“Here. Not There”: Rebalancing Health Systems Toward Primary Care

Good news, kind of. New data from the Centers for Disease Control and Prevention indicate that the United States reversed a three-year decline in life expectancy in 2018, thanks to gains made in combating opioid deaths and to improved cancer treatment. But before we cheer too loudly, a longer view is necessary. The 2018 number is still below where we were in 2014 and continues a pattern of progressively poorer performance relative to other countries dating back to 1980, even as our health care costs eclipsed them.

In this context, a very public health-care-industry spat about the unbalanced health care system in Colorado is worth noting. Officials there are pointing to the paltry amounts spent on primary care—the only health service where an increase in supply has been associated with longer life expectancy—while calling the hospital industry to account for high prices and large profits. It is a louder version of discussions happening elsewhere.

A December report from Colorado’s legislatively commissioned Primary Care Payment Reform Collaborative found that the state’s primary care providers are treading water. Payments to primary care providers in Colorado in 2018 amounted to 9.7% of all Medicare Advantage, Medicaid, and commercial payments, a primary care spend rate figure that had remained essentially flat for three years. Citing the benefits of a strong primary care–oriented delivery system, the Collaborative recommended that figure increase by 1 point per year for the next three years, in the form of non-fee-for-service payments that encourage comprehensive models of primary care.

A month after the primary care report was released, Colorado’s Department of Health Care  Policy and Financing published a report analyzing payments to hospitals in the Centennial State. The authors make five conclusions:

• The cost of health care has gone up much more sharply in Colorado than nationally and those costs are driven primarily by high hospital prices.
• Hospital profits have increased by more than 280% between 2009 and 2018.
• Colorado hospitals’ prices increased more than the growth in patient volume.
• Uncompensated care levels in Colorado are at historic lows.
• The increased revenue generated by public, taxpayer funded programs like Medicaid are not being passed along to health care consumers and employers.

“Not fair,” the hospitals have unsurprisingly responded. Medicaid and Medicare underpay them and commercial insurance prices must make up for it, they asserted. This cost shift argument is hardly a new one, however, and the industry did not contest the report’s basic findings.

What makes this stale standoff about alleged public sector underpayments to hospitals different are three new factors: an abundance of national information corroborating the state’s report; the simultaneous analysis from the state looking at the portion of dollars in health care being spent on primary care; and senior government officials who are calling attention to the dynamic.

Government leaders have trumpeted the reports and, in a departure with most hospital financial showdowns, showed little sympathy for industry arguments. Often, concessions made by hospitals on state Medicaid payments are repaid by officials through lax oversight of commercial payments, but the presence of good analysis and employer health care affordability concerns have changed that dynamic.

With their actions, Colorado officials are saying, “If we want to improve life expectancy and have a high-performing delivery system, we need to put our money here and not there.” The private insurance contracting model has not worked because of the market power of certain health providers. The state health policymakers in Colorado are using public accountability and other levers to rebalance the health system away from hospitals and toward primary care.

It remains to be seen how successful Colorado will be, but they are not alone. Rhode Island has been engaged in this work for 10 years now, using commercial insurance regulation to increase investment in primary care, limit hospital rate increases, and speed the adoption of alternate payment mechanisms. It has seen lower commercial insurance rate increases and increased statewide capacity for behavioral health integration and deployment of community health workers in primary care. Oregon has relied on legislation to increase the state’s primary care spending rate, promoting models developed by the state’s Primary Care Transformation Initiative and integrating them into the coordinated care organizations that deliver care through their Medicaid program.

Other states are joining Colorado in focusing public attention on how primary care continues to be shortchanged. In the last two months, both Maine and Vermont released reports on their primary care spending rates. Maine’s rate has remained constant for the last three years at 5.5% or 8.6% of total health care spending, depending on the definition used and payers included; Vermont’s rate was slightly over 10%. Both reports make recommendations that would refine the accuracy of the measurement in the future, including by standardizing definitions of primary care and incorporating non-claims payments, which are growing in importance. More state reports are anticipated in the coming year.

Refinement of a primary care spending measure is important but should not distract from the broader findings officials in Colorado have made. If we want a high performing health care system—one that helps increase life expectancy and is more cost effective—we need to spend a greater portion of our health care dollars on primary care.

This rebalancing will not happen by itself; those who benefit from current arrangements cannot be expected to change their practices. Shifting costs from one payer to another or getting more patient “skin in the game” hinders rather than helps rebalancing. And the shift away from fee-for-service provider payments to payments that encourage population level accountability is necessary but not sufficient.

As officials in places like Colorado are showing, making sure that more of our collective resources go here and not there will require that public leadership creates policy that increases awareness of the need for primary care investment, sets a different expectation, and makes it happen.