• Research Highlights the Enigma of Primary Care Spending

    Evidence Shows It Works, so Why Don't We Do More of It?

    May 29, 2019 11:09 am News Staff – It's a pretty simple formula that's been borne out by exhaustive research: the more money invested in primary care, the greater the return for all stakeholders. Higher quality, lower costs, better outcomes -- what's not to like?

    primary care spending

    Unfortunately, for all the evidence pointing to the value of primary care and all of the AAFP's work on this issue, the precise amount of spending on primary care that occurs at the national level remains unclear.

    Researchers with the RAND Corporation, Harvard Medical School and Brigham and Women's Hospital sought to address that uncertainty by studying a year's worth of health care spending on Medicare beneficiaries. Their analysis, published online April 15 in JAMA Internal Medicine, builds on previous attempts to quantify the so-called primary care spend as a percentage of total medical spending. That analysis found that spending on primary care amounted to only a small fraction of total fee-for-service Medicare spending and varied considerably among different patient populations and parts of the country.

    Story Highlights

    An analysis of health care spending on Medicare beneficiaries found that spending on primary care accounted for a very small percentage of total fee-for-service expenditures.

    Primary care spending represented between 2.1% and 4.9% of total medical spending depending on the definitions of practitioner and scope of services used.

    Primary care spending also differed considerably from state to state, although there was no significant association between spending percentages and practitioner headcounts.


    The research team examined spending for all Medicare beneficiaries 65 and older with 12 months of Medicare Part A and Part B fee-for-service medical coverage and Part D prescription coverage in 2015. More than 16.2 million people were included in the analysis.

    The research team used two discrete data sets in their analysis -- spending by primary care practitioner type and spending on primary care services -- each of which was further broken down into narrow and broad definitions.

    The narrow definition of PCPs was limited to the specialties of family medicine, internal medicine, pediatrics and general practice, and the broad definition was expanded to include nurse practitioners and physician assistants and the specialties of geriatrics and gynecology. Both definitions excluded hospitalists.

    The narrow definition of primary care services was limited to Healthcare Common Procedure Coding System codes on professional claims for evaluation and management visits; preventive care visits; care transition or coordination services; and in-office preventive services, screening and counseling. The broad definition included all professional services billed by PCPs, excluding those that were ordered but not performed directly by PCPs.

    The researchers measured primary care spending as a percentage of total medical and prescription spending at the state and national levels, as well as by various patient characteristics.


    Depending on the definition and scope of services, primary care spending among Medicare beneficiaries represented between 2.1% and 4.9% of total medical and prescription spending, with the highest percentages in the broad PCP/broad primary care service category.

    Across virtually all definitions, primary care spending percentages were lower among beneficiaries 85 and older, blacks and Native Americans, those who were eligible for both Medicare and Medicaid, and those with chronic medical conditions (with the exception of hyperlipidemia in the narrow PCP/narrow and broad primary care service definitions), and higher among Asians and beneficiaries 65 to 74.

    Primary care spending percentages also differed considerably from state to state, ranging from 1.59% of total spending in North Dakota using the narrow PCP and service definitions to exactly twice as high (3.18%) in Hawaii, and from 2.12% in the District of Columbia to 4.74% in Iowa for the narrow PCP/broad service category.

    Finally, the researchers found no significant association between primary care spending percentages and PCP headcounts, suggesting that simply counting the number of PCPs in a given state might not be an accurate way to measure investment in primary care.

    AAFP Advocacy

    It's important to note that nationally, the AAFP supports an increase in spending on primary care through its Health Care for All policy, which calls for U.S. primary care physicians to be compensated in a manner consistent with the Academy's Advanced Primary Care Alternative Payment Model. The Academy maintains that the APC-APM will support greater investment in primary care, allow primary care practices to achieve and sustain success through simplified payment structures and decreases in administrative burden, and result in better patient outcomes and more favorable experiences.

    Most recently, AAFP Vice Speaker Russell Kohl, M.D., of Stilwell, Kan., joined with executives from HHS and the Center for Medicare & Medicaid Innovation in April to unveil a handful of new payment models included in CMS' Primary Cares Initiative that were influenced, in part, by the APC-APM.

    Update on State Actions to Boost Primary Care

    Last month, AAFP News reported on primary care spending bills in several states as they made their way through those states' legislatures. In many cases, the AAFP and the respective state chapters had actively supported those measures.

    Although some of the measures remain in limbo, others have now been enacted.

    On May 6, Vermont Gov. Phil Scott signed into law a bill designed to boost the proportion of the state's total health care spending that is allocated to primary care.

    Ten days later in Colorado, Gov. Jared Polis put his signature on legislation that, among other things, requires insurance carriers that offer health benefit plans to state employees to set targets for investment in primary care.