The costs of becoming patient-centered

May 25, 2013

Although experts say that culture is the most important factor in a Patient-Centered Medical Home, costs are sure to be high on your list if you are determining whether to make the switch to this model. Here's what you need to know.

Becoming a Patient-Centered Medical Home (PCMH) is an expensive process-costing close to $100,000 per physician according to some recent estimates, and most of that on technology-but the biggest change required doesn’t include a price tag, says David N. Gans, MSHA, FACMPE, senior fellow for industry affairs at the Medical Group Management Association (MGMA)–American College of Medical Practice Executives.

“The change to become a PCMH is cultural. It’s how you use technology and integrate it into your care delivery,” he adds.

Still, cost is a concern and often a deterrent for many practices considering transitioning to a PCMH. A 4-year-old report from the Commonwealth Fund places cost estimates of transition even higher than Gans’. The report used data from 35 practices that had transitioned to a PCMH and found that the average cost per full-time physician was around $517,000. Information technology spending represented the largest variable cost-other costs were stable across the spectrum-with spending ranging from $5,000 per physician on the low end to $11,000 on the high end. (To view the entire report, see www.commonwealthfund.org/Publications/Fund-Reports/2009/Oct/Incremental-Cost-Estimates-For-The-Patient-Centered-Medical-Home.aspx.)

But Gans says it’s difficult to get a handle on the true costs of implementation.

“To my knowledge, there is very little updated [cost] information. That is because it is so dang hard to get,” says Gans.

Gans recently partnered on a research grant project with the Agency for Healthcare Research and Quality (AHRQ) to look at the cost of transitioning to and maintaining a PCMH. He couldn’t reveal much, because the study is pending publication, but Gans says the biggest obstacles are that every practice has a different starting point, and the final cost depends on what type of PCMH the practice will become.

Sarah Scholle, vice president of research and analysis for the National Committee for Quality Assurance (NCQA), who worked with Gans on the grant project to study PCMH implementation cost, agreed that the starting point is a major factor in how much transition will cost a practice. Obviously, becoming a PCMH will cost much more for a practice using paper records than one fully equipped with the latest health information technology (HIT).

But biggest isn’t necessarily better. Scholle says electronic health record (EHR) systems and registries can be simple and cheap, but they have to get the job done.

Many primary care practices already have EHR systems, and some have registries. Others already use care coordination is some way in their practices. But they aren’t all PCMHs.

Gans shares a story about one practitioner he met on a site visit in upstate New York. The solo practitioner was ranked “PCMH zero” and was located in the same building where he grew up. His father owned the building and ran a shoe store on the main floor.

The older neighborhood gave the physician a roughly 2,000-patient base-many of whom he had known for 20 years. He maintained a manual health record, and when asked how he managed the needs of his diabetic patients, he pulled out his own style of registry on a spreadsheet.

“He’s running a manual registry. He tracks patients and his own performance and keeps track of their foot exams and eye exams,” Gans says, adding the physician often would check in with patients when he ran into them around town, even advising them on grocery purchases. “He is really a PCMH, even though he’s [ranked] a ‘zero.’ He was walking the walk, but didn’t have any of the ‘stuff.’ ”

Gans says he saw many other practices that had all the “stuff” one would need to become a PCMH but didn’t embrace the culture.

The key takeaway, Gans says, is that the transition to PCMH isn’t really about the cost involved.

Gans co-presented a talk about the costs of implementing and maintaining a PCMH in late April, revealing new cost information he gleaned from a study he did last year with MGMA members who had earned PCMH recognition. Most organizations talked about the increase in cost during the transition as a major element on their journey, he says.

Although little hard data exist about transition costs available, Gans revealed that recent results gleaned from several studies put the range from $23,000 to $90,000 per physician-and that’s mostly costs associated with technology-for a total cost of about $15 per patient per month. Low-, mid- and high-scoring PCMHs have reported different cost ranges, although they typically spend about the same in every area except for technology, according to Gans and the studies he cites in his research.

In his research among MGMA members, Gans found that practices that had transitioned to a PCMH spend reporting spending changes in the following areas:

•    27.3% more on clinical facilities,

•    24.6% more on medical supplies,

•    24.4% more on medical equipment, and

•    69.5% more on HIT.

Changes to staffing also were documented, with practices that had transitioned to PCMH status reporting:

•    a 44.6% increase in administrative staff,

•    a 55% increase in clinical staff,

•    a 40.8% increase in registered nurses,

•    a 43.2% increase in non-physician providers, and

•    a 19.3% increase in physicians.

Gans also discusses how roles change after a practice becomes a PCMH. The MGMA study revealed that in non-PCMH primary care practices, internal staff members perform about 91.6% of patient education, 42.2% of nutrition counseling, 84.9% of care coordination, and 29.2% of behavioral health. In a PCMH, internal staff members perform 95.2% of patient education, 53% of nutrition counseling, 90.6% of care coordination, and 44.5% of behavioral health.

