Medical Homes-Health Cost Containment

New Content Added February 2016

Cost Containment header

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

Medical Homes original report- PDF File

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Executive Summary: 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

Early adaptors: 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.

National Conference of State Legislatures

Additional Resources: State Examples - 2014-2016

  • "The Patient-Centered Medical Home's Impact on Cost and Quality: Annual Review of Evidence 2014-2015” A latest report highlights latest evidence that links the patient-centered medical home (PCMH) with lower costs and improved health care quality. It summarizes "30 primary care PCMH initiatives from around the country that measured cost and utilization of services, and – new this year – payment models." At a Capitol Hill briefing Feb. 2, 2016 the Congressional Primary Care Caucus hosted a panel discussion about the evidence and its implications – especially in light of federal payment reform and future requirements for status as a PCMH – conversations happening right now. Posted 2/2/2016.   *NEW*
    Now Available: The Patient-Centered Medical Home's Impact on Cost and Quality, Annual Review of Evidence, 2014-2015 - Full report, 44 pp. | Executive Summary, 4 pp.  Here are the key findings.

    • PCMH controls costs by providing the right care: Positive, consistent trends show that advanced primary care improves quality and helps decrease costs. By providing the right primary care “upstream,” we can make a positive impact on how care is used “downstream” such as decreased emergency department (ED) visits and avoidable hospitalizations. Up next: consistent assessment of total cost of care that simultaneously measures better care, better health, and clinician satisfaction.
    • Payment and performance BOTH must be aligned: Payment reform is necessary but not sufficient for clinician buy-in. Alignment of performance measures across payers is critical too. The most impressive cost and utilization outcomes came from multi-payer collaboratives that aligned payment and incentivized performance measures linked to quality, utilization, patient engagement and/or cost savings. No single payment model best supported the PCMH, but moving away from fee-for-service is a must. Up next: implementation of Medicare payment reform through MACRA. 
    • Assessing and promoting the value of PCMH is needed: Significant variation in PCMH initiatives/programs makes for challenging evaluations and expectations. Up next: measurement and recognition of PCMHs must be better aligned with value as defined by patients, providers, and payers.
  • Virginia Delivery Reform  *NEW*
    Virginia Managed Care Organizations are required to implement at least one Medallion Care System Partnership (MCSP) to address complex and chronic health conditions by identifying, monitoring, and assigning members with complex or chronic health conditions to a Health Care Home. All MCSPs are required to target pediatric populations with the option to also target adults. Eligible providers receive payment based on one of four payment models the MCO may adopt. NASHP has tracked this activity and will continually update a map to include new PCMH and Health Home initiatives in states. The Commonwealth Fund provides support for this map. 2/22/2016

  • Colorado: Medical Home Initiative Found to Reduce Hospital, Emergency Department Use.  An evaluation of a multipayer patient-centered medical home initiative involving 15 physician practices and 98,000 patients in Colorado found sustained reductions in hospital admissions and emergency department (ED) use over three years, though quality-of-care results were mixed. The researchers, which included Harvard University’s Meredith Rosenthal and The Commonwealth Fund’s Eric Schneider, M.D, published their findings  titled “A Difference-in-Difference Analysis of Changes in Quality, Utilization and Cost Following the Colorado Multi-Payer Patient-Centered Medical Home Pilot” in the Journal of General Internal Medicine. Oct. 26, 2015.

    • State leaders from Colorado are demonstrating how multi-payer collaboratives drive change. Bert Miuccio, CEO of HealthTeamWorks, and Vatsala Parthy, Director of Colorado’s State Innovation Model (SIM) and Practice Transformation Network (PTN), shared their insight during a 2016  briefing – providing the “inside scoop” from one of the nation’s leading states in multi-payer PCMH innovations. 2/22/2016

Non-State Examples

[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.

Articles and Resources, 2011-2012

About this NCSL project

NCSL’s Health Cost Containment and Efficiency Series describes 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). Ashley Noble (Policy Specialist) tracks recent developments, 2014-2016. Barbara Yondorf was lead researcher, 2010-2012.

NCSL gratefully acknowledges the financial support for this publication series (2010-2012) from The Colorado Health Foundation and Rose Community Foundation of Denver, Colorado.