable health care system.

References

1. National Academies of Sciences, Engineering, and Medicine. Implementing High-Quality Primary Care: Rebuilding the Foundation of Health Care. Washington, DC: The National Academies Press; 2021.p 295.
2. Berenson RA, Ginsburg P, Hayes KJ, Kay T, Pham HH, Terrell G. Comment Letter on the CY 2023 Medicare Physician Fee Schedule Proposed Rule. The Urban Institute. 2022. https://www.urban.org/sites/default/files/202209/Medicare%20Physician%20Fee%20Schedule%20Comment%20Letter.pdf. Accessed February 19, 2024.