Payment Reform
In states across the country, the transformation to the Patient Centered Medical Home has saved taxpayers millions of dollars in health care costs. Recent studies estimate that if every American had access to a Medical Home, national health care expenditures would drop by 5.6%—translating into a national savings of at least $67 billion per year. The most notable savings example is the state of North Carolina—which, from 2003 to 2006, demonstrated savings of more than $200 Million dollars per year. Here’s where the savings were realized:
The North Carolina Experience (2003-2006)
| Category of Service | Estimated Savings from Benchmark |
|---|---|
| Inpatient | $142,085,680 |
| Outpatient | $51,865,028 |
| Emergency Room | $25,944,553 |
| Primary Care, Specialist | $45,498,709 |
| Pharmacy | $(15,526,996) |
| Other | $(5,065,238) |
| Totals | $244,801,735 |
In a PCMH, savings are achieved because physicians:
- Proactively assist their patients in staying healthy and managing existing illnesses or conditions
- Coordinate patient care among an organized team of health care professionals
- Utilize systems at the practice level to achieve higher quality care and better outcomes
- Focus on whole person care for their patients
Incorporating these value-added practices, however, takes time and money. To incentivize practices to make the investment, the PCMH payment model incorporates a “blended payment” program which recognizes the value of:
- Fee for Services
- Care Management fees in the form of Per-Member, Per-Month (PMPM) payments
- Pay for Performance (P4P) bonuses
WAFP has proposed a blended payment plan for Medical Assistance incorporating enhanced fee for service fees and a care management fee. Under the program, care management and fee-for-service fees would be increased according to the PCMH recognition level achieved by the practice:
| Level of Recognition | FFS primary care fee schedule increase | PMPM care management fee |
|---|---|---|
| No recognition | 0% | $0 PMPM |
| Level 1 PCMH recognition |  % |
$ PMPM |
| Level 2 PCMH recognition | % |
$ PMPM |
| Level 3 PCMH recognition | % |
$ PMPM |
The Wisconsin Projection
While the compensation model is not yet in place in Wisconsin, the plan has the potential to save Wisconsin taxpayers millions each year – and – deliver benefits to PCMH practices, as well. What follows are projected savings under various participation percentages – and assuming an average PMPM of $12.00. (This is an estimated amount based on data from other PCMH pilots and demonstrations.)
Patient Centered Medical Home Wisconsin Projections
| Medicaid Participants |
% in PCMH | Monthly Savings per Participant | Annual Savings per Participant | Annual Savings | Monthly Cost per Participant PMPM | Projected Cost (paid to PCMHs) | Net Savings |
|---|---|---|---|---|---|---|---|
| 45,650 | 5% | $29.05 | $348.57 | $15,912,286 | $12.00 | $6,573,600 | $9,338,686 |
| 91,300 | 10% | $29.05 | $348.57 | $31,824,571 | $12.00 | $13,147,200 | $18,677,371 |
| 228,250 | 25% | $29.05 | $348.57 | $79,561,429 | $12.00 | $32,868,000 | $46,693,429 |
| 456,500 | 50% | $29.05 | $348.57 | $159,122,857 | $12.00 | $65,736,000 | $93,386,857 |
For a Wisconsin practice of 5000 patients at Level 1 PCMH recognition, for example, that means a potential of $300,000 annually in PMPM payments.
For the latest updates on payment reform efforts in the state of Wisconsin, contact Larry Pheifer.
