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Fam Pract Manag. 2024;31(3):7-8

The publication of this supplement is funded by the American Academy of Family Physicians. Journal editors were not involved in the development of this content.

Primary care is the bedrock of a well-functioning health care system, but it faces critical challenges that state and federal entities can only solve by working together. Coordinated and collaborative efforts will have the greatest likelihood of successfully confronting and overcoming these challenges.

By working together, we can create a more robust and sustainable primary care system that benefits patients, physicians, and health care systems. While federal reforms set forth national priorities, they lack the flexibility to address states' unique needs and circumstances. Successful state pilot programs inform and refine national policies and address the health care needs of their populations. Working in concert, federal and state efforts allow for tailored approaches in states.

This Beyond the Beltway feature discusses states' roles to improve payment and reduce burdens and examines federal actions to advance state reform efforts, as well as offers resources to support state and local chapters in meeting shared federal and state goals.

There are a number of areas where state leadership is essential to transform payment that prioritizes primary care and reduces the administrative burdens of physicians, including:

  • Medicaid and Children's Health Insurance Program (CHIP)
  • State employee health plans
  • Regulatory authority
  • Legislation
  • Data collection and information sharing
  • Investment in primary care information structure


To increase payment and reduce the burden for primary care physicians (PCPs), states possess “levers for change.” These may include promoting value-based care with innovative payment structures in Medicaid programs or state employee health benefit plans; creating price transparency and/or primary care spending targets through legislative and/or regulatory action; and utilizing regulatory power to influence private payer actions.

Additionally, states investing in infrastructure, such as health information exchanges (HIEs), can facilitate data collection and sharing, an action crucially important to reduce burdens and more accurately measure quality under new payment models.

The table State Levers to Improve Payment and Reduce Burdens for Primary Care describes each of these areas in greater detail, including descriptions and examples of state-level activities and outcomes.


The federal government can empower and accelerate state-led health care reforms through payment innovation, financial support, regulations, and standardization. These bulleted items are actions the federal government uses to advance state reforms now and in the future.

Payment Innovation

  • The Center for Medicare and Medicaid Innovation (CMMI) has been advancing value-based payment (VBP) for primary care models for more than a decade and is increasingly including states in its innovation strategy.1
  • The States Advancing All-Payer Health Equity Approaches and Development (AHEAD) Model is a model with a range of tools to increase investment in primary care, provide financial stability for hospitals, and support beneficiary connection to community resources.
  • The Making Care Primary (MCP) Model launches in eight states in 2024, with states selected based on the willingness of Medicaid programs to implement an aligned payment program.

Financial Support

  • Federal grants and funding can be awarded to states for a range of activities, including implementing innovative payment models for PCPs in Medicaid. This helps overcome resource limitations and incentivizes states' reform efforts.
  • Matching funds can incentivize state investment in primary care infrastructure (e.g., information technology [IT] systems) or data collection initiatives that support payment reform. These funds encourage states to increase their own financial commitment.

Regulatory Flexibility

  • Federal waivers and demonstration programs provide relief from specific regulations in exchange for an agreed-upon state role, such as experimenting with new payment models. This allows greater flexibility and innovation at the state level, particularly for states that have yet to expand their Medicaid programs.2

Standardization and Alignment

  • The administrative tasks associated with ensuring coverage for patients and meeting documentation requirements for payment can be onerous when dealing with a single payer. However, many primary care practices frequently contract with 10 or more payers at a time.3 The burden can be overwhelming and contribute to a lack of well-being and burnout for physicians and their teams.4 With the increased requirements associated with VBP, aligning payers is essential to address these growing burdens. The Health Care Payment Learning & Action Network published a Multi-Payer Alignment Blueprint (PDF) in 2023 to share lessons learned from multi-payer alignment initiatives, building a foundation and generating momentum for national alignment strategies.
  • Standardizing measurement is one way to reduce the burden associated with VBP. CMS has signaled it recognizes this is a step that must be taken to pave the way toward VBP. In 2023, they announced the Universal Foundation of quality measures that should be the starting point for aligning across its programs with the explicit goal to “reduce provider burden by streamlining and aligning measures,” as well as improve health outcomes and equity.5


