ACTIVITY DISCLAIMER. Assessing the Cost of Sustaining a PCMH: Experiences From Two States DISCLOSURE. Learning Objectives. Michael Magill, MD

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1 Assessing the Cost of Sustaining a PCMH: Experiences From Two States Michael Magill, MD David Ehrenberger, MD ACTIVITY DISCLAIMER The material presented here is being made available by the American Academy of Family Physicians for educational purposes only. This material is not intended to represent the only, nor necessarily best, methods or procedures appropriate for the medical situations discussed. Rather, it is intended to present an approach, view, statement, or opinion of the faculty, which may be helpful to others who face similar situations. The AAFP disclaims any and all liability for injury or other damages resulting to any individual using this material and for all claims that might arise out of the use of the techniques demonstrated therein by such individuals, whether these claims shall be asserted by a physician or any other person. Every effort has been made to ensure the accuracy of the data presented here. Physicians may care to check specific details such as drug doses and contraindications, etc., in standard sources prior to clinical application. This material might contain recommendations/guidelines developed by other organizations. Please note that although these guidelines might be included, this does not necessarily imply the endorsement by the AAFP. DISCLOSURE Michael Magill, MD It is the policy of the AAFP that all individuals in a position to control content disclose any relationships with commercial interests upon nomination/invitation of participation. Disclosure documents are reviewed for potential conflict of interest (COI), and if identified, conflicts are resolved prior to confirmation of participation. Only those participants who had no conflict of interest or who agreed to an identified resolution process prior to their participation were involved in this CME activity. All individuals in a position to control content for this activity have indicated they have no relevant financial relationships to disclose. Professor and Chair, Department of Family and Preventive Medicine, University of School of Medicine, Salt Lake City; Executive Medical Director, University of Heath Plans, Murray. Dr. Magill has been practicing and teaching family medicine for 35 years. For 13 years, he led a 100- physician multipractice group that developed Care by Design, a model for patient-centered medical homes (PCMHs). He is now implementing payment reform through the University of Health Plans, and he leads a research team that documents the development, benefits, and costs of medical homes. Dr. Magill is passionate about health care transformation that is founded on family medicine. The content of my material/presentation in this CME activity will not include discussion of unapproved or investigational uses of products or devices. David Ehrenberger, MD Chief Medical Officer, Avista Adventist Hospital, Louisville, ; Chief Medical Officer, Integrated Physician Network, Louisville,. Dr. Ehrenberger is a graduate of the Tufts University School of Medicine, Boston, Massachusetts, and the University of California Los Angeles (UCLA) Family Medicine Residency in Santa Monica. He practices family medicine part-time in a 2011 Level III National Committee for Quality Assurance (NCQA)-Recognized Medical Home. Special leadership interests include advanced primary care (i.e., the patient-centered medical home [PCMH]); value-based population health care through community-wide integration of electronic health records (EHRs); data analytics and health information exchanges; and physician leadership development. He is chair of the board of HealthTeamWorks, Golden, (formerly Clinical Guidelines Collaborative), a member of the NCQA PCMH/accountable care organization (ACO) Recognition Program Review Oversight Committee, and a member of the Society of Teachers of Family Medicine Steering Committee for Practice Improvement. Dr. Ehrenberger served as a member of the board of the Foundation for Medical Care (a state quality improvement organization [QIO]) from 2007 to Learning Objectives 1. Describe a method to estimate ongoing marginal cost to a primary care practice of sustaining patient-centered medical home (PCMH) services including use of a "Cost Dimensions Tool" developed for this purpose. 2. Summarize methods and results from a recent study that applied this methodology to 20 diverse practices in and. 3. Describe limitations of the study and resulting cautions for interpreting and using the results. 4. Identify potential implications of the study for the participant's own practice and for the design of new models of primary care payment. 1

2 Audience Engagement System Step 1 Step 2 Step 3 Study supported by the Agency for Healthcare Research and Quality Grant Number 1R03HS22620 Michael K Magill, MD; David Ehrenberger, MD; Debra L Scammon, PhD; Julie Day, MD; Lisa H Gren, PhD; Jaewhan Kim, PhD; Rhonda Sides, CPA The content is solely the responsibility of the authors and does not necessarily represent the official views of the Agency for Healthcare Research and Quality The case for practice transformation to the Patient Centered Medical Home is now compelling yet little is known about the ongoing costs to maintain the new services provided. The Quadruple Aim (Triple Aim + 1) STUDY AIM Improve Health Reduce Costs Improve Experience PLUS Provider and Provider Team Vitality Must understand the cost structure associated with on-going maintenance of PCMH services in small- and medium-sized primary care practices. 2

