Register / Log In

PCMH model unlikely to yield cost reductions

The patient-centered medical home (PCMH) model may well bring benefits to the nation’s healthcare system, but reducing the cost of care is not likely to be among them.

That finding emerges from a study of costs and utilization at Veterans Health Administration (VHA) clinics around the country before and after the VHA’s decision in 2010 to implement its Patient Aligned Care Teams (PACT) initiative, which is similar to the PCMH model. Results of the study appear in the June, 2014 issue of Health Affairs.

After examining data from the years 2003 through 2012, researchers concluded that the savings from the PACT initiative were less than what the VHA invested in it, while adding that ongoing trends in costs and use are “favorable.”

The PACT initiative was designed to make primary care through the VHA more comprehensive, longitudinal and patient-centered. Under the model, each primary care provider—either a physician or a nurse practitioner—leads a team that includes a registered nurse care manager, a medical assistant and an administrative clerk. In addition, each VHA facility hired a cross-team health promotion specialist and health behavior coordinator.

PACT also expanded an earlier VHA initiative designed to integrate mental health and primary care by locating mental health professionals in primary care facilities to address issues such as depression, post-traumatic stress disorders and substance abuse disorders.  In all, the VHA spent $774 million on PACT, which included the hiring of an additional 1,271 registered nurse care managers.

The researchers looked at results for the five million VHA patients enrolled in primary care when the PACT initiative began, focusing on eight measures they believed would be affected by the initiative. Three of those were found to be statistically significant: hospitalizations for ambulatory care-sensitive conditions and outpatient visits with mental health specialists decreased, and primary care visits among patients aged 65 and older increased significantly.

The authors estimate that the changes in utilization resulting from the PACT initiative saved the VHA system $559 million, resulting in a net loss to the system of $178 million. The savings were due largely to a reduction in specialty mental health benefits.

“This suggests that an organization’s decision to adopt the PCMH model should be based not upon unrealistic expectations of substantial costs savings, but upon expected benefits, such as improved quality of care and high satisfaction with care,” the authors conclude.

The study’s findings are consistent with those of studies of other PCMH initiatives, such as the Group Health Cooperative pilot home, and Geisinger’s advanced medical home initiative, both of which were, like PACT, part of integrated health systems.


Though 6 million new patients have enrolled for Medicaid coverage due to expansion of the program, media reports say that nearly half of those enrollment applications have yet to be processed.

While the Centers for Medicare and Medicaid Services is boasting of a successful ICD-10 testing week, a recent study shows that the switch to the new code set could be a significant financial disruption for narrow-margin primary care practices, especially those in pediatrics.

Newly appointed U.S. Department of Health and Human Services Secretary Sylvia Mathews Burwell will face several challenges upon entering office, as she is tasked with the continued implementation of the Affordable Care Act.

Technology giant Apple unveiled its new operating system, iOS 8, on June 2, and a new platform called HealthKit has the healthcare IT industry abuzz with its possibilities.

Physicians are guiding accountable care organizations into the future in leadership roles, which will have profound effects on the future of the care model.

The problem with these studies of the PCMH model is that it is expected that cost savings which would be achieved will come from changes in population health. All these changes will be slow over 5-10 years by improving health early in chronic diseases such as diabetes, hypertension and heart failure(diastolic) and to expect these models to create cost savings in a few years is unrealistic. PCMH models require no government waivers or other special changes in corporate structure or cost sharing but do require additional investment in nursing and mid level providers. This is in counter-distinction to ACO models which can only exist thanks to antitrust, Stark and AKS/FCA waivers. Even in ACO models where strong financial incentives are possible and savings are sometimes achieved by radical treatments like antibiotics instead of surgery for appendicitis, cost savings are slower than desired and difficult to achieve. Moreover, even large clinically intergrated medical organizations like Geisinger that participated in ACO pilots often failed to succeed before legislation was created allowing lower costs to create ACOs and allowing access to additional information about the patients being cared for by the health system. Today, many of the models that are working are doing so because they have robust access to patient data and the ability to analyze those data near real time to decrease risk and choose more cost effective options. The government needs to facilitate sharing of patient information not only from government insurers but from all insurers in a near real time fashion. Only with access to such data, will providers be successful at rapid cost saving strategies, rather than strategies targeted long term to population health. Until then strategies such as the PCMH must continue to attempt to improve health care long term by improving risk factors and attempting to decrease the number of patients not taking advantage of known preventive options for their diseases or medical risk.
Jun 7, 2014