Medical home payment structure offered

The advanced medical home concept has been praised by health plans, physicians, and DMAA: The Care Continuum Alliance, which has voiced its support for the concept.

The overall theory of putting a patient’s care coordination into the hands of the provider has caught on despite the fact that the shape and breadth of the advanced medical home model remains in question.

What kind of role will DM play? Will DM vendors offer complementary services for providers rather than health plans? And, perhaps most importantly, what do you pay providers for overseeing care coordination?

There have been several commercially run medical home projects, and CMS’ Physician Group Practice (PGP) demonstration project touches upon aspects of the medical home. CMS is also preparing to test the concept with its Medical Home Demonstration Project, which starts 2009.

The project will take place in up to eight states in rural, urban, and underserved areas in which providers will provide “comprehensive and coordinated” patient-centered medical care, according to the legislation that created the project.

In preparation for the demonstration project, CMS and Mathematica Policy Research conducted research and developed a medical home design earlier this year. As part of the demonstration legislation, CMS was mandated to consult the AMA/Specialty Society RVS Update Committee (RUC) to make recommendations about the project’s payment structure. The RUC makes annual recommendations to CMS about new and revised physician services and performs reviews of the Resource-Based Relative Value Scale every five years.

After two months of work, the RUC released its medical home payment recommendations April 29. The response to the recommendations has been mixed, with healthcare bloggers particularly concerned about the suggested time commitment and pay structure.

However, RUC officials say the payment model would adequately pay providers for the care coordination needed in the medical home. William Rich, MD, RUC chair, says the recommendations took into account physician work relative value units and practice expense input recommendations, such as electronic medical record costs and nurse care coordination.

“I think everyone was pleased. My understanding is there are some bloggers who don’t understand financial implications that are complaining that the values aren’t high enough. They haven’t looked at the practice expenses. These values are quite robust and will revolutionize primary care as it’s delivered in this country,” says Rich.

One problem the RUC found was the nonstandard way in which commercial medical home projects have paid providers for care coordination. “It was very apparent that the current evaluation of medical homes was done with no rationale at all,” Rich says. “They just picked numbers out of the air to get some demonstration projects going on the commercial side.” To figure out the payment structure, the RUC drew on Mathematica’s work to offer three medical home tiers, depending on capabilities:

Tier 1 (entry level) requires 10 of the designated core capabilities

Tier 2 (typical) requires 16 of the designated core capabilities

Tier 3 (optimal) requires 18 of the designated core capabilities and three of an additional 10 requirements

Note: For more information on tiering and capabilities, see “Proposed method of tiering medical home qualification” below.

To provide an example of a possible payment scenario, the RUC describes a hypothetical practice that includes one doctor, one nurse case manager, and 250 participa-ting beneficiaries. The RUC estimates a Tier 3 practice could receive more than $160,000 for taking part in the demonstration. (See “Medical home payments” below for more details.)

Rich says the medical home payment structure is a “huge increase” for primary care. Although primary care would benefit from the medical home payments, other areas of healthcare realize the potential benefits of care coordination, and the medical home could resolve duplications of services and unnecessary hospital readmissions, he says. “Everyone realizes there are some real programs going on for the chronically ill, especially those most at risk who have multiple diseases,” Rich adds.

Response to recommendations

Vince Kuraitis, JD, MBA, principal and founder of Better Health Technologies in Boise, ID, who supports the medical home concept, is one of the bloggers who has questioned the RUC’s recommendations. Kuraitis wrote a four-part series of blog entries about the topic.

His concern is that the RUC’s process is viewed as anti– primary care and that the recommendations could underfund the medical home and cause physicians not to take part. “I think it makes a difficult process even more difficult,” he says.

Another concern is the lack of technology mentioned in the recommendations, says Kuraitis. In his view, the medical home will need care management technological support, which might include call center technology and staffing, predictive modeling/stratification software, remote patient monitoring hardware and software, medical management software, personal health records, patient Web portals, and caregiver Web portals. But the recommendations did not take that technology into account, he says.

Thomas Wilson, PhD, DrPH, an epidemiologist at Trajectory Healthcare, LLC, and founder and board chair of the Population Health Impact Institute in Loveland, OH, is also concerned about the recommendations.

Part of his problem is the RUC itself. Rather than have the RUC make the recommendations, Wilson says an advisory group composed of consumers and PCPs should review the concept and create a fair payment model. “I think the medical home is a wonderful concept and disease management is a wonderful concept—both in theory. What I want to see with the medical home as they go forward with it, let’s have open transparent methods to access how well it works so we can all learn from it.”