The AHRQ has asked for proposals to find researchers already working with practices that transformed to PCMHs that can go back and see what it cost those practices to transition to and operate under the new model, says David Meyers, MD, director of the center for primary care for the AHRQ.

The funding announcement was made because not enough evidence on cost existed, and AHRQ recognized that not having the answer to the cost question might be part of what is keeping many practices from making the leap. Meyers says that the AHRQ hopes to have more data over the next few years.

The biggest costs-technology and staffing

If your practice is considering becoming a PCMH, the first element to consider in terms of technology needs is having a good EHR and knowing how to use it.

In a PCMH, the EHR is not just used for medical records, Gans says. It’s used as a quality assessment tool and to schedule preventive services. Patient registries add function by tracking populations, and practice hours are expanded to offer greater patient access. Electronic communications with patients are common, and patient education and engagement are key elements. And you have to use your EHR in the context of a PCMH and look at it in terms of managing a population, Gans says. You must have a registry function, and, if your EHR doesn’t include that capability, you may need to purchase and add-on or a separate registry program plus and interface for your EHR system so the data can go back and forth between the two systems. (For more information on registries, see “Registries: Powerful tools to track, manage chronic disease” in the May 10 issue of Medical Economics.)

Optional ways exist to spend money and gain patient benefit when it comes to HIT as well. Many PCMHs are expanding telemedicine functions with items such as medical devices that can be given to the patient that report data back to the physician.

“There are all these new technology devices you wear on your wrist and tell you how many calories you burned today, record blood pressure, record heart beat-and it’s reported back to the doctor,” Gans says. “Very few do that, but that’s the type of tech expenditure that practices are looking at because they are patient-centered.”

That type of technology may be especially helpful when it comes to patient buy-in, Gans says. Patient portals are another expensive yet very helpful HIT tool, he says. (For more on patient portals, see "Patient portals help improve communication" in the December 25, 2012, issue of Medical Economics.)

You also will want to look into ways to communicate more effectively with colleagues-not just patients-when transitioning to a PCMH so you can share information such as laboratory test results, tests ordered, and a summary of an office visit. “Ideally, you want double sharing of information,” Gans says.

He suggests practices makes sure their EHRs will interface with other EHRs. The same advice rings true for programs that deal with medication reconciliation and clinical appointments.

Much technology might be tempting to invest in, but Meyers cautions against being caught up in it all.

“While I’m really excited by what all sort of innovators are doing with technology, that’s all bells and whistles. The basics are what folks are needing to concentrate on,” he says. “A good EHR [is one] that’s not just a billing machine but about making information available to doctors and patients.”

The scoring systems used for PCMHs are set up in a way that they award higher scores for higher levels of HIT use, but that criterion doesn’t necessarily indicate that those practices are better than others, Meyers says.

“PCMHs are still about relationships,” he adds. “Technology can help us enhance relationships, but that’s not required. You can still have high-quality care that’s personal, that’s coordinated, that’s safe, with basic level investments in technology.”

But even with the best HIT systems in place, a practice needs to be diligent about inputting data, Gans says. For a primary care physician (PCP) who has a new patient or an existing patient who develops diabetes, if the doctor wants to add the patient to a registry, manually adding that information comes with a cost. Practices need to remember that, aside from the HIT cost, human time associated with inputting data will have to be compensated as well.

Staffing is the single biggest expense during the transition to a PCMH, in Meyers’ opinion, because the move to a team-based model could require a lot of additional people.

“Most [practices] recognize that these added team members are wheat really makes a practice patient-centered and improves the level of care,” Meyers says, adding that in a PCMH or not, almost every patient needs a care coordinator at some point. “Some practices already have a team in place to do that well, but most don’t. What I’ve seen is that in many of the demonstrations and pilot programs, those who have been successful are the ones that really reinforce or build in their care coordination.” (For more on care coordination in a PCMH, see “How to coordinate care in a medical home” in the May 10 issue of Medical Economics.)

But it isn’t always necessary to add staff, Scholle says, explaining that many of the practices she surveyed changed the function of their current staff rather than hire someone new. Medical assistants who used to measure vital signs and guide patients to examination rooms can be given standing orders for patients with diabetes or to manage processes associated with specific tests. The questions to consider, she says, are whether you have staff members who can take on additional responsibilities and whether you can rearrange their roles to fit the practice’s need.

“If you don’t have a care coordinator, it’s a make-versus-buy situation,” Gans says. Increases to clinical staffing levels are often a major part of the cost to transition to a PCMH. More clinical staff members are required to record data and coordinate care, in addition to offering the extended access to the practice that is central to the PCMH ideology.

Additional staff members also are helpful in providing the education and engagement functions required for PCMH recognition. Many PCMHs use group visits effectively, and those visits help with patient engagement and allow a practice to educate and assist several patients in a subgroup within the same time frame. The physician doesn’t have to duplicate efforts, and group visits are “batch work” for staff, he says.

