November 13, 2008 

"Medical Homes" in Medicare –
A Care Coordination Demonstration

The Centers for Medicare & Medicaid Services (CMS) has undertaken a three-year "medical homes" care coordination demonstration.  The medical homes concept focuses on care coordination for Medicare beneficiaries with one or more chronic conditions, using the Medicare beneficiary's electronic medical record as a key care coordination tool.  The demonstration was created by the Tax Relief and Health Care Act of 2006 (TRHCA)[1] and modified by the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA).[2]

In January 2009, CMS will begin recruiting eligible medical practice sites in no more than eight states to act as medical homes.  The sites will serve urban, rural, and underserved areas.  The chosen medical practices will begin providing services to beneficiaries in January 2010. Payments for the medical homes demonstration end December 2012 and final evaluations are to be completed by December 2013.  

The Medical Home in Medicare

The concept of a medical home is part of a newer notion of care coordination referred to as the "patient-centered medical home" (PCMH).[3]

1.  Elements of the Medical Home

The medical home demonstration is intended to "redesign the health care delivery system to provide targeted, accessible, continuous and coordinated, family-centered care to high-need populations."[4] Under the demonstration, the terms "high-needs populations" and "family-centered care" define access criteria. "High-needs population" refers to beneficiaries with a chronic problem or problems being addressed by a variety of health care providers. Section 133 of MIPPA gives the Secretary the authority to expand the medical homes demonstration, and this is reflected in the current demonstration design.

2.  Who Can Participate?

To participate in the medical homes demonstration, a Medicare beneficiary:

• Must participate in the traditional Medicare program;

• Must be enrolled in Medicare Part A and Part B;

• Must have at least one eligible chronic disease as defined by CMS;[5]

• May not be in a Medicare Advantage plan, hospice, a long-term nursing home, in treatment for end-stage renal disease, or in another Medicare demonstration.

A beneficiary who divides his or her time between several residences may still participate in the medical homes demonstration project provided his or her primary residence is in the location of the physician practice medical home.[6]

A Medicare beneficiary who receives services through a physician practice that has agreed to participate in a medical homes demonstration project will not lose eligibility upon entering a nursing home, provided the beneficiary receives primary care from the medical home. Similarly, a beneficiary retains eligibility if care is received through a home health agency or through hospice.  In addition, the beneficiary may remain in the demonstration project if he or she recovers from the chronic condition(s) that enabled initial eligibility.[7] A beneficiary who is dually-eligible for Medicare and Medicaid and in the traditional Medicare program may also participate in the demonstration project.[8]  

A beneficiary enrolled in the demonstration project can lose eligibility if he or she:

• Does not sign an annual reenrollment form;

• Moves away from the demonstration project site;

• Loses Part A or Part B coverage;

• Enrolls in a Medicare Advantage plan;

• Disenrolls from the demonstration project;

• Changes to a new practice not part of the demonstration project;

• Enters the Medicare End Stage Renal Disease (ESRD) program.[9] 

3.  Qualifying Medical Practices

According to a CMS Fact Sheet from October 2008,[10] the medical homes demonstration project will divide qualifying medical practices into two tiers. The Tier 1, or "typical" medical homes, must have 17 basic capacities that include a health assessment plan, an integrated care plan, medication reviews, and referral tracking. The Tier 2 or "enhanced" medical homes have the 17 basic capacities, plus electronic medical records, and coordination of care capabilities, and must also have three of nine optional components.[11]   An aspect of CMS' implementation of the tier system is to provide financial incentives for medical homes to invest in better technology that facilitates care coordination.

4.  Tiered Reimbursement for Medical Practices

The pricing scheme for Tier I and Tier II practices is not the same, and pricing will vary within each Tier based on the risk-adjusted Hierarchal Condition Code (HCC) score assigned to each Medicare beneficiary.  The HCC score is a reflection of the beneficiary's health condition and is derived from the Relative Value Units (RVUs) that the American Medical Association's Relative Value Units Update Committee (RUC) recommends to CMS.   

A beneficiary with an HCC score of 1.6 or higher is deemed more likely to be ill and require more physician effort.  For a Tier 1 beneficiary with a score of 1.6 or higher, the fee would be $80.25; for a beneficiary with a score lower than 1.6, the per-member-per-month fee would be $27.12; for a Tier 2 beneficiary, the fees would be $100.35 for HCC scores 1.6 or higher and $35.48 for HCC scores below 1.6..[12] 

Public Policy Discussion

A variety of entities have attempted to describe a more comprehensive, substantive rendering of the medical homes concept.  Four physician organizations, for example, have developed a set of joint principles on medical homes to include a "health care setting that facilitates partnerships between individual patients, and their personal physicians, and when appropriate, the patient's family."[13] Similarly, the Medicare Payment Advisory Commission (MedPAC), a group created to advise the Congress on Medicare payment policy, has defined medical homes as a construct that "serves as a central resource for a patient's ongoing care."[14] Others see the Geisinger Health Plan, a large Pennsylvania-based health plan, as typifying medical homes.  The Geisinger model is described as an approach that "is designed to deliver value by improving care coordination and optimizing health status for each individual."[15]

MedPAC asserts that CMS's demonstration project will allow medical homes to share in the savings if the practice reduces hospitalization rates and medical errors.  In addition, traditional Medicare pays for most physician services on a fee schedule basis. Some practitioners and policymakers argue that many of the services that doctors provide are not listed as codes, and, therefore, doctors and other providers are not paid for their time, even though these services can be critical to the care of a patient.  Others argue that the cost of care coordination is included in payment rates.

Advocate Concerns About Medical Homes

It is important that beneficiaries retain the ability to choose their health care providers, including medical homes.  A key factor is whether local physician practices will meet the criteria for designation as medical homes. MedPAC encourages policymakers and planners to inform beneficiaries that even when they are voluntarily enrolled in a specific medical homes physician practice, their access to other physicians is not restricted.[16] It is imperative to reflect this flexibility in future refinements to the medical homes concept.

A criterion of the CMS demonstration project is that beneficiaries have at least one chronic condition.  MedPAC, however, recommended that the demonstration project begin with beneficiaries who have at least two chronic conditions. Advocates may favor the one chronic condition criterion because it recognizes that many Medicare beneficiaries with one chronic condition may require multiple physicians' involvement and thus meet CMS's "high-needs" criteria.

Another concern is that the medical homes approach may be too focused on health information technology (health IT).  Currently, larger and more affluent practices are moving into the health IT environment, while the take-up rate in smaller practices is slower. Additional steps to include smaller, less affluent practices as well as those in more isolated communities should be developed and made part of the demonstration project, including transportation and other social services. 

Advocates should continue to monitor these developments to make sure that beneficiaries who use rural and small practices are able to benefit from medical homes. The Geisinger approach has been pointed to by proponents of medical homes as having the capacity to conduct a medical homes program in a rural area.  The Geisinger health plan is, however, a large entity with significant capacity and reach. Its successes may be difficult to replicate in circumstances where physician practices are not as advanced in the use of health IT.

Conclusion

As the demonstration project gets underway, it will be important for advocates to work with policy planners and those responsible for program implementation. Beneficiary education about the value of medical homes and care coordination will be essential.  These activities may well lead to a broader spectrum of Medicare beneficiary participation in medical homes, particularly for persons who are isolated, have few resources, and who rely on physicians' practices that lack meaningful access to health IT.

For more information, contact attorney Alfred Chiplin (achiplin @ medicareadvocacy.org) in the Center for Medicare Advocacy's Washington, DC office at (202) 293-5760.

Copyright © 2010 Center for Medicare Advocacy, Inc.