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Part Three – Payment Reform: About More Than Just Dollar Signs


The final NCQA PCMH joint principle encourages appropriate payment that “recognizes the added value provided to patients who have a patient-centered medical home.”  In addition to the PCMH, Accountable Care Organizations can provide physicians with a payment structure that is financially rewarding, as well as efficient and unburdensome.

The following points highlight what is needed to ensure that primary care providers are reimbursed for delivery care in an adequate manner:

Billable Time

Payment for calls and emailing saves time and money for both the patient and the doctor if a face-to-face consultation is not necessary. Dr. Casalino says, “As long as practices are paid primarily for services provided by physicians during in-person visits, it will not be possible to fundamentally change the way physicians spend their time.”


Maryland HB 435 (enacted May 20, 2010) – requires health insurers to pay a bonus to PCPs for services provided after office hours.

Virginia SB 675 (enacted April 7, 2010)– requires health insurers to cover telemedicine services.


 Standardization of Claims

A recent Health Affairs article finds that on a national scale, a single transparent set of payment rules for multiple payers, a single claim form, and standard rules of submission would translate into $7 billion of savings annually for physician and clinical services. Four hours of professional time per physician and five hours of staff time could be saved each week.


Colorado recently enacted several bills (HB 1004, HB 1330, and HB 1332) to begin standardizing claims.

West Virginia enacted similar legislation (SB 665) on March 11, 2010.



While providers must submit claims within a certain period to be reimbursed, insurers often deny claims or claim to never receive them, placing the burden on physicians to monitor and resubmit paperwork.


Connecticut enacted HB 5303 (enacted May 5, 2010) – requires all managed care organizations to report claims denial data, which is posted on the state’s Department of Insurance website.

Vermont HB 444 (enacted June 2, 2009) – requires payers, within 30 days of receiving a claim, to send payment or to provide notice of why the claim is contested or denied.


In a Maryland State Medical Society survey of members, 95 percent said health insurance protocols had a somewhat or very negative effect on the doctor’s ability to treat patients, with nearly 19 percent of participants spending 150 hours per month interacting with carriers. The organization’s report concluded “hidden costs [are] missed opportunities: every hour a skilled provider spends on administrative tasks associated with insurance protocols is an hour not spent on patient care.”


While the federal health reform bill and recent state legislation provide opportunities to test different payment models, testing the feasibility of varying billing requirements is also needed to improve the primary care workforce.


Additional resources on payment reform

Harold D. Miller’s Ways to Facilitate Better Healthcare Payment and Delivery Systems and Lower Healthcare Costs

The Commonwealth Fund’s Developing Innovative Payment Approaches: Finding the Path to High Performance

AMA payment resources


Part Two – Not Doing the Job Alone

If only primary care providers played on a team rather than running alone, they may be able to address the inefficiencies of the status quo.  The patient-centered medical home (PCMH) model may not be a silver bullet—but is growing in popularity and can offer the support needed by many physicians.  The NCQA joint principles, on which many states base their pilot program definitions, require a team of physicians to collectively take responsibility for the ongoing care of patients.

With a whole person orientation of coordinated care, the PCMH promotes efficient and effective long-term delivery of care.  Also encouraged under these guidelines is the adoption of Health Information Technology (HIT) in order to enhance access to care and improve quality and safety.  Proper utilization of HIT provides support tools to guide decision-making and prevent wasting time by no longer having to sift through paper files.


According to a 2009 Kaiser Commission on Medicaid and the Uninsured report, Community Care of North Carolina, the state’s Medicaid program and a pioneer in establishing patient-centered medical homes, had an estimated savings for FY2006 of over $150 million.  An evaluation found the state achieved $3.3 million in savings for people with asthma and $2.1 million in savings for people with diabetes between 2000 and 2002.

In Seattle, Washington is the nonprofit, consumer-governed, integrated health insurance and care delivery system, Group Health Cooperative, which was recently examined in Health Affairs.  Investments in the medical home model led to an improvement in patients’ experiences with care, quality of care, and providers’ work environment–all while saving money.

