For decades, the United States has underinvested in primary care. Today, primary care accounts for roughly 5% of total health care spending across payers, a figure dramatically lower than peer nations. Evidence and policy benchmarks increasingly suggest that dedicating 10–15% of total health expenditures to primary care is necessary to sustain a high-performing health system (Milbank Memorial Fund, 2021; Koller & Khullar, N Engl J Med, 2017). The U.S. both spends far more per person overall and yet devotes a smaller share to the foundational layer of care.
Despite overwhelming evidence that strong primary care reduces mortality, lowers hospitalizations and total costs, and improves quality, continuity, and equity (Bazemore et al., Ann Fam Med, 2015; Basu et al., JAMA Intern Med, 2019), the U.S. payment system paradoxically has long incentivized procedural volume over cognitive, longitudinal care.
The Roots of Undervaluation
The turning point in modern physician payment occurred between 1989 and 1992, when Congress adopted the Resource-Based Relative Scale (RBRVS) under the Omnibus Budget Reconciliation Act and Medicare implemented the Physician Fee Schedule. Shortly thereafter, the American Medical Association convened the Relative Value Scale Update Committee (RUC) to advise the Centers for Medicare & Medicaid Services (CMS) on relative value units (RVUs).
While RBRVS was originally intended to correct distortions in physician payment, it has not prevented widening disparities. CMS has historically accepted the vast majority of RUC recommendations. The RUC, which is convened by the AMA and composed predominantly of specialty society representatives, has exerted substantial influence over valuation decisions. Over time, procedural services accrued higher work RVUs based on time and intensity assumptions, while evaluation and management (E/M) services—the core of primary care—remained comparatively undervalued.
Across the decades, specialists have seen incomes climb steeply while primary care compensation has lagged. The result is an estimated $230,000 annual income gap by 2025 between specialists and primary care physicians. This structural imbalance has fueled workforce shortages, burnout, fragmented care, and misalignment with value-based care goals.
Chart:
Growing Income Gap: Primary Care vs Specialists (1995–2025). Source: MGMA & Medscape Physician Compensation Reports (1995–2025). Values shown are illustrative.
Signs of Rebalancing
Yet the story is no longer solely one of decline. Over the past five years, meaningful recalibration has begun.
In 2021, CMS implemented the most significant reform of outpatient E/M coding in three decades. Documentation requirements were streamlined, and code selection shifted to medical decision-making or total time, recognizing the cognitive and coordination work central to primary care (CMS CY 2021 PFS Final Rule). RVU valuations for E/M services increased substantially, redistributing billions of dollars from procedural services toward outpatient care (AMA, CPT® E/M Code Changes, 2019 (eff. 2021)).
Subsequent reforms in 2024–2025 expanded longitudinal and care management codes. CMS finalized Advanced Primary Care Management (APCM) codes and behavioral health integration add-ons, recognizing team-based, continuous, relationship-centered care. These codes represent a subtle but important shift, rewarding continuity and chronic disease management.
The 2026 Medicare Physician Fee Schedule continues this trajectory. CMS finalized conversion factor increases of approximately 3–3.8%, resulting in a net estimated 3% increase in total allowed charges for family physicians (AAFP, Summary of the CY 2026 Medicare Physician Fee Schedule Final Rule, 2025). Importantly, evaluation and time-based codes are exempt from the newly applied “efficiency adjustment” that reduces work RVUs for many non-time-based procedural services, further tilting incentives toward cognitive care.
This is not a wholesale correction, but it is movement.
States as Laboratories of Reform
States have been more aggressive. Rhode Island pioneered multipayer requirements to raise primary care spending; Oregon, Colorado, Delaware, Washington, Massachusetts, and California have joined with benchmarks and mandates generally targeting ~10–15% of total health spending for primary care.
But state authority has limits. Most benchmarks operate through reporting, regulatory pressure, and insurer oversight rather than direct dollar reallocation; states cannot rewrite Medicare’s fee schedule or unilaterally transfer hospital revenue into primary care. Nonetheless, when combined with federal E/M and longitudinal care reforms, state benchmarks create a two-track policy dynamic that can shift contracts, payer behavior, and practice revenue models over time.
California’s Office of Health Care Affordability (OHCA), created by SB184 (2022), set an ambitious trajectory to increase primary care’s share by 0.5–1 percentage points per year to reach 15% by 2034, up from roughly 7% today. Public reporting begins this year. While debates remain about implementation (Chen, JAMA Health Forum, 2025), the benchmark represents one of the most ambitious structural commitments to primary care investment in the country.
The Path Forward
Rebalancing will not be instantaneous. The 2021–2026 federal reforms and state benchmarks mark a different trajectory, but they are incremental. Achieving the outcome evidence promises will require sustained funding shifts, transparent reporting with enforcement, and policies that address the workforce pipeline (including support for family medicine, which supplies the vast majority of clinicians who actually practice outpatient primary care). Above all, it requires political will to translate benchmarks and coding reforms into durable revenue streams that make primary care a viable, attractive career (i.e., a “great gig” as one of my colleagues calls it), and a robust platform for whole-person, equitable care.
Dr. Megan Mahoney is the Hellman Endowed Professor and Chair in the UCSF Department of Family & Community Medicine.
This article appeared in San Francisco Marin Medicine | January 2026