Primary care is at a crossroads: While COVID-19 has put unprecedented strain on the primary care system, the pandemic has also opened the door for rapid care delivery transformation. Reductions in visits early in the pandemic have threatened the financial viability of many practices and the demands of the pandemic response are exacerbating primary care staff burnout. Yet, practices have shown tremendous capacity for resilience and innovation during this time, for example, by rapidly adopting telehealth and new population health approaches.

In this challenging environment, Medicaid can play an important role in supporting and charting the trajectory for primary care going forward. Washington State, one of seven state participants in the second phase of CHCS’ Advancing Primary Care Innovation in Medicaid Managed Care initiative, made possible by The Commonwealth Fund, provides an example of how states can use innovative policy levers, such as value-based payment and monitoring primary care spending, to help advance primary care.

Innovation in Primary Care Value-Based Payment Models

Value-based payment models can support advanced primary care by: (1) allowing greater flexibility in how care is delivered; (2) paying for non-traditional clinical services, such as screening for health-related social needs; and (3) providing clinicians stable sources of revenue. COVID-19 has further highlighted the need for payment reform. Prospective payment models that offer upfront payment based on patient panels, not on volume of visits, have the potential to offer more stable revenue than fee-for-service (FFS) payment and more flexibility to support care delivery innovations.

In 2019, Washington State Health Care Authority (HCA) began developing a multi-payer primary care value-based payment model to better support member access to integrated and coordinated primary care. The resulting model aims to align payment and quality measurement across health plans for state-financed programs, including Medicaid as well as public employee and school employee plans. While this work began prior to COVID-19, Washington State accelerated the implementation timeline when the pandemic underscored the need to move away from FFS payment.

The proposed payment model includes the following components:

  1. Comprehensive Primary Care Payment, a per member per month (PMPM) payment for comprehensive primary care services, replacing FFS payment;
  2. Transformation of Care Fee, aimed at supporting primary care transformation; and
  3. Performance Incentive Payment, based on performance on quality and utilization metrics.

The Comprehensive Primary Care Payment would cover physical and behavioral health services including preventive, acute, and chronic care, as well as coordination with specialty and community support.  The Transformation of Care Fee is aimed at improving care coordination, behavioral health integration, and access, including through expanding alternatives to traditional office visits (e.g., home visits and telehealth). This fee will be provided for up to three years, based on practices’ transformation progress, and then transition to the Performance Incentive Payment. Quality metrics used for the Performance Incentive Payment will be aligned across plans, decreasing provider burden and standardizing a statewide vision of high-quality primary care. Proposed measures address domains such as prevention, chronic care, and behavioral health. Total cost of care will also be monitored but not be tied to payment. HCA and eight other payers recently signed a memorandum of understanding demonstrating their commitment to implementing the model.

Monitoring Primary Care Spending and Investment

Investment in primary care is a good indicator of a health system’s ability to achieve good health outcomes for lower costs — a perennial goal for the U.S. health system. In the U.S., spending on primary care is about five to seven percent of total health care spending, which is low compared to peer countries that spend closer to 14 percent of health care dollars on primary care. States across the country have been exploring methods to measure and eventually increase spending on primary care, targeting both public and commercial payers with legislation and regulation.

In 2019, Washington State’s legislature appropriated funding to calculate the state’s primary care expenditures and produce a report detailing the findings. Medicaid managed care plays a role in providing the data used to develop this report and monitor primary care spend. The state has used its contracts with managed care organizations and other publicly funded payers to require reporting of primary care expenditure data. This work has established a baseline measurement for primary care spend and will enable the monitoring of health care policies and system performance going forward.

Washington State is also looking to support investment in primary care in other ways beyond measurement. For example, one aspect of Washington State’s proposed primary care payment model is the commitment to “an incremental and defined percent of spend on primary care as a proportion of total cost of care” to support innovations such as expanded use of multi-disciplinary teams and new care modalities including telehealth. Additionally, earlier this year, the legislature considered a bill that would have increased Medicaid primary care payment rates by 15 percent above 2019 rates.

Moving Forward

This moment introduces a unique imperative for payers and policymakers, including Medicaid, to help stabilize the primary care system and enable more robust and equitable primary care into the future. Washington and other states are demonstrating how the levers of value-based payment and primary care investment can be used in tandem to provide additional financial supports, flexibility, and incentives for advanced primary care. Other states may consider implementing similar approaches to support a resilient, high-quality primary care system both in response to COVID-19 and beyond.

For additional state examples and design considerations for implementing these policy levers, see Advancing Primary Care Innovation in Medicaid Managed Care: A Toolkit for States.

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