State Primary Care Funding Strategy:
Over the last several years, headlines have touted that multiple states are doubling their primary care spending as a percentage of total health expenditures. But only five states[1] have formal, enforceable primary care spending targets. And five additional states participating in CMS’s AHEAD program have committed to increasing primary care spending as a share of total health care costs. Finally, Massachusetts is now considering legislation that would more than double its measured primary care spending. Closer examination reveals that some of these spending targets are really quite modest and only two states have reached their targets.
“High-quality primary care is the foundation of the health care system. Without access to high-quality primary care, minor health problems can spiral into serious illness, chronic diseases go unmanaged, and the opportunity to prevent illness is lost.”[2]
But a spending target is not a strategy. Without clear goals and objectives, attempting to redirect dollars toward primary care may simply result in higher total health care spending. The purpose of this article is to explain Authorizations, Goals & Objectives, the first of the Nine Key Levers shown in the graphic above. While a spending target can create financial opportunity, authorizations, goals, and objectives determine whether that opportunity becomes a well-organized, accountable plan for better and more cost-effective healthcare delivery.
Target Practice
A mandated primary care spending target, whether through legislation, executive order, regulation, or participation in the AHEAD program, is the first step in a complex, multi-year, multi-stakeholder effort. Its purpose is to provide the funds to build high-functioning primary care in settings where access, quality, coordination, and team-based care are currently underperforming.
A typical state primary care spending target authorizes state agencies to work with payers, providers, employers, and other stakeholders to substantially increase primary care funding. But a spending mandate does not typically specify how to accomplish that goal, and the goals and objectives themselves are often not explicitly stated, even when agencies have a clear idea of the health outcomes, access, equity, avoidable hospital use, and cost trends they hope to improve.
The Definition Paradox
Federal agencies such as the Agency for Healthcare Research and Quality (AHRQ) have proposed standard definitions of primary care, but states and payers do not consistently use them in practice. Instead, most operational definitions for spending targets are built from what can be observed in claims data, and they vary widely. The narrowest definitions count only a limited set of physicians, often excluding OB/GYNs. Intermediate definitions add more specialties and advanced practice clinicians, while the broadest also include additional clinicians, services, settings, and payments.
But if you want to measure the true cost of primary care delivery, and the cost of expansion, you have to look beyond claims. That means including the cost of expanding the educational pipeline and residency capacity, building or improving facilities, acquiring equipment, strengthening IT systems (including AI and interoperability), and supporting practice transformation—costs that are often excluded even from broad primary care definitions used for spending-target accounting.
Why do we care about definitions? Because the way a state defines primary care directly affects how much incremental funding is available to expand primary care, and which services and clinicians are counted when that funding is measured.
Take the examples of California and Massachusetts. They both have, or in Massachusetts’ case would have under proposed legislation, a target primary care spends of 15 percent. But California, which uses a broad definition of primary care, already spends more than 13.6 percent of its healthcare dollars on primary care, whereas Massachusetts, using a narrower definition, spends an estimated 7.2 percent of its healthcare dollars on primary care. As a result, if both states hit the 15 percent target, California would have to increase measured primary care spending by a little more than 10 percent, whereas Massachusetts would have to more than double measured primary care spending.
| California | Massachusetts | |
| Primary Care Spending Target (% of total healthcare spending) | 15% | 15% |
| Current Primary Care Spending (% of total healthcare spending) | 13.6% | 7.2% |
| Percent Increase in PC Spending (% of current spending) | 10.3% | 108% |
In this example, Massachusetts would increase primary care spending by ten times as much as California relative to its current level of spending.
The counterintuitive result: a narrow definition of primary care can yield more incremental primary care spending, but it counts a much narrower spectrum of primary care activity. It may leave out advanced practice clinicians, support staff and services, infrastructure, education, IT, facilities and other investments that may be essential to creating a high-functioning primary care system. A broader definition may better reflect what primary care needs to become, but unless the target is adjusted accordingly, it may produce much less new money. That is the primary care definition paradox.
Investment Not Included
The healthcare community often refers to increased primary care spending as primary care “investment,” but investment has a more specific meaning. In financial terms, an investment is spending money today to create future capacity, assets, or returns, such as expanding or renovating facilities, strengthening IT systems, or building new training programs.
Many of the expenditures required to expand high-functioning primary care, including educational pipelines, residency capacity, facilities, equipment, IT, and practice transformation supports, are multi-year investments. They lend themselves to tools such as bond financing and loan guarantees, not standard payment streams.
For that reason, this article generally uses the term primary care spending unless the discussion is specifically about capacity-building investment. Primary care funding is a broader term that encompasses both spending and investment.
Authorizations
Each state that adopts a primary care spending target typically designates at least one state organization, such as a health department, task force, or new entity, to translate the complex task of translating the target into policy and practice.
