Right Incentives Drive Success in Medical Home Study

July 21, 2015 01:41 pm Michael Laff

A recent study that examined a medical home initiative in northeastern Pennsylvania revealed that with the appropriate blend of financial incentives and clear targets for success, the model can reduce the number of costly procedures and improve care delivery.

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The three-year study, "Effects of a Medical Home and Shared Savings Intervention on Quality and Utilization of Care,"(archinte.jamanetwork.com) was published online in JAMA Internal Medicine in June and revealed positive results about the model's potential to transform care delivery.

Study Participants Show Care Improvements

The study began in 2009 and included 27 small primary care practice sites and two commercial insurers. Practices in the Pennsylvania Chronic Care Initiative were small, typically composed of three physicians each, and were required to attain recognition as medical homes from the National Committee for Quality Assurance. The insurers were the dominant insurance providers in the market.

Practices that participated in the initiative received a $1.50 monthly payment per patient to be used for care manager salaries and another $1.50 monthly payment per patient for other practice transformation costs. In addition, practices that had lower total annual spending on patients than anticipated and that met specified performance measures in 14 areas earned bonus payments ranging from 40 percent to 50 percent of savings.

Significant flexibility allowed practices to determine their own method for calculating savings. There was no financial penalty for exceeding projected annual spending.

Story highlights
  • A recent study of a medical home initiative in Pennsylvania showed lower hospitalization rates, fewer emergency visits, fewer ambulatory subspecialty visits and more ambulatory primary care visits.
  • The three-year study included 27 small primary care practice sites and two commercial insurers.
  • A study co-author pointed to sufficient financial incentives, as well as good communication with hospitals and ERs, as keys to success.

By the third year, participating practices reported lower hospitalization rates (8.5 vs. 10.2 patients monthly per 1,000 patients) and fewer ER room visits (29.5 vs. 34.2 patients per 1,000). Practices also recorded lower rates of ambulatory visits to subspecialists and higher rates of ambulatory primary care visits, as well as improved diabetes care among adults and higher breast cancer screening rates compared with practices that were not in the medical home initiative.

"One of the challenges is trying to change behavior of a lot of different people," said Eric Schneider, M.D., M.Sc., senior vice president for policy and research at the Commonwealth Fund and one of the study's co-authors. "Patients still go to the ER for care when they don't need to. Now we're seeing practices learn to get better at preventing hospital or ER visits with more effective care management."

Financial Incentives, Communication Are Key

The researchers noted that medical homes often do not include sufficient financial incentives to reward practices for controlling the cost of care.

"Systematic reviews and studies of medical home interventions have reported mixed effects on quality of care and little evidence of reductions in utilization or costs among community-based primary care practices," the authors wrote. "However, with few exceptions, these studies have evaluated interventions that lacked financial incentives for practices to control the utilization or costs of care."

In the Pennsylvania study, the level of trust between the medical home practices and insurers gradually improved after early conflicts about whether the monthly payments and incentives were set at appropriate levels, Schneider said.

The next step to foster continued improvement with medical homes, according to Schneider, is expanded payment reform that includes all health institutions, not just primary care practices.

"There is still an incentive for ERs to accept patients, so we need payment reform on a bigger scale to get hospitals and ERs interested so they are aligned with the changes," he said.

Schneider said the substantial financial incentives and good communication in the recent study were crucial differences between the practices the researchers examined and those involved in a similar earlier study(jama.jamanetwork.com) that showed less promising results. Specifically, the better communication recorded in the recent study -- timely, regular feedback from hospitals and ERs about visits by the practices' patients -- allowed the medical homes to adjust care delivery.

Schneider, who also was a co-author of the earlier study, said he received a lot of feedback from peers who asked him after that study was published why he did not support the medical home concept.

"As evaluators, we want to call it as we see it," he said. "We're not saying that the medical home doesn't work."

Some analysts suggest that the model works better for a larger network of physician practices, but Schneider said the research indicates otherwise. "That doesn't seem to be necessary for success," he said. "It may be that small practices are more nimble and are able to make changes easier."

Schneider said anticipation about the potential of medical homes to improve care and reduce costs resemble the ebb and flow of excitement about new technologies described in the Gartner Hype Cycle:(www.gartner.com) Expectations are high when a new technology is introduced, then disillusionment sets in after a few trials yield mixed or disappointing results, and, finally, expectations rise again as more positive outcomes are recorded.

Schneider said he thinks the medical home model is entering that period of enlightenment now.

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