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Los Altos Clinic is one of MemorialCare Medical Group’s four medical homes.
The Los Altos Clinic in Long Beach, Calif., is one of MemorialCare Medical Group's four medical homes. Dr. Lin H. Nguyen works with Kris Cowley, left, a care manager, and medical assistant Marisol Ramirez to provide a patient with team-based care.

Finding their way home

Despite mixed evidence, providers increasingly look to medical homes for better care, cost savings

By Andis Robeznieks
Posted: October 5, 2013 - 12:01 am ET

Many healthcare providers and payers are moving forward with patient-centered medical homes to improve primary care and care coordination and reduce costs, despite mixed research evidence of the cost-effectiveness of this major delivery system reform. They believe this population-based approach is a better way to deliver care but acknowledge that many financial, logistical and cultural challenges lie ahead.

In Michigan, Blue Cross and Blue Shield has enlisted 3,770 physicians in 1,243 primary-care practices as medical home providers with another 1,000 practices on their way. Some 2 million Michigan residents, about 20% of the state population, are now receiving care from these doctors.

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Medical homes go mainstream
“It's not a pilot project,” said Dr. David Share, senior vice president of value partnerships for the Michigan Blues. The insurer's calculations show savings have grown from a total of $155 million in the first three years of the program, which began in July 2008, to that amount in 2012 alone.

“Those are dollar savings observed in claims data—these are not back-of-the-envelope calculations,” Share said. He expects that savings—currently averaging about $26.37 per member, per month—will grow substantially over the next few years as more practices join the effort and expand their medical home capabilities.

Michigan providers are not alone. The Patient-Centered Primary Care Collaborative estimates that there are now close to 10,000 primary-care practices operating as medical homes. More than 6,000 have been recognized as medical homes by the National Committee for Quality Assurance, the leading third-party evaluator of these practices.

Policymakers hope the medical home approach will keep patients healthier, reduce emergency department and hospital use, and make primary care attractive again to medical students and doctors who have been moving away from this overworked, underpaid field of medicine. They want to boost the nation's shrinking supply of family physicians, general internists, pediatricians and geriatricians.

Primary-care physicians, long the low men and women on the totem pole of fee-for-service reimbursement, have moved quickly to embrace the concept. The American Academy of Family Physicians, American Academy of Pediatrics, the American College of Physicians and American Osteopathic Association adopted its core values of fostering patient safety and continuous quality improvement in 2007.

The Obama administration has advanced the concept by launching the CMS Comprehensive Primary Care Initiative in August 2012. Medicare and 43 other payers—including commercial plans and state Medicaid programs—are supporting 500 medical home practices with per member, per month care-management fees. Medicare also agreed to pay a $20 care-management fee for the first two years of the program and $15 for years three and four, with the offer of shared savings. In 2011, the CMS initiated a $42 million Federally Qualified Health Center Advanced Primary Care Practice Demonstration Project to show whether community health centers could improve quality and cut costs by adopting the medical home model.

Just a matter of time

Experts say it is only a matter of time before the medical home approach becomes the rule across the spectrum of care. “I don't think anyone anticipated this,” said Dr. Terry McGeeney, a Kansas City, Mo.-based director with the consultancy BDC Advisors and the founding CEO of TransforMED, the AAFP's medical home consulting arm. “The medical home has redefined primary care in this country.”

Yet skeptics abound. They say research shows that medical homes generate only modest savings at best. It has been difficult to measure new revenue and costs associated with the model, they say. Many medical homes have experienced unintended consequences such as lower staff morale after expanding evening and weekend hours and engaging in the hard work of re-engineering practices.

Plus there are questions over which healthcare players will control, pay for and benefit from the development of medical homes, since the model is intended to produce less spending on hospital admissions, ER visits and physician specialty care. Moreover, many smaller physician practices have found they can't afford the time and expense required to make the changes.

The foundation of the medical home movement was the AAFP's 2004 Future of Family Medicine report, which defined the new model of care and gave it a name borrowed from pediatrics. In addition to coming up with a new practice model, the project offered a chilling view of the future in the absence of major practice reforms. “The statement was that unless healthcare changed, family medicine wouldn't exist in 20 years,” McGeeney recalls. “That was the shot across the bow.”

The AAFP created TransforMED in 2005 to help physicians adopt the medical home model and has since done so with more than 600 practices. In 2006, it launched a two-year, 36-practice demonstration project that showed the model can work, but that implemention was hard and more work was needed to refine the concept. It has since moved on to help large health systems implement their own medical home programs. TransforMED received a $20.8 million grant from the CMS Innovation Center in 2012 to explore expanding the medical home model.

