Health Law Consulting Blog

Wednesday, January 22, 2014

Patient Centered Medical Home Different Payment Models

I previously discussed the core components of the patient centered medical home delivery care model (PCMH). The post prompted numerous inquiries from health care professionals regarding what the financial benefits are in becoming recognized as a PCMH medical practice.

I researched the issue in more detail and found varying reports regarding reimbursement payment models by federal, state, and private payers that support PCMH recognized health care providers.

Read on to learn more about how proposed payment models may affect the financial aspects of a PCMH medical practice. 

Fee-for-Service Payment Model

Historically, healthcare providers have been reimbursed under a fee-for-service (FFS) payment model.  The FFS model focuses more on the volume of care rather than the value of care.  Because the PCMH program focuses on high quality and patient-centered care, volume-based payment models will need to be further reformed to best compensate healthcare providers who formally implement the PCMH program into their practice.  Such payment models should be designed to give primary care practices incentives to deliver comprehensive care for patients with complex medical needs. 

Proposed PCMH Reimbursement Payment Model

Under the Patient Protection and Affordable Care Act (PPACA), health care providers may now qualify for enhanced federal funding incentives for implementing and managing a PCMH recognized practice.  Many physicians are already running PCMH-worthy medical practices, but can only be recognized when they become certified by an organization like the National Committee on Quality Assurance (NCQA).  While the adoption of the PCMH model has been shown to benefit patients, practices and the health system at large, it makes sense for practices considering becoming PCHM certified, to do a cost-benefit analysis.  Key elements of the PCMH practice model are complex care coordination and increased communication with patients.  Medscape Business of Medicine offers some practical considerations to practices thinking about PCHM certification (e.g., changing processes to capture the work physicians and practices are already doing, expanding technology and adding staffing), which is why doing a cost-benefit analysis is an important first step.  While getting insurance companies to reimburse for care coordination is a major focus of the implementation effort, getting the public to pay for their share of enhanced communication is also necessary. 

Some health plans already reward practices with PCMH designation (e.g., PCHM practices receive an additional $2 to $3 per member per month allocation from AETNA. Practices that fully implemented the Blue Cross Blue Shield of Michigan’s (BCBSM) PCMH program model are reported to have achieved a 3.5 percent higher quality measure, a 5.1% higher preventative care measure and a $26.37 lower per member per month medical cost for adults.  As a result, the BCBSM plan is reported to have saved an estimated $155 million during the first three years of its PCMH program, plus an additional $155 million in the program’s fourth year.

Preliminary research on various payment models has recently been conducted on some PCMH recognized healthcare providers with varying practice types.  The results varied by practices and payer types.

I reviewed several proposed payment models that best supported PCMH recognized providers. In particular, the models proposed by the Safety Net Medical Home Imitative (SNMHI) were the most comprehensive regarding linking payment to the value of service. Such models consist of the following proposals:

  1. FFS with New Codes for PCMH Recognized Services;
  1. FFS with Higher Payment Levels;
  1. FFS with Lump Sum Payments; and/or
  1. Grants

Further, SNMHI has proposed additional reimbursement models that you can review here.

Healthcare providers will need to visit their federal, state, and/or private agency initiatives and policies to find out more information on the particular standards each payer requires in order for a practice to receive reimbursement for managing a PCMH recognized practice.

Contact me for more information about becoming PCMH recognized or specific payment models.


Primary Care and Co-Occurring

The Patient Centered Medical Home

Paying for the Medical Home Initiative: Payment Models to Support Patient-Centered Medical Home Transformation in the Safety Net

Announcement from Blue Cross Blue Shield of Michigan via the Wall Street Journal

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