Archive for the ‘health care reform’ Category

Plan Participation in Health Insurance Exchanges: Implications for Competition and Choice

September 11, 2012 Comments off

Plan Participation in Health Insurance Exchanges: Implications for Competition and Choice

Source: Urban Institute

This brief examines the conditions under which competition in health insurance exchanges is likely to be effective in placing downward pressure on insurance premiums. We conclude that areas with a single dominant insurer or a dominant hospital system are less likely to experience effective competition. In markets in which there are several insurers with significant market share and no dominant hospital system, the result could be limited or tiered network products that could successfully constrain the cost of premiums. Participation of existing Medicaid plans may also increase effective competition in health insurance exchanges.

CRS — NFIB v. Sebelius: Constitutionality of the Individual Mandate

September 10, 2012 Comments off

NFIB v. Sebelius: Constitutionality of the Individual Mandate (PDF)

Source: Congressional Research Service (via Federation of American Scientists)

In one of the most highly anticipated decisions in recent years, the Supreme Court released its ruling regarding the constitutionality of the Affordable Care Act (ACA) in June 2012. In NFIB v. Sebelius, the Court largely affirmed the constitutionality of ACA, including its individual mandate provision. In a move that was unexpected to many, the Court upheld the mandate as a valid exercise of Congress’s taxing power, but not its Commerce Clause power.

First, Chief Justice Roberts, in a controlling opinion, found that the Commerce Clause does not provide Congress with the authority to enact the individual mandate. While the Chief Justice acknowledged that Congress’s authority to regulate interstate commerce is quite broad, he also pointed out that Congress had never attempted to use this power to make individuals buy an undesired product. The Chief Justice further noted that the language of the Clause (i.e., the power to regulate interstate commerce) reflects the idea that there must be something to regulate in the first place (i.e., some type of “activity”). The problem with the individual mandate, as indicated by the Chief Justice, is that it “does not regulate existing commercial activity. It instead compels individuals to become active in commerce by purchasing a product on the ground that their failure to do so affects interstate commerce.” The Chief Justice also noted that if the mandate were permissible under the Commerce Clause, a mandatory purchase could be permitted to solve almost any problem, thus agreeing with those who had raised concerns about a lack of a limiting principle—the idea that if Congress could require the purchase of health insurance, it could require Americans to purchase anything. While no other Justice joined the opinion of Chief Justice Roberts with respect to the Commerce Clause analysis, four Justices issued a dissenting opinion that reached the same conclusion based on somewhat similar reasoning.

The Chief Justice then found the mandate provision to be a valid exercise of Congress’s taxing power. For this portion of the opinion, Chief Justice Roberts was joined by Justices Ginsburg, Breyer, Sotomayor, and Kagan. The key question here was whether the mandate provision was a tax or penalty. The Court used a functional approach to find the provision was in fact a tax, looking at its substance and application, rather than any statutory labels (which used the term “penalty”). The Court rejected the argument that the provision was actually a regulatory penalty, and therefore outside the scope of the taxing power, because it was not prohibitory, had no scienter requirement, and would be collected just like any other tax by the IRS. The provision’s obvious regulatory purpose was not a significant factor, with the Court noting that it is common for taxes to be intended to influence behavior. Further, the Court found the provision did not have to be read as making the failure to buy health insurance unlawful. Finally, the Court found the mandate provision, while a tax, was not a “direct tax” and therefore was not subject to the Constitution’s requirement that direct taxes be apportioned among the states based on population.

It should be noted that the Supreme Court also rendered a decision on the constitutionality of the ACA’s expansion of the Medicaid program. For a discussion of the Supreme Court’s decision on the Medicaid expansion, see CRS Report R42367, Medicaid and Federal Grant Conditions After NFIB v. Sebelius: Constitutional Issues and Analysis, by Kenneth R. Thomas.

Provider 2020: Strategies for strategic differentiation in an uncertain environment

September 1, 2012 Comments off

Provider 2020: Strategies for strategic differentiation in an uncertain environment
Source: Deloitte

A number of factors are converging to make the next decade likely one of the most tumultuous in the history of the health care industry. While it may seem premature or even risky to begin planning for a future that is uncertain, the greater risk is failing to take decisive action now.