Getting recognized

Even practices that have the technology and the staff benchmarks met, Gans says, may not achieve PCMH recognition simply because they never applied. On choosing to apply, those practices fulfilling all those elements would immediately be recognized because they are already doing everything they need to do. For example, Gans says he doesn’t know whether any Kaiser practices are PCMHs, yet they have all of the features.

“To my knowledge, none of the Kaiser groups are PCMHs because they don’t have to be. They already are. They just never sought certification because they don’t need it,” he says.

And cost certainly is a factor when looking at certification.

Costs vary by depending on the agency performing the certification, the size of the practices, and the type of practice.

The Accreditation Association for Ambulatory Health Care (AAAHC) and Joint Commission has two programs – full accreditation with Medical Home, and Medical Home On-Site Certification. Pricing for each are based on the size and scope of services of the practice applying. A small primary care practice might anticipate a total cost of about $2,500 for Medical Home On-Site Certification. A similar practice attempting full AAAHC accreditation including Chapter 25 on Medical Home might anticipate a cost range of $6,400 to $8,000. There is also a $775 Application for Survey fee added to either option.

The URAC  PCHCH (Patient Centered Health Care Home) Achievement program cost varies depending on size and organization type, as well as the length of the onsite audit, Gans says, but it ranges from $2,500 to $6,000.

The NCQA bases its certification fee on the number of physicians in a practice and can range from roughly $600 for a solo practice to more than $4,000 for a practice with eight or more physicians.

Will reimbursements be waiting?

Payment for achieving PCMH can come in many forms, Gans adds, including:

•    enhanced fee-for-service for office visits,

•    reimbursement for PCMH related services, and

•    fee-for-services with pay-for-performance bonuses for meeting goals.

The most common reimbursement method for commercial payers to PCMHs is a standard fee-for-services for all services plus an additional payment based on the number of enrolled patients. Pay-for-performance bonuses are offered for meeting predetermined goals.

But some practices start transitioning to a PCMH and stall at some point, usually for financial reasons.

“There are people who can make steps toward the journey, but then can’t go any further,” Meyers says. Many practices are engaged in demonstrations, and the Centers for Medicare and Medicaid Services is one of the entities paying a lot of primary care practices to participate in their coordinated care demonstrations, he adds.

“For many people, looking around to find out what incentives and resources in your are-this is the kind of journey you don’t want to have to go on alone if you don’t have to,” Meyers says.

A wide range of financial support is available to practices that want to transition to PCMHs, Scholle says. In some parts of the country, numerous resources exist, but others have virtually nothing. The American College of Physicians and the American Academy of Family Physicians both have resources-or at least guides to help you find them-available, and practices interested in making the switch should check community resources, too. Local medical societies, state organizations, and other local medical groups often offer resources and guidance on affordability and any programs available to aid the transition to PCMH, Scholle says.

But the fact is, not everyone will be able to find an assistance program that fits his or her practice, Meyers cautions. If you’re in such a situation, take some time to learn more about the PCMH model and move toward it gradually. Most physicians already want to be there anyway, Meyers says.

“Most doctors will say, ‘This is the way I’d like to practice.’ They want to provide care coordination, and they want to get information about their patients so they stay out of the hospital,” Meyers adds. “For many people in [a PCMH], they would never go back. They say, ‘This is why I went into the healing practice.’ If you deliver care the way it needs to be delivered, most people have found ways to get it covered.”

One trend to watch for down the road will be the possible partnership of accountable care organizations (ACOs) and PCMHs. Meyers says healthcare professionals have asked him whether they should join an ACO or become a PCMH. He says they should do both.

“A good primary care practice is the foundation of a good ACO. It can invest in helping primary care make the change [to a PCMH],” he says.

The most difficult part of the transition is getting out of the fee-for-service cycle. Physicians in traditional models don’t have time to build relationships with patients or put data into registries, Meyers says. They need new funding to support care coordination, and Meyers says the transition to pay-for-performance models will be the impetus that gets more practices on the path to PCMH.

But healthcare reform and the millions of new patients it will bring to primary care, coupled with PCP shortages, make it difficult to slow down and spend more time with fewer patients. Meyers says the profession needs to move past the idea that the physician is the center of the practice.

“[In a PCMH, it] is a team that cares for you, not just that one doctor,” Meyers says. This arrangement means a physician might spend 30 minutes talking to the patient about his or her symptoms and what is going on in his or her life, but then a team member takes over to help the patient better understand medications or medical devices.

“The team can take of more people, and at the right time. Doctors shouldn’t spend time finding printouts or checking on lab results; that way, they can spend more time talking about what’s going on in the patient’s life. That’s what you want your doctor doing, not chasing down the paper. It’s better use of doctors. It lets them do their best when the team does [more].”

The most exciting part about new models such as the PCMH is that ideas discussed several years ago are finally starting to come to fruition, Meyers says. “It’s nice to have a real vision of what we want in our healthcare system, and now to make it happen.”