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Patient-Centered Medical HomeDeveloping the Recognition Process&A Defining a New Reimbursement System

March 12, 2007

Michael S. Barr, MD, MBA, FACPVice President, Practice Advocacy & ImprovementDivision of Government Affairs & Public PolicyAmerican College of PhysiciansEmail: mbarr@acponline.orgPhone: 202-261-4531

pc mh practices
PC-MH Practices…
  • Organize the delivery of care for all patients according to the Care Model
  • Use evidence-based medicine and clinical decision support tools
  • Coordinate care in partnership with patients and families
  • Provide enhanced and convenient access to care
  • Identify and measure key quality indicators
  • Use health information technology to promote quality, safety & security of information
  • Participate in programs that provide feedback on performance & accept accountability for process improvement and outcomes

Practice Evolution…


Electronic Medical record

HIE = health information exchange

CDS = clinical decision support

e-Rx = electronic prescribing

PDA = personal digital assistant

SMGs = self-management goals

PHR = personal health record

Limited data review >> Dashboard >>> Benchmarking >>> Reporting

Visit-based care >>> Scheduled phone/email >> Remote monitoring

Appts. by Phone >>> Advanced Access >>> PHR + Web-based portal

Pre-Printed Education >> Computer-generated >> Customized + SMGs

Books/charts >>> Handheld PDA >>> EMR + CDS

Rx Pad/Pen >>> e-Rx (alone) >>> EMR+eRx

Flow sheets >>> E-registry >>> EMR >>> HIE

process to define pc mh using ppc
Process to Define PC-MH using PPC
  • AAFP, AAP, ACP and AOA will review PPC elements, documentation requirements and scoring methodology for voluntary recognition process
  • Consensus-driven process to identify standards for PC-MH and the associated documentation
  • Scoring methodology will:
    • Establish the “first rung” of the ladder
      • Practice meeting this standard will be distinctly different than the usual practice
    • Identify more sophisticated levels of the PC-MH
    • Provide basis for estimating cost of implementation to practice and benefit to patient, office, payer, employer
  • Goal is to develop recognition process by mid-2007

Stage 2

Stage 3

Stage 4

Stage 0

Stage 1

Advanced PC-MH


Road MAP

Intermediate PC-MH

Basic+ PC-MH

Basic PC-MH

Direct Support










Structural Fee










Pay for Quality





making the case for pc mh framework
Making the Case for PC-MH Framework
  • Improve access
  • Facilitate coordination of care
  • Eliminate redundant tests/procedures
  • Order the right tests/procedures
  • Enhance communication with other health care providers
  • Increase efficiency of subspecialty colleagues
  • Patient-centered transitions of care – appropriate “handshakes”
practice qualification process reimbursement framework
Practice Qualification Process → Reimbursement Framework
  • Relate attributes to costs of providing services
  • Identify potential quality improvements, cost reductions, opportunities for shared savings
  • Develop reimbursement model based to support and reward existing efforts and provide incentives for increasing sophistication

PC-MH Attributes that May Impact on Ambulatory Care Sensitive Condition Hospitalizations



Exhibit 42

Went to ER for Condition That Could Have Been Treatedby Regular Doctor, Among Sicker Adults, 2005

Percent of adults who went to ER in past two years for condition that could have been treated

by regular doctor if available

International comparison

United States, by race/ethnicity,

income, and insurance status

GER=Germany; NZ=New Zealand; UK=United Kingdom; AUS=Australia; CAN=Canada; US=United States.

Data: Analysis of 2005 Commonwealth Fund International Health Policy Survey of Sicker Adults; Schoen et al. 2005a.

Source: Commonwealth Fund National Scorecard on U.S. Health System Performance, 2006



Exhibit 43

Ambulatory Care Sensitive (Potentially Preventable) Hospital Admissions, by Race/Ethnicity and Patient Income Area, 2002

Adjusted rate per 100,000 population

Congestive heart failure


Pediatric asthma


* Combines 4 diabetes admission measures: uncontrolled, short-term complications, long-term complications, and lower extremity amputations.

Data: Race/ethnicity estimates—Healthcare Cost and Utilization Project, State Inpatient Databases (disparities analysis files) and National Hospital Discharge Survey (AHRQ 2005a, 2005b); Income area estimates—HCUP, Nationwide Inpatient Sample (AHRQ 2005a). Patient Income Area = median income of patient zip code. NA = data not available.

Source: Commonwealth Fund National Scorecard on U.S. Health System Performance, 2006



Average = $3,027/day

Average = $3,108/day

average costs inpatient day for selected conditions
Bronchitis/Asthma = $3,027/day

Pneumonia = $3,108/day

Heart Failure/Shock = $3,873/day

Assume Primary Care Office with 3 Physicians:

6,000 patients


Asthma: 10-12%

Pneumonia: 1.7%

Heart Failure: 1-2%

Diabetes: 10%

Number of Patients in Practice with:

Asthma: 660

Pneumonia: 102

Heart Failure: 90

Diabetes: 600

Average Costs/Inpatient Day for Selected Conditions

example of savings from reduced ambulatory care sensitive admissions
Example of Savings from Reduced Ambulatory Care Sensitive Admissions

If only 0.5% get admitted,

7.26* admissions, 29 hospital days, $95,832 in costs

If reduce hospitalization by 35%, $33,541 in potential savings

*If ~1500 patients generates 7.25 admissions, expectation for 6000 patients would be 29 admissions/year or, for 3 physicians <0.5 patients/week per physician. Park Nicollet described an average census for FM and IM of 2.5 inpatients/day.

