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The Medical Home: Pull the RUC Out
This third and final post in the series addresses questions about the future of the Patient Centered Medical Home (PCHM):
- 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’s Problematic About Using the RUC Methodology with the PCMH?
There are at least two reasons for not having the RUC methodology seen anywhere in the same county country as the PCMH. First, the RUC methodology doesn’t account for technology and services needed for optimal care management. Second, the RUC methodology is conceptually flawed.
1) The RUC methodology doesn’t account for technology and services needed for optimal care management. Here’s what the RUC recommended methodology for the PCMH pays for:
- Physician time (estimated at between 6.5 and 9.2 minutes per patient per month, depending on tier)
- RN/LPN time
- Medical supplies: 3 patient education brochures per patient per year
- Medical Equipment:
Tier 3: an EMR, hardware, maintenance training, etc.
Tier 2: Registry software
Tier 1: none
- Professional liability insurance
Here’s a sample of what the RUC methodology does NOT pay for in its methodology:
- Call center technology or staffing
- Predictive modeling/stratification software
- Remote patient monitoring hardware or software
- Medical management workflow software
- Personal Health Record (PHR)
- Patient web portal
- Caregiver web portal
Applying the RUC methodology to the PCMH assumes that “simply paying primary care doctors a few bucks more to provide care management services will make the PCMH work just fine.” How realistic is this? According to Gordon Norman, MD, MBA, President-Elect of DMAA:
“Disease management has about a 15 year learning curve of developing techniques for improving population health that is not going to be learned or adopted overnight by primary care physicians.” Disease Management Advisor, February 2008
The Medicare Health Support (MHS) program has struggled. MHS has been Medicare’s most significant experiment with disease/care management services. In hindsight, some people look back on the MHS demonstration project and say:
What were they thinking when they built a program assuming you could manage care of frail, elderly patients without deep involvement of the patient’s physician?
In foresight, here’s my two cents about the way the Medicare Medical Home Demo is shaping up:
What were they thinking when they built a program assuming physicians could manage frail elderly patients without modern technology and care management processes?
2) The RUC methodology is conceptually flawed. While the PCMH is a great care delivery model, it doesn’t yet have a business model to make it viable.
By definition the RUC process recommends fees based on resources used (inputs). Primary care physicians primary input is cognitive skills — thinking time. Thus, the RUC process inherently pits primary care physicians and specialists in a win/lose game.
What’s the right methodology to use in calculating a care management fee? Doctors, it’s right under your doctors noses as spelled out in the Joint Principles for a PCMH:
Payment appropriately recognizes the added value provided to patients who have a patient-centered medical home (emphasis added).
Care management fee payments should be based on value provided (outputs), not resources consumed (inputs).
This bears repeating.
Care management fee payments should be based on value provided (outputs), not resources consumed (inputs).
A recent Government Accountability Office report examining trends in primary care reached the same conclusion:
In our view, payment system reforms that address the undervaluing of primary care should not be strictly about raising fees but rather about recalibrating the value of all services, both specialty and primary care. Resource-based payment systems like those of most payers today do not factor in health outcomes or quality metrics; as a consequence, payments for services and their value to the patient are misaligned.
Ideally, new payment models would be designed that consider the relative costs and benefits of a health care service in comparison with all others so that methods of paying for health services are consistent with society’s desired goals for health care system quality and efficiency.
I can already hear the objections. “But we’re doctors…we just want to practice medicine, not deal with this business model stuff.”
…which is exactly the reason that primary care is in the situation it’s in today.
What’s the Optimal Level for a PCMH Care Management Fee?
The short answer is “nobody knows.”
Let’s revisit the level of fees being recommended by the RUC. As described in the first post in this series, one physician estimated that RUC recommended payments would be around $50 per patient per month (PPPM).
So, why wouldn’t CMS pay physicians at least as much as they have been paying health plans and DM companies in the MHS project — $75 to $150 PPPM?
Deloitte Consulting estimated that a breakeven care management fee would be around $150 PPPM.
Something closer to a $150 PPPM care management fee makes a lot more sense to me if we’d like to see a successful demonstration project.
Should primary care leaders pull the RUC out? How?
I have several specific recommendations for my primary care physician colleagues and their leaders:
1) Think differently about your value. You cannot succeed by accepting a payment methodology based on resource consumption (the RUC). You must price your services based on the value that you can create for patients.
Get a viable business model for the PCMH, then get a life for primary care physicians.
2) Pull the RUC out. Specialists do not have your economic interests at heart. That’s an observation about human nature, not a criticism of specialists. What makes you think specialists would allow significant dollars to be taken from their pockets and put into the pockets of primary care physicians?
Dumping the RUC process for the Medicare Medical Home demo will be challenging, but it’s certainly doable for any other PCMH demo projects in the works. Many health plans are exploring PCMH demonstration projects.
3) Lead. Put a dollar amount to what you think the care management fee should be. Be proactive, not passsive.
