Medicare’s Biggest Change in 40 Years on the Horizon?


Earlier this week CMS issued a typically cryptic Announcement indicating that they were shelving the Medicare Medical Home Demonstration (MMHD) and instead would focus on the recently announced Multi-Payer Advanced Primary Care Initiative (MAPCI). My blog post from Tuesday provides details and asks the question “What does all this mean?”

Medicare’s Biggest Change in 40 Years?

CMS’ Announcement about the rise of MAPCI and the fall of MMHD struck me as highly significant…but all the pieces didn’t fit. I’ve spent a fair amount of time emailing and talking with colleagues this week…and the big picture is emerging…and it’s really BIG.  My working hypothesis is that Medicare is on the verge of its biggest
change in 40 years:

  • Medicare was created as a centralized, monolithic payment model.
    It’s been one size fits all, and that size is created in Washington DC.
    There has been little tolerance of regional administrative variability,
    and the ironic result has been high variability in regional costs and
  • Medicare seems poised to do a 180. It’s signaling movement toward
    supporting state-based, multipayer initiatives — where Medicare is at
    the table and influential, but not in control.  It’s a recognition that
    health care is local and that unique solutions will be needed in
    different regional markets. The Obama administration is demonstrating
    strong support for the Patient Centered Medical Home (PCMH) and
    Accountable Care Organizations (ACOs) as important building blocks in
    this transition.

…and while this shift could be solidified by national health care reform legislation, it doesn’t seem to be dependent on such legislation. Success will measured at the level of individual state MAPCI’s.

The Rise of MAPCI…

We don’t know a lot yet about the Multi-Payer Advance Primary Care Initiative. This project was announced in a “White House Briefing” in September with a press release, fact sheet, and press conference including Secretary Sebelius, Vermont Governor Jim Douglas, and White House Office of Health Reform Director Nancy Ann Deparle. As of today (October 29), Medicare has created a home page for MAPCI.  Here’s additional background about MAPCI:

From the Fact Sheet:

The Advanced Primary Care model (APC), also known as the patient-centered medical home, is emerging as a leading model for efficient management and delivery of quality care. An APC practice
links multiple points of health delivery by utilizing a team approach with the patient at the center. The care model emphasizes prevention, health information technology, care coordination and shared decision making among patients and their providers.

States have initiated APC projects of differing scale to improve the delivery of services in Medicaid. Given the resources required to become an effective APC — improved technology, additional staff, and
changes in practices — a subset of states have brought private payers together with Medicaid to align incentives and increase the benefit to providers who become APC models.

States currently engaged in multi-payer APC initiatives have invited Medicare to participate given that Medicare’s involvement will create a truly all-payer system.

CMS will solicit applications from states, which would be the only entities that could apply.

From the Press Release:

The new demonstration will build on a model being tested in Vermont. Under the Vermont model, private insurers work in cooperation with Medicaid to set uniform standards for “Advanced Primary Care (APC) models” also known as medical homes.

In Advanced Primary Care models, physicians are given supplemental payments for achieving nationally-recognized quality standards, coordinating care across a multidisciplinary team and monitoring patients’ care outside the physician’s office or hospital using health information technology.

This demonstration will mark the first time Medicare will be a full partner in these experiments and the practice model would, for the first time, align compensation offered by all insurers to primary care

“This is a jump start on health insurance reform,” said DeParle.

From the Press Conference:

Secretary Sebelius: What you get is a new model of health care that really could work for the entire country. It’s a model that patients like, because they get better care and more time with their doctors.
It’s a model that physicians like, because they can concentrate on keeping their patients healthy, which is why they went into medicine in the first place.

We’re moving more toward bundled payments to hospitals and other care providers, to eliminate avoidable readmissions and reward better quality of care over quantity of care.

…and the Fall of the MMHD

CMS’ Announcement earlier this week did not provide a lot of detail or rationale for shelving the MMHD.

CMS Announcement stated that there is “proposed legislative language” that could impact the MMHD and “it would be impractical to  pursue clearance”.

Congress passed legislation in 2006 mandating CMS to create and implement the MMHD, so CMS is not likely acting independently. While CMS has been called many things by many people, “proactive” is
not one of them.

For those like me that are not Washington DC insiders, it’s difficult to discern what’s going on here. The rise of MAPCI and the fall of MMHD seem to be orchestrated at levels higher than CMS —
perhaps by Secretary Sebelius at HHS, the White House, or ??

While I’ve been a big fan of the medical home model, I’ve been an equally big critic of the MMHD…it’s not the right model to demonstrate success of the Medical Home.  Major criticisms have included:

  • The MMHD business model is DOA
  • The MMHD is not scaleable. Small practices don’t have interest or
    capability to develop care management infrastructure, yet MMHD funding
    goes directly to physicians.
  • The MMHD does not provide other players in local delivery system
    any incentives to cooperate with primary care physicians.  Hospitals
    and specialists would be economically damaged by reduced patient


The rise of MAPCI and the fall of MMHD are positive and constructive developments. Here are some first-glance implications of these events:

As I referenced in the first section, the biggest potential implication is Medicare’s policy shift away from centralized payment administration and control to support of state-driven, multipayer initiatives. Medicare is continuing to move away from being a passive payer to a value-focused purchaser.

The rise of MAPCI and the fall of MMHD are signs of the Administration’s increasing support of primary care and Accountable Care Organizations. Today’s New England Journal of Medicine has an article by Rittenhouse, et. al. explaining the synergy between supporting primary care and accountable care models.

In today’s weekly Patient Centered Primary Care Collaborative (PCPCC) update call, Dr. Paul Grundy (who is a DC insider and is Chair of the PCPCC) characterized the MAPCI as a “phased-in rollout”.

Are ACOs a good model? Not everyone agrees, but the more I learn the more I like the ACO construct.  In particular, the ACO focuses on the creation of effective “networks” at multiple levels:

  • Contracting networks aligning financial incentives of various health care stakeholders
  • Health information technology networks supporting the adoption and meaningful use of EHRs and other technologies
  • Social and collaborative care networks — medicine as a “team sport” requiring high levels of collaboration between patients and care providers and among different members of the care

MAPCI models also seem to have much higher potential to create network effects and high levels of adoption in regional markets.  We’re finding that individual payers don’t have enough clout to drive reform initiatives, and that multipayer models are much more promising.  Read Dr. Jaan Sidorov’s explanation and superb analysis of the Medical Home Purchasing Cartel.

Disease/care management vendors should be pleased with these developments.  MAPCI’s will need to develop care management capabilities.  They will be a much more manageable sales target than
thousands of scattered physician practices.  MAPCI’s likely will experiment with a variety of care management approaches — and could be a boon to DM companies, tech companies, health plans, home health agencies, and others.

Of course, there are many details to work out.  Your comments are welcomed.

Vince Kuraitis JD, MBA is a health care consultant and primary author of the e-CareManagement blog where this post first appeared.

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