3 Study Groups Study Methodology 5 FQHC Sites 7 Family Practices 8 Multispecialty Primary Care Practices Design: Setting: Interviews: Outcomes: Case series: 20 clinical practices Cost Accounting methodology Primary care practices differ by: NCQA PCMH Recognition Ownership Payer mix Patient demographics and health status Practice and network leadership Multiple Measures Time Personnel costs Staffing Poll Question What is your best estimate of the cost to maintain PCMH services per clinician FTE per year? 1. $10, $25, $50, $100, $150,000 Four study stages 1. Develop PCMH Cost Tool 2. Collect data (facilitated, CCE) 3. Analyze data 4. Disseminate lessons learned Medical Home Models CO UT >= 69% Feature NCQA PCMH 2011 Care by Design TM Experience Access and Continuity Plan & Manage Care Self Care Support Measure & Improve Performance Appropriate Access Care Team Planned Care Health Manage Populations Appropriate Access Care Team Planned Care Cost Track/Coordinate Care Appropriate Access Care Team Planned Care 3

4 PCMH Cost Dimensions Tool Modeled on NCQA PCMH 2011 Standards Identifies specific ongoing costs associated with each of the NCQA PCMH dimensions Focused on resources and systems not found in traditional, high performing primary care practices PCMH Cost Dimensions Tool Exclusions: Basic Primary Care and EMR Functions Culturally and Linguistically Appropriate Services Electronic system for Patient Information Electronic system for Structured Clinical Data Comprehensive Health Assessment Use of Electronic Prescribing Poll Question How would you estimate cost of PCMH functions in your practice? 1. Ask the practice manager to estimate the cost 2. Ask a doctor to estimate the cost 3. Identify PCMH payment amount ( per member per month ) from insurance companies 4. Ask practice leaders to specify hours per month for PCMH functions by employee type 5. Conduct a formal time-motion study PCMH Cost Dimensions Tool Three survey worksheets: 1. Costs (line item) 2. Staffing 3. PCMH Functions Pilot tested at 3 NCQA PCMH Level III practices PCMH Cost Dimensions Tool: Cost Worksheet PCMH Cost Dimensions Tool: Practice Staff Worksheet 4

5 PCMH Cost Dimensions Tool: PCMH Functions Worksheet (Q&A via AES) Staffing Per Physician FTE The Data MA/Physician FTE Other Staff/Physician FTE NP or PA/Physician FTE Staffing Per Clinician FTE $16,000 $14,000 $12,000 $10,000 Cost per Month per Clinician FTE Practices $13,055 $10,190 $13,929 $9,295 $9, $8,000 $7,529 $6,558 $7, $6,000 $5, $4, MA/Clinician MA/Provider FTE Other Staff/Clinician Staff/Provider FTE NP PA/Physician FTE $2,000 5

6 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $8,366 $5,001 Cost per Month per Clinician FTE Practice $8,568 $9,066 $7,247 $8,423 $5,079 $5,176 $7,698 Poll Question What is your estimate: Average PCMH cost per encounter in study practices? 1. $12 $15 2. $33 $37 3. $65 $69 4. $82 $85 $70.00 Cost per Encounter Practices $75.00 Cost per Encounter Practices $74.02* $60.00 $59.34 $65.00 $50.00 $50.06 $55.00 $40.00 $30.00 $20.00 $34.12 $19.65 $36.32 $37.18 $23.57 $19.04 $36.68 $45.00 $35.00 $25.00 $30.04 $30.36 $33.01 $31.86 $30.31 $25.72 $23.83 $32.71 $15.00 $10.00 $5.00 $5.00 *New practice outlier excluded from UT mean cost per encounter $7.00 Cost PMPM (2000 Panel Size) Practices $6.96 $6.00 Cost PMPM (2000 Panel Size) Practices $6.00 $6.08 $5.00 $5.02 $5.00 $4.96 $4.65 $4.83 $4.00 $4.40 $4.05 $3.65 $4.21 $3.85 $4.00 $3.00 $3.80 $2.71 $3.28 $3.73 $3.00 $2.50 $3.06 $2.59 $2.00 $2.00 $1.00 $1.00 6

