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Assessing the ROI for NCQA Primary Care Medical Home Recognition

White paper makes the business case for patient-centered medical homes.

July 9, 2019

Washington, DC— National Committee for Quality Assurance (NCQA) recently engaged Milliman, an independent actuarial and financial consulting firm, to develop a white paper on how health care C-suite executives and medical practice leaders can make the business case for patient-centered medical homes (PCMH).

Public and commercial payers increasingly require and reward health system proof of value. C-suite leaders recognize the importance of primary care providers in the mix of efforts to ensure optimum use of services, particularly by patients with complex care needs.

The NCQA Patient-Centered Medical Home  Recognition program improves quality of care and lowers costs. Recognition requirements cover practice management processes and patient-care quality metrics to address both high-cost chronic care patients and overall patient satisfaction. More than 14,000 primary care physician practices hold a current NCQA Recognition.

Milliman developed the white paper to help address the question, “What are the operational and financial considerations for becoming an NCQA PCMH-Recognized entity from the perspective of a primary care practice?” Although funded by NCQA, Milliman’s study is independent. It provides guidance to leadership for weighing the business case and the costs of PCMH Recognition, including motivations to undergo PCMH Recognition under varying payment models. The white paper can be downloaded here.

White Paper Topline

  • For a hypothetical practice, increased annual revenue linked for practices implementing PCMH ranged from 2%–20%, depending on the payment model
  • As in all NCQA Recognition programs, improvement measures are dependent on a practice’s patient population.
  • NCQA-Recognized PCMHs can drive revenue through increased primary care capacity, patient volume, and/or incentive payments.

“This is a good look at how quality provides a return on investment,” said Michael Barr, MD, Executive Vice President, NCQA Quality Measurement and Research Group. “When a practice does well on quality, it can also do well financially.”

Methodology Summary

Milliman developed revenue estimates based on a hypothetical primary care practice of 10 physicians with 20,000 unique commercial patients over one year. Annual revenue ranged from 2%–20%, depending on the payment model and the attributed members to the payment model. Milliman also examined investment costs for a hypothetical practice, including NCQA Recognition fees. Calculations were based on input from implementers of the NCQA PCMH Recognition process, literature review, and Milliman data sources. The white paper also lays out key considerations for developing a business case including components of a pro forma. Infrastructure costs were not included, because most related to EMR implementation. The white paper contains detailed information.

“There is no one formula for making the business case given the complexities of health systems and reimbursement models across the country and across various payers,” added Susan Philip, MPP, Senior Healthcare Management Consultant, Milliman. “That said, there are considerations that cut across all models that C-suite leaders can review in assessing the merits of the NCQA PCMH Recognition process.”

Note: Although NCQA commissioned the Milliman study, Milliman principals are responsible for methodology and findings outlined in their paper.

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