In California, this role is assigned to the Office of Health Care Affordability; in Oregon, to the Oregon Health Authority, the Department of Consumer and Business Services, and a primary care task force; in Connecticut, to the Office of Health Strategy; and in Massachusetts, if S.3116 is passed, to the Office of Primary Care Policy and Payment together with a Primary Care Technical Advisory Council that includes the Insurance Commissioner. Without these authorizations, it would be impossible for a state to manage such a complex operation across multiple public and private payers.
So, with a spending target typically comes with an authorization that opens the door to a multi-year planning, development, and implementation effort involving numerous public- and private-sector stakeholders. That makes it essential to establish goals and objectives before the money starts moving.
Goals & Objectives
The underlying goals of a primary care spending campaign are rarely controversial. Most campaigns are intended to improve access to high-quality care, reduce Treatable Mortality and Unhealthy Days, advance equity, reduce avoidable hospital use, and moderate per capita healthcare costs.
Here is the central challenge. Establishing and meeting a primary care spending target is a major undertaking in its own right. States that have taken this step already carry a substantial implementation burden. So, it is understandable that attention often centers on achieving the target rather than on how the additional funds should be used to advance these broader goals for health outcomes, access, equity, and costs.
Spending targets are vital starting points because they provide funding, but they do not determine how the money is to be spent. Appreciating the limitations of a primary care spending target is what makes a well-designed set of goals and objectives not just helpful but essential. Even when a state’s spending target is achieved, there is no guarantee that these broader aims are achieved as well.
Statewide Goals
Statewide Goals describe the broad outcomes the campaign is intended to achieve. They can include reducing Treatable Mortality and Unhealthy Days, improving access and health equity, reducing unnecessary hospital usage, and moderating per capita costs.
Objectives
Objectives then translate those goals into the specific work required under each of the remaining Key Levers shown in the graphic above. They help determine who is responsible for doing what, how resources should be allocated, and how progress should be measured. Objectives define the operational results that should emerge from completion of each of the remaining Key Levers as shown in the graphic at the beginning of this article.
Strategic Planning comes first. Needs Assessment and Resource Allocation determine which competing needs and opportunities should receive priority for new primary care funds, in service of the statewide goals. Governance and Stakeholder Participation decide what kinds of organizations should be trusted with those funds, and under what conditions, in service of the statewide goals. Together, those two levers help move the state from a primary care spending target to a practical plan for deciding where the money should go and which organizations should be eligible to receive it.
The three Resource Development levers then address what has to be built or strengthened: the primary care workforce, the provider organizations capable of delivering high-functioning primary care, and the facilities, equipment, IT systems, training capacity, and support staff needed to make expansion possible.
The three Cost & Quality Management levers address how the program will be paid for, measured, and improved over time. Provider Reimbursementdetermines how dollars flow to practices and care teams. Data Measurement & Reporting determines whether access, quality, equity, avoidable utilization, and cost trends are actually improving. Continuous Quality Improvement addresses the information systems, reports and management discipline needed to continuously improve such goals as reduced mortality and improved access.
To sum up, goals and objectives are what transform a primary care funding commitment into a program with purpose and accountability. They define what healthcare aims the state is actually trying to achieve, rather than pure financial results. They also provide criteria for allocating resources among competing initiatives. They can reveal where investments that lie beyond the purview of a primary care spending mandate will be needed to make the program work. Without goals and objectives, allocation decisions risk becoming ad hoc, driven by who is first in line for funding rather than by which investments are most likely to improve primary care performance.
Summing Up & Looking Ahead
A primary care “investment” initiative begins with a target and the authorizations needed manage implementation. But it succeeds or fails depending on whether the additional funds are allocated in a way that actually strengthens primary care delivery and achieves the state’s health care goals.
A spending target opens the door to a multi-year planning, development and implementation effort involving numerous public and private sector stakeholders, including payers, providers, employers and NGOs. That is why a primary care spending campaign should be understood not simply as a funding initiative, but as a complex management undertaking.
That complexity explains why goals and objectives need to be established. Statewide Goals define what the state is trying to accomplish in healthcare terms. Operational objectives begin to organize the work: what needs to be assessed, what resources need to be allocated, what kinds of organizations should receive new funds, what capacity needs to be built, and how progress will be measured.
Subsequent articles will examine Key Levers 2 through 9, showing how planning, resource allocation, governance, workforce, payment, and measurement can turn a primary care “investment” campaign into a high-functioning primary care system. The next article in the series is entitled Key Lever 2 – Primary Care Needs Assessment: Translating statewide primary care goals into programs.
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[1] Six if Oklahoma’s Medicaid-only target is included.
[2] Implementing High-Quality Primary Care: Rebuilding the Foundation of Health Care, National Academies of Sciences, Engineering, and Medicine, 2021