Physicians lead the team

The medical home concept is to have primary-care physicians lead a team of professionals—including nurse practitioners, physician assistants, pharmacists, health educators and medical assistants—who take responsibility for providing or facilitating comprehensive, coordinated and accessible care for a panel of patients, looking at the health of the individuals and of the whole group. Team members also work closely with patients to engage them in taking care of themselves.

The improved access includes extended office hours and same-day scheduling of appointments; proactive tracking of patient conditions and preventive-care needs through electronic health records; and identifying the sickest patients in a population panel and working to keep them out of the hospital and away from the emergency department.

As hospital systems move to acquire physician practices, they increasingly prefer to affiliate with primary-care practices that have developed the medical home model, McGeeney said. In competitive markets, practices' adoption of the medical home model is becoming seen as “the price of admission,” he said.

“The good news for practices is, if they agree to join the network, the hospitals will fund it,” he said. Some hospitals bring in consultants to support the process or have their own in-house advisers to act as medical home coaches. “It's usually part of the upfront agreement, so they know exactly what they're getting into.”

McGeeney said there are no solid cost estimates for transforming a practice into a medical home, but such costs can include hiring new staff, temporary loss of productivity and buying an EHR system. But these costs can also be seen as investments. “When you factor in the increased efficiencies, reduction in no-shows from same-day scheduling, enhanced practice panels, efficiency from the EHR, some data suggest a net win financially. Certainly quality of life improves,” he said.

Many of the early adopters of medical homes say they now have the statistics to show a “dose-response” relationship between medical homes and cutting costs and improving quality. Share of the Michigan Blues said his plan has been able to pay primary-care practices for care-management services through decreased spending on admissions to hospitals and skilled-nursing facilities and fewer emergency department visits.

Hallmarks of the patient-centered medical-home model
Dr. Thomas Graf, chief medical officer for population health at Danville, Pa.-based Geisinger Health System, said his organization, one of the leaders in the medical home movement, also has seen savings from reducing the amount of hospital and post-acute care that patients with chronic conditions previously received. But there have been “no wholesale changes” in the amount of referrals to specialists.

The key is creating links between the primary-care medical home and other parts of the healthcare system, said Dr. Xavier Sevilla, vice president of clinical quality at Englewood, Colo.-based Catholic Health Initiatives, who represented the AAP on the committee that developed the medical home principles in 2007. “The conversation is more about the medical neighborhood, which is everybody out there—the specialists, the primary-care doctors, the nursing homes and the hospital,” he said.

This will require culture change within the healthcare industry. Such changes already are taking place in primary-care practices. Physicians traditionally have directly provided most patient care. But in medical homes, they have to learn to delegate care to nurses, physician assistants and other team members up to the top of their professional licensure. Sevilla said physicians are just learning how to do this. “Providers are doing a lot of tasks that do not require their level of education and training,” he said.

Nurses are complicit in this problem. Sevilla said nurses in primary care spend half their time “paper pushing.” In the medical home model, they're called upon to perform duties such as care management and patient education, which they find more satisfying.

Impressive growth

While medical home growth has been impressive, research has not necessarily shown cost savings and quality gains. Part of the problem is that it's hard to measure the short-term impact of several interventions implemented at once, said Dr. Eugene Rich, a senior fellow with Mathematica Policy Research in Washington.

In 2010, HHS' Agency for Healthcare Research and Quality spent more than

$4.1 million to study the transformation of 14 practices into medical homes. The findings were published this year in a May-June supplement of the AAFP's Annals of Family Medicine.

According to an AHRQ summary of the 14 practice transformations, nearly all had difficulty measuring the financial impact of the process as well as difficulty measuring new revenue or costs associated with new services. The practices also experienced unintended consequences, such as lowering of staff morale after expanding evening and weekend hours.

But Sevilla said that, in general, the medical home has been a boost to morale. “You were seeing folks close to getting burned out in primary care, but this is giving them a second wind,” he said. “Now they say they look forward to going to work and taking care of their patients.”

Share, who also practices at the Corner Health Center in Ypsilanti, Mich., agreed. “You're able to do your best work and have more time to do it,” he said of the medical home. “It gets you off the hamster wheel.”

Nevertheless, a report posted Sept. 9 on the JAMA Internal Medicine website that looked at a multipayer medical home pilot in Rhode Island found inconclusive results. Health insurers committed some $2 million for two years in the form of a $3 per patient per month fee and they also paid for the services of nurse care managers at the pilot's five practices. The researchers concluded that “no significant improvements” were found in quality measures and there were only “modest” cost savings. While there were downward trends in emergency department visits and inpatient admissions, they were not considered significant.

