Government, insurers testing medical home model to curb costs

A growing number of public and private payers nationwide have launched experimental programs that seek to reduce downstream medical costs by rewarding primary care physicians (PCPs) who manage patients under a "medical home" care model, the New York Times reports. Under such pilot programs-which are currently underway in at least a half-dozen states-PCPs are hiring additional staff to help monitor patients’ treatment and follow-up, helping patients pre-empt problems by sending reminders about preventive tests, and enabling patients with medical emergencies to secure office visits on short notice. To foster improved chronic disease management, physicians are stepping up phone and e-mail communication with patients, spurred in part by the promise of additional revenue beyond the $60 commercial insurers and Medicare pay for an average PCP office visit. For example, three of the Philadelphia area’s largest insurers-Independence Blue Cross, Aetna, and Cigna-and some local Medicaid providers have agreed to spend at least $13 billion across the next three years for a pilot project that increases payments to physicians who agree to more closely communicate with their entire patient rosters. More than 100 physicians have signed on to participate, and the program is expected to start expanding into other parts of the state this fall. Meanwhile, Blue Cross Blue Shield of Michigan plans to spend $30 million this year to reward about 4,900 PCPs in that state who plan to offer similar services.

The Medicaid and Medicare programs are also studying the medical home concept, and one North Carolina Medicaid medical home experiment saved the state program about $162 million in 2006. A three-year Medicare pilot

-for which Congress earlier this month earmarked $100 million in financing (see related coverage in July 16 Daily Briefing)-will further test the concept of rewarding PCPs who create medical homes. In addition, the Medicare Payment Advisory Commission has recommended that CMS expand plans for a Medicare pilot that is expected to pay an additional $30 to $40 per month to PCPs in eight states for each enrolled patient with a chronic illness. Advocates of the medical home model hope it will help attract more doctors to primary care-a field that was chosen by only 7% of medical school graduates last year, according to the American Academy of Family Physicians. However, critics note that "there is very little concrete rigorous evidence" that the setup will reduce health costs in the long term or will produce a direct return on investment within a "reasonable time horizon" (Freudenheim, Times'%20fees&st=cse&oref=slogin, 7/21 [registration required]). (SOURCE: Advisory Board Daily Briefing,, July 21, 2008)