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Medical Home (PCMH)

Concepts and Introduction

The Medical Home, also known as the primary care medical home (PCMH), patient centered medical home (PCMH), advanced primary care, and the healthcare home, is a concept almost 50 years old. It was first introduced by the American Academy of Pediatrics and subsequently revised and adopted by a number of primary care specialties as part of an overall effort in the early 2000s to address the Future of Family Medicine. The observations were simple: the RBRVS system had started to create significant distortions in the value of services, significantly favoring interventions to the detriment of evaluation and management. Medical school graduates were quick to respond to this shift, moving into specialties that provided far greater FFS billing opportunity, and the ranks of family practitioners were starting to significantly shrink.

The response to the report on the Future of Family Medicine, in conjunction with the IOM’s report on Crossing the Quality Chasm, and the rising costs of health care pointed policymakers, payers and providers in one direction: shoring up primary care. And here’s where the cart got before the horse.

The industry’s response looked at the design of primary care and its functions, and then tried to figure out incentive/payment models that would suit the design and functions. Nowhere was this more evident than in the proposal by Allan Goroll and colleagues that soon became the rallying point for many field experiments. Goroll calculated the cost of running a physician practice and then divided the needed revenue into a patient panel to arrive at a needed fixed payment per patient.

The path chosen was simple: let’s first design the form of the practice, then its functions, and that will lead us to a financial incentive model. Put simply, it’s just backwards. Incentives drive functions, and functions drive form, not the other way around.

Lessons Learned:

  • It’s very difficult to transform a traditional physician practice into the type of Medical Home described and defined in the report on the Future of Family Medicine – a large national PCMH demonstration effort issued a paper in 2010 describing the challenges.
  • The evidence of a positive financial impact is mixed – our own analyses to-date suggest that pilot participants (those that were selected to participate in a PCMH pilot and are receiving an incentive for doing so) have better results than a random sample of physicians in the same community. The chart on the left below shows that patients managed by PCMH pilot practices have fewer hospitalizations and lower lengths of stay (resulting in fewer bed days) than patients managed by non-PCMH pilot practices. However, the chart on the right shows that practices designated as PCMH by the NCQA and that are not participating in a pilot are not better than other physicians in their community, while pilot participants are.

    Bed Days per Thousand

    PACs Per Thousand: Community-wide

  • The search for a sustainable funding model of PCMH practices continues – PCMH practices must fit into a larger context of a delivery system that has a financial risk associated to the decisions made by all its members on the type and frequency of services rendered. As such, health plans and physicians continue to explore different types of incentives that would cause practices to transform in a manner consistent with the Future of Family Medicine report while reducing the total medical spend associated to a population of patients. Some options include:
    • Creating prospective budgets, especially for patients with chronic conditions and assigning financial risk to the practice for that budget
    • Defining a global per member per month cost for all patients based on historical trends and creating a gain-sharing mechanism with the practice based on actual costs
    • Establishing bonuses paid above the routine FFS payments that are linked to a cost and quality scorecard