Primary care in the United States is in crisis for a number of reasons. An increasing percentage of our workforce is experiencing burnout, and reimbursement for primary care is insufficient to provide needed services for patients and adequate compensation for primary care teams. Additionally, funding shortfalls and payment mechanisms hinder transformation that improves value, even as policy makers look to primary care to drive value in health care.

In this context, there is much to learn from the experience of Rhode Island’s statewide payment innovation model and the Center for Medicare and Medicaid Innovation (CMMI). Each has supported primary care transformation, and their work demonstrates the need to both consider the size of the investment and the time it may take to achieve a return on investment if we are to achieve the triple aim of improving care and health while reducing costs.

The Size Of Investment In Primary Care

Only 6–8 percent of health care dollars are spent on primary care services. The CMMI’s Comprehensive Primary Care (CPC) initiative and Rhode Island’s statewide payment innovation model provide evidence that additional investment in primary care is likely to sustain transformation, improve patient outcomes, and will be cost neutral, or cost saving, overall. The CPC initiative spent $371 million in per-member-per-month fees since the start of the initiative in 2011 and doubled the amount spent on primary care for the most complex patients. Rhode Island increased its primary care investment by nearly 40 percent between 2008 and 2012, largely investing in medical home transformation.

Creating new models of primary care involves fundamental, structural changes. For example, the CPC initiative lists five advances that will improve primary care delivery but that will require investment: 1) improved access and continuity; 2) planned care for chronic conditions, preventive care for high-risk patients, and team-based integration of behavioral health; 3) risk-stratified care management; 4) patient and caregiver engagement, and; 5) coordination of care across the medical neighborhood. Each of these will require health systems of all types to invest critical resources in their primary care structures.

CPC Initiative Is Achieving Savings, Counterbalanced By The Cost Of Care Management

In 2011, the CPC initiative increased support to fund primary care transformation with an initial average per-member-per-month payment of $20, which resulted in a 50 percent increase in primary care spending. These fees were risk adjusted, with the highest being $40 per member per month for the patients with the highest illness severity. What did these investments achieve? At its halfway point in 2014, the overall initiative demonstrated a 1 percent net savings in Medicare fees ($8 per member per month), counterbalanced by the care management fees and improved patient experience across multiple domains. While savings may be modest or neutral, these practices were able to achieve improved outcomes at no additional cost across the United States and demonstrated clear financial benefits in several states.

The Rhode Island Model Is Improving Outcome Measures And Saving Money

Rhode Island has made a bold investment at the state level, making incremental increases in its minimum primary care spending from 5.0 percent to 10.7 percent over a five-year period. This funding includes per-member-per-month supplemental payments for infrastructure and performance on key metrics of quality, such as decreasing hospitalizations and improving patient experience. The multipayer contract adjudication of these payments and monitoring of quality is conducted by the Care Transformation Collaborative (CTC) of Rhode Island.

Through the guidance of the CTC, Rhode Island experienced a substantial increase in the number of patient-centered medical homes in the state, and 95 percent of practice sites have achieved medical home status. Patient-centered medical homes may improve the quality and cost of services through improved care coordination, population management, and the use of quality improvement methods. Through the CTC, primary care practices have begun to include other features common to patient-centered medical homes that have been shown to improve patient outcomes, such as behavioral health integration and community health teams. Based on success over the past five years, payers have even increased the fee schedule for patient-centered medical home practices, convinced that these advanced primary care models will improve outcomes for patients and concurrently hold down costs.

The Rhode Island experience suggests that primary care transformation takes time, as will the return on investment. For example, the success achieved by the medical home transformation effort in Rhode Island took several years and required a committed and sustained investment. In the initial two years, there was a trend toward reduced hospital use, but the change in inpatient admissions did not reach statistical significance. More recently, CTC practices have shown more substantial reductions in hospital use, including a 7.2 percent reduction in hospital admissions in a multipayer evaluation.

In a study conducted by Blue Cross and Blue Shield of Rhode Island of more than 100,000 members, practices having undergone patient-centered medical home transformation through the CTC over a five-year period showed a 5 percent reduction in costs and savings of $30 million compared to other primary care practices. Given that patient-centered medical home transformation may be accompanied by improved patient access as well as improved care coordination and management, unnecessary hospital admissions might be avoided under this model. This cost savings represented a 250 percent return on investment in transforming practices into patient-centered medical homes, accomplished by a 16 percent reduction in hospital admissions and a 30 percent reduction in readmissions, compared to patients in other primary care practices. Rhode Island provides state-level evidence that primary care delivery system investment can pay off by improving outcomes such as hospital use over time.

Differing Approaches To Investment

As was done on the state level in Rhode Island, federal investments in medical home transformation are largely being made through enhanced fee-for-service payments, per-member-per-month fees, and shared savings in accountable care organization models or pay-for-performance quality incentives, but few have invested at levels comparable to the CPC initiative and within the CTC practices in Rhode Island. In most cases, payment mechanisms do not come close to providing the increase in resources that is likely needed to make a meaningful investment in primary care. Shared-savings models may help to reduce costs, but the average 0.5 percent drop in spending is not enough to support the infrastructure that is essential for practice transformation and ongoing care management.

Whether resources should be distributed based on volume or value to improve primary care was not tested by the CPC initiative or Rhode Island, but it is an important question. Neither entity experimented with a move away from fee-for-service. Using a micro-simulation model, we tested the impact of providing increased payments to primary care through per-member-per-month fees, shared savings, and enhanced fee-for-service. We found that the underlying reliance on a fee-for-service payment structure provides little incentive to restructure primary care practices to prioritize value over volume.

We need to create a payment system that enables primary care to serve as the efficient and valued foundation of a high-functioning health system. The CPC initiative may be overly constrained by the limits of its investment and its reliance on fee-for-service payment, while the Rhode Island model may provide the right amount of resources but may be constrained by its use of fee-for-service as the base payment structure. New payment models being advanced by the CMMI offer improvements from prior versions. In particular, track two of the Comprehensive Primary Care Plus (CPC+) initiative offers reduced fee-for-service payments in return for higher quarterly payments that more than make up for the loss of fee-for-service revenue, which has the effect of moving practices closer to capitation. More experiments such as CPC+ are needed that test the way practices are paid, the adequacy of that payment, and the value of services being provided. Only through a committed and thoughtful investment in primary care and its evaluation will we realize the true promise of primary care and rescue our failing health care system.

Author’s Note

The author would like to thank Martell Hesketh for her assistance in preparing this blog.