7 Total Cost Summary: per Encounter & PMPM* $40.00 $36.68 $35.06 $35.00 $32.71 $30.00 $25.00 $20.00 $15.00 $10.00 $4.83 $5.00 $3.85 $4.37 $- Cost per Encounter (Average/Pt) Cost Per "Member" Per Month *PMPM normalized to 2000 panel All Practices Poll Question Which of the following NCQA PCMH Standards costs the most to sustain? 1. Enhance Access and Continuity 2. Identify and Manage Populations 3. Plan and Manage Care 4. Provide Self Care Support and Community Resources 5. Track and Coordinate Care 6. Measure and Improve Performance PCMH Standards and Elements Annual Cost per FTE Clinician $35, Enhance Access and Continuity $28,076 $30,000 $28,076 $40,000 $25,000 Cost per Provider FTE/year $35,248 Total Cost per Provider/Year = $104, Plan and Manage Care $35,248 $20,000 $15,000 $10,000 $10,172 $14,663 $10,994 $5,000 $5,646 $0 1. Enhance 2. ID & Manage Pt Access/Continuity Populations 3. Plan and Manage Care 4. Provide Self 5. Track and Care Support and Coordinate Care Community Resources 6. Measure & Improve Performance $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 Cost per Month per FTE Provider $9,658 $7,698 $8,733 All Practices $- All Practices Data not adjusted for Consumer Price Index, practice characteristics, patient population. Examples of Potential Payment for PCMH Functions* Function Fee for Service Chronic Care Management Value Based Purchasing Enhance Access & Continuity Plan and Manage Care Self Care Support Track & Coordinate Care Per Member Per Month *per FTE clinician $28,076 2,000 pts 15% Medicare 50% eligible for CCM 300 pts 150 pts X $42/pt/mo X 12 mo = $75, patient panel X $4.37 pmpm = $104,900 7

8 Limitations Qualitative assessment of PCMH functions Partial implementation of PCMH Assessed cost of PCMH, not revenue Estimated panel size: 2000 patients/fte physician Not addressed: Cost of implementation Opportunity costs Outcomes: ROI, quality, satisfaction Main Findings Marginal costs to maintain PCMH are consistent across various practice settings: ~$35/encounter, ~100,000/yr/FTE clinician Value-based payment (PMPM, CCM) may roughly offset most marginal costs This study s cost data do not reflect the cost of full PCMH implementation or those of future PCMH constructs (2014 and beyond) Future research should examine Costs of PCMH relative to associated revenue and opportunity costs The relationship of PCMH costs to quality, total cost of care, provider, staff, and patient experience Cost variation by practice type and by staffing model to identify the most efficient practice model(s) Implications the Good News Advanced Primary Care (APC) i.e., PCMH may be heavy lifting but it s also about doing the right thing All PCMH Standards (systems) are not equal begin with the low cost, high impact practice changes Your voice matters in driving payment reform Practice Recommendations Measure your practice s actual costs of PCMH elements (Q&A via AES) Negotiate payment using cost facts to cover value of PCMH 8

9 Finis Thank you! Contact Info: Not So Fast. PCMH Cost Take Home Messages Cost/encounter = $35.06 Cost PMPM = $4.37 Cost/FTE Provider/month = $8,733 Cost/FTE Provider/year = $104,799 Let s do a Gut Check: 6 Provider Family Practice (3MD, 3MLP) PCMH Cost Gut Check Assumptions: Key NCQA PCMH Functions Rates: $95/hr, $46/hr, $35/hr, $17/hr, $16/hr, BHP $40/hr Afterhours: 3 hrs/eve and Sat (MD, PA, MAx2, FO) Outsourced data analytics, reporting PCMH Maintenance Cost gut check Role/Function Rate FTE or $/mo Yearly cost Care Coordinator $41/h 1 $??? Practice Coach $31/h 0.17 $??? Champion (MD) $95/h 0.08 $??? Analytics/valid/provider $300/mo $??? Report writing/provider $50/mo $??? Huddles, Rx Rec, Care Plan, PSM $6,678/mo $??? PI Team, QI, Group Vst, Team mtgs $2605/mo $??? Registry outreach (MA) $17/h 1 $??? Tracking (lab, ref, imaging) $17/h 0.5 $??? After-hrs access (eve, Sat) $13,680 $??? Behavioral Health $40/h 0.4 $??? Pt Sat (CG-CAHPS) $700/prov $??? TOTAL/year (+benefits) $??? TOTAL/year/provider $??? 3MD/3MLP Practice PCMH Maintenance Cost gut check Role/Function Rate FTE or $/mo Yearly cost Care Coordinator $41/h 1 $65,000 Practice Coach $31/h 0.17 $12,500 Champion (MD) $95/h 0.08 $16,000 Analytics/valid/provider $300/mo $21,600 Report writing/provider $50/mo $3,600 Huddles, Rx Rec, Care Plan, PSM $6,678/mo $80,136 PI Team, QI, Group Vst, Team mtgs $2605/mo $31,260 Registry outreach (MA) $17/h 1 $35,000 Tracking (lab, ref, imaging) $17/h 0.5 $16,320 After-hrs access (eve, Sat) $13,680 $164,160 Behavioral Health $40/h 0.4 $30,720 Pt Sat (CG-CAHPS) $700/prov $4,200 TOTAL/year (+benefits) $600,620 TOTAL/year/provider $100,103 3MD/3MLP Practice 9

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