Michigan Blues report cost reductions
Meredith Rosenthal, professor of health economics and policy at the Harvard School of Public Health and the study's lead author, said the medical home model “is not a magic pill” and that advocates “continue to make statements that ignore reality.” Still, she said, the medical home “is the right way to practice even if it doesn't generate short-term savings.”

Despite those findings, it was announced July 8 that 20 more Rhode Island practices serving some 260,000 patients were joining the program. Also, one of the payer participants, Blue Cross and Blue Shield of Rhode Island, announced July 31 that it was entering into a similar program with University Medicine, a Providence-based multispecialty group that includes six medical home practices and Brown University Medical School physicians.

Experts say broader payer support is critical for medical homes to succeed and grow. “The No. 1 obstacle is paying for it because it truly requires new resources—it requires technology, it requires care coordination and, under the traditional fee-for-service model, they're not getting any money for that,” said Mary Witt, a senior vice president for the Camden Group consultancy in Los Angeles.

There still are many markets where insurers are hesitant to take the first step and start paying for medical home care-coordination services. “Just getting somebody to jump first is the trick,” Geisinger's Graf said.

Geisinger believes it has the evidence that medical homes produce significant cost savings and improved quality. The system, with the support of its own Geisinger Health Plan, piloted its medical home program—called ProvenHealth Navigator—in 2007 with 3,000 Medicare patients. Preliminary results included greater adherence to prescription regimens, increased use of generic drugs, fewer hospital admissions and less use of skilled-nursing facilities. Using a formula that combines quality measures, total costs, patient experience and professional experience ratings, Graf said there was a 4% improvement after one to two years, 7% improvement after three to four years and 10% improvement after five years. Also, he said that for every $1 Geisinger invested in its medical homes, it got $1.70 back.

Some additional upfront costs

But while quality generally improved across the board, Graf said the “impact on cost was much less universal.” He notes that the medical home model can generate additional upfront costs by scheduling more office visits, improving patient adherence to prescription regimens and ordering more tests to ensure chronic conditions are under control. But, he said, within 1,000 days of initiating these interventions with diabetic patients, strokes, heart attacks and diabetic eye disease can be prevented. “It doesn't take a rocket scientist to figure out that if they don't have a heart attack, their care will be cheaper,” Graf said.

Experts caution that the medical home transformation is not easy. Dr. Antonio Rios, chief physician executive for the Northeast Georgia Physicians Group in Gainesville, one of the practices participating in the CMS Innovation Center's medical neighborhood project, said the time commitment and required physician-culture changes remain obstacles to medical home adoption.

One big challenge, Rios said, is shifting physicians' traditional focus from the single patient in front of them to thinking proactively about their entire patient panel. They need to use patient registries to monitor the prevalence of particular conditions and organize team members to take action before and between patient visits. “That is a huge leap and it does not come easy.”

The predominant fee-for-service payment system also remains an obstacle. Medical home proponents have been advocating for a blended-payment model that includes a fee-for-service component, a per member, per month fee and shared savings.

Dr. Somava Stout, vice president for patient-centered medical home development at the Cambridge (Mass.) Health Alliance, an integrated safety-net system with a three-campus, 229-bed hospital, said her system focuses on the 5% of its patients with the most complex conditions, who are identified using EHRs. Stout said the system is not reimbursed for the work these care managers perform. “We shoot ourselves in the foot when somebody doesn't get hospitalized,” she said. “It takes time to see the benefits. The work we do today may pay off in 10 years.”

Building for the future

At Catholic Health Initiatives, Sevilla said even though the care coordination services are not reimbursed, “we're building our system for the future to take advantage of value-based care,” he said.

Dr. Eunah Fischer, chief medical officer for Blue Cross and Blue Shield of North Dakota, said payers agree with that view. “We want to shift away from fee-for-service office visits into care coordination, non-face-to-face services and coaching,” she said. “The patient-centered medical home concept is critical to our overall strategy.”

For her plan, that shift began in 2005 in the form of a diabetes managed-care program in which participating providers were paid a $500 per member per year fee.

Fischer said the program decreased hospital admissions and ER visits. It was expanded the following year to include management of coronary artery disease and hypertension. The provider fee was increased to $1,200 per member a year. In 2009, the program evolved into a broader medical home model, with a sliding care-management fee.

Now 80% of the insurer's members are connected to a medical home.

Share of the Michigan Blues said his plan is already looking to develop new payment models for medical neighborhoods. His plan rewards development of medical home capabilities and performance, he said.

Share said the work ahead is to align incentives so primary-care physicians, specialists and hospitals work together to optimize treatment rather than being at odds with each other.

“Hospitals will still be busy,” he said. “But they'll be busy doing what's really needed.”

Follow Andis Robeznieks on Twitter: @MHARobeznieks

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