From Congress to employers: shifting the primary care paradigm through efficient payment models to embrace innovative solutions, improve access, and transform health care delivery.
U.S. health care spending reached $4.3 trillion in 2021 and accounted for 18.3% of our nation’s gross domestic product. The Medicare Hospital Insurance Trust fund will be partially depleted and able to pay only 89% of benefits in 2031. These skyrocketing costs are a key area of concern in Congress, at government agencies, and in boardrooms and C-suites, which are all trying to figure out the solution to reign in health care spending. One possibility that has bubbled up is further investment in enhanced primary care as a way to shift from a fee-for-service system toward value-based payment – which includes aligning incentives across the health system and encouraging prevention and disease management as way to reduce more costly episodes of care.
Addressing health care costs is one of the top bipartisan priorities of this Congress, with several hearings this session focused on innovative solutions to driving down spending across the system. In a House Ways and Means Committee hearing, members discussed how enhanced access to primary care providers can promote preventive health care and reduce overall costs. Similarly, in a Senate Health Committee hearing on addressing the mental health crisis, testimony from several witnesses discussed the importance of integrating behavioral health into the primary care process. And perhaps more urgently, Congress is discussing the need to bolster the health care workforce and expand care in rural and underresourced areas, including addressing the expiration of vital programs – such as those that fund community health centers – at the end the fiscal year. The U.S. Health Resources & Services Administration projects a shortage of 35,260 primary care physicians by 2035, with shortages disproportionately impacting rural areas.
Meanwhile, up the road from Congress, the Center for Medicare and Medicaid Innovation (or Innovation Center) is doubling down on advanced primary care and accountable care models. In its strategic refresh, the Innovation Center took stock of lessons learned from its first decade of over 50 models tested and set a new goal for all Medicare fee-for-service beneficiaries – and the vast majority of Medicaid beneficiaries – to be in an accountable care relationship by 2030. This means increasing the number of beneficiaries with access to advanced primary care providers as well as accountable care organizations – often quarterbacked by primary care providers that manage a patient’s journey across the system. U.S. Center for Medicare and Medicaid Innovation Director Liz Fowler said they plan to test three to four new models on advanced primary care this year, recognizing that these models are some of the ripest to meet the Innovation Center’s goals: improving quality, reducing costs, and advancing equity. Recently, the Innovation Center announced their latest primary care model, the Making Care Primary (MCP) model, featuring a longer runway and upfront investments to support safety net and primary care providers new to value-based payment make the transition from fee-for-service.
There is also an increasing recognition that primary care is a value driver in both government and private sector payer markets. Employers are increasingly looking to invest in enhanced primary care models to tackle rising costs, access issues, and improve employee satisfaction. This includes fixed-fee, value-based primary care models such as direct primary care (DPC). DPC typically covers all visits, well and preventive care, and chronic disease management for a set up-front cost. Many DPC practices rely on improved patient communication creating more opportunities to email, text, and chat on video with a provider. Studies have shown these arrangements resulted in a 54% reduction in emergency room claims, 25% fewer hospital admissions and a 13% reduction in total cost of claims for employer partners. In addition to the cost savings, participants spend twice as much time with their physician and have high satisfaction rates, while providers enjoy smaller patient panels and fewer nonclinical burdens.
Other employer partnerships integrate hybrid models of care and address specific populations. Crossover Health, for example, enables employees to access care virtually as well as in on- or near-site employer clinics. In another instance, Parsley Health is rolling out a women’s health program designed to offer coordinated care for a range of health conditions and serve as a single virtual “home base.”
The retail space is engaging in what seems to amount to a primary care arms race. In May, CVS Health announced it acquired primary care provider Oak Street Health for approximately $10.6 billion to “broaden CVS Health’s value-based primary care platform and significantly benefit patients’ long-term health by improving outcomes and reducing costs.” Walmart, Walgreens and others have been active in the primary care space, too.
Health systems are also looking to primary care acquisitions to foster value despite their historical status as loss leaders on balance sheets because of their potential downstream benefits. A recent EY-Parthenon survey of more than 250 health system executives found that more than half (55%) recognize their owned primary care assets must evolve to remain competitive, and primary care was ranked as the top investment area in terms of importance.
So what’s next? While stakeholders seem to be convinced of enhanced primary care’s value proposition, one big elephant in the room remains: Do we have the workforce necessary to balance such innovation and investment while ensuring access and equity? Despite its perceived value, the supply of primary care providers is dwindling, particularly in rural areas, in part due to decades of underinvestment and perverse incentives inherent in our fee-for-services system, which rewards volume over value. Part of the underinvestment is driven by low reimbursement for primary care that may undervalue the time and resources that primary care clinicians need to best serve their patients. Changing how we pay for primary care is a key part of the solution.
Perhaps the secret to reducing costs is actually paying for more care – not less – but making sure it’s the right kind of care. As evidenced by increasing adoption and investment in all-inclusive, round-the-clock primary care models, investing heavily in lower-cost, higher-value care (like preventive care) up front can result in meaningful savings down the road. It also requires a fundamental rethinking of what primary care is.
Successful enhanced primary care models are incorporating and integrating mental health care, coaching and wellness; addressing social determinants and other life needs; and providing meaningful navigation of care and costs across the health system. Self-funded employers, which are on the hook financially for these investments, are seeing the value in enhanced primary care for their businesses and employees and are active in exploring these partnerships. Opening this up to a broader constituency will require a concerted effort – and investment – across stakeholders. Primary care groups entering into value-based arrangements for the first time will need support; the primary care pipeline needs to be strengthened and diversified; and policies are needed to enhance access and flexibility for primary care innovation. If we do this right, it will be beneficial for the health of our country’s patients and its pocketbook.
Heather Meade is principal, Washington Council, Ernst & Young LLP, and Laura Dillon is senior manager, Washington Council, Ernst & Young LLP. The views reflected in this article are the views of the authors and do not necessarily reflect the views of Ernst & Young LLP or other members of the global EY organization.