Patient-centered medical homes in Louisiana had minimal impact on Medicaid population’s use of acute care and costs

By Evan S. Cole et al.
Health Affairs 2015;34:87-94

We sought to evaluate the effect of patient-centered medical home certification of Louisiana primary care clinics on the quality and cost of care over time for a Medicaid population. … We found no impact on acute care use and modest support for reduced costs and primary care use among medical homes serving higher proportions of chronically ill patients.

Primary care use was lower in patient-centered medical homes compared to control clinics, but both ED use and ambulatory care-sensitive inpatient and ED use were higher.

This analysis provides some evidence that cost per patient is reduced only when a large proportion of the Medicaid patients served by the patient-centered medical home are chronically ill. However, the evidence is not robust. (p. 1729)

Yet another study finds that “medical homes” don’t save money and have little impact on quality. This study examined 27 clinics in the New Orleans area that received certification as “medical homes” during 2008 and 2009. What makes this study particularly interesting is that “homes” were promoted with great fanfare by the Bush administration and Louisiana’s health policy establishment just nine years ago as an essential piece of the solution to the devastation inflicted on New Orleans’ primary care system by Hurricane Katrina. Michael Leavitt, secretary of health and human services (HHS), and Louisiana “home” advocates left a paper trail that records the groupthink that created and sustained their unrealistic expectations of “homes.” Now, nine years later, we can look back and compare reality with groupthink.

In my last comment on this blog, I said the “medical home” fad is muddling the debate about how to solve the health care crisis because it pretends the problem afflicting the primary care sector is improper “design” or “structure” when the real problem is inadequate resources.

What’s true in medicine is true in health policy: If you don’t diagnose correctly, you can’t prescribe correctly. If you think the primary care sector needs “redesign,” you will prescribe “medical homes” and “breaking down silos” and other nostrums with labels connoting a change in structure. If, on the other hand, you conclude the proper diagnosis is too few resources, then you recommend more resources.

You might think post-Katrina New Orleans would be one of those situations where it would be impossible to screw up the diagnosis. You might think inadequate resources would be the obvious diagnosis of the injury suffered by that city’s primary care system. The hurricane left New Orleans with a severe shortage of physicians, and of hospital and nursing home beds. In the face of such devastation, you might think defective “structure” or “design” would be an obviously inaccurate diagnosis.

You would be wrong. You underestimated the power of managed-care groupthink.

The Bush administration diagnosed New Orleans’ problem as a “design” problem, and Louisiana’s health policy elite enthusiastically agreed. Federal and Louisiana policy makers (“prescient local leaders,” according to Rittenhouse et al., p. 1730) proposed inflicting the “medical home” experiment on New Orleans’ beleaguered primary care work force as the solution to the alleged “design” problem.

Katrina hit in August 2005, just as the “medical home” fad was germinating within the American health policy establishment. In February 2007 the fad burst into view with the publication of the “Joint Principles of the Patient-Centered Medical Home” by the American Academy of Family Physicians and three other primary-care associations. By 2008, despite the complete lack of evidence for the claim that “homes” could cut costs and only weak evidence for the claim that “homes” could improve quality, the “patient-centered medical home” (PCMH) had won the endorsement of virtually the entire health policy establishment, including the Medicare Payment Advisory Commission, many federal and state legislators, and great swaths of academia.

The influence of the PCMH fad is evident in a “concept paper” published in October 2006 by a group that called itself the Louisiana Health Care Redesign Collaborative. The purpose of the paper was to explain to HHS Secretary Levitt how the collaborative proposed to “rebuild … the health care system in the Greater New Orleans area.” The very fact that the collaborative put the word “redesign” in its name tells you it had already adopted the “defective design” diagnosis. The collaborative listed the PCMH solution as the number one “reform” it intended to endorse if HHS would send some money (see p. 1).

The idea of inflicting the PCMH experiment on New Orleans in its time of crisis was apparently hatched within HHS. Secretary Leavitt sent “explicit instructions” to Louisiana that state policy makers would have to propose a “redesigned health care system” if they wanted HHS assistance (see p. 3 here).

The collaborative, a group of Louisiana health policy leaders, happily obliged. They put “redesign” in their name. And in their concept paper, they enthusiastically embraced the “defective structure” diagnosis and the unproven claims for PCMHs. In the excerpts from the concept paper presented below, note the use of “redesign” and “transformation,” words that in 2006 were just beginning to become the buzzwords that signified one’s allegiance to managed care theology in general and the “defective structure” diagnosis in particular.

As the area slowly recovers from Katrina, an opportunity to redesign the health care system … presents itself. [HHS] Secretary, Michael Leavitt, has recognized the opportunity and has challenged Louisiana to propose a redesigned health care system. [p. 2]

The medical home model … will reduce the high costs associated with the current reliance on emergency departments for the care of urgent, ambulatory-sensitive conditions. The evidence shows that such a model will improve health.

The medical home model forms the foundation for … the ultimate transformation of the way care is provided in the current Medicaid program. … This should result in better quality and lower costs. [p. 6]

None of these claims were evidence-based in 2006, and none are today.

