Offsetting Patient-Centered Medical Homes Investment Costs Through Per-Member-Per-Month or Medicare Merit-based...

Area of Science:

• Health Services Research
• Healthcare Economics
• Primary Care Medicine

Background:

• Primary care practices are transitioning to patient-centered medical homes (PCMHs) to enhance care delivery.
• The financial implications, including initial investment and cost-recovery strategies, are crucial considerations for PCMH adoption.

Purpose of the Study:

• To evaluate the financial viability of achieving PCMH recognition.
• To examine potential cost offsets through commercial payer per-member-per-month (PMPM) payments and Medicare Merit-based Incentive Payment System (MIPS) incentives.

Main Methods:

• Analysis of a network's 4-year expenditure of $4,818,260 for PCMH recognition across 57 practices.
• Calculation of breakeven points based on commercial PMPM payments ($3.37-$8.98) for 1645 commercially insured patients per physician.
• Modeling of MIPS incentive payments against average 2016 Medicare reimbursement ($196,812 per physician).

Main Results:

• Breakeven for PCMH costs necessitates coverage of 2.4% to 6.4% of commercially insured patients per physician, depending on PMPM rates.
• Simulated MIPS incentive payments, at half the maximum available annually, indicated that PCMH costs would be surpassed by 2022 for the network's Medicare reimbursement.

Conclusions:

• Commercial PMPM payments and Medicare MIPS incentives offer viable pathways to offset the financial investments required for PCMH recognition.
• These financial incentives are critical for enabling primary care practices to successfully implement and sustain patient-centered medical home models.