Primary care delivery through patient-centered medical homes (PCMHs) and other coordinated-care models have improved care and reduced costs. Health plans have a strategic opportunity to promote better care at a lower cost by embracing medical homes and encouraging their development as a core component of provider networks.

PCMHs will also play an increasingly important role to help address the massive access and cost challenges created under the Affordable Care Act (ACA), particularly Medicaid expansion, the new Health Insurance Exchange (HIX) marketplaces, and mandatory coverage of preventive services.

A new journal article – The Opportunity for Health Plans to Improve Quality and Reduce Costs by Embracing Primary Care Medical Homes – examines best practices by health plans to encourage the delivery of primary care through PCMHs.  The authors – Sarah Collins, MBA; Kip Piper, MA, FACHE, and Gary M. Owens, MD – recommend six steps health plans should use to take advantage of medical homes as a means to improve healthcare quality and to reduce costs.

The article is published in the latest issue of American Health & Drug Benefits, a peer reviewed print and online journal for public and private sector decisions makers responsible for medical and prescription drug benefits.

The study includes an interesting stakeholder perspective by Jack E. Fincham, PhD, RPh, professor of pharmacy practice and administration at the University of Missouri – Kansas City School of Pharmacy.

Article Abstract:

Background: 

The large and growing costs of healthcare will continue to burden all payers in the nation’s healthcare system—not only the states that are struggling to meet Medicaid costs and the federal government, but also the private health plans that serve commercial, Medicare Advantage, and Medicaid beneficiaries. Cost will increasingly become a concern as millions more people become newly insured as a result of the Patient Protection and Affordable Care Act (ACA).

Primary care delivery through patient-centered medical homes (PCMHs) and other coordinated-care models have improved care and reduced costs. Health plans have a strategic opportunity to promote better care at a lower cost by embracing medical homes and encouraging their growth. Health plans can play an important role in transforming the US healthcare system, as well as better position themselves for long-term corporate success.

Objectives: 

To discuss several examples of organizations that serve a variety of beneficiaries and have been successful in promoting medical homes and coordinated primary care, and to suggest steps that health plans can take to improve the quality of care and reduce costs.

Discussion: 

The models discussed in this article take a number of different approaches to create incentives for high quality, cost effective, coordinated primary care. Several health plans and groups use enhanced fee-for-service (FFS) or per-member per-month payment models for primary care physician (PCP) practices that reach a specified level of medical home or electronic health record certification. Most of the examples addressed in this article also include an additional payment to encourage care management and coordination.

The results showed a significant decline in costs and in the use of expensive medical services. One Medicaid coordinated-care program we reviewed saved almost $1 billion in reduced spending over four years, and achieves savings of approximately 15 percent within 6 months of the beneficiaries’ enrollment into their program. Another PCMH payer program led to an approximate 28 percent reduction in acute care hospital admissions among Medicare beneficiaries and an approximate 38 percent reduction in admissions among commercial beneficiaries.

Conclusion: 

Based on the review of real-world examples, we recommend six steps that health plans can use to take advantage of the opportunity to embrace medical homes as a means to improve healthcare quality and to reduce costs.

These recommendations include getting feedback from PCPs to improve plan provider networks, creating value-based primary care reimbursement systems, encouraging biannual visits with high-risk patients, funding case managers for high-risk patients, considering Medicaid coordinated care models, and promoting ACA policies that support primary care.

To read the journal article online, click here.