The CareFirst Patient-Centered Medical Home Program: Cost and Utilization Effects in Its First Three Years

BACKGROUND: Enhanced primary care models have diffused slowly and shown uneven results. Because their structural features are costly and challenging for small practices to implement, they offer modest rewards for improved performance, and improvement takes time. OBJECTIVE: To test whether a patient-centered medical home (PCMH) model that significantly rewarded cost savings and accommodated small primary care practices was associated with lower spending, fewer hospital admissions, and fewer emergency room visits. DESIGN: We compared medical care expenditures and utilization among adults who participated in the PCMH program to adults who did not participate. We computed difference-in-difference estimates using two-part multivariate generalized linear models for expenditures and negative binomial models for utilization. Control variables included patient demographics, county, chronic condition indicators, and illness severity. PARTICIPANTS: A total of 1,433,297 adults aged 18–64 years, residing in Maryland, Virginia, and the District of Columbia, and insured by CareFirst for at least 3 consecutive months between 2010 and 2013. INTERVENTION: CareFirst implemented enhanced fee-for-service payments to the practices, offered a large retrospective bonus if annual cost and quality targets were exceeded, and provided information and care coordination support. MEASURES: Outcomes were quarterly claims expenditures per member for all covered services, inpatient care, emergency care, and prescription drugs, and quarterly inpatient admissions and emergency room visits. RESULTS: By the third intervention year, annual adjusted total claims payments were $109 per participating member (95 % CI: −$192, −$27), or 2.8 % lower than before the program and compared to those who did not participate. Forty-two percent of the overall decline in spending was explained by lower inpatient care, emergency care, and prescription drug spending. Much of the reduction in inpatient and emergency spending was explained by lower utilization of services. CONCLUSIONS: A PCMH model that does not require practices to make infrastructure investments and that rewards cost savings can reduce spending and utilization. ELECTRONIC SUPPLEMENTARY MATERIAL: The online version of this article (doi:10.1007/s11606-016-3814-z) contains supplementary material, which is available to authorized users.