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February 21, 2023
Report
Yalda Jabbarpour
Stephen Petterson
Anuradha Jetty
Hoon Byun
Publication
Dec 2, 2024
Nov 25, 2024
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From 2010 to 2020, the percentage of total health care spending allocated to primary care has been low, and little progress has been made over time. US primary care spending for all insurance types over the decade varied from 6.2% in 2013 to 4.6% in 2020. By comparison, Organization for Economic Co-operation Development (OECD) nations spent an average of 7.8% of total health care expenditures on primary care in 2016, according to the NASEM report.
“Primary care spending” depends on payers’7, 8 and states’9 definitions of primary care.10 For this report, primary care spending was defined as the proportion of total health care expenditures being spent on outpatient and office-based visits to primary care clinicians (Figure 1). This “narrow” definition is restricted to outpatient and office-based expenditures to primary care physicians (PCPs), defined as family physicians, general pediatricians, general internal medicine physicians, general practitioners, and geriatricians. A “broad” definition adds spending for office-based care from nurse practitioners (NPs), physician assistants (PAs), behavioral health clinicians, and obstetricians/gynecologists. (Appendix B provides additional data using the broad definition, as well as information on how each of the specialties in the broad category contributes to primary care spending.)
Spending on primary care as a percentage of total health care spending ranged from 3.5% to 8% depending on payer and year. In the decade studied, Medicare spent the lowest share of health care spending on primary care, followed by Medicaid, and then commercial insurance. Medicare primary care spending increased modestly over time, rising from 3.8% in 2015 to 4.6% in 2019, but then falling to a historic low of 3.5% in 2020. Whether the dip in 2020 is an aberrancy due to the COVID-19 pandemic remains to be seen. Medicaid primary care spending has fallen nearly continuously since 2014, from a high of 5.3% to a low of 4.2% in 2020. Commercial insurance spending on primary care has also declined since 2010, when primary care spending stood at 6.9%. However, since 2015, primary care spending among commercial insurers has been relatively flat.
In 2020, 29 states had primary care spending data available. Oregon had the highest commercial, Medicare, and Medicaid primary care spending at 12%, 9.5%, and 8.3%, respectively. One possible explanation for Oregon’s high primary care spending is how the state leveraged its Center for Medicare and Medicaid Innovation State Innovation Model funding. Oregon used these financial resources to transform its health care delivery through payment reform, creating Medicaid coordinated care organizations and a transformation center to disseminate best practices among them.11
Most payments for primary care do not support teams that offer whole-person care. The spectrum of payment models for physician reimbursement ranges from fee-for-service (FFS) to full capitation, with many practices having some combination of reimbursement schemes.12 FFS payments, where physicians are paid for services regardless of quality, may encourage overtreatment and do not support care provided by an interdisciplinary team made up of billing and nonbilling providers. Conversely, capitation, where a physician is paid a fixed amount for each patient for a given period of time regardless of service use, may encourage underuse of resources.13 Hybrid payment models (part FFS and part capitated) that reimburse the entire primary care team, though perhaps more administratively complex than pure FFS or pure capitation, outperform both models.14
By Christine Haran
In January 2023, the Connecticut comptroller’s office kicked off its State Employee Plan Primary Care Initiative Pilot. The initiative aims to help the state fulfill its goal, codified in a 2022 law, of increasing spending on primary care to 10% of total health care spending by all payers by 2025.
Through the employee plan administrator, Anthem, the initiative provides a significant increase in per-member, per-month care coordination payments, as well as significant quality bonuses, to participating primary care providers. In exchange, the providers commit to improve competencies in core areas identified by the Connecticut Office of Health Strategies Primary Care Roadmap, such as team-based care that includes clinicians and nonclinicians, including care management personnel. The providers also agree to be held accountable by taking on some shared risk for the total costs of care of their attributed members.
“We’re talking about a roughly 50% increase in total funds and resources going toward primary care for these practices,” said Health Policy and Benefits Division Director Joshua Wojcik.