Although critics have questioned the payment model, the American College of Physicians praised the RUC for its work. The organization of 125,000 internal medicine physicians and medical students was one of four physician groups that released a joint statement in support of the medical home concept in March 2007.

In response to the RUC’s recommendations, David Dale, MD, FACP, president of the American College of Physicians, sent a letter to Rich on May 17 praising the RUC’s report. “The RUC’s work on this project is an important step in defining and quantifying the work that is associated with this new model of medical care,” wrote Dale.

CMS actuaries are now crunching the numbers and will provide their own recommendations to the federal agency later this year. Unlike the RUC, which focused solely on trying to create a payment structure that adequately pays physicians for the added work, the actuaries will have to take into account the demonstration project’s cost neutrality requirement.

Pennsylvania kicks off medical home project

CMS is not the only one testing the advanced medical home. Health plans and states are also exploring whether the medical home can improve patient outcomes and lower long-term costs.

Pennsylvania is one of the most recent states to give the medical home a try. In the first phase of the Prescription for Pennsylvania healthcare reform program, Gov. Ed Rendell presented a program that will include 220,000 patients, 150 PCPs, and six health insurers in Southeastern Pennsylvania.

Supporters say providers will track patient care and conditions, which will also reduce costs for chronic care by improving control and averting emergency room visits and admissions.

The healthcare reform program also looks to improve access to care, patient self-management skills, quality of care measured by evidence-based clinical processes, and outcomes measures.

When he announced the program, Rendell said more than 40% of Pennsylvanians with chronic conditions do not receive recommended care to manage their diseases.

Rendell suggested that developing a medical home in which healthcare providers “adopt evidence-based protocols proven to help manage chronic disease” will help patient health.

“It will also have economic benefits, as healthier employ-ees mean improved productivity for our businesses, and taking appropriate preventive measures can reduce the need for many expensive emergency room visits and translates to lower insurance premiums overall. That’s why this report—this blueprint—is critical for improving quality of life and to save money,” he said.

Independence Blue Cross in Philadelphia, one of the insurers involved in the three-year program, anticipates making physician care coordination payments in the $5–$6 milliondollar range.

The actual investment will depend on how many practices participate as well as the level of documented transformation their practices achieve through the National Committee for Quality Assurance’s (NCQA) Physician Patient Connections—Patient-Centered Medical Home (PCMH) certification, says Ruth Stoolman, PR manager at Independence Blue Cross.

The Pennsylvania program will include:

  • A team approach that includes physicians, nurses, case managers, and health educators
  • Open-access scheduling to enhance patient access to timely care and to allow physicians more time to see sick patients
  • Improved patient education and promotion of selfmanagement of chronic conditions
  • Improved communications, including e-mail and phone
  • More decision support for patients
  • Outside practice coaches to help implement the neces-sary changes and help guide practices on how to achieve their goals

“This model will radically change how primary care is delivered, how that care is paid for to promote quality, and to move people toward taking an active role in their own health,” Stoolman says. “Over time, we expect that we’ll see fewer avoidable emergency room visits and hospitalizations due to better and ongoing management of chronic conditions like diabetes and asthma, better quality of life for people with these chronic conditions, and longer life expectancies.”

She adds that the program should also improve provi-der and member satisfaction.

Independence Blue Cross will also offer free technology to participating practices that will allow the insurer and providers to track, monitor, and remind patients about health information and also help to better identify gaps in patient care.

Advocates for the Pennsylvania program hope the collaborative will serve as a benchmark in how the model is designed and implemented throughout the country.

“It should be emphasized that patient education is a critical component of the PCMH—empowering patients to understand their conditions and take an active role in their care,” Stoolman says.

“No matter how successful physicians are in reaching all the stated NCQA goals, unless their patients are actively involved in managing their care, any notable improvements in quality outcomes will be limited,” she adds.

Creating a payment structure

When developing the Medical Home Demonstration Project payment structure, William Rich, MD, chair of the AMA/Specialty Society RVS Update Committee (RUC), says the RUC reviewed other medical home projects to gauge the physician time, workload, and practice expenses.

Most of the costs in a medical home are not for new technology, such as electronic medical records, but for human capital, Rich says, adding that the RUC was able to review propriety costs and data to determine how much time and money would be involved in coordinated and preventive care.

The RUC made the following calculations for how much time it believes a physician would typically spend per patient per month depending on tier and included the physician work relative value units (RVU):

  • Tier 1: 6.5 minutes; 0.25 work RVUs
  • Tier 2: 7.8 minutes; 0.30 work RVUs
  • Tier 3: 9.2 minutes; 0.35 work RVUs




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