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Apr 19, 2022   |   In the News
Issue Brief: Primary care spending in California’s commercial market
In the News

First-of-its-kind study examines primary care spending for commercially insured Californians at both health plan and provider organization levels

What percent of healthcare dollars are going toward primary care for adult Californians with commercial health insurance? Does the level of primary care investment vary across health plans and provider organizations? How do primary care spending levels relate to quality, patient experience, utilization, and cost performance?

A new issue brief – Investing in Primary Care: Why it matters for Californians with commercial coverage – examines these questions and more. The brief, published by California Health Care Foundation, analyzes 2018 data from IHA’s Performance Measurement programs, representing 13.9 million commercially insured adults in California or about 80% of the commercially insured adult population. Authored by Dolores Yanagihara, VP of Strategic Initiatives at IHA, and Ann Hwang, MD, senior consultant with Bailit Health Purchasing, LLC, the brief is part of a series on strengthening primary care in California. Covered California served as the initial project sponsor and funded much of the early analytic work. The study received important analytical and project coordination support from Onpoint Health Data, methodological guidance from RAND Corporation and America’s Physician Groups, and additional funding support from Milbank Memorial Fund.

The study contributes to the evidence that investing a greater percentage of spend on primary care is related to better performance on measures of quality, utilization, and cost. It also provides a baseline assessment of the percentage of health care spending that goes to primary care in the commercially insured adult population in California. The study found that, among the 14 health plan products analyzed, primary care spending percentage averaged 7.5%, with a range from 3.5% to 12.7%.

A novel analysis: Measuring primary care at the provider organization level

This is the first study to examine primary care spending percentage at the level of the Provider Organization, contributing new evidence of the important role of primary care and its relationship to positive quality and cost outcomes. Provider Organizations (POs) are groups of healthcare providers organized to contract with health plans to provide care for patients. In California, POs assume responsibility and financial risk for managing the care of their assigned Health Maintenance Organization (HMO) patients by participating in a capitated, delegated model of care. The study found that primary care spending percentage at the PO level for the enrolled HMO population was associated with better performance on measures of clinical quality, patient experience, utilization, and cost.

Altogether, the findings highlight an important opportunity for policymakers, purchasers, health plans, and providers to measure primary care spending percentage and enhance primary care investment, particularly within POs with the lowest primary care spending percentage.

Momentum for primary care improvement in California

The issue brief adds to growing momentum for primary care improvement efforts in California. Convened by the California Health Care Foundation, leading members of the state’s health care industry have formed the Primary Care Investment Coordinating Group to craft guiding principles and recommendations they will move forward in their own organizations across the state. Additionally, in January, the Purchaser Business Group on Health (PBGH) launched a pilot program to promote primary care improvement through performance measurement. IHA is supporting the pilot by assessing provider organization performance on the Advanced Primary Care measures through the Align. Measure. Perform. (AMP) Program and sharing aggregated findings with the participating purchasers. Finally, legislation has been introduced to establish an Office of Health Care Affordability that would, among other things, measure and promote sustained systemwide investment in primary care and behavioral health. IHA is proud to be part of the coordinated efforts recognizing primary care as an important lever toward a healthier and more equitable California.

Access the Issue Brief

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