Changing Payment Policy to Improve Quality & Reduce Fragmentation: The Medical Home Concept

I begin by thanking Concurring Opinion for hosting this symposium to review a book that discusses the need for health care reform through the lens of fragmentation.  The existence of fragmentation in the US health care delivery system is not a new concept; indeed it is a well established problem.  The novelty of this book is that it not only forces the reader to think more deeply about the fragmentation problem, but also how the law might be encouraging this fragmentation, how changes in the law might decrease fragmentation, and how non-legal factors might impact reformation of health care laws.

Several chapters focus on how fragmentation of the U.S. health care system undermines the provision of quality care and increases costs. (See Ch. 2, 3, 5, & 9). In Chapter 9 – Value-based Purchasing Opportunities in Traditional Medicare:  A Proposal and Legal Evaluation, authors Timothy Jost and Lawrence Casalino provide an excellent overview of eight distinct changes that can be made to improve the quality of care provided in the Medicare program.  Several of the changes reflect recommendations similar to those made by MedPac in its annual “Report to the Congress.”  Some of the changes include (1) “make the conditions of participation in Medicare more stringent,” (2) “encourage beneficiaries to choose a medical home,” (3) “change payment methods to reward quality and efficiency,” and (4) provide the public with information on the quality of care provided by the Medicare providers. (pp. 202 – 207)  The chapter goes on to describe two distinct models of providing health care that will reduce fragmentation among providers and improve the quality of care provided by encouraging separate Medicare providers to work in a coordinated and integrated fashion:  the medical home and the accountable care organization.  The chapter concludes by discussing the legal challenges to implementation of the various value-based Medicare purchasing proposals.

My comments will focus on the Medical Home concept and its ability to reduce fragmentation and improve quality of care by improving communication and coordination of care among individual and institutional providers that treat a single patient.  The current physician reimbursement method under Medicare, the physician fee schedule, does not incentivize physician practices to provide the care envisioned in a medical home.  It does not compensate the primary care physician to coordinate care across providers, to continuously monitor the patient’s care, and to train the patient to take an active role in maintenance of his/her health. It also does not provide a framework or “model” for designing a primary care practice that is consistent with best practices.

According to Casalino, in a medical home a patient has a relationship with a personal physician that provides “first contact, continuous, and comprehensive care.” (p. 207) This type of care is consistent with the care provided by a primary care physician.  The primary care physician works with his/her team of providers to “take responsibility for coordinating a patient’s care among the physicians in the home practice and across all elements of the health care system (e.g., hospitals, specialist physicians outside the home practice, and rehabilitation facilities).” (p. 208)  The home will provide enhanced access to services by effective use of email and telephone services.  The home will also use registries and care management processes to provide a broad array of services including “screening, preventive, follow-up care,” and patient self-care training. (Id.)  Some specific quality mechanisms for medical homes that are a part of the Casalino proposal include (a) National Committee for Quality Assurance (NCQA) certification as a medical home, (b) NCQA random on-site audits, (c) patient satisfaction surveys, and (d) mandated on-site audits when patient complaints are received.  Under Casalino’s proposal, the reimbursement methodology would have two components.  The medical home physician would be paid on a revised fee schedule plus receive a patient satisfaction bonus.  The medical home practice would also receive a risk-adjusted monthly fee for each Medicare beneficiary that selects the practice as his/her medical home.  These quality and reimbursement proposals differ from the current fee- for-service physician reimbursement method under the Medicare fee schedule, and are designed to incentivize the provision of quality and efficient care.

The importance of the medical home concept is reflected in the fact that a demonstration project designed to test the concept in Medicare was enacted as part of the Tax Relief and Health Care Act of 2006, and was expanded in the Medicare Improvements for Patients and Providers Act of 2008.  Additionally, there are several provisions within the Patient Protection and Affordable Care Act of 2010 (PPACA) that support use of medical homes.  In my article, from Concierge Medicine to Patient-Centered Medical Homes:  International Lessons and the Search for a Better Way to Deliver Primary Health Care in the U.S., I discuss how the patient-centered medical home (PCMH) model is a tool that can be used to improve the provision of primary care in the U.S. based on lessons from international organizations that focus on health policy and an examination of the laws and policies of countries that rely more heavily on primary care.  Extensive use of primary care services as part of a health care system has long been advocated by the World Health Organization (WHO) as a way for health systems to provide efficient health care to all of its citizens.  This position is reflected in the WHO’s “Health For All” agenda and re-emphasized in the 2008 World Health Report.  Additionally, other countries, such as the United Kingdom, Netherlands, and Belgium rely more heavily on primary care, and have made concerted efforts to improve the quality of primary care.  Some of those initiatives are consistent with the features of the medical home model as reflected in the NCQA accreditation criteria.  Specifically, the UK, Netherlands, and Belgium require an external assessment of the performance of the medical home; require the use of evidenced-based guidelines in the provision of care; and require the use of technology to communicate with patients, and provide enhanced access to care.  Additionally, these governments have incentivized the provision of quality care through value based purchasing initiatives including quality improvement and care coordination.  In the UK for example, the government included terms within its General Medical Services Contract with physicians that provided financial rewards based on meeting clinical performance requirements, conducting patient surveys, and improving care in response to surveys.

Jost notes that a key legal barrier to use of the medical home model in Medicare is that the Medicare laws governing Part A (hospitals) and Part B (physicians) specify the methods of payment to such a detailed level that it would not be flexible enough to allow payment for medical home practices.  Jost recommends amendment of the Medicare statute to specifically authorize this Medicare proposal.  To date recommendations to resolve this potential legal problem have been generally followed.  Congress has mandated that the Secretary of HHS conduct a medical home demonstration project for Medicare beneficiaries with chronic conditions and provided for expanded use of the medical home model through specific provisions of PPACA.

In conclusion, in Chapter 9 of The Fragmentation of the U.S. Health Care System, Casalino and Jost provide an easy to understand and comprehensive outline of the bulk of the recommendations (and legal barriers thereto) that have been proposed or enacted to accomplish value-based purchasing in the Medicare Program with respect to hospitals and physicians. This chapter would serve as a valuable resource to a varied readership interested in health care reform generally, and delivery system reform in particular.

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1 Response

  1. Frank Pasquale says:

    Thank you for such an informative and compelling perspective. It’s nice to see the Tax Relief and Health Care Act of 2006 and the Medicare Improvements for Patients and Providers Act of 2008 get some attention! I also applaud the demonstration project for Medicare beneficiaries with chronic conditions, and look forward to seeing how its effectiveness will be assessed.