“Provider 2020: Strategies for strategic differentiation in an uncertain environment” takes a closer look at a strategic response to the path forward. In this article, Deloitte reviews:

  • Potential strategic destinations for hospitals and health systems
  • The evolving journey of strategic differentiation
  • “False positives” in the current market
  • Where to start: Selecting the suitable path for strategic differentiation

National Federation of Independent Business v. Sebelius: Five Takes

August 28, 2012 Comments off

National Federation of Independent Business v. Sebelius: Five Takes
Source: Social Science Research Network

In this article, following our now-famous “Five Takes” format, we will look at some possible meanings and implications of the Supreme Court’s decision.

We first consider possible analogies between NFIB and two other famous cases whose opinions are held out as deftly straddling the line between principle and prudence: Marbury v. Madison and the Bakke case (Takes One and Two). Takes Three and Four examine the opinion though the lens of constitutional theory. We consider whether the decision, Chief Justice Roberts’s opinion especially, served what Charles Black called the Court’s “legitimating” function, quelling doubts about the Act’s constitutionality and, thus, its legitimacy. We further consider whether, in ultimately upholding the Act despite its relative unpopularity, Chief Justice Roberts’s opinion could be seen as an example of judicial restraint a la James Bradley Thayer. Finally, in Take Five, we consider that the peculiar construction of the opinion handed the Administration a somewhat Pyrrhic victory while laying the foundation for robust judicially-enforced limits on congressional power. A brief conclusion follows.

New High Interest GAO Report — Patient Protection and Affordable Care Act: Estimates of the Effect on the Prevalence of Employer-Sponsored Health Coverage

August 13, 2012 Comments off

New GAO Report

Source: Government Accountability Office

Patient Protection and Affordable Care Act: Estimates of the Effect on the Prevalence of Employer-Sponsored Health Coverage. GAO-12-768, July 13.
Highlights –

CBO — Letter to the Honorable John Boehner providing an estimate for H.R. 6079, the Repeal of Obamacare Act

August 13, 2012 Comments off

Letter to the Honorable John Boehner providing an estimate for H.R. 6079, the Repeal of Obamacare Act

Source: Congressional Budget Office

CBO and the staff of the Joint Committee on Taxation (JCT) have estimated the direct spending and revenue effects of H.R. 6079, the Repeal of Obamacare Act, as passed by the House of Representatives on July 11, 2012. H.R. 6079 would repeal the Affordable Care Act (ACA), with the exception of one subsection that has no budgetary effect. This estimate reflects the spending and revenue projections in CBO’s March 2012 baseline as adjusted to take into account the effects of the recent Supreme Court decision regarding the ACA.

For various reasons discussed in the report, the estimated budgetary effects of repealing the ACA by enacting H.R. 6079 are close to, but not equivalent to, an estimate of the budgetary effects of the ACA with the signs reversed.

Opting in to the Medicaid Expansion under the ACA; Who are the Uninsured Adults Who Could Gain Health Insurance Coverage

August 12, 2012 Comments off

Opting in to the Medicaid Expansion under the ACA; Who are the Uninsured Adults Who Could Gain Health Insurance Coverage
Source: Urban Institute

This brief provides new national and state-level information about the uninsured adults with incomes below 138 percent of FPL who could become eligible for Medicaid if states decide to expand Medicaid under the Affordable Care Act (ACA). At present, few states cover non-disabled, non-pregnant parents with incomes up to 138 percent of the Federal Poverty Level (FPL) and even fewer cover such adults without dependent children. This analysis shows that the approximately 15 million uninsured adults who could gain coverage under the ACA Medicaid expansion are a diverse group in terms of their age, gender and race/ethnicity.

Still Standing: Planning for the High-Wealth Tax Increases Ahead

August 11, 2012 Comments off

Still Standing: Planning for the High-Wealth Tax Increases Ahead
Source: Deloitte

The Supreme Court’s decision to uphold the Patient Protection and Affordable Care Act of 2010 means that two new tax increases in the health care reform law targeting earned and unearned income of certain wealthier individuals will take effect as scheduled in 2013.

