At a corporate level, most health plans are on record saying that the medical home model has promise for reducing cost and raising quality. Health plans may be preparing to support the medical home, but it seems that many will not be content to simply offer increased payment for recognized Patient Centered Medical Homes (PCMH) sites. Instead, many plans have ambitions to play a robust, ongoing role in the design and delivery of medical home services. This would help ensure that the health plan's contributions become a key part of the overall value proposition of any future medical home network or product. The provider-facing medical home formulas they are testing are surprisingly complex and often include both financial and operational components as abbreviated below:
- Financial support mechanisms usually combine three common building blocks: fee schedule enhancements, per-member-per-month payments for care management, and primary care pay-for-performance. (Total value across contracts varies wildly.)
- Operational support approaches range from hands-off to hands-on, with some plans going so far as to manage care teams or embed plan-employed care managers in practices. Some plans have also entered into information technology partnerships that invite or require providers to use payer-sponsored care management information services and tools as part of the medical home contract.
PCMH models are evolving toward rewarding primary care practices for reductions in total spending for patients continuum-wide. Under this approach, primary care physicians are incentivized for doing things that help reduce avoidable hospitalizations, emergency department visits, and inappropriate specialty care use.
Nationwide, health systems are taking a few key steps to ensure immediate-term financial sustainability, including:
- Focusing on growth strategies ranging from increasing Primary Care Physician (PCP) panel size to entering narrow networks to backfill specialty and hospital volumes.
- Steering self-insured employees and families to PCMHs to capture cost reduction/quality improvement benefits
- Targeting Medicaid/uninsured populations for early rollout of PCMH services.
- Building joint-negotiating capacity through clinically integrated physician-hospital organizations (PHOs) and integrated health care delivery systems.
- Negotiating aligned incentives across the full continuum of care—for example, implementing performance incentives for avoiding preventable hospitalizations that offset decreased volume.
Taking a long-term view, most observers agree that a transformed primary care network is essential for any health system looking to take on population-level risk in the future. Therefore, systems investing in the PCMH model, even though accountable care incentives may not be available at the system level yet, are using the shorter-term steps as a bridge to navigate the transition period between current and future contracting incentives. To learn more visit PCPCC: The PCMH and Delivery System Reform.