Costs of Transforming Established Primary Care Practices to Patient-Centered Medi

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ABSTRACT Background: The patient-centered medical home (PCMH) is a promising model to achieve the "triple aim" of improving patients' experience of care, improving population health, and reducing per capita health care costs. Insurance companies are encouraging primary care practices to transform to PCMHs through financial incentives or direct contractual requirements. Practices considering the PCMH transformation and recognition process need information regarding the costs they will incur, to weigh these against the anticipated benefits for patient outcomes and the available financial incentives and make a fully informed decision. Objective: To quantify the time, effort, capital, and total direct and indirect costs associated with primary care practices' transformation to and sustained recognition as PCMHs, based on the experience of 60 primary care practices within HealthTexas Provider Network (HTPN), a large ambulatory care medical group practice affiliated with the Baylor Health Care System (BHCS) in North Texas. The practices obtained PCMH recognition from the National Committee for Quality Assurance (NCQA) in 2010-2011. Aims: Aim 1: To estimate the costs of a primary care practice's initial PCMH transformation and application for formal recognition under the 2008 NCQA criteria. Aim 2: To estimate the costs of renewing PCMH recognition under the 2011 NCQA criteria for a PCMH initially recognized under the 2008 criteria Methods: Structured interviews will be conducted to obtain data related to: 1) time and effort of activities related to PCMH transformation and application for NCQA recognition; 2) additional infrastructure or equipment purchased related to transformation and application for NCQA recognition; and 3) the extent to which practice staff would have been engaged in revenue-generating activities during the time spent on transformation and application activities. Corporate resource leaders, and physicians, midlevel providers, medical assistants, and office managers from a representative sample of 6 HTPN primary care practices will be interviewed. Direct costs will be estimated based on: 1) the time and effort for activities by job category multiplied by the average hourly rate for that job category in the payroll system; and 2) observed expenditures in the general ledger or other financial sources. For physicians, the average wage will be estimated using the reimbursements collected for an average office visit minus non-physician practice expenses, converted to an hourly wage figure, based on data from individual practice records. Indirect costs for the practices will be estimated based on the time and effort of individuals multiplied by the average reimbursements earned by the practice for an average office visit and the individual's percentage of effort going toward reimbursable activities. Significance: Results from the proposed study will inform primary care providers' decisions to invest practice resources in PCMH transformation. Results will also be useful in determining the size and structure of the financial incentives that need to be offered to primary care practices to encourage PCMH transformation.