Report: Ominous Drop in Primary Care Spending Percentage

Dec. 2, 2020
Primary Care Collaborative report also details several state-level innovations to measure and bolster primary care spending

A new report from the nonprofit Primary Care Collaborative (PCC) reveals a decline in U.S. primary care spending percentage between 2017 and 2019 and wide variation in primary care spending between the states. In its study based on commercial claims data, 39 states saw a drop in primary care spending when measured using a narrow definition of primary care. The report, titled “Primary Care Spending: High Stakes, Low Investment,” also highlights several state-level innovations to measure and bolster primary care spending.

In 2019 primary care spending across commercial payers was only 4.67 percent of total national commercial healthcare spending, falling from 4.88 percent in 2017, the study found. (The study did not measure non-claims spending.) The report also highlighted correlations between higher primary care spending at the state level and fewer emergency department visits, hospitalizations, and preventable hospitalizations.

During a Dec. 2 online meeting to discuss the report, Darilyn Moyer, M.D., chair of the PCC’s board of directors and executive vice president and CEO of the American College of Physicians, noted that other countries do a better job of measuring the percentage of total cost of care spent on primary care. “Understanding that orientation is important given what we know about how health systems oriented toward primary care have better population health outcomes, better equity and lower costs. The United States has fallen short on primary care spending vs. its European counterparts.”

PCC Advisor Ann Kempski said it was striking that primary care spending remains low and is trending lower. She added that this report is not an outlier — other studies have shown similar results. The fact that spending fell between 2017 and 2019 “is not the kind of progress we had expected and hoped for,” said Kempski, who previously served as executive director of the Delaware Health Care Commission working on health system transformation. Before that, she served as director of policy for the Permanente Federation of Kaiser Permanente. “There is well-established literature that shows health systems that have a stronger primary care orientation have better population health outcomes and provide care in a more cost-efficient manner,” she said.

A panel discussion responding to the report included Kate Goodrich, M.D., M.H.S., senior vice president for trend and analytics within the Clinical and Pharmacy Solutions segment of Humana Inc. and former CMS chief medical officer. She said that both in her work at CMS and at Humana, primary care has been widely understood to be a high-value lever to improve care and value. “As articulated in this report, we are failing as a nation to take advantage of that important lever,” she said. “At Humana we believe investment in primary care and partnerships with primary care clinicians are key to members’ better health. It is so important for us as a country to step back and figure out what we need to do to accelerate that journey." Noting that the report highlights significant variation at the state level, she added that there are important levers at the state level that could be understood better.

In a statement accompanying the report, Ann Greiner, PCC’s president and CEO, called the report a three-alarm fire. “The primary care platform was shrinking—and then the pandemic hit. Primary care practices were slammed financially and did their best to respond to patients’ needs, but they have been hamstrung,” she said. “Patients, particularly those in vulnerable and marginalized communities, are the collateral damage.”

Moyer noted that there is considerable momentum to measure and shift payment to primary care at the state level. More states are including spending targets for primary care, following Rhode Island’s lead in 2010 to establish a target of 10.7 percent of total healthcare spending on primary care.

Here are some highlights of recent state actions from the report:

  • In January 2020, Connecticut Gov. Ned Lamont issued Executive Order 5 establishing a state healthcare cost benchmarking process that also includes a primary care spending target of 10 percent by 2025.

• Delaware has set a target of 12 percent by 2024, and Oregon now requires that its commercial carriers and Medicaid Coordinated Care Organizations achieve a minimum of 12 percent of primary care spend by 2023.

• At the end of 2019, the Colorado Primary Care Payment Reform Collaborative recommended that all commercial payers should be required to increase the percentage of total medical spending (excluding pharmacy) spent on primary care by at least 1% percent annually through 2022.

• Washington state is contractually requiring its Medicaid MCOs and plans serving school employees to report on primary care spending and has a minimum payment requirement on commercial plans participating in the Cascade Public Option plan to pay 135 percent of Medicare for primary care services.

A growing number of states (Oregon, Connecticut, Delaware, Vermont, and Washington) are or will be measuring primary care spending in the context of broader healthcare cost benchmarking efforts. Massachusetts is measuring primary care spending together with the other five New England states under an initiative of the New England States Consortium Systems Organization (NESCSO) to report primary care spending across these states using a common definition of primary care spending.

Defining attributes of advanced primary care

Also at its annual meeting this week, the PCC joined with  the National Alliance of Healthcare Purchaser Coalitions and the Pacific Business Group on Health to release a new set of attributes to characterize advanced primary care (APC), a practice that shifts the focus of primary care toward quality.

The attributes further develop the Shared Principles, created by over 100 organizations under the auspices of the PCC and FMAHealth and introduced in October 2017. To date, more than 350 organizations representing diverse healthcare stakeholders have adopted them. As employer groups, the National Alliance and PBGH have each developed employer-identified attributes of APC that were brought together by the PCC and aligned.

The seven new attributes of APC include: enhanced access for patients; optimize time with patients; realigned payment methods; organizational and infrastructure backbone; disciplined focus on whole-person health; behavioral health integration; and referral and care management. The document shows how these attributes align with each Shared Principle, which include comprehensive and equitable and team-based and collaborative.

 The announcement of the APC practice attributes was made by Elizabeth Mitchell, PBGH’s president and CEO, in the closing keynote address of the PCC’s annual conference, held online Nov. 30 and Dec. 1. In her announcement, Mitchell outlined how employer-identified attributes of APC conform to the Shared Principles and explained the new set of APC characteristics.

“PBGH’s jumbo employer members understand that primary care is essential to a healthy workforce and that primary care practices need resources to provide optimal care,” Mitchell said. “Advanced primary care as defined by these attributes will help to ensure that our employees stay healthy and that front-line, community-based physicians have the support and resources needed to provide essential preventive services and chronic disease management within communities. COVID-19 has exposed how vulnerable our primary care system is and the need to dramatically increase our investment in primary care.”












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