Building solid medical homes

In the past few years, the concept of the patient-centered medical home has gained momentum. Payers, including Medicare, have shown an interest in it, and some medical home projects are under way. Physician organizations have adopted principles supporting the idea.

The widely held hope is that the medical home can improve the delivery of quality of care and lower costs through better coordination of care. But as with so much in changing the health system, a simple premise -- even a popular one -- can raise complicated and contentious issues. The American Medical Association is taking a key role in sorting all of this out.

At its Interim Meeting in November 2008, the AMA House of Delegates adopted principles calling for medical home physicians to implement an infrastructure that gives them more continuous contact with patients, coordinates care better across the health system and uses more evidence-based medicine to guide clinical decision-making. Delegates asked the AMA to continue to study the concept and look at payment structures and funding sources.

The resulting Council on Medical Service report took a closer look at the model and was received generally favorably by delegates at the AMA Annual Meeting in June. After some changes, delegates adopted the report, which recommends that the AMA support the medical home model as a way to provide care to patients but without restricting access to specialty care. Delegates also voted to advocate that all health plans and the Centers for Medicare & Medicaid Services develop one standard for a medical home, and that specialty practices as well as primary care practices should be able to serve as a medical home.

The AMA urges that Medicare incentive payments associated with the medical home be paid for through systemwide savings such as reductions in hospital admissions and readmissions and not be subject to a budget neutrality offset in the Medicare physician payment schedule. The house voted to advocate that additional pay to physicians who operate a medical home should not come from reducing specialists' pay. The new policy also calls for the AMA to help design incentives to enhance care coordination among those who provide treatment for patients outside the medical home.

The report notes that the medical home model is one of the more fully developed proposals for reforming Medicare physician payment. Last October, CMS released information about a demonstration project in eight states that will pay higher rates to selected practices that serve as medical homes. Recruiting for participants was supposed to start in January 2009, but the initiative has been delayed.

But testing of the model isn't waiting for Medicare.

The AMA council's report contains an encouraging report that savings are possible. It cites Community Care of North Carolina, a program of 15 nonprofit health networks that uses the model and coordinates care among doctors, hospitals and others. The networks care for 74% of the state's Medicaid beneficiaries. Independent evaluations report that the program saved the state $77 million to $85 million in fiscal 2005 and $154 million to $170 million in fiscal 2006.

And about three dozen small and medium-sized family practices are taking part in a national demonstration project sponsored by TransforMED, a wholly owned, for-profit subsidiary of the American Academy of Family Physicians. Other efforts have been launched, and multiple health plans are cooperating on pilot projects that pay physicians extra for coordinating care.

Yet not all the observations so far have been positive. An analysis of the TransforMED project in the May/June Annals of Family Medicine found that medical home implementation "consumes an inordinate amount of time, energy and dollars."

Such a profound shift in the delivery of care is sure to be examined many more times. The AMA has outlined the care principles for how medical homes should rightly be run. Moreover, it has provided the funding perspective that will allow them to be sustained fairly once they prove their worth.