Freese, RB. Annals Internal Med. 1999; 130: 350-354.

example of savings from reduced alos and ambulatory care sensitive admissions
Example of Savings from Reduced ALOS and Ambulatory Care Sensitive Admissions

Estimatedsavings from LOS*

Estimatedsavings from LOS & admits

*Health Serv Res. 2003 June; 38(3): 905–918 – 37% reduction ALOS with hospitalists

framework for reimbursement
Framework for Reimbursement...

…incremental strategy for reimbursement linked to infrastructure development; reporting of quality & cost measures; performance (outcomes)

…coordination of care

…adoption and use of health information technology for quality improvement

…provision of enhanced communication access such as secure messaging and telephone consultation

…remote monitoring of clinical data

…reduced administrative requirements for practices

…enhanced coverage and reduced co-insurance for patients who select to receive care in an advanced medical home

framework for reimbursement21
Framework for Reimbursement...

…acknowledges the value of both providing and receiving coordinated care in a system that incorporates the elements of the Care Model

…aligns incentives so that physicians and patients would choose medical practices that deliver care according to these concepts

pay for performance alone will not
Pay-for-Performance ALONE will NOT:
  • Correct inequities in reimbursement for health care services…
  • Reduce variability in quality and cost across the United States…
  • Attract medical students and residents to primary care residencies…
  • Reduce the hassles experienced by practicing physicians…
  • Or exceed the cost of implementing health information technology to support robust reporting from clinical records.
pc mhs would be paid under a different payment model
PC-MHs would be paid under a different payment model
  • Payment should recognize the added value to patients:
    • Reflect the value of care management outside of the face-to-face visit including coordination of care
    • Support adoption and use of health information technology
    • Support provision of enhanced communication access
    • Recognize the value of physician work associated with remote monitoring of clinical data using technology
    • Allow for separate fee-for-service payments for face-to-face visits
    • Recognize case mix differences in the patient population being treated within the practice
acp proposes a hybrid payment structure for the pc mh
ACP proposes a hybrid payment structure for the PC-MH
  • Bundled, severity-adjusted care coordination fee paid on a monthly basis for the following components:
    • the physician and non-physician clinical staff work required to manage care outside a face-to-face visit
    • the health information technology and system redesign incurred by the practice
  • Combined with per visit FFS payment and a
  • Performance based bonus payments based on evidence based measures of care
are we proposing to eliminate ffs and replace it with capitation
Are we proposing to eliminate FFS and replace it with capitation?
  • We believe that payment based solely on volume does not align incentives with physician-directed care coordination
  • The “bundled care coordination” fee will create incentives for primary/principal care physicians to coordinate care with the patient, family caregivers, and other health professionals
  • Maintaining a FFS component reduces incentives for physicians to avoid seeing patients face-to-face
  • The bundled care coordination fee differs from capitation because it is based on the work and systems involved in care coordination, rather than insurance risk to physicians, and is risk-adjusted to create incentives to care for sicker patients
the patient centered medical home is not defined by specialty
The patient-centered medical home is not defined by specialty
  • Any physician who has the training and experience to provide first contact, continuous and comprehensive care could be the patient’s “personal physician” in a PC-MH
  • General internists, family physicians and pediatricians will often be the “personal physician” because they are trained to provide first contact, continuous and comprehensive care
  • Physicians who limit care to particular organ systems, disease conditions, or procedures are less likely to have the “whole person” orientation needed
  • In some cases, the most qualified personal physician to take care of the “whole patient” will be a subspecialist or specialist
the pc mh is a care facilitator not a gatekeeper
The PC-MH is a care facilitator, not a gatekeeper
  • The goal is to not to restrict access to specialists but to facilitate and integrate specialty care with the whole person perspective of the patient’s personal physician
  • Patients may see a specialist at any time without prior approval
  • The PC-MH will facilitate appropriate referrals, sharing of information, and coordination of care among a multidisciplinary team
  • The PC-MH will integrate disease management support into the practice itself, rather than funding DM as a “stand alone” service divorced from the treating physician
  • Patients are not “locked” into the PC-MH, but they may affirmatively designate a PC-MH as their initial point of care
issues to be explored with other specialties include
Issues to be explored with other specialties include:
  • How will specialists outside the PC-MH share information with the personal physician within the PCMH (and vice versa)?
  • How will referral patterns be affected?
  • Will the physician in a PC-MH be held accountable for the total cost of care of patients who select care from a PCMH, and if so, what impact will this have on physicians and other health professionals who care for those patients?
  • How could specialty physicians and their practices qualify as PC-MHs?

Proposed Model

Chronic Care

Type of Care

Patient-Centered Medical Home

Traditional non- PC-MH

Fee-for-Service Payment System

under “improved RBRVS” plus establishment of new care coordination procedure codes.

  • New multi-component payment structure
  • structural practice component
  • care coordination component
  • “improved RBRVS” visit-based fee component
  • performance-based component *

Payment Model

Potential for increased reimbursement from new care coordination codes, P4P and HIT use incentives.

Increased reimbursement for providing care coordination.

Potential for increased reimbursement through P4P.

Reduced documentation


*** May include performance measures in addition to those included under the “improved RBRVS” system.