Medical Homes Health Cost Containment

Medical Homes- Health Cost Containment

New Content Added October 2014

Cost Containment header

The following NCSL Issue brief has been distributed to legislators and legislative staff across the country.

Medical Homes - PDF File

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Cost Containment Strategy and Logic

“Medical home” describes a way of organizing and delivering health care that is coordinated, comprehensive, efficient and personalized.  Health care practices and clinics that meet medical home criteria manage all aspects of a patient’s care. The main purpose of medical homes is to improve the quality of care.

Medical Home Model
  1. Each patient has a personal physician who is responsible for coordinating and providing or arranging all of his/her care.
  2. Care is coordinated across all settings and practitioners (e.g., specialists, mental health professionals, nutritionists, hospitals, home health agencies, nursing homes) by a physician-led team of health care professionals.
  3. Patients have expanded health care access (e.g., e-mail access to their physician, after-hours care, 24-hour nurse advice line).
  4. Quality and safety are priorities, care is evidence-based, physicians rate themselves on efficiency and quality measures, and patients are involved in all care decisions.
  5. Physicians are paid a care coordination fee in addition to their regular office visit fee and may receive bonus payments for meeting or exceeding specified quality and efficiency targets. Care coordination fees may be adjusted based a patient’s health (e.g., higher fees for patients with several chronic conditions or children with special needs).

Summary of Health Cost Containment and Efficiency Strategies - Brief #12- Medical Homes

State/Private Sector Examples  Strategy Description Target of Cost Containment Evidence of Effect on Costs
North Carolina, Vermont, Minnesota, United Health Group and IBM, Group Health Cooperative, Geisinger Health System, Bridges to Excellence and others Some studies show significant medical home savings. Others have found minimal or no overall savings but report other benefits, such as improved quality of care, fewer medical errors and enhanced health care access. Medical homes are designed to address several shortcomings in the current health care system, especially uncoordinated care. Poor care coordination is associated with duplicate procedures, conflicting treatment recommendations, unnecessary hospitalizations and nursing home placements, and adverse drug reactions. Most studies that support medical homes’ potential to reduce overall spending have not assessed a complete version of the approach.

Additional Information

Non-State Examples
In 2008, CIGNA and Dartmouth-Hitchcock Medical Center, for example, launched a medical home pilot program in New Hampshire with 391 primary care providers. Blue Cross Blue Shield of Michigan started a medical home program in 2008. Its goal is to involve 4,900 primary care physicians. The health plan expects to spend $30 million on the program. United-Health Group is collaborating with IBM to test the medical home model at seven medical group practices in Arizona serving IBM employees and Medicare and Medicaid beneficiaries covered by UnitedHealth.
Bridges to Excellence (BTE), a national nonprofit health care use the medical home model to deliver primary care. Examples include Group Health Cooperative, serving Oregon and Washington; Geisinger Health System, located in central rural Pennsylvania; and Intermountain Healthcare, serving Utah and southeastern Idaho.
Large, fully integrated health care delivery systems11 increasingly qualify improvement organization, has mounted a multi-state, multiple employer Medical Home Program.
Several large employers participate, including Ford, GE, Humana, P&G, UPS and Verizon. Several health plans also participate. BTE Medical Home Designated Physicians are eligible for an annual bonus payment of $125 for each patient covered by a participating employer or health insurer, with a suggested maximum yearly incentive of $100,000 per physician.
In September 2009, the U.S. Secretary of Health and Human Services announced Medicare will join selected state-based, multi-payer medical home initiatives in a three-year Advanced Primary Care Demonstration. The states had not been selected as of April 2010.

[i] Quality of care measures the degree to which various inputs, processes and standards of care meet patient needs and increase the likelihood of improved patient health.


Recent Articles and Resources, 2014

  • PCMH Pilot Not Associated with Cost Reductions, Study Shows
    A study of a three-year multi-practice patient-centered medical home pilot finds lackluster results. "We're now concerned that medical home transformations may not really achieve the goals set out for them at the rapid pace that people have hoped," says the author - Health Leaders Media 2/27/2014

  • At home with the specialist: Oncologists and other specialists launching patient-centered medical homes -
    Solo practice endocrinologist Carol Greenlee of Maine is one of a small number of specialist physicians in the country who operate their practice as a patient-centered medical home, a model pioneered by primary-care doctors. She has expanded the medical home into a medical “neighborhood.” [article summary] Modern Healthcare, 10/18/2014.

  • The Patient-Centered Medical Home's Impact on Cost & Quality: An Annual Update of the Evidence, 2012-2013, Marci Nielsen, PhD, MPH, et al, of the Patient-Centered Primary Care Collaborative. Support provided by the Milbank Memorial Fund. 1/2014.

Articles and Resources, 2011-2012

SUMMARY: Patient-centered medical home (PCMH) pilots are in high gear around the country and high on the healthcare reform agenda. We wanted to see how long it takes a physician practice to transform itself into a full patient-centered medical home.  156 organizations responded to the fourth annual Patient-Centered Medical Home (PCMH) e-survey, administered in March 2010 by the Healthcare Intelligence Network. The survey identified PCMH adoption rates, targeted populations, components of a medical home and the effects of the PCMH model on clinical and financial outcomes. When asked to identify the length of time required to convert a practice to a medical home:
  • 37 percent said the transformation took from one year to 18 months;
  • 23 percent said the transformation took from 18 months to two years;
  • 16 percent said the transformation took less than a year;
  • 12 percent said the transformation took more than two years; and
  • 12 percent said the transformation took from one year to 18 months.
For additional research data and insights on this topic:  Download the executive summary of 2010 Medical Home Performance Benchmarks: Adoption, Utilization and Results.
  • Outcomes of Implementing Patient Centered Medical Home Interventions: A Review of the Evidence from Prospective Evaluation Studies in the United States.  The primary care patient-centered medical home (PCMH) results in improved quality of care and patient experiences and reduces costs from hospital and emergency department utilization, according to evidence presented in a new brief from the Patient-Centered Primary Care Collaborative (PCPCC). More... 

About this NCSL project

NCSL’s Health Cost Containment and Efficiency Series will describe two dozen alternative policy approaches, with an emphasis on documented and fiscally calculated results. The project is housed at the NCSL Health Program in Denver, Colorado. It is led by Richard Cauchi (Program Director) and Martha King (Group Director) with Barbara Yondorf as lead researcher. 

NCSL gratefully acknowledges the financial support for this publication series from The Colorado Health Foundation and Rose Community Foundation of Denver, Colorado.
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