Financial Implications of the Patient-Centered Medical Home

Abstract

IN THESE EARLY YEARS OF THE 21ST CENTURY, A CLEAR consensus has emerged on 2 points: primary care in the United States is in disrepair, and reinvigorating it is critical to improving the nation’s health and reining in burgeoning health care costs. Ample evidence now exists that countries that lead in primary care—by providing accessible care that is person-centered, comprehensive, and coordinated—achieve better health outcomes for their citizens at a lower cost. The World Health Organization, in the its 2008 report Primary Health Care Now More Than Ever, prompted all countries to strengthen their primary care systems. The United Kingdom, the Netherlands, and others are doing just that by building on their already solid foundations with innovative practice models, funding mechanisms, and new methods to integrate primary care with specialty and community health services. Playing catch up, the United States is promoting the patient-centered medical home (PCMH) as the main vehicle for addressing its primary care crisis. This model embraces the core attributes of primary care, a populationbased approach to chronic care and prevention, a reformed reimbursement mechanism, and a patient-centered philosophy. Since 2007, the medical home has been vigorously piloted and adopted by a wide range of payers, health systems, and clinician organizations. Promising results from various studies involving different populations are now beginning to emerge. The Affordable Care Act (ACA) contains many features to support adoption of the PCMH in the Medicare, Medicaid, and the Children’s Health Insurance Programs through better reimbursement rates and new funds for model adoption and testing. However, adoption of the PCMH places substantial demands on the capabilities of practices. The majority of practices do not currently have the necessary infrastructures to be robust PCMHs. The importance of primary care, as detailed by the World Health Organization and the Institute of Medicine, and embedded in the ACA and Centers for Medicare & Medicaid Services regulations, suggests that it is time to examine what it requires for practices to be medical homes and what these capabilities provide in return. In this issue of JAMA, Nocon and colleagues provide a detailed look at some of the financing aspects of a large and presumably diverse set of 669 federally funded community health centers. Although this cross-sectional study does not examine the effects on quality or overall care costs, it provides an estimate of the association between ratings that assessed several aspects of the PCMH and health center operating costs. Overall, a 10point higher score on the total PCMH rating scale was associated with a $2.26 (ie, 4.6%) higher monthly operating cost per patient. Supporting an earlier experiment in an integrated delivery system, this study confirms that sizable and ongoing investments are needed to create and sustain medical homes. These findings also complement other research showing that absent investment and payment reform, attempts to implement PCMHs can fail to achieve the desired goals for PCMHs, which can be discouraging to primary care practitioners. Nevertheless, with sufficient staffing and practice support, adoption of the PCMH can lead to greater work satisfaction and less burnout. The study by Nocon et al also reveals that the operational costs associated with features of the medical home vary substantially across practices. This finding is important because it underscores the need for individual health centers to tailor their clinical and management strategies according to the availability of local resources and the case-mix of the served population. The report by Nocon et al also highlights the cost implications of improved service to medically underserved and vulnerable populations. For 40 years, federally funded community health centers have provided health care services for these patient populations. Gains promised by the medical home should be highest in disadvantaged populations because these patients are more likely to have uncoordinated and episodic care and often rely on emergency departments to receive services. Patient-centered medical homes can potentially narrow the health inequities that exist because of lack of access