Investing in primary care leads to higher quality care and lower costs, new CHCF study finds

Health care systems that invest more in primary care as part of their overall budget perform better on measures of clinical quality and patient experience, hospital inpatient and emergency department utilization, and total cost of care, according to a study recently published by the California Health Care Foundation (CHCF).

 

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Across the eight health plans in California’s commercial market examined for the study, 14 health plan products were observed, including health maintenance organizations (HMOs), preferred provider organizations (PPOs), and exclusive provider organizations (EPOs). The primary care spending percentages varied greatly between products, with the average being 7.5% with a range from 3.5% to 12.7%. 

“These figures provide a baseline estimate of primary care spending for commercially insured adults in California,” the analysis said.

The figure below shows the variation in primary care spending percentages across these 14 health plan products, and were adjusted for population age, gender, and clinical risk score. The average adjusted primary care percentage was 7.9% for HMO products, 6% for PPO products, and 5.8% for EPO products.

 

Image: California Health Care Foundation

 

According to the analysis, at the health plan product level, a higher primary care spending percentage by a health plan product was associated with better performance for clinical quality and slightly lower acute hospital utilization, but slightly higher emergency department utilization and total cost of care. HMOs generally had the highest spending on primary care.

Across the 180 provider organizations within the assessed HMOs, the primary care spending percentage averaged 7.6% and ranged from 2.8% to 15.4%, with the total cost of care on a per-member per-month basis averaging $365. According to the analysis, at the provider organization level, there was a statistically significant positive association between the primary care spending percentage and performance on various care quality and cost measures.

The table below shows how increased primary care spending translated to improved performance measures within HMOs.

 

Image: California Health Care Foundation

 

A one-percentage-point increase in primary care spending was associated with 0.76 fewer acute inpatient hospitalizations per 1,000 member-years, translating to 6,400 fewer hospital discharges per year for the 8.5 million adult HMO members in the study. Such an increase was also associated with a $9.09 lower monthly health care expense rate for members, representing $923 million less in spending per year (a 2% decrease in total spending).

The analysis also showed that if provider organizations in the lower brackets of primary care spending matched those in the higher brackets of spending, this would prevent 25,000 acute hospitalizations and 89,000 emergency department visits, as well as save $2.4 billion in overall health care spending in one year. 

“While existing research (including this study) does not address the question of causalitythat is, whether increasing primary care spending percentages would, on its own, lead to improved outcomesit provides growing evidence of the benefits of high-quality primary care,” the analysis said.

CHCF’s Primary Care Investment Coordinating Group (PICG), comprised of public and private health care purchasers, policymakers, analysis and improvement specialists, consumer advocacy organizations, and funders, provided several key recommendations for policymakers, including:

  1. “Measure and publicly report primary care spending, including non-claims spending, in a standardized way. 
  2. Set a floor and/or target for primary care spending to stimulate adequate investment. 
  3. Pay for advanced primary care with prospective, risk-adjusted, population-based and performance-based payments. 
  4. Evaluate benefit design and provider networks, and incorporate contractual requirements such as PCP selection and matching. 
  5. Track progress and report on impact.”

The analysis also mentions the proposed Office of Health Care Affordability, whichamong other thingswould be in charge of measuring and promoting “sustained systemwide investment” in primary care.