Still standing: Planning for the high-wealth tax increases ahead examines these provisions and discusses practical steps taxpayers can take now to evaluate their tax positions for 2013 and prepare for the impact of these impending tax hikes.

Private Health Insurance Exchanges and Defined Contribution Health Plans: Is It Déjà Vu All Over Again?

August 6, 2012 Comments off

Private Health Insurance Exchanges and Defined Contribution Health Plans: Is It Déjà Vu All Over Again?

Source: Employee Benefit Research Institute

This Issue Brief examines issues related to private health insurance exchanges, possible structures of an exchange, funding, as well as the pros, cons, and uncertainties to employers of adopting them. A summary of recent surveys on employer attitudes are examined, as are some changes that employers have made to other benefits that might serve as historical precedents for a move to some type of defined contribution health benefits approach.

  • The combination of insurance market reforms and the embodiment of the exchange structure in the Patient Protection and Affordable Care Act (PPACA) has brought a renewed focus on limiting employer’s health care cost exposure.
  • The key provisions of PPACA influencing these considerations are not the availability of exchanges per se, but a number of insurance market reforms that are combined with the exchanges, such as guaranteed issue, modified community rating, premium and cost sharing subsidies, and increased choice of health plan.
  • Following the growth of defined contribution (DC) retirement benefits, DC health benefits were seen as promising tools to help control employer benefit costs by capping the employer’s per-worker insurance contribution and engaging workers in their health care choices.
  • Employers never moved in the direction of giving workers a defined or fixed contribution to purchase health insurance for a number of reasons: They were hesitant to drop group coverage in favor of offering individual policies, and they were concerned that many employees would not be able to secure coverage in the individual market.
  • Employer issues addressed with an exchange/fixed contribution approach include cost certainty, total compensation transparency, uniformity of benefits in multi-state environments, COBRA costs, the looming excise tax on high cost coverage (the so-called “Cadillac tax”) under PPACA, the potential for reduced administrative costs, and higher employee satisfaction.
  • Employer issues that need to be addressed in adopting a private exchange/fixed contribution approach include plan design, implications of adverse selection, setting the level of fixed contribution, the amount of plan choice, and geographic cost variation.
  • Issues not addressed by an exchange/fixed contribution approach include worker preference of, and satisfaction with, employment-based coverage, group purchasing efficiencies, the role of employer as advocate in coverage disputes, delivery innovation and health care quality, and health literacy issues.

New From the GAO

August 1, 2012 Comments off

New GAO Reports and Testimony

Source: Government Accountability Office

+ Reports

1. Influenza Pandemic: Agencies Report Progress in Plans to Protect Federal Workers but Oversight Could Be Improved. GAO-12-748, July 25.
Highlights –

2. Medicare: CMS Needs an Approach and a Reliable Cost Estimate for Removing Social Security Numbers from Medicare Cards. GAO-12-831, August 1.
Highlights –

3. Medicaid Expansion: States’ Implementation of the Patient Protection and Affordable Care Act. GAO-12-821, August 1.

4. Counter-Improvised Explosive Devices: Multiple DOD Organizations are Developing Numerous Initiatives. GAO-12-861R, August 1.

5. Service-Disabled Veteran-Owned Small Business Program: Vulnerability to Fraud and Abuse Remains. GAO-12-697, August 1.
Highlights –

6. Contingency Contracting: Agency Actions to Address Recommendations by the Commission on Wartime Contracting in Iraq and Afghanistan. GAO-12-854R, August 1.

7. Ensuring Drug Quality in Global Health Programs. GAO-12-897R, August 1.

+ Related Product

Survey on States’ Implementation of the Patient Protection and Affordable Care Act (GAO-12-944SP, August 2012), an E-supplement to GAO-12-821. GAO-12-944SP, August 1.

+ Testimony

1. Medicare: Action Needed to Remove Social Security Numbers from Medicare Cards, by Kathleen M. King, director, health care, and Daniel Bertoni, director, education, workforce, and income security issues, before the Subcommittees on Social Security and Health, House Committee on Ways and Means GAO-12-949T, August 1.