To support the insurer and the practices in the analyses of their performance and cost data, the initiative is covering costs for Anthem to hire analysts who will be available to the provider groups. “We’re not just giving the primary care groups additional resources to improve their capabilities and walking away,” Wojcik said. “We’re also demonstrating that we’re going to do everything we can to make sure you’re successful.”
Between 2010 and 2019, the percentage of fully capitated PCP visits remained relatively unchanged, hovering between 7.7% and 9.9% (Table 1), signaling a lack of progress.
KIM STUTZMAN, MD
Program Director, Family Medicine Residency of Idaho – Nampa Residency
Where were you trained, and do you feel like it has impacted your practice?
I trained at Family Medicine Spokane from 1991 to 1994. It was a community program with university affiliation, part of the University of Washington–Washington, Wyoming, Alaska, Montana and Idaho network. Training there clearly impacted my future as I was able to practice full-scope rural medicine in a community of 2,000 individuals for 12 years. Since then, I opened a rurally focused residency.
Oregon has been tracking primary care spending since 2016, following the passage of a law requiring the Oregon Health Authority and the Department of Consumer and Business Services to report on the percentage of medical spending allocated to primary care. Annual reports are published in a data dashboard. The spending reports also highlight the percentage of those payments that are value-based.
Starting in 2023, the largest insurers in Oregon, along with the state’s Medicaid managed care plans, called coordinated care organizations, and the public employee benefits plans, will be required to spend at least 12% of all spending on primary care. “Tracking and publishing these data have helped bring some specificity to these conversations,” said Zachary Goldman, health care cost economist with the Oregon Health Authority, explaining that given the absence of a uniform definition of primary care, there are still open questions about whether to include, for example, pharmaceutical drugs or behavioral health services rendered by a primary care provider, in primary care spending. “Defining these terms (e.g., primary care, value-based payment) in the early stages required significant engagement with interested parties.”
7. Reid R, Damberg C, Friedberg MW. Primary care spending in the fee-for-service Medicare population. JAMA Intern Med. 2019;179(7):977. doi:10.1001/jamainternmed.2018.8747 8. Reiff J, Brennan N, Fuglesten Biniek J. Primary care spending in the commercially insured population. JAMA. 2019;322(22):2244. doi:10.1001/jama.2019.16058 9. Jabbarpour Y, Jetty A, Greiner A. Investing in Primary Care: A State-Level Analysis. Primary Care Collaborative; 2019. Accessed August 16, 2022. https://www.pcpcc.org/sites/default/files/resources/pcmh_evidence_report_2019_0.pdf 10. Bailit MH, Friedberg MW, Houy ML. Standardizing the Measurement of Commercial Health Plan Primary Care Spending. Milbank Memorial Fund; 2017. Accessed May 24, 2019. https://www.milbank.org/publications/standardizing-measurement-commercial-health-plan-primary-care-spending 11. Primary Care Spending in Oregon: A Report to the Oregon State Legislature. Oregon Health Authority; 2018. Accessed April 8, 2019. https://www.oregon.gov/oha/HPA/dsi-pcpch/Documents/SB-231-Report-2018-FINAL.PDF 12. Rama A. Policy Research Perspectives: Payment and Delivery in 2016: The Prevalence of Medical Homes, Accountable Care Organizations, and Payment Methods Reported by Physicians. American Medical Association; 2017. https://www.ama-assn.org/sites/ama-assn.org/files/corp/media-browser/public/health-policy/prp-medical-home-aco-payment.pdf 13. National Academies of Sciences, Engineering, and Medicine. Implementing High-Quality Primary Care: Rebuilding the Foundation of Health Care. The National Academies Press; 2021. doi:10.17226/25983 14. Berenson RA, Shartzer A, Murray RC. Strengthening Primary Care Delivery through Payment Reform. Urban Institute; July 2020. https://nap.nationalacademies.org/resource/25983/Strengthening%20Primary%20Care%20Delivery%20Through%20Payment%20Reform.pdf
