Risk-Based Bonus Payments for the Patient-Centered Medical Home
The Patient-Centered Medical Home (PCMH) requires fundamental reform of health care financing. We propose a Risk-Based Comprehensive Payment system with risk-adjusted base and bonus payments.
Bundled base payments cover the expected cost of primary care services but do not encourage quality. Bonus payments incentivize desired outcomes by rewarding better-than-expected performance in clinical quality, efficiency, and patient-centeredness.
Base and bonus payments require credible risk adjustment to discourage practices from cherry-picking easy patients and dumping difficult ones.
We estimated models to predict thirteen cost and utilization measures in 17.4 million commercially insured people using diagnoses, age, and sex from Thomson-Reuters MarketScan® 2007 claims data.
Using the same data, we imputed assignment of 456,781 people to 436 medium-sized primary care practitioner (PCP) panels (500 – 5000 patients).
For each measure, a PCP’s performance is judged by summing the difference between observed (O) and expected (E) outcomes across panel members.
For each outcome we calculated: mean; coefficient of variation, or CV = SD/mean; and both individual and grouped R2 as measures of predictive accuracy
Using risk models to calculate expected outcomes explained 29-49% of the observed patient-level and 85-98% of practice-level variation in performance, with differential variability.
Deviation from the mean in total health spending is more variable at the PCP level than other more targeted measures.