2012 Deloitte Survey of U.S. Employers: Opinions about the U.S. Health Care System and Plans for Employee Health Benefits

July 31, 2012 Comments off

2012 Deloitte Survey of U.S. Employers: Opinions about the U.S. Health Care System and Plans for Employee Health Benefits (PDF)

Source: Deloitte

From press release:

U.S. employers are concerned about continued rising health care costs; however, they are unaware of solutions that could improve the safety and quality of care, and simultaneously reduce cost. While employer-sponsored health benefits are not likely to disappear, changes that shift financial risk to employees are certain.

These are among key findings in Deloitte’s 2012 survey of employers with 50+ workers offering health benefits. The survey explores employers’ opinions about the U.S. health care system, the Affordable Care Act (ACA), and anticipated strategies for employee health benefits coverage and cost containment. Participants include C-suite executives and human resource (HR) professionals.

Health Care Reform: Seeking the Cure for Tax and Social Justice on the Landscape of Changing Familial Norms

July 16, 2012 Comments off

Health Care Reform: Seeking the Cure for Tax and Social Justice on the Landscape of Changing Familial Norms (PDF)

Source: Seton Hall Legislative Journal

Goals of health care reform under the PPACA fall broadly under four categories: cost containment, affordability, improved access and quality of care. The PPACA contains many expansions to the nation’s health care delivery systems for individuals and families alike. For example, insurers are generally prohibited from excluding pre-existing medical conditions and parents may keep dependents on their insurance plans until the age of twenty-six. Furthermore, Medicare Part D will undergo a dramatic facelift, as seniors anticipate a post-doughnut-hole retirement with their prescription drug plans. Moreover, Medicaid is an enormous platform for expansion, as individuals, including those without children, will now be eligible for enrollment and coverage if they are 133% above the poverty line5 Any person who was not eligible for Medicaid on December 1, 2009, and meets these and citizenship requirements will qualify for the expanded program.

While the magnitude of the PPACA will continue to unfold over the next several years, the limitations of the PPACA in meeting its goals will become gravely apparent for the growing number of non-traditional families comprised of gay and lesbian couples and their children. The Defense of Marriage Act (“DoMA”), signed into law by President Clinton in 1996, defines marriage for federal purposes as a legal union between a man and woman as husband and wife. While DoMA purports to relinquish to states the decision of whether to allow gay marriages and civil unions, the legislation excludes same-sex couples and their families from spousal benefits included in federal directives8 Moreover, no state is required to recognize out-of-state same sex marriages, marking the first time that Congress has applied the Full Faith and Credit Clause of the Constitution in a negative fashion.

The implications of the struggle for same-sex couples are manifold. For instance, unlike married couples, domestic partners must pay federal and sometimes state taxes on health care benefits when they are covered under a spouse’s policy. The Internal Revenue Service counts the value of the domestic partner’s benefit as income for the employee. The scene becomes murkier when one partner in a same-sex couple gives birth to or adopts a child, or if one of the partners becomes ill. For example, under the Family Medical Leave Act (“FMLA”), larger employers must provide employees job-protected unpaid leave due to a serious health condition rendering the employee unable to perform his or her job, or to care for a sick family member, or for a new child.

DoMA sharply limited the reach of the FMLA by excluding same-sex partners from caring for one another or for a child who is not the biological offspring of the employee partner in states in which gay marriage is prohibited. Similar limitations apply in the long-term care and hospital proxy settings, which have become particularly distressing for older LGBT couples unable to plan for retirement.

The PPACA creates new programs and provides new federal resources to promote health and provide access to affordable healthcare for American families. Yet, the Department of Health and Human Services failed to interpret the Act’s references to family, child, spouse, parent, dependent, and other terms to connote familial relationships in ways that would recognize diverse family structures. This gap is problematic because American family structures are increasingly varied. For example, the 2000 U.S. Census reported 5.5 million couples were living together who were not married, up from 3.2 million in 1990. The majority of unmarried-partner households had partners of the opposite sex, while an estimated 594,000 households reported partners of the same sex. Other research indicates that approximately two million American children under the age of eighteen are being raised by parents in a same-sex relationship.

