Payment Reform Required to Support, Sustain PCMH, Expert Says

May 05, 2010 04:35 pm James Arvantes

The patient-centered medical home, or PCMH, cannot operate in a sustained fashion without fundamental payment reform to support the tenets of the medical home. But physician practices will have to determine the type of payment reform that works best for them based on their individual needs, says Allan Goroll, M.D., professor of medicine at Harvard Medical School and chair of the Payment Reform Task Force for the
Patient-Centered Primary Care Collaborative, or PCPCC.

According to Goroll, all health care is local. The payment model that works best for a particular practice is an individualized issue, says Goroll, one that will have to be negotiated between payers, purchasers and practices when possible. "Practices vary tremendously based on their culture, their location and their patient populations.” And this means that different payment models will work best for different practices, says Goroll.

For their part, family physicians will have to "negotiate different mechanisms of payment if they want their medical home initiatives to get started and to be sustained," says Goroll. But any payment reform needs to correct existing imbalances and distortions in the current physician payment system, he notes. "(Payment) needs to be valued based, and it should encourage patient-centered coordinated care by all providers."

The issue of payment reform has taken on new importance with the recent enactment of health care reform legislation and an expanding emphasis on pay for performance and value. And Goroll is adamant that the current fee-for-service system cannot support the PCMH model. It does not provide sufficient resources to implement and sustain the model, and it encourages volume over value.

"Fee-for-service does not sustain primary care in the United States," says Goroll. "It is the reason why primary care in the United States has melted down. It is insufficient in and of itself to pay for high performance primary care that requires health care teams and health information technology."

Goroll acknowledges, however, that changing payment models is "very difficult."

"Even if we have a great new system that is simpler, fairer, more logical, there is a great sense out there that this is about money and it is the devil you know versus the devil you don't," he said.

Managing Risk

Goroll insists that risk adjustment (i.e., robust adjustment of payment based on the medical and psychosocial needs of the covered population or practice panel) has to be an essential part of any global payment or capitation system for it to work properly.

One of the pitfalls of unadjusted capitation is that it encourages underutilization of services. One way to address this issue is to risk adjust the base payment so that resources are sufficient to meet the needs of the patient or practice panel. Another is to supplement the capitation payment with substantial rewards for achieving desired outcomes that include cost, quality and patient experience.

The Massachusetts Coalition for Primary Care, for example, uses a payment mechanism that applies a risk-adjusted comprehensive payment for each patient, along with a 25 percent risk-adjusted bonus for outcomes.

"Our approach is an alternative to fee-for-service among (physicians) who don't want to be under a volume-based system and who are willing to take responsibility for the comprehensive care of their primary care patients," says Goroll, chair of the coalition.

Goroll describes payment reform as one part of a two-part solution to improving and strengthening primary care in the United States. The other is practice transformation into the medical home model, allowing for enhanced, patient-centered performance.

Total Transformation

The PCMH cannot just apply to one segment of the population and exclude others, asserts Goroll. "You can't make a practice a high performing practice without it really being a unified structure that is organized to deliver high quality patient-centered care to everybody. If we really are going to transform primary care in the United States and improve it, we have to transform primary care for everybody."

Goroll acknowledges, however, that many PCMH pilot projects focus on patients with chronic conditions, which is a way of caring for patients with the greatest needs. "But if we ignore everybody else, we are just going to be generating a whole new group of people who will get to this unfortunate state," he notes.

The current pilot projects should be looked at as works in progress with the goal of eventually bringing all patients into the medical home, says Goroll, adding that the same type of logic applies to payment issues.

"We can't have multiple payment and delivery systems going on within a particular practice," says Goroll. "It breeds chaos and compromises the effort."

Despite the many challenges, however, Goroll is optimistic about the future of primary care.

"Once we change payment, especially as we move payment from the exclusive rewarding of volume, we will attract a whole new generation of our best medical students into primary care," he notes. "The emphasis will be on good patient care, not volume of service."