Primary care practices face substantial revenue loss amid COVID-19
An estimated $15.1 billion is needed to neutralize revenue losses in primary care practices in the U.S. due to the COVID-19 pandemic, according to a study published in Health Affairs.
“Ultimately, the loss of revenue among PCPs threatens to result in the closure or consolidation of practices, particularly smaller or independent practices in high-poverty or rural areas,” Sanjay Basu, MD, PhD, director of research and population health at Collective Health in San Francisco and a faculty member at the Center for Primary Care at Harvard Medical School, told Healio Primary Care.
“A health care system without the necessary primary care infrastructure is likely to be increasingly fragmented, more costly and less effective, and these costs will be borne by all Americans,” he added.
Recently, a survey conducted by the Primary Care Collaborative in Washington, D.C., and the Larry A. Green Center in Richmond, Virginia, found that two in five PCPs were not able to state that they had enough billable services or cash at hand to stay open through August.
The survey also found that 37% of PCPs had layoffs or furloughs in the previous month, and 28% reported skipping or deferring salaries.
Basu and colleagues created a validated microsimulation model of primary care finances to estimate the impact of the COVID-19 pandemic on primary care practices’ operating expenses and revenues.
The model simulated outcomes for practices categorized as Federally Qualified Health Centers (FQHCs), non-FQHC urban practices in high-poverty areas, non-FQHC rural practices in high-poverty areas and practices not located in high-poverty areas.
The researchers used data from the Medical Group Management Association DataDive and the National Association of Community Health Centers on FQHC and non-FQHCs practices’ visit volume, staffing, revenue and cost estimates. They also used data from the National Ambulatory Medical Care Survey to identify the distribution of patients’ type of insurance across practices.
Basu and colleagues determined that visit volume was at its lowest for all types of visits — down 58% — in late March, and was at its lowest for in-person visits — 69% — in early April. Therefore, they expected that the rebound in patient volume would be steady — but still below normal — by mid-June.
They estimated that primary care practices would lose $67,774 (interquartile range (IQR) = –$80,557 to –$54,990) in gross revenue per full-time physician in 2020 due to the effects of the pandemic on fee-for-service payments. They noted that this loss in gross revenue would equate to net revenue losses of $57,290 (IQR = –$265,636, +$119,803) per full time physician if practices maintained their preexisting costs.
If practices furloughed staff and reduced salary and benefit costs to the 25th percentile during the pandemic, the gross revenue losses would lead to net revenue of -$28,265 for each full-time physician.
Basu and colleagues estimated that rural non-FQHCs would face the greatest gross revenue losses, with an average loss of $75,274 (IQR = –$76,367, –$74,180) per full-time physician in 2020. This loss in gross revenue would equate to net revenues of -$4,691 per full-time physician (IQR = –$115,998, +$104,332) when practices maintained their previous costs, or $24,234 (IQR = –$55,866, +$104,332) per full-time physician if they furloughed staff and reduced salary and benefit costs.
Considering the number of active PCPs in the United States, Basu and colleagues estimated that the cost to neutralize gross revenue losses would be $15.1 billion (IQR: $12.3 billion, $18.0 billion).
“Our results ultimately highlight vulnerability of primary care practices to financial demise due to fee-for-service and visit-based payment policies, indicating that capitation-based payment reforms may be key to ensuring robustness of primary care into the future,” Basu said.
Importance of maintaining primary care
Basu said that “after COVID recedes, the U.S. will continue facing the challenge of caring for the 100 million adults with diabetes or pre-diabetes, and hundreds of millions with obesity, just to name a few, particularly given the fact that over 60% of visits nationally for such chronic conditions are delivered in the primary care setting.”
In addition, he emphasized that a “well-functioning” primary care system is necessary to serve as patients’ “first contact” in the health care system and to determine when patients need emergency or specialty care.
“Absent such a system, patients will be forced to rely even more heavily on emergency rooms and, in some cases, direct access to specialists, both of which could result in unnecessary care and expenses, potentially far in excess of the above estimates, that might otherwise have been averted,” Basu said.
Other studies, he added, have shown that primary care improves patients’ health and quality of care in the United States.
One such study — in which Basu was the lead author — showed that increased accessibility to PCPs led to improved life expectancy.
“Patients who use primary care have been shown to receive substantially higher quality care, including increased provision of recommended preventive and chronic disease services, Basu said
Calls for PCP funding, policies
One way to prevent worsening of PCP revenue losses is to maintain COVID-19-related telemedicine payment policies, researchers said.
“Current telemedicine payment policies enable practices to treat telemedicine visits as equivalent in terms of financial payments as in-person visits,” Basu said. “But if telemedicine payment policies revert back to older policies that lack such parity, the losses to PCPs from COVID-19 would balloon substantially.”
Multiple organizations — including the ACP — have called for these telemedicine policies to be extended not just by CMS, but also by private insurers.
The ACP has also called for HHS to create a targeted allocation of COVID-19 emergency funds to primary care practices.
Specifically, in a letter to HHS Secretary Alex Azar, the ACP called for an allocation for PCPs under the Provider Relief Fund that would be great enough to offset 80% of lost revenue from all payers when combined with other funds that have been made available to these practices.
“Internal medicine specialists and other primary care physicians have an essential role in delivering primary, preventive and comprehensive care not only to patients with symptoms or diagnoses of COVID-19, but also to patients with other underlying medical conditions, including medical conditions like heart disease and diabetes that put them at greater risk of mortality from COVID-19,” ACP President Jacqueline W. Fincher, MD, MACP, said in a press release. “Many studies have shown that the availability of primary care in a community is associated with reduced preventable mortality and lower costs of care, yet recent surveys suggest that many will soon close without additional support. They must be supported.”
ACP. Internists Call on HHS to Make a Targeted Allocation of Funds to Keep Primary Care Practices from Closing. https://www.acponline.org/acp-newsroom/internists-call-on-hhs-to-make-a-targeted-allocation-of-funds-to-keep-primary-care-practices-from. Accessed July 21, 2020.