There are a variety of general issues that must be considered in determining the policy relevance of any proposed reform of provider payment. The proposed payment reform must be able to withstand legal challenges to its compliance with existing law and regulation, and be practicable within the constraints of diverse employer contracts for employment-based insurance.
Second, it must not expose the overall program of provider payments to significant risks that the perceived integrity of the payment system will be jeopardized, e.g., by so rewarding undesirable provider behaviors that this “gaming” will offset the theoretical advantages of the proposed reform. In this regard, even hybrid payment models, especially those mixing FFS and capitation, while theoretically providing needed balance to unidirectional incentives to overuse or underuse, might cause physicians to separately (and perversely) respond to each of the incentives. For example, a practice reimbursed at existing FFS levels for visits and prepaid a monthly per patient payment for medical home activities might continue to churn office visits, yet give short shrift to the desired medical home services, thereby producing the worst of both worlds.
Third, the costs to the payer for administrating the reform must be acceptable; ideally the administrative costs for the reformed payment option would be lower than for the provider payment system it replaces. Theoretically elegant payment reform approaches can be rendered infeasible by real world operational issues for payers, like claims processing software programming problems or challenges introduced by missing data. For example, some payers have difficulty supporting FFS combined with new monthly medical home fees–and therefore have opted to enhance office visits code payments, despite the theoretical incentive problems created. Similarly, assigning a payment-relevant “severity code” to each plan enrollee, as suggested earlier, might prove technically difficult or impose unacceptable administrative costs.
The issue of attribution is relevant–and difficult— as well, as plans on an ongoing basis–at least monthly–would have to maintain an accurate roster of subscriber/beneficiary-PCMH matches to determine which practices qualify for additional payments. In addition, payers would need a reliable and relatively inexpensive way to qualify practices for additional payments and/or apply a fairly robust set of performance measures to guide payment decisions, with all of the complications of establishing and maintaining valid and reliable measures.
In addition to these administrative and financial challenges for payers, the administrative costs to the medical practice for participating in the reform must be reasonable. Some of the preferred payment approaches described above would include administrative costs that go beyond the already substantial, standard administrative functions for billing and collecting, now to include medical home services28
. The process of qualifying as a medical home and of contributing data for severity adjustments or pay-for-performance would be important considerations, both in net revenue for the practice and for perceived relevance to enhancing patient care.
Thus, there are several major payment policy issues that must be resolved to translate the theoretical advantages of medical home payment reform into real world benefits in primary care practices. These include fundamental questions identified above regarding how to best pay practices for basic medical home services, as well as questions about how to best to reward practices for superior performance as medical homes. There are also policy challenges inherent to promoting optimal medical home connections to other community health care resources. Finally, payers must overcome various implementation challenges to medical home payment policy. As revealed through discussions and feedback at the recent conference “Patient Centered Medical Home: Setting a Policy Relevant Research Agenda,” each of these overarching policy issues invokes a substantial subset of policy relevant research questions. These collectively comprise a robust policy research agenda relevant to “buying a medical home.” (see Table ).
PCMH Payment Policy Research Questions