Federal Support for Comprehensive Primary Care in Medicaid is Critical Amid COVID-19 Pandemic

As the negative economic impacts of COVID-19 have led to state budget shortfalls and limited resources for state Medicaid programs, federal strategies that advance comprehensive, patient-centered primary care in Medicaid are more critical than ever. Primary care improves health outcomes and prevents more costly care over the long-term for this population. To address this issue, BPC released a new report with federal policy recommendations to advance comprehensive primary care in Medicaid. Amid the pandemic, these recommendations have broader implications for addressing access to care, resources for states, and health inequities exacerbated by COVID-19.

State budget shortfalls over the next two years could total an estimated $555 billion, and shortfalls in 2021 could exceed any year of the Great Recession. Governors must sustain state operations with less resources, while managing the state’s pandemic response. As Medicaid spending accounts for about 20% of states’ general funds, states often cut Medicaid spending during periods of economic decline by: (1) cutting eligibility; (2) cutting optional benefits; or (3) cutting payments to providers, many of whom are struggling financially during COVID-19. In effect, during a pandemic when access to affordable health insurance coverage is most vital, individuals could lose access to coverage or services. Although Congress has provided temporary aid to states through the Families First Coronavirus Response Act (FFCRA)—and conditioned that aid on states maintaining eligibility standards, coverage, premiums, and cost-sharing protections—states still face competing demands on their limited resources that may compel Medicaid spending cuts and disrupt improvements to primary care.

Additional immediate financial assistance to states would help tremendously, but the pandemic has made clear that states will also need long-term financial support, policy changes, and federal guidance to implement programs and services that improve health through primary care. Federal financial support for primary care transformation initiatives would improve access to comprehensive primary care. BPC recommends that Congress appropriate $120 million in funding for the Primary Care Extension Program. This appropriation would support competitive grants to states for the establishment of state- or multistate-level Hubs that would work with local entities to: assist primary care providers in implementing patient-centered medical homes; support primary care learning communities; participate in a national network of Hubs; and plan for financial sustainability. Congress should also direct the secretary of Health and Human Services (HHS) to promote the measurement and reporting of primary care spending in states. This data would help develop evidence for primary care investment and uncover potential long-term savings.

COVID-19 has led to an estimated 5.4 million workers becoming uninsured. Incentivizing non-expansion states to adopt Medicaid expansion would improve access to affordable health insurance coverage for up to almost 5 million people and likely reduce revenue shortfalls in those states. While Oklahoma voters adopted Medicaid expansion during the pandemic, addressing barriers to Medicaid expansion will encourage adoption among the remaining non-expansion states. Non-expansion states do not have the same financial incentives as the early expansion states that received a higher federal match. BPC recommends that Congress permit the remaining non-expansion states to expand Medicaid coverage under one of two options: (1) expand coverage to those with incomes up to 138% FPL with the same federal match that states initially received under the ACA, or (2) expand coverage to those with incomes up to 100% FPL with a lower, 88% federal match.

A dramatic increase in mortality during the pandemic underscores the importance of addressing health disparities in Medicaid through comprehensive primary care. Most of these excess deaths have been attributed to COVID-19, but deaths from chronic conditions such as heart disease and diabetes have also spiked. Communities of color have also been disproportionately impacted by the pandemic. Since Medicaid serves a significant number of populations that experience health disparities, including those with chronic conditions and communities of color, Community Health Workers can meaningfully address these challenges by serving as a link between beneficiaries and needed health or social services in their community. Specifically, they have demonstrated success in managing chronic disease, reducing disparities, and improving health equity. Federal guidance would help states better understand their options for reimbursing community health workers and would accelerate adoption of those policies. During a BPC event on this important topic, Ben Shaffer, Rhode Island’s Medicaid Director, expressed support for such guidance. To address disparities in health outcomes, BPC recommends that Congress direct the HHS secretary to provide guidance to states on defining and reimbursing community health workers, where evidence supports improved outcomes for those with chronic conditions.

As the pandemic has exacerbated health inequities, it shines a light on the importance of addressing non-medical social needs in the context of primary care. For example, the U.S. Census Bureau indicates 42% of households that experienced loss of employment income had no or slight confidence in their ability to pay next month’s rent. Improving financing and coverage of proven cost-effective interventions to address housing insecurity and other social needs would strengthen comprehensive primary care and promote health equity. BPC recommends that Congress provide the HHS secretary with the authority to approve Medicaid coverage of non-medical services that address social needs, if the secretary certifies certain conditions described in BPC’s report are met.

The federal government has provided vital support to states during the pandemic, but states continue to face budget shortfalls that could derail state efforts to improve primary care delivery. Federal action to implement BPC’s recommendations that advance comprehensive, patient-centered primary care would help states overcome this challenge and encourage them to transform primary care delivery.