Patient-Centered Medical Home Cost Reductions Limited to Complex Patients

Published Online: November 19, 2012
Thomas J. Flottemesch, PhD; Louise H. Anderson, PhD; Leif I. Solberg, MD; Patricia Fontaine, MD, MS; and Stephen E. Asche, MA
Objectives: To examine the long-term relationships between costs, utilization, and patient-centered medical home (PCMH) clinical practice systems.

Study Design: Clinical practice systems were evaluated at baseline by the Physician Practice Connections-Research Survey (PPC-RS). Annual costs and utilization of a retrospectively constructed cohort of 58,391 persons receiving primary care at 1 of 22 medical groups over a 5-year period (2005-2009) were compared.

Methods: Multivariate regressions adjusting for patient demographics, health status, and autoregressive errors compared PPC-RS scores and study outcomes for the entire cohort and 3 subcohorts defined by medical complexity (medication count 0-2 [n = 29,657], 2-6 [n = 19,505], >7 [n = 9229]). Outcomes (adjusted to 2005 dollars) were total costs, outpatient costs, inpatient costs, inpatient days, and emergency department (ED) use.

Results: For the entire cohort, a 10% increase in PPC-RS scores was associated with 3.9 (medication count: 0-2), 6 (3-6), and 11.6 (>7) fewer ED visits per 1000 in 2005; and 5.1, 7.6, and 13.6 fewer ED visits in 2009. That 10% increase was not associated with the 0-2 medication subcohort’s total (−$22/person in 2005; $184/person in 2009), outpatient (−$11/person in 2005; $42/person in 2009), or inpatient ($26/person in 2005; $29/person in 2009) costs. However, it was associated with significantly decreased total (−$446/person in 2005; −$184/person in 2009) and outpatient (−$241/person in 2005; −$54/person in 2009) costs for the most medically complex subcohort (>7 medications).

Conclusions: Association of PCMH clinical practice systems with reduced costs appears limited to the most medically complex patients.

(Am J Manag Care. 2012;18(11):677-686)
The patient-centered medical home (PCMH) is a topic of interest.1-15 A high-functioning medical home requires coordinated care by a consistent team.16-21 Although few clinics are PCMHs, adults reporting a usual source of primary care are 25% more likely to report positive clinician attributes22 and reduced disparities.23 Observational studies suggest the PCMH approach results in improved satisfaction24 and reduced utilization.25 Pilot studies have found reduced emergency department (ED) use26 and cost reductions.27-31 Clinical practice systems are an important component of a PCMH.32,33 They give access to relevant information, coordinate management of complex conditions, and facilitate delivery of preventive care services. The Physician Practice Connections–Patient-Centered Medical Home (PPC-PCMH), a tool endorsed by the National Committee for Quality Assurance (NCQA), measures practice systems and has been used in PCMH programs.34-38

Prior studies of utilization26,39 have looked at short time frames of 12 to 24 months.16 In theory, the PCMH would reduce medical costs over time by avoiding complications leading to ED visits and inpatient stays, especially among patients with complex illness, as suggested by the chronic care model of Bodenheimer et al.40 This study uses a 2005 measure of the PPC-PCMH and a retrospectively constructed cohort from a large Midwestern health plan to evaluate whether clinical practice systems evaluated at baseline are associated with reduced utilization and costs over a subsequent 5-year period. We present key findings in terms of predicted annual per person amounts to illustrate (1) how predicted costs and utilization change in response to clinical systems and (2) how baseline clinic systems related to different patient groups.


Data Sources, Study Population, and Primary Care Medical Groups

Utilization, billing, provider, medical group, and patient demographic data came from the administrative databases of a large, not-for-profit Midwestern health plan. Practice system measures came from a 2005 survey of medical group directors using the Physician Practice Connections-Research Survey (PPC-RS).41 This instrument is similar to the PPC-PCMH except for fewer questions about the electronic medical record, a focus on 4 chronic conditions (diabetes, cardiovascular disease, asthma, and depression), and graded response categories. A full description of the tool is available on request.

A retrospective cohort over 2005 to 2009 was constructed to compare a baseline measure of clinic systems with subsequent utilization patterns. Subjects needed to meet the following inclusion criteria: (1) have 10 or more months of continuous enrollment in each year; (2) be alive on December 31, 2009; (3) be 19 years or older as of January 1, 2005; and (4) be attributable to the same primary care medical group for 2005 to 2009. Persons were attributed to the medical group with which they had the greatest percentage of primary care visits. Primary care visits were defined as visits with providers in the following specialties: family medicine, internal medicine, general practice, geriatric medicine, and obstetrics and gynecology (Ob-Gyn). Nurse practitioner and physician assistant visits were included. Our decision to include visits with Ob-Gyn providers was made because such visits are a regular source of care for many women of childbearing age. However, such an inclusion does not strictly conform to the personfocused primary care concept of Starfield.42 The implications of this decision are discussed in the Limitations section.

Those with no primary care visits were unattributed and excluded. Those attributed to more than 1 medical group (ie, those who had an equal number of visits to 2 or more groups) were also excluded. We further limited the sample to medical groups with a minimum of 200 attributed members. Per year, of the 318,857 adults attributed in 2005 approximately 5% were excluded due to death or disenrollment, 25% due to a change in attributed medical group, and 5% due to no primary care utilization. This resulted in 58,391 persons across 22 medical groups. Most (n = 48,292) had commercial insurance, 7077 were Medicare enrollees, and 3022 were enrolled in Medicaid. For dually eligible Medicare beneficiaries aged 65 to 75 years, all claims including pharmacy were processed by the health plan in order to track benefits, deductibles, and payer liability. All claims from Medicaid beneficiaries were processed for similar reasons.

Five annualized outcomes were constructed: total cost, total outpatient cost, total inpatient cost, inpatient days, and ED visits. The health plan’s administrative databases contain information concerning insurance product, medical diagnosis, care specialty, costs, and limited demographics (age, address, and sex). These were organized using Evaluation and Management, International Classification of Diseases, Ninth Revision, and Current Procedural Terminology (CPT) codes. Total cost included all reimbursed medical costs, including copays, coinsurance, and deductibles. Outpatient cost included professional services, prescriptions, lab and x-ray tests, and outpatient surgical procedures. Inpatient cost included professional and facility fees for hospital-based services including emergency care. Inpatient days were days with an overnight hospital stay. ED visits included all visits to an ED with reimbursed service. If a subject was not enrolled for the entire year, their cost and utilization was annualized using their monthly average.

To avoid variation in outcomes due to benefit design or provider contract, total, outpatient, and inpatient costs were based on a standardized measure, the relative resource value unit. Relative resource value units are based on Centers for Medicare & Medicaid Services relative value units, inpatient diagnosis-related groups (DRGs), and Ambulatory Payment Classification weights. The logic is to apply a standardized fee schedule across all providers by developing standardized costs for each CPT code, hospital DRG, and National Drug Classification (NDC) code that is dependent upon the type of procedure/service/prescription provided but independent of the place of service, type of insurance coverage, or year. This fee schedule was developed by constructing a weighted average of billed amounts across all contracted providers for each CPT code, hospital DRG, and NDC code. Our measures of costs were developed by adjusting these averages by the ratio of billed to paid amounts across service category and scaled to the base year of 2005.

PPC-RS Survey

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Issue: November 2012
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