Having extracted from Louisiana the necessary pledge of allegiance to conventional managed care wisdom, Leavitt awarded a $100 million grant (called the Primary Care Access and Stabilization Grant) to the Louisiana Department of Health and Hospitals (LDHH) in July 2007. LDHH offered even more money to clinics that applied to the National Committee for Quality Assurance (NCQA) to receive certification as a PCMH during 2008 and 2009.

Now the first rigorous analysis of those clinics that received NCQA certification – the paper by Cole et al. quoted above – has shown that none of the expectations for PCMHs articulated in the Redesign Collaborative’s concept paper were realistic. Contrary to the claims made in 2006 by Louisiana’s “prescient local leaders,” Cole et al. found that New Orleans PCMHs failed to cut costs for Louisiana’s Medicaid program, and that patients of PCMHs used fewer primary care services, were more likely to be treated in an emergency department, and were more likely to be treated in an inpatient or emergency department setting for ambulatory-care sensitive conditions than patients in non-PCMHs.

Because the 27 PCMHs studied by Cole et al. received more resources than the non-PCMH controls (they received money both from the HHS grant and PCMH “bonuses” from LDHH), we may infer that when those extra resources are tacked onto the cost of treating PCMH patients, the PCMH experiment substantially raised total Medicaid spending and presumably total spending for the entire New Orleans area. What proportion of the higher costs incurred by PCMHs was wasted on busywork and what proportion improved the lives of New Orleans residents is impossible to say because the amount and disposition of the additional money allocated to the PCMH clinics was of no interest to Cole et al.

There can be little doubt that at least some of the extra resources, notably those used to hire more doctors and nurses and to retain health care professionals currently on staff, benefited patients. A 2012 examination by Rittenhouse et al. of the effect of the PCMH experiment on the adoption of PCMH “processes” (as opposed to cost and quality outcomes of those processes) reported that the PCMH clinics “increased the number of patients served” (p. 1734).

But that analysis also showed that as the federal and LDHH subsidies came to an end, PCMH clinics began to abandon “PCMH processes” in order to focus on avoiding bankruptcy. “Implementing new models of care became a second-tier priority, after simply keeping the clinic doors open,” Rittenhouse et al. reported (p. 1736). This is precisely what you would have expected if your diagnosis of post-Katrina New Orleans had been insufficient resources, not “defective design.” The observation by Rittenhouse et al. is consistent with other evidence that the financial cost of meeting NCQA’s “gold-plated” PCMH criteria places severe stress on PCMHs that do not receive sufficient compensation for those costs.

The contrast between the omnipresent happy talk about “homes” and the conclusions reached by Cole et al. is stark. Some readers may be wondering whether the Cole paper is out of line with other research. The answer is no, it is not. This is true whether we restrict our analysis to Medicaid-related research or broaden our scope to include all research on “homes.” Here I’ll comment only on the Medicaid-related research.

Cole et al. stated that their paper “constitutes the only external evaluation to date of New Orleans’ communitywide implementation of medical home capability and processes in the region’s safety net” (p. 1730). In fact, their paper appears to be the first and, to date, the only rigorous analysis of PCMH Medicaid programs in any state (half the states have implemented PCMH Medicaid programs). Cole et al. noted, “Few studies have specifically evaluated the effect of care provided by patient-centered medical homes on a Medicaid population,” and of those “none appear to have been peer reviewed.” (pp. 87-88). This is consistent with this statement by Mary Takach in her review, published in 2012, of research on Medicaid PCMHs: “Notably absent from this review of state patient-centered medical home initiatives are rigorous evaluations of whether or not these initiatives and their payment models work” (p. 2438). At this date, then, it appears that the study by Cole et al. is the definitive study on the impact of PCMHs not just on Medicaid spending on New Orleans PCMHs but on all existing PCMH Medicaid programs.

A decade has gone by since “prescient” health policy entrepreneurs endorsed the “home” fad. The fad has had its day in the sun. It is time to junk it along with the “defective design” diagnosis and acknowledge that what the primary care sector needs is more resources. Those who yearn to believe that costs can be reduced by improving quality should shift their focus from “homes” serving everyone in a “population” to specific services targeted at relatively tiny, select groups of people who are very sick. A few studies suggest that medical costs can be reduced by amounts that exceed the cost of the quality-improving intervention when the intervention is directed at carefully selected, chronically ill patients, such as children with debilitating illness or elderly patients with hypertension and congestive heart failure.

But these studies are few and far between. The idea that we can “quality improve” our way to lower costs with “homes” and other managed care fads contradicts research and common sense. If we are serious about lowering health care costs, we must focus on reducing administrative waste and high prices. We could achieve reductions in some prices with “all-payer” systems in which state or federal agencies set limits on fees and prices. But to achieve a substantial reduction in prices and administrative waste, we must abandon the unending managed care experiment and the multiple-payer system that are together driving up prices and administrative costs and rely instead on a single-payer system.

Kip Sullivan is a member of the board of Minnesota Physicians for a National Health Program. His articles have appeared in The New York Times, The Nation, The New England Journal of Medicine, Health Affairs, the Journal of Health Politics, Policy and Law, and the Los Angeles Times.