The Growing Role of Emergency Departments in Hospital Admissions

July 12, 2012 Comments off

The Growing Role of Emergency Departments in Hospital Admissions

Source: New England Journal of Medicine

Growing use of U.S. emergency departments (EDs), cited as a key contributor to rising health care costs, has become a leading target of health care reform. ED visit rates increased by more than a third between 1997 and 2007, and EDs are increasingly the safety net for underserved patients, particularly adult Medicaid beneficiaries.1 Although much attention has been paid to increasing ED use, the ED’s changing role in our health care system has been less thoroughly examined. EDs serve as a hub for prehospital emergency medical systems, an acute diagnostic and treatment center, a primary safety net, and a 24/7 portal for rapid inpatient admission. Approximately a quarter of all acute care outpatient visits in the United States occur in EDs, a proportion that has been growing since 2001.2 We examined the proportion of hospital admissions that come through the ED, hypothesizing that use of the ED as the admission portal had increased across conditions.

We analyzed data from the Nationwide Inpatient Sample (NIS), the largest all-payer database of U.S. inpatient care, from 1993 to 2006 (the most recent year for which the ED admission data are available on HCUPnet, an interactive Web-based tool that uses data from the Healthcare Cost and Utilization Project of the Agency for Healthcare Research and Quality). The NIS contains data from approximately 8 million hospital stays each year and is weighted to produce national estimates. We used HCUPnet to query the NIS regarding trends in the 20 clinical conditions for which patients were most frequently admitted to the hospital in 2006. Clinical Classifications Software was used to group the conditions into clinically meaningful categories. We excluded two conditions for which patients are rarely admitted through the ED (osteoarthritis and back problems), one psychiatric condition that was not consistently coded in claims data (affective disorder), and four obstetrical diagnoses that are generally evaluated in other care settings, such as labor-and-delivery triage areas (liveborn infant, maternal birth trauma, other complications of birth, other complications of pregnancy).

The number of hospital admissions increased by 15.0%, from 34.3 million in 1993 to 39.5 million in 2006; admissions from the ED increased by 50.4%, from 11.5 million to 17.3 million. The proportion of all inpatient stays involving admission from the ED increased from 33.5 to 43.8% (P<0.001). In 12 of the 13 conditions for which patients were most frequently admitted and that met our inclusion criteria, an increased proportion of admitted patients came through the ED (P<0.001), regardless of the trend in overall admissions; the exception was coronary atherosclerosis, for which rapid “rule-out” protocols and ED-based chest-pain observation units have reduced the need for inpatient admission.

Federally Qualified Health Centers and Private Practice Performance on Ambulatory Care Measures

July 11, 2012 Comments off

Federally Qualified Health Centers and Private Practice Performance on Ambulatory Care Measures (PDF)

Source: American Journal of Preventive Medicine


The 2010 Affordable Care Act relies on Federally Qualifıed Health Centers (FQHCs) and FQHC look-alikes (look-alikes) to provide care for newly insured patients, but ties increased funding to demonstrated quality and effıciency.


To compare FQHC and look-alike physician performance with private practice primary care physicians (PCPs) on ambulatory care quality measures.


The study was a cross-sectional analysis of visits in the 2006 –2008 National Ambulatory Medical Care Survey. Performance of FQHCs and look-alikes on 18 quality measures was compared with private practice PCPs. Data analysis was completed in 2011.


Compared to private practice PCPs, FQHCs and look-alikes performed better on six measures (p 0.05); worse on diet counseling in at-risk adolescents (26% vs 36%, p 0.05); and no differently on 11 measures. Higher performance occurred in ACE inhibitors use for congestive heart failure (51% vs 37%, p 0.004); aspirin use in coronary artery disease (CAD) (57% vs 44%, p 0.004); -blocker use for CAD (59% vs 47%, p 0.01); no use of benzodiazepines in depression (91% vs 84%, p 0.008); blood pressure screening (90% vs 86%, p 0.001); and screening electrocardiogram (EKG) avoidance in low-risk patients (99% vs 93%, p 0.001). Adjusting for patient characteristics yielded similar results, except that private practice PCPs no longer performed better on any measures.


