By Emily Mullin
December 21, 2011

While they may be at varying stages in the development and implementation process, many states are currently working with both public and private payers to design medical homes with the goal of improving patient care and lowering healthcare costs.

A new report, released Dec. 2 by the Commonwealth Fund, looks at eight states – Alabama, Iowa, Kansas, Maryland, Montana, Nebraska, Texas and Virginia – and how they are using different strategies to encourage primary care providers to adopt the model.

In the past few years, “medical home” has become a buzz term in the healthcare industry, and both payers and providers have launched medical homes pilots and programs to offer enhanced, patient-centric primary care services. Public payers, especially Medicaid, have been leaders in these efforts, with the objective of curbing costly hospital readmissions and emergency visits and thereby driving down the cost of healthcare services to consumers and institutions.

With the support of the Commonwealth Fund, the National Academy for State Health Policy (NASHP) has provided funds to help states build medical homes with their Medicaid and Children’s Health Insurance Program, or CHIP. From 2007 to 2009, the NASHP doled out its first round of assistance to eight states – Colorado, Idaho, Louisiana, Minnesota, New Hampshire, Oklahoma, Oregon and Washington – to support their medical home projects.

Developing a Framework for Implementation

Drawing on the combined experiences of these states and a small group of states that already had medical home programs, NASHP developed a framework that other states could follow to implement medical homes. The framework includes five broad steps:

• Strategically engage partners.
• Set performance expectations and implement a process to identify practices that meet expectations.
• Compensate and motivate practices through enhanced payment.
• Help practices meet expectations and improve performance.
• Evaluate program performance.

While the medical home models in Alabama, Iowa, Kansas, Maryland, Montana, Nebraska, Texas and Virginia implemented their medical home programs launched in 2009 and 2010 varied by state, a number of common themes emerged.

First, the idea of tailoring the definition of "medical home" to reflect state needs, priorities, and circumstances was apparent in all the states who adopted the model early on. As they craft their definitions, state policymakers are frequently looking to national definitions and other states' existing definitions to conceptualize their priorities. For example, Montana's definition emphasizes the importance of culturally effective, community-based care.

Second, states have been using payment policy to foster greater collaboration among primary care and specialty care physicians, as well as other service providers. For example, Iowa is paying primary care providers for remote consultations with hospital-based specialists, while Alabama is paying more to practices that collaborate with their local community networks.

In addition, states are using payment policy to reward better-performing medical homes with positive patient outcomes. State medical home programs are offering higher financial rewards to practices that meet more demanding standards as well as distributing savings based on practice performance, with greater shares going to those that perform better on preselected performance measures.

As well as offering enhanced payment, states are supporting practices by providing electronic health record systems, registries and data as well as support in implementing these new tools. Many states are also offering learning collaboratives to practitioners to help improve the overall quality of medical homes.

States use various strategies to help primary care providers improve care coordination. Some states are explicitly directing participating practices to use a portion of their medical home payments to hire staff who coordinate care. Other states are developing community resources that link practices and patients to other services in the community and augment the primary care providers' care coordination activities.

Another common function of the medical home is evaluating quality and outcomes. States are looking to improve the quality of care for patients within medical homes, and to do so, states must monitor changes in acute care utilization, cost containment and patient and provider experience.

But before practices can be evaluated for outcomes, they must meet certain standards in order to qualify as a medical home. States are using criteria established by national organizations like URAC as guides for what medical homes should look like in their states. To that end, some states are adopting national qualification standards outright, while others are modifying them.

State-lead medical home programs have also raised concerns about antitrust issues when multiple payers come together to create a medical home. States that are seeking to build multipayer programs play critical roles in providing antitrust protection for interested private payers, and they have multiple options for providing this protection. For example, neutral state agencies can supervise sensitive meetings as well as enact legislation that explicitly provides antitrust protection for medical homes.

For more lessons from states with emerging medical home programs, read the full report from the Commonwealth Fund here.    

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