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Population Health News

Patient-Centered Medical Home Upkeep Costs $8000 per Month

By Jennifer Bresnick

- Maintaining the staffing and care coordination requirements of the patient-centered medical home (PCMH) costs an average of $8600 per month, and even partial implementation of PCMH features can cost approximately $105,000 per full-time clinician each year, according to a study of primary care practices across two Western states. 

Patient-centered medical home costs

The study, published in the Annals of Family Medicine this month, used the NCQA 2011 PCMH standards to assess the financial impact of the popular care model, may represent an important contribution to the debate over the value and ROI of innovative practice frameworks.

“Transformation of a practice to a PCMH requires many changes, including new workflows, systems to improve patient access and manage health of a patient population, and potentially addition of staff to perform new services,” notes the study, authored by researchers from the University of Utah, Integrated Physician Network in Colorado, and Crosslin and Associates of Nashville, Tennessee.

“Payers and practices must make sufficient up-front investments to develop PCMH functions. Support for the ongoing costs of sustaining the changes is also essential.”

Previous studies have mostly focused on the end results of implementing the PCMH across a primary care network, including the financial gains from reduced emergency department utilization, improved chronic disease management, and better integration into the community.

READ MORE: CIOs Focus on EHR Optimization for Population Health, Analytics

Research from the Patient-Centered Primary Care Collaborative (PCPCC), for example, has showed that the majority of PCMH case studies have achieved reductions in spending, higher levels of patient satisfaction, fewer unnecessary hospitalizations, and shorter hospital stays.

However, few reports have delved into just how much time, effort, and spending it takes to produce a measurable return on investment, state the authors of the new study, leaving a significant gap in the health system’s understanding of just how valuable the PCMH can be.

The study examined twenty Utah and Colorado primary care practices in various states of PCMH development.  While the 2011 NCQA PCMH criteria used in the study have recently been replaced by an updated framework that stresses more robust use of health IT tools, the study did not take into account the costs and effort of maintaining an EHR, collecting and documenting patient data, or using electronic prescribing, as these are competencies that all primary care providers are now required to develop.

Instead, the analysis focused more specifically on the personnel costs of the patient-centered medical home, using surveys and a cost dimensions tool to quantify PCMH-related spending.  The study examined the level of PCMH services delivered, the time devoted to these activities, and the compensation provider received for their efforts.

The study found that providers in Utah spent an average of $7691 per month on PCMH personnel requirements, while Colorado providers spent $9658 per month.  Incremental costs per encounter were $32.71 in Utah and $36.68 in Colorado, while the average cost per member per month was $3.85 in Utah and $4.83 in Colorado, assuming a panel of 2000 patients.

READ MORE: NCQA Revamps Patient-Centered Medical Home to Ease Adoption

While the patient-centered medical home model may return significant savings to the community health system in general, primary care providers may not accrue much of that revenue for themselves.  Reducing hospital admissions or emergency room use does not necessarily bring dollars back into a primary care provider itself, unless they are operating under a specific accountable care arrangement that rewards them financially for their efforts.  For healthcare communities still laboring largely under fee-for-service reimbursement models, spending thousands each month on PCMH care coordination and population health management competencies may not seem like a sound investment.

A recent editorial published in the same journal also notes that maintaining PCMH certification can be an onerous and lengthy process, sapping even more time and energy away from overburdened staff members.  Dr. Edward Bujold argues that the PCMH, in conjunction with participation in programs such as meaningful use, has led him and his staff to spend “hundreds of hours studying for and taking exams, certifying for numerous programs, and updating then relearning our EHR to meet meaningful use requirements.”

“This was time we could have spent in patient care or pursuing outside interests designed to nurture our physical and mental wellbeing—the fourth pillar of the Quadruple Aim: improving the health of populations, enhancing the patient experience, reducing the per capita cost of health care, and improving the work life of health care providers, including clinicians and staff,” he added, stating that he is considering walking away from the PCMH model due to its unreasonable administrative demands.

Other research by the RAND Corporation points out that achieving Level 3 NCQA recognition can be an extremely lengthy process, as providers undergo significant cultural, clinical, and health IT changes. 

Participants in the three-year Federally Qualified Health Center (FQHC) Advanced Primary Care Practice Demonstration were paid a quarterly incentive of $18 per Medicare patient to offset the costs of providing PCMH services – a sum that would more or less cover the added personnel expenses of the PCMH – but the majority of providers do not receive such bonuses.

READ MORE: Specialists Get Higher Marks than PCPs for PCMH Satisfaction

Participants in the demonstration joined Bujold in complaining about competing priorities and difficult learning curves, reporting feeling as if they were being “pulled in several different directions while they tried to simultaneously submit a successful application for achievement of NCQA Level 3 recognition and transform their practices with new methods of delivering care for patients.”

However, advocates for the patient-centered medical home model point out that greater alignment between primary care coordination and value-based reimbursement payment models is on the horizon, and accountable care may be missing link between adopting the PCMH and achieving measurable, objective savings.

“The financial aspect has been an ongoing challenge,” said Marci Nielsen, PhD, MPH, Chief Executive Officer of the PCPCC, in an interview with “We’ve got somewhere in the neighborhood of 15 to 20 percent of practices adopting this model because they know it’s good for patients, but the last 80 percent are still holding out for payment reform.  It’s not because they’re obstinate.  More often than not, they literally just can’t afford to make changes to their practice without some upfront funding.”

“Just establishing accountable care organizations (ACOs) that may or may not be adequately sharing cost savings with primary care isn’t enough,” she continued.  “We need to change the way we pay for care delivery at the practice level as well.  We’re not doing it enough yet.  We’re hopeful that our ability to demonstrate that the patient-centered medical home provides better care for real patients – and that it can also save money – will ensure that investing in primary care and sharing in savings with the PCP is the right thing to do.”


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