FQHCs and look-alikes demonstrated equal or better performance than private practice PCPs on select quality measures despite serving patients who have more chronic disease and socioeconomic complexity. These fındings can provide policymakers with some reassurance as to the quality of chronic disease and preventive care at Federally Qualifıed Health Centers and look-alikes, as they plan to use these health centers to serve 20 million newly insured individuals.

See: When Public Beats Private: Community Clinics That Keep Costs Down and Do a Better Job, Too (The Atlantic)

Give Me Liberty or at Least Your Votes: A Study of Governors’ Altruism on Health Care

July 9, 2012 Comments off

Give Me Liberty or at Least Your Votes: A Study of Governors’ Altruism on Health Care
Source: Brookings Institution

“Give me Liberty or give me Death,” proclaimed Patrick Henry in defense of revolution. In many ways, more than a few Republican governors over the past several months have embraced this mantra in criticizing the president’s health care law. They view the law as an affront to basic liberty, and while it would deliver assistance to their constituents that could prevent illness or death, liberty is of greatest import.

Elected officials have the choice of representing the needs or views of those who put them in office or stand on principle to do what they believe is right. Officials often frame their views of the health care law in terms of the latter. Democrats and progressives view the law as a means of opening access to affordable health insurance for more Americans. Republicans and conservatives describe the law as a government overreach that threatens the basic liberties that all Americans enjoy and must retain.

Regardless of the needs of constituents, elected officials’ values appear to be a driving force. In a basic way, states with lower rates of uninsured often have Democratic governors or are traditionally blue states, and states with higher uninsured rates more commonly have Republican governors or are traditionally red states.

A Guide to the Supreme Court’s Affordable Care Act Decision

July 6, 2012 Comments off

A Guide to the Supreme Court’s Affordable Care Act Decision

Source: Kaiser Family Foundation

This policy brief describes the Supreme Court’s decision on the Affordable Care Act and looks ahead to the implementation of health reform now that questions about the constitutionality of the law have been resolved.

Mandate-Based Health Reform and the Labor Market: Evidence from the Massachusetts Reform

July 4, 2012 Comments off

Mandate-Based Health Reform and the Labor Market: Evidence from the Massachusetts Reform (PDF)
Source: National Bureau of Economic Research (via Wharton School)

We model the labor market impact of the three key provisions of the recent Massachusetts and national \mandate-based” health reforms: individual and employer mandates and expansions in publicly-subsidized coverage. Using our model, we characterize the compensating di erential for employer-sponsored health insurance (ESHI) | the causal change in wages associated with gaining ESHI. We also characterize the welfare impact of the labor market distortion induced by health reform. We show that the welfare impact depends on a small number of \sucient statistics” that can be recovered from labor market outcomes. Relying on the reform implemented in Massachusetts in 2006, we estimate the empirical analog of our model. We nd that jobs with ESHI pay wages that are lower by an average of $6,058 annually, indicating that the compensating di erential for ESHI is only slightly smaller in magnitude than the average cost of ESHI to employers. Because the newly-insured in Massachusetts valued ESHI, they were willing to accept lower wages, and the deadweight loss of mandate-based health reform was less than 5% of what it would have been if the government had instead provided health insurance by levying a tax on wages.

U.S. Supreme Court and the Federal Health Law

June 28, 2012 Comments off

U.S. Supreme Court and the Federal Health Law

Source: National Conference of State Legislatures

The U.S. Supreme Court handed down its decision today in U.S. Department of Health and Human Services (HHS) v. Florida. There were four issues before the Court regarding the Patient Protection and Affordable Care Act (PPACA): the applicability of the Anti-Injunction Act; the constitutionality of the individual mandate; the severability of the individual mandate provisions from other provisions of PPACA; and the constitutionality of the Medicaid expansion.

Below is a chart explaining the legal arguments for and against each of these issues along with the Court’s ruling.

