States test new models to boost primary care spending

States test new models to boost primary care spending © sabdiz - stock.adobe.com

For decades, primary care physicians have warned that the field is underfunded, especially when compared to specialty care. A new viewpoint in JAMA Health Forum highlights how several states are now attempting to change that equation by requiring insurers to allocate a larger share of health care dollars to primary care.

Rhode Island set the precedent

In 2010, Rhode Island became the first state to mandate increased investment in primary care. The state required commercial insurers to boost primary care spending by 1% annually while capping hospital price growth at Medicare plus 1%. By 2018, primary care’s share of commercial spending rose to 12.3%.

At the same time, overall health care spending growth slowed, a change largely credited to the hospital price cap.

Expanding experiments

Other states have followed with their own policies.

Oregon required coordinated care organizations and certain public plans to devote at least 12% of budgets to primary care by 2023. By 2021, commercial insurers averaged 12.5% and Medicaid organizations 11.1%.

Delaware passed legislation in 2021 to gradually raise primary care spending by 1.5% annually until it reaches 11.5% by 2025, with mandatory minimums beginning in 2026.

Colorado implemented rules in 2022 and 2023 requiring commercial insurers to raise primary care spending by 1% each year, pushing the total primary care spending share from 12% in 2020 to 15.1% in 2022. Variation across payers was wide: 5% for commercial insurers, nearly 20% for Medicaid and Medicare Advantage.

California established an Office of Health Care Affordability in 2022 to set standards for primary care and behavioral health investments. In 2024, the state required primary care reimbursement rates to exceed 87.5% of the lowest Medicare rate and proposed a target of 15% of total health spending for primary care by 2034.

Alternative payment models

Most states are pairing higher primary care spending with alternative payment models (APMs) designed to move away from fee-for-service.

Rhode Island mandated that 50% of all insurance payments — across specialties — flow through APMs by 2021.

Delaware set a goal that at least 60% of residents be attributed to value-based care models by 2021.

Oregon and Colorado are also advancing APM adoption, with Colorado set to implement specific primary care APM parameters in 2025.

The challenge of total costs

While primary care spending is rising, evidence that these policies alone reduce overall health costs is limited. Rhode Island’s experience suggests hospital price caps, not just higher primary care spending, were key to slowing total expenditures. Oregon and Delaware adopted broader spending growth targets, while Colorado avoided caps altogether.

California added a review process to monitor market consolidation, a major driver of price growth.

“States are important laboratories of health policy,” the authors wrote. “To date, evidence that increasing primary care spending alone, shifting to APMs for primary care or using spending targets without price caps could slow total spending remains lacking.”

What comes next

The viewpoint concludes that states are making a concerted effort to strengthen primary care financing and delivery, though the path forward differs widely. Whether these investments translate into long-term savings and improve patient outcomes will depend on how states balance new spending with measures to control prices and manage consolidation.