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Medical Homes

As lawmakers consider ways to pay for health reform, use our glossary of potential offsets to get caught up fast.

Updated at 2:30 p.m. on Nov. 23 to reflect continuing legislation.


Medical homes would pay physicians a small stipend every month to coordinate medical care for chronically ill Medicare beneficiaries, whose many doctors often don't communicate with one another and may be providing redundant or poorly planned care.


Executive Summary

Nearly all observers agree that getting a handle on spending for chronically ill patients and end-of-life care is one of the keys to reining in costs. Five percent of Medicare beneficiaries account for a staggering 43 percent of the program's resources, and the costliest 25 percent of patients require 85 percent of Medicare spending. But health care reformers hope they are zeroing in on a way to trim costs: medical homes.

The idea is simple enough. About three-quarters of Medicare spending pays for patients who have five or more chronic conditions and see an average of 14 different doctors each year, according to the Congressional Budget Office's report. With a physician-cum-quarterback to coordinate all that care, the CBO hopes to save billions every year by avoiding unnecessary and duplicate tests, using specialists more appropriately and better managing medications. Medicare would pay qualifying physicians starting at about $34 a month for every patient they agreed to provide a "medical home" for.

But with health care reformers looking to cut costs wherever they can, medical homes may be a bridge too far. The CBO estimates that paying doctors to participate would cost $5.6 billion over the next 10 years.


"One thing that's agreed upon is that there are a lot of activities that we would like primary care physicians to pursue," such as managing medications and coordinating a patient's various doctors, "and we realize there's no payment for it," said Paul Ginsburg, president of the Center for Studying Health System Change, a nonpartisan policy research organization. "Medical homes are one way of doing that, but I would say that they are very faddish. There's a lot of support for the idea of medical homes, but a lot of issues about whether it can succeed."

And while medical homes might recoup the initial $5.6 billion outlay, there's also a chance they could increase spending. The CBO warns that patients may end getting more care as physicians huddle and realize that a patient isn't receiving all the recommended treatment.

Financial considerations aside, there's widespread agreement among doctors that some form of coordinated care for chronically ill patients is a good idea: Both the American College of Physicians and the American Academy of Family Physicians back the plan, according to Ginsburg. Speaking at the annual conference of the Patient-Centered Primary Care Collaborative, Rep. Allyson Schwartz, D-Pa., said that the idea of creating medical home pilots was so widely liked that lawmakers barely had a chance to debate it before it was included in a bill.

Max Savings

There is little doubt that medical homes would improve care for chronically ill patients, but it's unclear whether that will translate into savings for the federal government. Given the uncertainty about just how much waste medical homes will trim, the CBO gives no savings estimate.


Works Best When Combined With

Implementing electronic records is critical for medical homes to have a chance. It's tougher and more time-consuming to break down a patient's care using paper records from a dozen or more doctors in different offices. Doctors hoping to serve as medical homes would need electronic data systems in their offices that include "searchable data such as patient demographics, visit dates and diagnoses," a report from the Centers for Medicare & Medicaid Services recommends.


Both the House and Senate bills create pilot projects to study medical homes and determine the most effective strategies.


CMS Medical Home Demonstration

Congressional Budget Office Report (Option 39)

• Group Hopes To End 'Medical Homelessness'

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