Full Text — Supreme Court Ruling on the Affordable Care Act

June 28, 2012 Comments off

Full Text — Supreme Court Ruling on the Affordable Care Act (PDF)

Source: Supreme Court of the United States


Association Between Patient-Centered Medical Home Rating and Operating Cost at Federally Funded Health Centers

June 27, 2012 Comments off

Association Between Patient-Centered Medical Home Rating and Operating Cost at Federally Funded Health Centers

Source: Journal of the American Medical Association


Little is known about the cost associated with a health center’s rating as a patient-centered medical home (PCMH).


To determine whether PCMH rating is associated with operating cost among health centers funded by the US Health Resources and Services Administration.

Design, Setting, and Participants

Cross-sectional study of PCMH rating and operating cost in 2009. PCMH rating was assessed through surveys of health center administrators conducted by Harris Interactive of all 1009 Health Resources and Services Administration–funded community health centers. The survey provided scores from 0 (worst) to 100 (best) for total PCMH score and 6 subscales: access/communication, care management, external coordination, patient tracking, test/referral tracking, and quality improvement. Costs were obtained from the Uniform Data System reports submitted to the Health Resources and Services Administration. We used generalized linear models to determine the relationship between PCMH rating and operating cost.

Main Outcome Measures

Operating cost per physician full-time equivalent, operating cost per patient per month, and medical cost per visit.


Six hundred sixty-nine health centers (66%) were included in the study sample, with 340 excluded because of nonresponse or incomplete data. Mean total PCMH score was 60 (SD, 12; range, 21-90). For the average health center, a 10-point higher total PCMH score was associated with a $2.26 (4.6%) higher operating cost per patient per month (95% CI, $0.86-$4.12). Among PCMH subscales, a 10-point higher score for patient tracking was associated with higher operating cost per physician full-time equivalent ($27 300; 95% CI, $3047-$57 804) and higher operating cost per patient per month ($1.06; 95% CI, $0.29-$1.98). A 10-point higher score for quality improvement was also associated with higher operating cost per physician full-time equivalent ($32 731; 95% CI, $1571-$73 670) and higher operating cost per patient per month ($1.86; 95% CI, $0.54-$3.61). A 10-point higher PCMH subscale score for access/communication was associated with lower operating cost per physician full-time equivalent ($39 809; 95% CI, $1893-$63 169).


According to a survey of health center administrators, higher scores on a scale that assessed 6 aspects of the PCMH were associated with higher health center operating costs. Two subscales of the medical home were associated with higher cost and 1 with lower cost.

The patient-centered medical home (PCMH) is a model of care characterized by comprehensive primary care, quality improvement, care management, and enhanced access in a patient-centered environment. The PCMH is intuitively appealing and has improved clinical and organizational performance in several early studies, leading a broad range of stakeholders to call for its adoption.1

It is critical to understand the cost of the PCMH from the perspective of individual clinics. Such cost data are essential for practices to make informed decisions to adopt the PCMH and for policy makers and administrators to design financially sustainable medical home models. Most PCMH cost studies have focused on potential savings from reducing hospitalizations and emergency department visits.2 – 8 Although those are important cost outcomes, the savings accrue to payers and rarely affect the finances of the primary care provider.9 – 11 The majority of US primary care physicians do not benefit financially from prevented hospitalizations or emergency department visits.

We are aware of only 1 previous study that has examined the cost effect of the PCMH from the primary care provider perspective, using actual practice cost data from more than 1 site. Zuckerman et al12 studied 35 private primary care practices and found minimal evidence of an association between a clinic’s medical home rating and cost; however, the analysis was limited by the small number of practices, limited variation in PCMH rating, and discordant timing of data sources (2006 cost data and 2008 PCMH data).

The present study examines the association between PCMH rating and operating cost in primary care practices, specifically among federally funded health centers. In this article, unless otherwise noted, the terms health center and grantees are used to refer to organizations that receive grants under the Health Center Program as authorized under section 330 of the Public Health Service Act, as amended. It does not refer to Federally Qualified Health Center look-alikes or clinics that are sponsored by tribal or Urban Indian Health Organizations, except for those that receive Health Center Program grants.

See also: Financial Implications of the Patient-Centered Medical Home (editorial)

See: The price tag on a patient-centered medical home (EurekAlert!)


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