The AAFP recognizes the critical role chapters play in influencing policy at the state level and supports their work in a variety of ways. In particular, the AAFP supports chapters to actively engage in state-level efforts focused on increasing primary care investment. Throughout 2022 and 2023, the AAFP hosted the Primary Care Investment Learning Community, which included chapter staff and physician leaders. The community explored the challenges advocates face in states when they push for policies to improve primary care payment and reduce burdens. As a result of the community, the AAFP and its Center for State Policy (CSP) developed the AAFP Primary Care Investment Toolkit (PDF). Chapter staff and leaders can use and build upon the toolkit's approaches and guidance for states to define a shared vision of primary care, engage stakeholders, set targets for investment, measure primary care investment, and establish accountability within their states.

The AAFP also supports chapter advocacy in Medicaid access policies. In states that haven't expanded Medicaid since the Affordable Care Act, chapters are provided evidence of the positive impacts of Medicaid expansion, such as reducing uninsured rates and improving health outcomes.

The AAFP offers external experts to train chapter advocates about leveraging the 1115 waiver process to implement innovative programs that promote the objectives of both Medicaid and the CHIP. The New York State Academy of Family Physicians leveraged this process recently and was able to secure increased rates for primary care in an amendment to New York's Medicaid section 1115 demonstration.6

The lack of federal action to address inadequate Medicaid primary care payment rates has resulted in state-by-state advocacy efforts to create payment parity between Medicaid and Medicare. The CSP developed the Medicaid-to-Medicare Parity Toolkit to guide chapters with this effort. The toolkit includes model legislation, a sample letter to legislators, a recorded webcast, maps, infographics, and social media content. This toolkit and many more can be accessed by AAFP Chapter staff through the CSP's State Advocacy Toolkits webpage.


The Change Healthcare outage due to the February 21 cyberattack resulted in far-reaching impacts on family physicians, practices, and the health care system.7 Change Healthcare facilitates health care payments, processing more than 15 billion transactions annually. Most of its major service lines were disrupted, including claims submission, physician and clinician payment, e-prescribing, pharmacy network management, prior authorization support, and specialty prescription coupon use. Practices were impacted based on how many of its payers had contracts with Change Healthcare.

The cyberattack also exposed a critical vulnerability within the American health care system: an overreliance on consolidated service providers. It serves as a reminder of the dangers of consolidation in this vital sector and highlights the risks of depending on a single, centralized provider for crucial health care functions like claims processing. When a single entity is compromised, it can have a ripple effect across the entire health care system, causing widespread disruptions. It also highlights the challenge of a lack of alternative options during a crisis, which can significantly hinder the system's ability to respond effectively.

The attack reinforces the need for heightened security measures across the entire health care landscape. It increased the awareness of vulnerabilities within the health care system related to supply chain vendors, legacy IT systems, and potential patient-data breaches. In light of the attack, health care organizations may consider increased protection measures, including cybersecurity insurance.

Lever Description Examples
Medicaid Programs

States that have expanded Medicaid maintain an increased flexibility to design value-based payments (VBPs) models that address health inequities and transform how primary care is delivered for Medicaid enrollees.

States that have not expanded Medicaid face unique challenges in designing innovative payment structures for primary care and may need to explore other levers discussed below in concert with federal regulatory flexibility when available, such as waivers and demonstration programs.

The Ohio Department of Medicaid has been on a multi-year journey to shift payments from fee-for-service to VBP for primary care starting in 2013, with the design and launch of its Comprehensive Primary Care (CPC) program, which started under the State Innovation Models (SIM) initiative in collaboration with the CMMI.8 While the SIM grant ended in 2019, Ohio has continued to iterate on this program and operates CPC and CPC for Kids to this day.
State Employee Health Plans State employee health plans, covering millions of public employees and their dependents, represent significant purchasing power within the health care market. This leverage can be strategically used to promote payment reform for PCPs and improve the overall health care landscape for state employees. By adopting innovative payment models within their own employee health plans, states can set an example for private insurers and encourage broader adoption.