Addressing Limitations

Adopting new standards in order to transition to a medical home overnight is not a possibility for any practice.  Another Health Affairs article (“How Physician Practices Could Share Personnel and Resources to Support Medical Homes”) provides suggestions how physicians, particularly in small practices, can utilize resources to make the change as easy as possible, citing existing examples.

After only 26 months, a study of the Patient-Centered Medical Home National Demonstration Project shows it can take years to see improved patient-outcomes.  However, improvements in access and better prevention and chronic care scores were already experienced under the demo.  A supplement to the May/June issue of the Annals of Family Medicine, also focused on implementing medical homes, provides lessons learned.

Moving Forward…

CMS is accepting applications for the Multi-Payer Advanced Primary Care Practice Demonstration, bringing Medicare, Medicaid and private payers into up to six state-operated PCMH demos.

Recently enacted state efforts include:

With the pilots included in the federal health reform bill and established separately through state legislation, opportunities to create medical homes will only continue to increase and the time to become informed is now.

The final segment in this three-part posting will feature state approaches to addressing payment and billing issues.

May 10, 2010 — UPDATE: Image from State Net Capitol Journal:

Friday, April 30 was one of the first deadlines established under the federal health care reform legislation.  States were required to decide whether they would work with the federal government to establish a health insurance pool for high risk individuals.

Much of the debate amounted to mere partisan ties.  Of the 29 states that agreed to create a pool, Alaska, California, Connecticut, New Jersey, South Dakota and Vermont have Republican governors.

Participating states didn’t want their residents’ health care left up to the federal government.  A spokesperson from Michigan Governor Jennifer Granholm’s office (D) says, “We know our market. We are connected to our consumers, and we can properly respond to them.”

In Connecticut, Governor M. Jodi Rell’s (R) response to Secretary Sebelius seeks a partnership between the state’s existing pool, which Connecticut formed in 1976, and the requirements of the federal legislation.   According to the Governor, “[Connecticut’s] participation will depend on the state not being forced to pick up any additional financial burdens as a result of the new venture.”

According to the Washington Post, 19 states will not join HHS in creating a state pool:

  • Alabama 
  • Arizona 
  • Delaware*
  • Florida 
  • Georgia 
  • Hawaii 
  • Idaho 
  • Indiana 
  • Louisiana 
  • Minnesota 
  • Mississippi 
  • Nebraska
  • Nevada
  • North Dakota
  • South Carolina
  • Tennessee*
  • Texas
  • Virginia
  • Wyoming*

* the 3 states with Democratic governors

Arizona Governor Jan Brewer (R) explained her decision not to participate by saying, “In light of Arizona’s existing fiscal challenges, I cannot commit the state to a program without confidence that there is funding available to sustain it.”

Expressing similar concerns in a recent press release, Wyoming Governor Dave Freudenthal (D) says, “The state’s involvement would be an unnecessary addition to the process that would result in redundant administrative costs and unnecessary delays in the implementation process.”

Always the rebels, Rhode Island and Utah—both with Republican governors—are undecided.


Additional resources on:

38 states with established high risk pools

State and federal pools 

HHS available funding for the pools by state’s High Risk pool site

June 2, 2010 — UPDATE: In a recent statement, Vermont Governor James H. Douglas (R) laid out his conflicting opinions—on the state’s 2010 universal health care legislation—which lead to the ultimate decision not to sign or veto the measure.  Included in the letter, SB 88:

+ Shows promise for quality improvement and cost reduction – representing the culmination of years of work by revising the state’s existing program, Blueprint for Health.

+ Articulates the components of the integrated medical home and community health team payment reform model.

+ Requires insurance carriers to participate in the statewide expansion of the Blueprint as a condition of doing business in the state.

+ Establishes interoperable connectivity through the state Health Information Exchange and a one-year primary care work force development committee.

+ Charges the Department of Banking, Insurance, Securities and Health Care Administration with limiting the rate of growth in hospital spending and insurance premiums.

– Has caused concerns among health care professionals regarding low-income residents’ access to free prescription samples.

– Mandates studies that are a “wasteful expense of time and scare resources, as Vermont would be prevented by the federal health care reform law from implementing any of the new ‘designs’ until 2017 at the earliest.”

– Jeopardizes Vermont’s participation in the CMS Advanced Primary Care Practice Medicare demo.

