The Patient-Centered Medical Home: How It Will Affect Medical Billing (Part I)

Kathy McCoy, MBA August 12th, 2011

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What will the patient-centered medical home mean to medical billing?In a previous post, we introduced the concept of patient-centered medical homes, or PCMHs. In it, we explained that a PCMH is a physician-led primary care practice designed to provide more personalized, better-coordinated care and improved health at a lower cost. A PCMH achieves these improvements by making care more accessible, focusing on prevention, reducing errors, increasing efficiency, working in partnership with patients and measuring and improving the quality of its care.

But, why should this matter to a medical billing professional?

Get ready for change

First, PCMHs are of importance to billing staffers because the concepts behind the “medical home” are the linchpin of a current and growing vision of tomorrow’s model of healthcare. Quite importantly, the core tenets of the PCMH are the basis for the reforms happening now as part of the Patient Protection and Affordable Care Act (PPACA). The concepts of “accountable care,” “meaningful use,” “quantifiable indicators of quality of care” and many others are fundamental to these reforms. At the same time, these are concepts that have come from the medical-home model that has been evolving for the past five decades.

Many primary care practices are already embracing the PCMH model. There are many pilot programs underway, and some 14,000 physicians caring for nearly 5 million patients were participating in these programs by the middle of 2010. And more are following suit. Practices that decide to become medical homes will, to put it bluntly, experience considerable change. Medical billing personnel — and all other staffers — in these practices will be exposed to and part of significant realignment, restructuring, IT investment, policy and procedure changes and more. So, change is coming. But what changes?

A new system of payment/reimbursement

For medical billing personnel, the biggest question is this: How will the PCMH model impact how billing is handled? The simplest answer is that reimbursement is likely to change… though exactly how depends on many variables. But it makes sense to discuss what is driving the potential and desired changes. 

For the people and organizations developing the PCMH model, driving the transition and choosing to become medical homes, payment reform is definitely in mind. In fact, payment/reimbursement reform is an essential component to the successful implementation of the medical home model. The reason for this is that the transition to PCMH, the implementation of its principles and the delivery of this type of care are all costly. Providing medical-home care requires more time and a greater dedication of practice resources, none of which are free to the practice.

In addition, the entire premise is that a medical home provides greater value to patients while also reducing the overall cost of healthcare. So there should be savings, and the care is — simply put — more valuable.

Sharing in the cost reductions

The reforms in the PPACA are centered around not just improving care and reducing costs but specifically around the concept of “accountable care.” And Accountable Care Organizations (ACOs), which are also emerging in the new healthcare reality, are essentially a product of the Medicare Shared Savings Program. Providers are aligning into ACOs in part to share in the financial rewards resulting from the savings provided by their new efficiencies. This notion of sharing in the cost savings is also an important part of the proposed payment/reimbursement reforms specified in the PCMH model.

Payment reform is one of the “joint principles” of the medical-home model

The PCMH Joint Principles (see previous blog post The PCMH: An overview for medical billing personnel), include the principle that payment for medical homes should appropriately recognize and reflect the additional value they provide to patients. The Joint Principles also outline a clear structure for reimbursement reform, asserting that it should…

•     Reflect the value of both physician and non-physician work beyond just the face-to-face patient visit.

•     Pay for services associated with the coordination of care—not just within the practice itself but also between other providers, consultants and resources.

•     Support the adoption and use of healthcare information technology (HIT) to improve quality of care.

•     Support the provision of enhanced communication methodologies between patients and the PCMH, including secure email and telephone consultation

•     Recognize the value of physician work associated with remote monitoring of clinical data.

•     Allow for separate fee-for service payments for face-to-face visits, making sure that payment for non-visit work doesn’t reduce the payment for the visits themselves.

•     Recognize the differences in the case mix within the PCMH’s patient population.

•     Allow for additional payments for achieving measurable and continuous quality improvements.

•     Allow physicians to share in the savings that result from improved management of patient care, such as reduced hospitalizations.

Payment, incentive and the complex reality of who does the paying

Based on the above tenets, there is a “proposed nation model” for changing reimbursement. This model includes payment for services, payment for quality and efficiency and payment for infrastructure support. But these are not all directly tied to what billing personnel will handle in the normal course of their duties. Some of these “payments” are incentives, and these depend on the willingness and specific program design of the payers. The majority of the current PCMH pilot programs are through single payers, who use a three-part payment model consisting of traditional fee-for service, fixed per-month-per-member payments and performance bonuses. How PCMH payment is handled in non-single-payer situations is more complex… and still evolving.

In future posts, we will cover other important aspects of the medical home, including billing codes and, of course, the ongoing changes and evolutions in the PCMH model. We invite all medical billing managers and staff to come back and learn more, and to share your comments on what this all means to your practice and the future of healthcare.


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