In this article, we will cover patient centered medical homes (PCMHs) in detail.

This article is Part 6 of our 6-part series simplifying alternative payment models in healthcare.

If you missed earlier parts of the series, or want to jump around, here are the links:

  1. Alternative Payment Models Made Simple – Overview (Part 1 of 6)
  2. Alternative Payment Models Made Simple – Pay for Reporting (PFR) (Part 2 of 6)
  3. Alternative Payment Models Made Simple – Pay for Performance (PFP) Part 3 of 6)
  4. Alternative Payment Models Made Simple – Bundled Reimbursements (Part 4 of 6)
  5. Alternative Payment Models Made Simple – Accountable Care Organizations (ACOs) (Part 5 of 6)
  6. Alternative Payment Models Made Simple – Patient Centered Medical Homes (PCMH) (Part 6 of 6) (THIS ARTICLE :))

Defining Patient Centered Medical Homes (PCMHs)

Patient Centered Medical Homes can be one of the more confusing concepts to understand in the emerging alternative payment model systems.

It is just not as straight-forward as pay-for-reporting/pay-for-performance, bundled reimbursements, or even the accountable care organization shared savings concepts.

That’s because the PCMH is not a place but rather a model of providing healthcare.

In a PCMH, all healthcare for a given patient is coordinated through a single primary care physician (PCP). As such, the PCP acts like a quarterback directing care to the appropriate healthcare providers (i.e., players), as needed. All the while, the PCP is the central keeper of the full picture of what is going on with that patient.

The Agency for Healthcare Research and Quality (AHRQ) defines a medical home not simply as a place but as a model of the organization of primary care that delivers the core functions of primary health care.[1. AHRQ. Defining the PCMH. Available at: Accessed March 2016]. As such, it has five (5) important components:

  1. Comprehensive Care: The majority of each patient’s physical and mental healthcare needs should be addressed within a PCMH model. As such, prevention and wellness, acute care, and chronic care need to be included. A core team typically includes a PCP, social workers, educators, nutritionists, pharmacists, and care coordinators who organize in a network on behalf of the patient.
  2. Patient-Centered: There is an effort to truly educate and activate patients and their families as members of their own care team.
  3. Coordinated Care: The PCMH team coordinates care with broader healthcare system elements such as specialty care, home health care, and community services and supports. This coordination is particularly important during transitions between sites of care.
  4. Accessible Services: Enhanced around-the-clock phone access, electronic access to health records, email communication with the care team are widely used in PCMH models.
  5. Quality and Safety: The PCMH has a visible commitment to quality and quality improvement through the use of evidence-based medicine and clinical decision-support tools. Measuring and responding to patient experiences and patient satisfaction are also typical with PCMH models.

Evolution of Patient Centered Medical Homes (PCMHs)

The PCMH concept has been around since the 1960’s when the American Academy of Pediatrics (AAP) defined the concept.[2. Available at: Accessed March 2016]

Since then the concept has matured.

In 2007, the American Academy of Family Physicians (AAFP), American College of Physicians (ACP) and the American Osteopathic Association (AOA) joined the AAP and developed the Joint Principles for the Patient-Centered Medical Home. These principles have been highly influential in advancing this model of care delivery.

The Patient-Centered Primary Care Collaborative (PCPCC) – a coalition of over 1,000 employers, healthcare executives, providers, patient advocacy groups, health plans, hospitals, and unions – has widely promoted the PCMH as a method to help improve quality of care while reducing costs in the US.[3. Nielsen M et al. Benefits of implementing the primary care patient-centered medical home: a review of cost & quality results, 2012. Available at: Accessed March 2016.]

Major payers in the US such as WellPoint, Aetna, Human, UnitedHealthcare, and Blue Cross Blue Shield plans have started investing in PCMH models since 2012.

Most patient centered medical home programs include 3 pillars of payment:

  1. Monthly care coordination payment
  2. Visit-based fee-for-service (FFS) payments
  3. Performance-based payments

Payers are realizing it is to their own benefit to reimburse for the kinds of activities that go into care coordination. For example, physicians and staff need to take time to call or send appropriate paperwork to other physicians. They need to take time to “check in” with patients with a phone call. They need to take time to set up specialist appointments to make sure they happen. They need to provide 24/7 on-call access that helps patients decide when they truly need emergent care or can wait for an office visit.

Such relatively minor investments in these kinds of provider services can help avoid costly health consequences and resource utilization. Chief among them are unnecessary ER utilizations and hospitalizations simply because the patient panicked. and waste that commonly result from un-coordinated care.

Under PCMH models, payers continue to reimburse providers in a fee-for-service (FFS) manner for office visits.

In addition, most PCMH programs also include some form of “bonus” payment. These bonuses are awarded when the PCMH provider meets shared objectives of providing quality care, without waste, that reduces costs. These incentives are similarly structured to the pay-for-reporting and pay-for-performance systems we discussed earlier in this article series.

Starting or Joining Patient Centered Medical Homes

There are multiple components necessary to become a patient centered medical home. A few include the following:

  • Primary Care Practice
  • Official PCMH designation (NOTE: NCQA offers a PCMH certification)
  • Staff to handle coordination of care (e.g., 24/7 call service)
  • Staff to deliver comprehensive care (e.g., behavioral health providers, social workers)
  • Systems of patient engagement (e.g., phone, text notifications, email, portals, web-based resources, patient surveys)
  • IT infrastructure to handle coordination of care (e.g., referral tracking systems, electronic prescribing)
  • Provider networks that address all potential medical needs for patient population (e.g., specialist arrangements, urgent care arrangements, hospital arrangements)

The models have been generally successful.[3. Nielsen M et al. Benefits of implementing the primary care patient-centered medical home: a review of cost & quality results, 2012. Available at: Accessed March 2016.] Here are a few examples:

  • PinnacleHealth: 0% 30-day hospital readmission rate for PCMH patients vs 10% to 20% for non-PCMH patients
  • BCBS of Rhode Island: 17% to 33% reduction in health care costs in PCMH patients
  • BCBS of Tennessee: increased screening rates for diabetes exams (+3%), diabetes retinal exams (+7%), diabetes retinopathy exams (+14%), lipid exams (+4%); increased prescription rates for coronary artery disease medications (+6%)

Wrap-Up: Patient Centered Medical Homes (PCMH)

We’ve seen how patient centered medical homes can help achieve higher quality of care at a lower cost.

Like ACOs, it can be complicated to build, launch, and operate patient centered medical homes.

Key components are highlighted by AHRQ as the following:

  1. Comprehensive Care
  2. Patient-Centered Care
  3. Coordinated Care
  4. Accessible Services:
  5. Quality and Safety:

In order to achieve these goals, the PCMH may have a good deal of infrastructure to build –  in terms of staff to hire and train, in terms of services to implement, and in terms of technology to purchase.

But for those who do implement the PCMH model, the rewards can be substantial.

Payers are incentivizing patient centered medical homes with 1) monthly stipends (for coordination services), 2) FFS reimbursements for care delivered, and 3) pay-for-reporting / pay-for-performance incentives. That’s because they’re working.

This is the last article in this series titled “Alternative Payment Models Made Simple.” 

I hope you’ve found it helpful to quickly get up to speed on these emerging reimbursement systems. Feel free to reach out to me directly if you’d like to talk more about how they might apply to your specific practice or institution.

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