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The Medical Home: Confusion Over Care Management Fees

The honeymoon is over.

Prior to April 29, 2008, reviews of the Patient Centered Medical Home (PCMH) model  had been uniformly enthusiastic and positive.

Today the PCMH model is hitting reality — someone’s going to have to bring home money to pay the bills. On April 29 the American Medical Association/Specialty Society RVS Update Committee (RUC) released a  report making recommendations relating to payment levels of care management fees for the PCMH.

This report has stirred cries of confusion and outrage. I’ll elaborate on these cries in the second posting of this series, but if you can’t wait, read here, here, here, here, here, here, here, and here.

Welcome to a series of three blog postings discussing the PCMH, care management fees, and the RUC report.  I can’t claim to smooth the uproar, but I hope to frame the issues so that they can be understood and discussed constructively.

The series will address numerous questions. This first post:

  • What is the PCMH care management fee?
  • Why is the PCMH care management fee important?
  • Why are people confused?

The second post:

  • What is the American Medical Association/Specialty Society RVS Update Committee (RUC) ?
  • What is the RUC’s role in the Medicare Medical Home Demonstration project?
  • How are people reacting to RUC recommendations for PCMH reimbursement levels?

The third post:

  • What’s problematic about using the RUC methodology with the PCMH?
  • What’s the optimal level for a PCMH care management fee?
  • Should primary care leaders pull the RUC out? How? 

What is the PCMH Care Management Fee?

The PCMH model has been advanced as the 21st Century solution to today’s primary care crisis. 

Over the past year, the outpouring of support for the PCMH has been nothing short of amazing.  Last spring the four major primary care groups unanimously adopted the Joint Principles of the Patient-Centered Medical Home (Joint Principles).  125+ diverse organizations have shown support for their PCMH by participating in the Patient Centered Primary Care Collaborative.  Almost everything written in the press has been supportive of the PCMH concept.

The need for “care management” is described in the Joint Principles:

Care is coordinated and/or integrated across all elements of the complex health care system (e.g., subspecialty care, hospitals, home health agencies, nursing homes) and the patient’s community (e.g., family, public and private communitybased services). Care is facilitated by registries, information technology, health information exchange and other means to assure that patients get the indicated care when and where they need and want it in a culturally and linguistically appropriate manner.

The Joint Principles also describe a new payment structure needed for the PCMH, including a care management fee:

  • It should pay for services associated with coordination of care both within a given practice and between consultants, ancillary providers, and community resources.
  • It should support adoption and use of health information technology for quality improvement;
  • It should support provision of enhanced communication access such as secure e-mail and telephone consultation;
  • It should recognize the value of physician work associated with remote monitoring of clinical data using technology.
  • It should allow for separate fee-for-service payments for face-to face visits. (Payments for care management services that fall outside of the face-to-face visit, as described above, should not result in a reduction in the payments for face-to-face visits).

Why is the PCMH Care Management Fee Important?

The PCMH creates three types of payment for primary care physicians.

  • A fee schedule for visits and procedures
  • A care management fee
  • An incentive payment.  This can be structured in different ways.  It can be a pay for performance payment, or in  the case of the Medicare Medical Home demo, 80% of “savings” are passed back to physicians.

The care management fee is paid per patient per month (PPPM) in addition to usual fee-for-service payments.  The care management fee is paid for each patient who designates a particular doctor or medical practice to be their “medical home”.

Today’s payment system pays primary care physicians for face-to-face visits.  The care management fee is important because it provides funding for doctors to undertake valuable care coordination activities that don’t qualify as being face-to-face and are not reimbursed today.  This includes activities such as remote patient monitoring, phone calls, secure email between patients and doctors, use of EHRs and PHRs, etc.

How Should the Care Management Fee Be Conceptualized? Why are People Confused? 

Beyond discussing the concept of a care management fee, very little has been said or written about the specific level of the PPPM care management fee.   

That is, until April 29…

Which I hope is beginning to give you a clue about the problem here…

There are many POSSIBLE ways to conceptualize the level of payment for the monthly care management fee:

Very Low– $3 PPPM.  At this amount, the care management fee should be categorized as “throwing a bone to the docs”.  It’s a token payment to keep the bottom from falling out of primary care. In the North Carolina Medicaid project — Community Care of North Carolina — physicians are paid a care management fee of $3.00 per patient per month. This level of payment does not provide a significant incentive for physicians to adopt and implement comprehensive care management processes and technologies.

Low — $13–50 PPPM.  One physicians blogger initially calculated that $13 PPPM is the approximate amount recommended by the RUC report; he then revised his calculation to $50 PPPM. Unfortunately, the RUC report does not translate its recommendations into specific dollar amount.  I don’t know whether the calculations are precise, but this seems like a reasonable order-of-magnitude range to put a dollar amount on the RUC’s recommendations.  Hopefully the RUC and/or AMA will clarify this ASAP.

Medium — $75 to $150 PPPM. At this level the care management fee becomes analogous to the type of fees paid for disease management services by Medicare in the Medicare Health Support (MHS) project. In the MHS demonstration project, vendors are being paid a monthly fee in the range of $75 to $150 per patient per month.  The level of care management fee could be paid to physicians under a PCMH model rather than vendors using a disease management model.

The most extensive (albeit preliminary) analysis to-date around required care management fees was performed by Deloitte Consulting in their February 2008 report The Medical Home: Disruptive Innovation for a New Primary Care Model. The report spells out detailed assumptions and concludes:

net costs for health services must be reduced by at least $150 per patient per month to break even – a plausible amount, considering the potential avoidance of costly hospital admissions, emergency room visits and related services.

Put another way, Deloitte estimated that a $150 PPPM fee would be break-even for payers. Deloitte’s analysis includes cost assumptions for physicians acquiring EMRs, PHRs, coaching platforms, patient classroom facilities, web sites, patient education materials, etc.  Physicians presumably would contract out for many of these components, rather than build components internally.

High —  $300+ PPPM.  This level of payment is analogous to a case management fee for complex, high cost patients.

You might ask “Why is there such a wide range of POSSIBLE care management fee payments?” 

That’s exactly the problem.  All of these levels could fit under the label “Patient Centered Medical Home”.

You might also ask “Aren’t these apples to oranges comparisons — there’s no standardization as to the types of services provided or the severity of illness experienced in the patient population?” 

Yes, and that’s also exactly the point.  Trying to discuss the concept of a care management fee in the abstract won’t get us anywhere.  

The lack of specificity to date about the required services and payment level for the care management fee can only lead to misunderstandings and confusion. We need details. 

NEXT POST IN THE SERIES: The Medical Home Hits the RUC.

Article Series - The Medical Home: End of the Honeymoon

  1. The Medical Home: Confusion Over Care Management Fees
  2. The Medical Home Hits the RUC
  3. The Medical Home: Pull the RUC Out
  4. Extra: Will $87 Per Hour Rescue Primary Care?

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