The Payment Reform Landscape: Payment For Non-Visit Functions And The Medical Home

As I’ve been discussing in Health Affairs Blog each month, payment reforms can pose a spectrum of financial risk for providers, with financial upside only — such as pay-for-performance programs — on one end, and downside-only models — such as nonpayment for care that shouldn’t happen — on the other. In March, we examined pay-for-performance, an-upside only model.  This month, we look at another upside-only model, typically used to support care coordination and patient centered medical homes (PCMH). The technical term that Catalyst for Payment Reform (CPR) has coined for this payment model is “payment for non-visit” functions.

In its simplest form, this model is a per member per month (PMPM) payment, layered on top of another form of payment like fee-for-service. Providers typically receive this PMPM payment to help them manage their patients’ care and to support their coordination with other providers in the “medical home.” A lot has been written about care coordination and patient-centered medical homes and their ability to improve care outcomes; however, like their pay-for-performance “cousin,” the ability of these models to contain costs remains to be seen.

How common is this payment model?

According to CPR’s 2013 National Scorecard on Payment Reform, based on responses to eValue8, a nationwide survey of commercial health plans, 0.6 percent of commercial insurance payments to doctors and hospitals are payments for non-visit functions, such as care coordination fees for patient-centered medical homes. This percentage represents about 5 percent of all value-oriented payment as measured by CPR. (Approximately 11 percent of all commercial payments are value-oriented—designed to improve quality and reduce waste.)

However, in the public sector, payments for non-visit functions may be more prevalent. According to a 2012 article in Health Affairs, about half of all states are implementing some type of patient-centered medical home for their Medicaid populations Nineteen of those 25 states are paying providers a PMPM care management fee to perform the functions of a patient-centered medical home. The model may continue to gain popularity in the private sector as well.