What’s the right range? $50 PPPM will get you nowhere; $150 PPPM is much more realistic to turn the great concept of the PCMH into something that actually works.
The honeymoon period for the PCMH is over. A long-term relationship is hard work, but worth it.
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Could not agree more. See our paper if you’ve not already done so. Goroll AH, Berenson RA, et al. J Gen Intern Med 2007;22:410-415.
To understand the revenue impact of medical home payment, you need to know two things:
1. What is the monthly payment?
2. For which patients will the physician receive payment? (i.e., which patients may enroll in the medical home?)
The RUC recommendations are about $50 pmpm for the level 3 PCMH. CMS estimates that 86% of the Medicare population will be eligible for enrollment.
The Deloitte paper does not explicitly define these critical elements, but if I understand it, it envisions 15% of the Medicare population being eligible.
From page 12 of the Deloitte report:
“• Health coaching and increased effectiveness in patient enrollment in
disease management programs is a major driver for care coordination.
• Currently, disease management organizations are typically
enrolling 10-15 percent of eligible patients for their programs.
The Center’s model assumes 15 percent.”
Deloitte recommends at least$150 PMPM
Now, which method generates more revenue for the physician? $150 pmpm for 15% of your Medicare population. Or $50 PMPM for 85% of your Medicare population?
The Deloitte paper also proposes that a doc will take of of 1000 patients “who need care management”. If this means 1000 of the sickest and most complex 15% of Medicare beneficiaries, this is totally unrealistic. Too many patients.
Allan, thanks for your feedback.
Alan, you raise excellent points. The precise math will depend on interpretations by CMS, and we’ll have to wait to see the MMHD RFP to clarify some issues.
The MMHD legislation states that the project will take place with “high-need populations”, defined as “individuals with multiple chronic illnesses that require regular medical monitoring, advising, or treatment.”
This is still pretty fuzzy wording.
Alan, you quote CMS as stating that 86% of Medicare patients will be eligible for enrollment. Can you reference a source? I’ve never seen anything this specific from CMS. 86% seems to stretch the definition of “high need population”.
Nonetheless, you’re absolutely right in asking about the population to which the PPPM fee should be applied, and $50 PPPM of a broad base of Medicare patients could be better than $150 PPPM of a frail, elderly population.
It’s unfortunate that we’re trying to do the math under such opaque conditions.
From page 3 of the RUC recommendations:
“CMS has indicated that it will rely on beneficiary eligibility criteria for the demonstration project that will expand inclusion to 86% of all beneficiaries based on the Hwang criteria.”
Also on page 3:
“If 86% were eligible for the demonstration (per CMS current criteria), 245 patients per family physician would be eligible.”
The 86% figure is also referred to in the cover letter to Kerry Weems.
The document emphasizes that the recommendations are based on a particular set of assumptions, and that different assumptions (such as eligibility criteria that would limit enrollment to 15% of Medicare beneficiaries) would change substanitally the recommended payment levels.
Thanks for clarification about 86%.
IMHO that changes scope of project significantly from what is implied by “high need population” wording in the enabling legislation….still mulling over implications.
Let’s see what the actual RFP looks like…hopefully soon.
I agree that the definition of the target population is very important. Certainly most Medicare recipients do not require high intensity care management at any given time. Many could benefit, however, from a reorganization of primary care using technology and refocused staff operating as a team, to improve the management of chronic disease. The PCMH is a total practice reorganization, not only a focused intervention dealing exclusively with the highest risk subgroup. In this sense it is conceptually different from other disease management initiatives.
I agree that there are major implications to CMS’s decision to structure the demo this way. I also agree that we will not know the real deal until the RFP is issued. But in the meantime, and in view of the criticism appearing suggesting that the RUC’s payment recommendations are inadequate, it is important for people to understand that the RUC recommendations are based on a broader and shallower payment approach than what they are used to thinking about.
Great series of blogs, Vince! As I was reading them, I kept thinking of the increasing number of PC docs who are re-inventing their practice outside of Medicare and the health plans, via so-called ‘concierge’ and retainer fee models. These models consist of a direct-to-patient management contract offered by physicians and their practices, and they typically include the kinds of health IT tools you mention that the RUC doesn’t — e.g. web portals, PHRs, etc. I wonder if HHS and CMS, in their wisdom, will ever get around to looking at what the private sector is doing, and what works when patients and their doctors self-select better models of care? DCK
It’s interesting that the 2k that some concierge docs charge is about $150 in pppm terms. The 2k covers a lot of what’s offered in the pcpmh.
Lowell
If aren’t measuring it then you don’t really know it’s value. I was happt to see the government realize it needs some help. In June 2008, Eight state Medicaid teams selected to meet in Washington, D.C. for summit to advance the Patient Centered Medical Home model. The Summit was a learning event designed to help foster innovation and widespread adoption of the PCHM model. Teams from 8 leading-edge states shared information from current medical home demonstrations and policy developments with other teams in a collaborative setting.
I haven’t heard anything come from this, but I hope some of these problems mentioned are resolved.