California Public Employees' Retirement System (CalPERS) value-based insurance design (VBID), known as the PERS Select Basic plan, aims to improve the quality while lowering the cost of health care by empowering patients to make informed choices.9

In 2019 or 2020, participation in the CalPERS VBID preferred provider organization (PPO) was associated with:10

• A higher probability of PCP use, immunizations, and outpatient out-of-pocket (OOP) payments and a lower probability of inpatient surgical and total admissions and OOP payments.

• A higher mean positive spending for PCPs, laboratory tests, inpatient cesarean deliveries, and medication OOP payments and lower inpatient OOP payments.

• Similar total health care spending changes in both years, suggesting the VBID program has the potential to promote valued health care services while controlling the costs for CalPERS PPO plan members.

Regulatory Authority While states don't have direct control over private payer policies, they can leverage their regulatory power to encourage insurers operating in their state to improve payment and reduce the burden of primary care. However, the effectiveness of this approach is limited by legal challenges, the scope of state authority, and enforcement capabilities. States often need to combine regulatory efforts with other strategies to achieve meaningful change in private payer behavior, such as data transparency and stakeholder engagement.

In 2022, the Oklahoma Health Care Authority (OHCA) announced its new health care model, SoonerSelect, which is focused on comprehensive medical care with enhanced care coordination and assessments of the social determinants of health.11 It includes cost containment by investing in preventive and primary care as one of its goals.

In 2017, Oregon established its own Primary Care Payment Reform Collaborative (PCPRC) within the Oregon Health Authority to support the implementation of its Primary Care Transformation Initiative.12 The initiative provides focused support on using VBP, assists clinics and payers in implementing the initiative, aggregates data across payers and providers, aligns metrics in coordination with the Health Plan Quality Metric Committee, and facilitates the integration of behavioral health services into primary care. In addition, the PCPRC is charged with releasing an annual report with recommendations to achieve initiative goals by 2027.

Legislation Legislation offers a powerful tool for states to enact lasting changes and support payment reform initiatives for primary care. Potential areas for legislation include, but are not limited to: minimum payment standards for Medicaid, setting all-payer primary care investment targets, mandates for specific payment models by private payers, and establishing funding mechanisms for primary care infrastructure.

Colorado’s HB19-1233, passed in 2019, created the state’s Primary Care Payment Reform Collaborative, which extended tax credits for rural preceptors and added a 16% Medicaid rate increase for PCPs utilizing alternative payment methods.13

California’s 2023 enacted budget secured the renewal of the managed care organization (MCO) tax, ensuring ongoing funding for Medi-Cal base-rate increases in primary care, obstetrics, and non-specialty behavioral health, and allocates $75 million annually for graduate medical education.14

Data Collection and Information Sharing Data collection and information sharing play a crucial role in driving successful payment reform for PCPs in new payment models. States can facilitate this by establishing standardized data collection and reporting requirements for value-based primary care payment arrangements, investing in developing and expanding HIEs, and establishing strong data security and privacy regulations to protect patient information while facilitating data exchange. Oregon used state funds to expand HIE access, focusing on supporting integrated behavioral, oral, and physical health, including primary care, particularly in rural and underserved areas serving as safety nets.15
Investment in Primary Care Infrastructure

Strategically investing in primary care infrastructure can allow states to play a critical role in enabling PCPs to participate effectively in new payment models. This investment can ultimately lead to a more efficient, coordinated, and patient-centered health care system. States can do this through several mechanisms, such as allocating state budgets specifically for primary care investments, levies, and fees and collaborating to create public-private partnerships to develop and implement cost-effective infrastructure solutions for primary care practices.

In 2021, Delaware’s General Assembly passed legislation implementing affordability standards. The legislation directed carriers to increase primary care investment by 1.5% annually until reaching 11.5% of the total cost of medical care, limit price growth for hospital and other non-professional services, and expand meaningful adoption of alternative payment models.16 The legislation tied approval of annual commercial fully insured rates by the department of insurance to compliance with the state affordability standards. It also tasked the Delaware Health Care Commission with monitoring compliance with value-based care delivery models and developing a Delaware primary care model.

In 2022, Connecticut’s governor issued an executive order that set a target for primary care expenditures of 10% of total health care expenditures by 2025.17

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