Medical homes: cost effects of utilization by chronically ill patients.

OBJECTIVES: The impact of primary care practices adopting the patient-centered medical home (PCMH) model is analyzed by comparing per member per month (PMPM) costs and utilization among commercial HMO members with chronic illnesses in PCMH and non-PCHM practices in the Philadelphia area. Transforming primary care practices to conform to the PCMH model has shown early promise in reducing costs and improving outcomes, and chronically ill patients' frequent contact with the healthcare system and costly care make them ideal targets for such health system reforms. STUDY DESIGN AND METHODS: The impact of the PCMH model on PMPM costs was analyzed using a generalized linear regression model to adjust for age, gender, and baseline cost. The impact of the PCMH model on utilization per 1000 rates was analyzed with the Poisson regression model, adjusting for baseline differences in age, gender, and risk score. RESULTS: After accounting for differences at baseline, PCMH practices achieved lower total, inpatient, and specialist PMPM costs, as well as lower relative utilization of hospital admissions and specialist visits. CONCLUSIONS: These findings suggest that policy makers should maintain or expand incentives to adopt PCMH reforms and that targeting chronically ill patients may be the most effective way to leverage the benefits of PCMH adoption.