Let’s Talk Business: PCMH Recognition

Research shows that NCQA Patient-Centered Medical Home (PCMH) Recognition supports improved quality, reduced costs and a better patient experience.

That sounds good, but what about the business impact?
How can your practice calculate its return on investment?

Milliman developed a white paper to help address the question, “What are the operational and financial considerations for becoming an NCQA-Recognized PCMH, from the perspective of a primary care practice?”

Things to Consider

Potential benefits of PCMH Recognition:

  • Increased utilization of primary care.
  • Improved quality.
  • Improved effectiveness of care and patient outcomes.
  • Increased revenue.
  • Demonstrated readiness to be successful in value-based contracts.

Costs of PCMH Recognition may include:

  • New systems, structures and processes.
  • Staff needed to support transformation to and delivery of advanced primary care.

Hypothetically Speaking

Let’s say your practice has 10 primary care clinicians and 20,000 unique commercial members. With PCMH Recognition, your practice could have a 2%–20% increase in revenue (depending on payment models). Regardless of the payment model, however, this hypothetical practice will still have a positive ROI.

Need a Pro Forma?

Every practice is different. Every practice must count the costs. This pro forma should include, but is not limited to:

  • A defined way to calculate labor costs (incremental or costing method).
  • Payer mix and payment models, including payment amounts, payment units and conditions for payment.
  • Potential changes in revenue resulting from increased primary care utilization, including increased preventive care and screenings, reduced no shows and efficient use of care that results in more strategic deployment of primary care services.
  • Projected revenue streams associated with the payment arrangement.
  • Projected operational or administrative costs or savings.

“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.”