Can patient-centered medical homes deliver value-based care?

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Care delivered by primary care physicians in a patient-centered medical home (PCMH) is consistently associated with better outcomes, reduced mortality, fewer preventable hospital admissions for patients with chronic diseases, lower utilization, improved patient compliance with recommended care and lower spending. So why don't more insurers use PCMH models?

Although the PCMH concept is not new--it has appeared in medical literature since the 1960s--pilot projects recently have been popping up across the country. As many of them demonstrate success in decreasing costs while improving outcomes, perhaps health insurers will consider implementing the model as a way to reduce unnecessary health spending. If they did, the health insurance industry could move away from paying by the procedure and toward rewarding healthcare providers for coordinating patients' care, improving quality and reducing hospitalizations.

The value of PCMH lies in primary care physicians managing patients' overall care, which is personalized and coordinated. It is designed to facilitate medical management of the whole person rather than a specific health condition, thereby achieving better health outcomes, higher patient positive experience and more efficient use of resources.

"It isn't rocket science," Paul Grundy, president of the Patient-Centered Primary Care Collaborative told a conference audience in October. "There's a trusting relationship that exists between patients and the doctors and they're doing stuff like making sure that the medication is managed. They're doing stuff like making sure that the aspirin is taken, that the cholesterol is managed, that the blood pressure is managed."

There are several pilot PCMH projects currently underway. Cigna (NYSE: CI) and Holston Medical Group launched one such program that uses electronic medical records to track medical history case management/disease management, extends urgent care hours, and educates patients to better navigate the healthcare system. Cigna will pay the primary care physicians as usual for the medical services they provide and also reward them through a pay for performance structure if they meet targets for improving quality and enhancing access to appropriate care.

Similarly, Empire BlueCross BlueShield launched its own PCMH pilot with 300 physicians. The pilot enhances access and communication, including a written patient summary after every visit and 24/7 access to care, to help patients better understand their condition and provides a single point of contact. Referrals to specialists, test results and adherence to national standards of care will be tracked and monitored. "We believe this pilot represents healthcare reform in the truest sense and that it will reduce the medical costs that continue to drive up insurance premiums," says Mark Wagar, Empire President and CEO.

Indeed, PCMH has had its successes. Some noteworthy achievements include:

  • The North Carolina Medicaid program required an upfront $10.2 million investment and saved $244 million in overall healthcare costs for the state.
  • A year-long pilot project between BlueCross BlueShield of South Carolina, BlueChoice HealthPlan of South Carolina and Palmetto Primary Care Physicians resulted in 10.4 percent fewer inpatient hospital days and 12.4 percent fewer emergency room visits. The patients, all with diabetes, had better control of cholesterol and glucose levels, improved their body mass index and measures of potential kidney damage, as well as had higher rates of recommended eye exams. They also had 6.5 percent lower total medical and pharmacy costs.
  • Geisinger Healthy System's PCMH resulted in a 40 percent reduction in hospital 30-day readmissions, a 20 percent reduction in overall hospital admissions, and a 7 percent decrease in cost of care.
  • South Carolina BlueCross' PCMH model for patients with diabetes produced better health outcomes at a lower cost, including 10.7 percent fewer hospital admissions and 32.2 percent fewer emergency room visits.

However, there are also problems with the PCMH model that should be changed in order to achieve future success. According to Nicholas Bonvicino, director of clinical initiatives for Horizon Healthcare Innovations, existing medical home standards lack specificity to allow for practice variation, including time frames for access and response, and adequate care team definition. They also lack breadth of full activities required for transformation, including reimbursement and benefit changes, and full management of transitions of care.

Another drawback to PCMHs is that their return of investment is not immediate. "The ROI is longer term, but it's tangible. You must set expectations that results will be seen over a few years, not over a few months," says Belva Denmark Tibbs, vice president of medical operations with Kaiser Permanente, which has its own PCMH plan. Therefore, achieving buy-in requires focusing on the successful clinical outcomes. For example, by implementing evidence-based practices, Kaiser knows its diabetic members have fewer hospitalizations, fewer of them are going blind and fewer need amputations. "That means we're saving very costly hospital dollars," she added.

Insurers also can be reluctant to pay for PCMH. Geisinger Health System, which successfully implements its own PCMH model, addressed that problem by changing the payment structure so the system pays physicians on a fee-for-service basis while providing advanced practitioner stipends and staff bonuses. It has directly increased physician compensation by 10 to 15 percent.

Geisinger also provides physicians with additional funds to help them carry out PCMH functions, with the goal of moving from a volume-based to a value-based system. The company employs a gain-sharing program that gives the medical home sites the opportunity to earn bonuses if they meet certain cost goals and achieve quality standards. "If the practices hit 100 percent of their quality measures, and they save money, then they receive 50 percent of their savings," said Ronald Paulus, Geisinger's executive vice president. - Dina