Primary Care's Effects on Costs in the US Veterans Health Administration, 2016–2019: an Observational Cohort Study

Abstract: Background: Enhancing primary care is a promising strategy for improving the efficiency of health care. Previous studies of primary care’s effects on health expenditures have mostly relied on ecological analyses comparing region-wide expenditures rather than spending for individual patients. Objective: To compare overall medical expenditures for individual patients enrolled vs. those not enrolled in primary care in the Veterans Health Administration (VHA). Design: Cohort study with stratification for clinical risk and multivariable linear regression models adjusted for clinical and demographic confounders of expenditures. Participants: In total, 6,009,973 VHA patients in fiscal year (FY) 2019—5,410,034 enrolled with a primary care provider (PCP) and 599,939 without a PCP—and similar numbers in FYs 2016–2018. Main Measures: Total annual cost per patient to the VHA (including VHA payments to non-VHA providers) stratified by a composite health risk score previously shown to predict VHA expenditures, and multivariate models additionally adjusted for VHA regional differences, patients’ demographic characteristics, non-VHA insurance coverage, and driving time to the nearest VHA facility. Sensitivity analyses explored different modeling strategies and risk adjusters, as well as the inclusion of expenditures by the Medicare program that covers virtually all elderly VHA patients for care not paid for by the VHA. Key Results: Within each health-risk decile, non-PCP patients had higher outpatient, inpatient, and total costs than those with a PCP. After adjustment for health risk and other factors, lack of a PCP was associated 27.4% higher VHA expenditures, $3274 per patient annually (p < .0001). Sensitivity analyses using different risk adjusters and including Medicare’s spending for VHA patients yielded similar results. Conclusions: In the VHA system, primary care is associated with substantial cost savings. Investments in primary care in other settings might also be cost-effective.

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