States Try Different Approaches to Boost Primary Care Spending

May 20, 2022
Oregon is requiring coordinated care organizations and commercial carriers to allocate 12 percent of their medical spending to primary care by 2023

State governments are exploring different approaches to increasing the percentage of overall healthcare spending that goes to primary care, while also trying to decrease overall spending.

During a recent webinar, Diana Crumley, senior program officer at the Center for Health Care Strategies (CHCS), said that in the United States, we spend about 5 to 8 percent of our healthcare dollars on primary care. Other high-income countries spend about 14 percent. “That puts us at the bottom of the list in terms of primary care access,” she said.

a program officer at the , detailed several approaches states are taking to invest more in primary care for Medicaid populations.

One is to focus on multi-payer efforts. She said Oregon tracks primary care spending for all payers in the state; it has already seen Medicaid payers increase primary care spending from 13.1 percent in 2014 to 16.2 percent in 2019.

During the CHCS webinar, Summer Boslaugh, transformation analyst for the Oregon Health Authority (OHA), described Oregon’s work to develop policies to measure and increase primary care spending over time. A bill passed by the Oregon Legislature requires coordinated care organizations (CCOs), which are Oregon's Medicaid ACOs, and commercial carriers to allocate 12 percent of their medical spending to primary care by 2023. The state is both reporting on and setting a target for primary care expenditures. Primary care spending by payer is publicly reported annually, she said.

The 2015 legislation also directed OHA to create the Primary Care Payment Reform Collaborative, which is comprised of 36 members representing primary care providers, health plans, CCOs, behavioral health providers, patients and other stakeholders. The charge of the collaborative is to assist OHA in the implementation of a Primary Care Transformation Initiative, which encompasses all the work that OHA is doing to increase investment in primary care. “It's about improving and increasing primary care spend, as well as aligning that payment in a way that is more supportive of the care that primary care practices deliver and the way that they would like to be able to deliver care with more flexibility,” Boslaugh said, including by investing in the social determinants of health. Another goal is to facilitate the integration of primary care behavioral and physical health care.

Smithey’s blog noted that Washington State also is developing a multi-payer primary care payment model that seeks to increase investment in primary care, move away from fee-for-service payments and toward flexible capitated payments, and promote integrated, whole-person care.

Another approach is to focus on Medicaid managed care as a lever. In the Medicaid space, states want to know what primary care spend is, but they have several priority areas for working with Medicaid managed care organizations on care transformation and behavioral health integration. “There is a growing interest in regional partnerships of primary care providers,” Crumley said. “In New York, they're thinking about health equity regional organizations. New Jersey is thinking about regional health hubs. Oregon is thinking about community investment collaboratives — all with the focus on what investments are needed to really make primary care work for more people.”

A 2020 report from the nonprofit Primary Care Collaborative (PCC) revealed 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 highlighted several state-level innovations to measure and bolster primary care spending.

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.

• 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.

West Virginia is funding a Medicaid Primary Care Support program that provides technical assistance to community-based primary care facilities, a grant program for federally qualified health centers, and an annual report to track Medicaid primary care spending.

The CHCS blog noted that states are trying to shift away from fee for service to capitated upfront payments tied to quality outcomes. “In Oregon, more than half of Medicaid primary care expenditures now come from non-claims-based spending intended to improve the quality of care, including payments through capitated APMs,” it said.

Smithey wrote that “states can also set standards that place health equity front and center, such as California’s 2022 Medicaid managed care RFP, which requires managed care organizations to report primary care spending stratified by age and race/ethnicity as a way to work toward equity. Additionally, states can explore payment parity for primary care between Medicaid and other payers to help address longstanding inequities in access to care for people enrolled in Medicaid.”

CHCS has created an “Advanced Primary Care Innovation in Medicaid Managed Care Toolkit” to describe different approaches.