May 17, 2010 — UPDATE: Image from the Kaiser Commission on Medicaid and the Uninsured:

In Vermont, a state with more than 90 percent of residents insured and ranked #1 in the Commonwealth Fund’s most recent State Scorecard on Health System Performance, the legislature is close to adopting a change to the health care delivery system not accomplished by Congress—universal coverage.   Both chambers of the state’s Democratic-controlled General Assembly passed different versions of SB 88—the original version of the bill, passed by the Senate, would establish a single-payer system.  The House amended the legislation, replacing single-payer with a public option, which would allow the state to create a health insurance program to compete with private payers.

Legislators currently are working out the details in a conference committee.  Governor Jim Douglas (R) has not yet indicated whether he will sign either version of the bill if it reaches his desk.  The governor supports certain cost-containing provisions of the legislation but does not approve of either bill in its entirety.  The state could not pursue such plans until 2017 as required by the new federal health care law.

Vermont, however, isn’t alone in its efforts.  Minnesota SF 118 was introduced in 2009 but has received little attention from the Legislature in 2010.  During the current legislative session, HB 767 and SB 682 were considered by the Maryland General Assembly but ultimately were reported as unfavorable by their respective initial committees of referral.

California also is considering a single payer bill, SB 810, which passed the state Senate and is under consideration in the Assembly.  In a recent press release concerning federal health reform, Governor Arnold Schwarzenegger (R) indicated that he supports reform and expanding coverage.  However, given the state’s current economic condition, adoption in 2010 seems unlikely.


Additional resources on universal health care in Vermont

History of Health Care Reform Legislation in Vermont

Details of Vermont’s Premium Assistance Program & Buy-In Option

June 1, 2010 — UPDATE: According to a San Jose Mercury News article, in order to plan for and begin implementing the federal health reform legislation, the California Legislature is considering more than 20 bills, of which as many as a dozen may be voted on this week as lawmakers face a deadline to pass bills out of their house of origin.   

The article says, “Lawmakers and the governor’s staff have met with Jon Kingsdale, the executive director of Massachusetts Connector, that state’s health insurance exchange, who will consult with California as it develops its own version.”   

Included in the bills currently being debated are:   

  • SB 890 – Prohibits annual or lifetime benefit limits, establishes a medical loss ratio of 85 percent, and allows for changes in individual health plans or insurers on annual renewal dates.
  • SB 900 – Establishes a state health insurance exchange.
  • SB 1088 – Allows enrollment in parents’ insurance coverage up to age 26.
  • SB 1163 – Requires health insurers to give 180 days written notice of changes in the premium rate or coverage and extends requirements placed on health insurers to deny coverage.
  • AB 1595 – Expands eligibility for Medi-Cal, the state’s Medicaid program.
  • AB 1600 – Establishes mental health parity.
  • AB 1602 – Establishes a state health insurance exchange, eliminates annual and lifetime limits on health care coverage, and allows enrollment in parents’ insurance coverage up to age 26.
  • AB 1825 – Requires coverage of maternity services.
  • AB 1887 – Establishes framework for the operation of California’s temporary high risk pool.
  • AB 2244 – Prohibits denial of coverage based on preexisting conditions.
  • AB 2470 – Imposes specific requirements and standards on health insurers related to the application forms, medical underwriting, and notice and disclosure of rights and responsibilities.
  • AB 2477 – Establishes continuous eligibility for children under Medi-Cal.
  • AB 2578 – Prohibits health insurers from increasing rates without prior approval from the Department of Managed Health Care or the California Department of Insurance.

California is not alone in its efforts to replicate and build upon federal health reform. In Michigan, legislators are considering similar legislation:   

  • HB 6034 – Prohibits denial of coverage based on preexisting conditions, allows enrollment in parents’ insurance coverage up to age 26, and requires that rates are adequate, equitable and not excessive.
  • HB 6035 – Requires continuation of coverage and approval of rate increases.
  • HB 6036 – Allows enrollment in parents’ insurance coverage up to age 26 and limits when a health benefit plan can be changed or cancelled.
  • HB 6037 – Establishes the MI-Health Board to develop a standard guaranteed issue health plan, which will serve as a minimum level of coverage for all health plans in the state.


