Understanding the Costs of PatientCentered Medica

Authors: Kenneth W Kizer

Publish Date: 2016/04/11

Volume: 31, Issue: 7, Pages: 705-706

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Abstract

The United States spends far more on health care than other developed countries but receives less health value for its expenditures12 Since this is due in significant part to our marketbased feeforservice method of paying for health care services moving to more valuebased methods of payment is an integral part of current health care reform strategies3 4 5 6 Multiple models of valuebased payment are currently being tested including various forms of pay for performance episode of care bundled payment accountable care organizations and patient centered medical homesThe patientcentered medical home PCMH is considered one of the most promising models of valuebased payment for primary care as well as a potential vehicle for revitalizing the primary care foundation of the health care delivery system While the basic concept of the medical home was popularized in pediatrics in the 1960s the current model of the primary care medical home is little more than a decade old and is still evolvingPCMHs are primary care practices that have been redesigned according to a set of principles aimed especially at promoting optimal health improving the quality of care reducing unnecessary care and ensuring timely and coordinated care particularly for persons with chronic conditions7 8 9 Multiple professional associations and other organizations have variously defined the PCMH and while there is no single universally agreed upon definition the operational and functional characteristics associated with National Committee for Quality Assurance accreditation have become the de facto PCMH standard10 Central elements of the primary care medical home model include patients having a close ongoing relationship with a specific clinician and caregiver team care management to coordinate and integrate services across the continuum of care a ‘whole person’ and population health orientation to care extensive use of advanced information and communication technologies to identify patient needs and enhance access and patient engagement and use of standardized processes for improving quality and safetyHundreds of PCMH projects have been launched over the past decade and numerous outcome studies have been published These studies have provided generally encouraging but inconsistent and sometimes conflicting results linking this new model of care to improved clinical and financial performance11 12 13 Some of the variability in results can be attributed to differences in how medical homes have been defined and operationalized as well as to differences in length of patient followup which outcome variables have been assessed and other study design features but overall the evidence tying PCMHs to improved health care value remains inconclusiveNotwithstanding the intuitive logic and apparent face validity of the conceptual underpinnings of the PCMH model the widespread adoption and mandatory inclusion of medical homes in some state Medicaid programs14 is curious given the ambiguous evidence of the model’s superiority Such mandates seem even more incongruous considering how poorly quantified are the costs of transforming a typical primary care practice to a medical home Creating an infrastructure to successfully achieve the functionalities of a medical home clearly entails startup and ongoing operational costs but the magnitude of these costs has been imprecisely detailed8In this issue of JGIM Martsolf and colleagues from RAND and Harvard provide important insights into the costs associated with implementing medical homes15 They report on the initial transformation and ongoing operational costs associated with implementing medical homes at 12 primary care practices participating in the Pennsylvania Chronic Care Initiative PACCI a statewide multipayer medical home pilot program including both commercial and Medicaid managed care plans The costs of medical home transformation were determined by conducting semistructured interviews with practice managers and other practice representatives to identify the structural and functional changes directly related to medical home transformation and then calculating the costs corresponding with the changesThese investigators found the investment costs to establish the requisite information technology and care management infrastructure were substantial but varied widely depending on the baseline characteristics and capabilities of the practice15 Onetime startup costs to transform to medical home practice ranged from 7694 to 117810 with a median of 30991 while ongoing annual operating costs ranged from 83829 to 346683 with a median of 147573 These equated to per clinician median startup and annual ongoing costs of 9814 and 64768 respectively and per patient startup and ongoing costs of 8 and 30 respectively Funding these costs was especially challenging for small and independent practicesThe conclusions that can be extrapolated from this study are limited insofar as it evaluated the costs of only one PCMH initiative in a single state and the results may have been affected by variable respondent recall nonetheless the study is important for three main reasons

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