States Take Lead in Adopting Medical Home Model

February 17, 2009 04:00 pm James Arvantes

The patient-centered medical home, or PCMH, has emerged as a driving force behind health care reform efforts on the state level, creating sustained and systematic change that is reshaping the nation's health care landscape.

In just the past few years, more than 30 states have launched PCMH projects, according to the National Academy for State Health Policy(, or NASHP. Some of the nation's largest payers, including UnitedHealthcare, CIGNA, WellPoint, Aetna, Humana, and Blue Cross and Blue Shield, have initiated PCMH pilot projects in local, regional and statewide markets. These projects are operating independently or in conjunction with state initiatives to form multipayer collaboratives.

"There is a tremendous amount of activity at the state level on the commercial side," says Paul Grundy, M.D., M.P.H., chair of the Patient-Centered Primary Care Collaborative and director of health care technology and strategic initiatives at IBM. "Some of the projects are mixed public and commercial, some are mixed multipayer commercial, and some are individual commercial pilots."

For example, eight states -- Colorado, Louisiana, Maine, Minnesota, New Hampshire, Pennsylvania, Rhode Island, and Vermont -- have established multipayer initiatives as part of the State Children's Health Insurance Program, or SCHIP, or their state Medicaid programs, according to NASHP. And Minnesota will start requiring private insurance plans to offer medical homes as part of their health care networks by July 1, 2010.

Defining the PCMH

Many state reform initiatives are basing their definition of the PCMH on the Joint Principles of the Patient-Centered Medical Home, which were formulated by the AAFP in concert with the American Academy of Pediatrics, the American College of Physicians and the American Osteopathic Association. The principles also were recently adopted by the AMA.

Other states have developed their own definitions of the PCMH, employing guidelines that are similar to the joint principles but which vary to fit individual circumstances and conditions.

However, all of the definitions reflect the core elements of the medical home, including access to primary care health professionals and provision of ongoing comprehensive and coordinated care. And every medical home initiative, in both the private and public sector, seeks health care transformation through fundamental reforms of payment and delivery systems, says Grundy.

It is becoming clear, he adds, that to achieve true transformation of the health care system, any health care model adopted must result in the stabilization of primary care medicine and a subsequent increase in the number of primary care physicians. That can only be accomplished through a PCMH model that calls for providing the same level of care to an entire patient population and not just a subset of that population, according to Grundy.

"A physician cannot be paid to treat eight people differently and transform his or her practice around that, and have that as a sustainable model for the country," he notes.

The PCMH concept as embodied by the joint principles represents a way of realigning financial incentives with health care delivery goals to provide coordinated, integrated and ongoing care that improves quality, enhances access and reduces costs. This, in turn, adds value to the buyers of health care, patients and practices, Grundy says.

"If you look at how Spain, Denmark, France or New Zealand have transformed themselves in terms of delivering care, they have done so on a foundation of robust prevention and comprehensive integrated primary care as the very basis on which their health care delivery systems are built," says Grundy. "Without a foundation of robust prevention and primary care, you cannot get to the other things you need in any meaningful way."

Road Map to Quality and Cost Savings

North Carolina's Medicaid managed care program, Community Care of North Carolina(, or CCNC, is the oldest and probably the most successful medical home initiative in the country. CCNC is based on physician-led networks that employ the medical home concept to provide care to the state's Medicaid recipients. It started with nine pilot projects covering 250,000 Medicaid enrollees in 1999 and has since expanded to 14 networks covering more than 750,000 Medicaid recipients across the state.

CCNC pays each network $2.50 a month for each Medicaid recipient and an additional fee of $2.50 to each physician for each Medicaid patient in the physician's practice, a total investment of $5 for each patient. One of the keys to the program is managing patients with chronic diseases and making sure they transition seamlessly between primary care physicians, subspecialists and hospitals.

During the past nine years, CCNC has saved North Carolina nearly half a billion dollars, becoming a driver of quality initiatives in the state and emerging as a model for other states to emulate. The North Carolina experience proved to state governors and legislators that the medical home model could actually reduce Medicaid costs while improving patient care and outcomes.

"Typically, controlling big Medicaid budgets meant cutting benefits, beneficiaries or provider payments," says Mary Takach, a policy specialist with NASHP. "State governments had to make tough, painful budgetary decisions. But they now have an opportunity to control their Medicaid budgets by providing better primary care. That is a very gratifying policy approach for states to look at."

Medical Home Vehicles

Because of their sheer size, SCHIP and Medicaid programs have played key roles as vehicles to implement the PCMH at the state level. And they often have served as examples for private payers to follow.

Medicaid programs throughout the nation provide care to nearly 60 million people, and SCHIP provides care to 4.5 million children nationwide, putting the programs in a strong position to drive systematic change, says Takach.

"We are finding that the Medicaid medical home efforts vary widely," she says, adding that most of the initiatives target high-cost populations, which is how state officials are able to initially sell the medical home concept to governors and legislators.

For example, according to Takach, Pennsylvania officials were able to launch a medical home project that now is being rolled out on a statewide basis by "citing the fact that 80 percent of state health care dollars go to caring for 20 percent of those Medicaid populations with chronic illnesses."

Takach points out that many states are first mandating medical homes for children in Medicaid or SCHIP before expanding the program to other parts of their Medicaid populations.

Colorado started enrolling SCHIP and Medicaid recipients younger than age 18 into medical homes about a year ago and has since assigned 60,000 SCHIP and Medicaid recipients to a PCMH, says Joan Henneberry, M.S., executive director of the Colorado Department of Health Policy. Sixty practices now are participating in the program, she adds, and the state plans to move all its Medicaid and SCHIP recipients younger than 18 into a PCMH by the end of 2010.

"We want our kids to have a consistent pediatric provider, whether it is a clinic, a family practice doctor or a pediatrician," says Henneberry.

Colorado's SCHIP population receives care through capitated health plans, such as Kaiser, Colorado Access, the Denver Health Plan and the Rocky Mountain Health Plan. State officials work with the health plans to provide enhanced payments to practices that have met the state's definition of the PCMH.

Colorado's Medicaid kids are enrolled in fee-for-service plans. The state pays Medicaid medical home practices a fee based on calculating primary care evaluation and management codes at 90 percent of Medicare, plus enhanced payments for providing initial physician exams and annual exams, and for following all early periodic screening, diagnosis and treatment, or EPSDT, recommendations.

"If a provider does all of these things, the (Medicaid payment) rate climbs to about 112 percent of Medicare," explains Henneberry.

Colorado's definition of the PCMH is based, in large part, on standard definitions of the medical home. But the state's definition is not as strict as the criteria used by the National Committee for Quality Assurance(, or NCQA, to qualify practices as medical homes.

"We wanted to make sure that as many primary care settings as possible could meet the definition," says Henneberry.

Preliminary data from the project are showing good signs, she adds, including reduced emergency department visits and higher immunization and EPSDT rates.