May 26, 2010 — UPDATE: Governors are continuing to establish the infrastructure needed by their states to implement the new laws and prepare for the new opportunities included in the federal health reform bill.  Most recently, Washington state Governor Christine Gregoire (D) signed an executive order creating a Health Care Cabinet and California Governor Arnold Schwarzenegger (R) established a state Health Care Reform Task Force.   

In Michigan, Governor Jennifer Granholm (D) created a Health Insurance Reform Coordinating Council, New Mexico Governor Bill Richardson (D) set up a Health Care Reform Leadership Team, and launched by Pennsylvania Governor Ed Rendell (D) is a Commonwealth Health Care Reform Implementation Committee and Advisory Committee.   

May 19, 2010 — UPDATE: Despite involvement in a lawsuit against the federal government concerning the constitutionality of the new health reform law, Virginia Secretary of Health and Human Resources Bill Hazel, MD announced the establishment of the state’s Health Care Reform Initiative. Funded from existing resources, this statewide initiative is located within the Office of the Secretary of Health and Human Resources and will serve as the liaison between the Governor’s office, agencies and entities affected by health care reform, lead development of the required Health Insurance Exchange and identify and coordinate grants to fund health care reform. The new program is charged with making recommendations addressing Medicaid reform, insurance reform and health care delivery reform, due to the Governor by September 30, 2010 and annually by January 10 until 2014.   

May 17, 2010 — UPDATE: New York also laid the groundwork to begin implementation. Governor David Paterson (D) recently created the Governor’s Health Care Reform Cabinet, which will advise and make recommendations to the Governor on all aspects of federal health care reform. The Director of State Operations will serve as the chair, with the Deputy Secretary for Health, Medicaid and Oversight and the Deputy Secretary for Labor and Financial Regulation serving as vice-chairs. Included in its responsibilities are identifying deadlines established under federal law; determining with which provisions the state must comply and those that are optional; and assessing the state’s capacity to carry out those provisions.   

April 28, 2010 — UPDATE: Maine joined at least four other states in establishing the infrastructure needed to implement the new federal health reform laws.  Governor John E. Baldacci (D) recently issued an executive order creating the Health Reform Implementation Steering Committee.  Utilizing existing state resources including the Governor’s Office of Health Policy and Finance, State health officials, and the Advisory Council on Health Systems Development, the steering committee will begin the planning to meet requirements under the federal law. The new committee will also work with the Joint Select Committee on Implementation created by the Maine Legislature this session.   

Additional information can be found at AAFP News Now.   


On Tuesday, April 20, Colorado Governor Bill Ritter signed an executive order, creating a new inter-agency task force and naming Lorez Meinhold, the Governor’s healthcare policy expert, as director.  Governor Ritter says, “National reform allows us to accelerate and build on our work to provide higher quality care at lower costs to more Coloradans. Today marks a new chapter for healthcare in Colorado.”   

With similar “ahead-of-the-curve” intentions, Wisconsin Governor Jim Doyle established the state’s Office of Health Care Reform to develop an implementation plan that uses national health care reform to build on Wisconsin’s successful reform efforts and ensure the state’s residents and businesses realize the benefits of reform as soon as possible.  The Governor’s press releases says, “Wisconsin has already developed initial plans for an exchange under Governor Doyle’s leadership, making the state uniquely positioned to be a leader in implementation.”   

Connecticut Governor M. Jodi Rell also announced that she has established a Health Care Reform Cabinet, comprising officials from several state agencies, to ensure that state-administered health programs and other key elements meet the goals and requirements of the recently passed national health care reform law.   

Maryland makes head of the class.  The day after President Obama signed the federal health care reform legislation into law, Governor Martin O’Malley unveiled an executive order creating the Maryland Health Care Reform Coordinating Council to advise the administration on policies and procedures to implement the new federal law as efficiently and effectively as possible.   

However, not all states’ approaches to addressing health reform are alike.  Governor Sean Parnell announced Alaska will join 20 other states in legally challenging the constitutionality of the federal legislation.  According to the National Conference of State Legislatures, 39 states—including the four mentioned above—have filed legislation opposing certain provisions of federal health reform.


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