HHS' medical home demo fails to show savings, report says

Nearly a year after HHS' innovation center concluded a $57 million, three year-long experiment to transform federally qualified health centers into patient-centered medical homes, analysts say the demonstration is unlikely to reduce spending.

The demo was intended to support FQHCs' transformation into "advanced primary care practices," which CMS defined as those that work under the same principles as practices that have received Level 3 recognition as a PCMH from the National Committee for Quality Assurance.

In November 2011, at the start of the experiment, 500 FQCHs enrolled as participating sites, with each setting the goal of achieving NCQA Level 3 recognition by the end of the three-year demonstration period. CMS had set a goal of NCQA Level 3 recognition for 90 percent of the FQHCs participating in the demonstration.

However, by Aug. 20, 2014, three months shy of the conclusion of the demonstration, just 47 percent of the participating sites had achieved Level 3 PCMH recognition. Seventeen percent had achieved Level 2 recognition, and 3 percent received Level 1 recognition, according to RAND, the independent research group commissioned by HHS to analyze the experiment.

By Aug. 20, 33 percent of participating FQHCs still had not achieved any level of NCQA recognition, including 6 percent that were denied after application and 27 percent that either never applied or were still waiting for results.

Despite the demonstration's goal of reducing hospital admissions and emergency department care, the RAND study found admissions and ED utilization increased compared with FQHCs that did not participate in the study.

Costs for participating demonstration sites were also higher than those of nonparticipating sites at the end of the ninth quarter, according to the report. During the last three quarters of the demonstration, the person-per-quarter total cost for each Medicare beneficiary was $65 to $101 more in demonstration sites than comparison sites.

"These cost findings are important and suggest that it is unlikely that overall costs associated with the demonstration at is completion will be lower for demonstration FQHCs than for comparison FQHCs," the report authors wrote.

Analysts point out the demonstration may have led to clinics better identifying patients with high-level medical needs and large gaps in care, resulting in a rapid increase in treatment and costs.

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