Building the Medical Home

Appearing June 5th before the House Committee on Energy and Commerce’s Subcommittee on Health, Thomas J. Foels MD, CMO, Independent Health (IHA) in Buffalo New York, presented testimony at the hearing “Reforming SGR- Prioritizing Quality in a Modernized Physical Payment System”.

Dr. Foel’s testimony centered on IHA’s efforts to build an improved system of care based upon the Patient-Centered Medical Home (PCMH) model combined with a novel hybrid reimbursement program to align payment with key PCMH design elements.

IHA is a not-for-profit plan providing health benefits and services to nearly 400,000 individuals in an eight county region within the Buffalo Metropolitan area of Western New York (WNY). IHA’s affiliated physicians include an open network of approximately 1,200 contracted primary care and 2,300 contracted specialty physicians with the majority practicing in independent small single specialty group practices or solo practice settings.

IHA initiated the PCMH pilot program in 2009. An important element of the PCMH was a proposed alternative reimbursement that emphasized a prospective risk-adjusted care coordination fee paid on a per member per month basis. In addition, existing quality incentive programs were enhanced and carried higher performance thresholds.

Following the completion of the initial PCMH Pilot Program in 2012, additional primary care practices meeting eligibility criteria were recruited to participate in the enhanced PCMH program that IHA call “Primary Connections”.

During the following 18 month period (2011-2012), the physician advisory panel accepted the need to transition away from a FFS based reimbursement system. At that time, FFS reimbursement was retained only for those services that included office visits, immunizations, and select office-based testing. The remaining monetary balance of the FFS revenue was converted to a prospective risk adjusted per member per month payment.

It was found that overall participating PCMH practices had the potential to earn 150 percent more than non-participating primary care practices. During the following 18 month period, quality performance continued to advance with the total cost of care diminishing. Since the inception of the PCMH program, aggregate total cost of care for members assigned to PCMH practices has decreased 3.4 percent as compared to peer averages.

In July 2012, IHA developed a new hybrid reimbursement program for “Primary Connections”. This new reimbursement approach now includes a shared savings component providing an opportunity for practices to earn up to 200 percent of their former base revenue of four years earlier. The development of the shared savings model has had a dramatic impact on the interaction of PCMH practices with one another as well as generating meaningful engagement with specialists.

The IHA PCMH program realizes:

  • FFS remains a valuable mechanism to promote the use of important and potentially underutilized services, including preventive services
  • Prospective risk adjusted population-based care coordination fees give practices the freedom to tailor their care services to member needs and frees them from dependency upon face-to-face interactions
  • Virtual high performing networks have the potential to emerge under the influence of properly designed alternative payment systems
  • Successful adoption of alternative reimbursement programs requires trust, transparency, and physician engagement in the design elements
  • Existing models of care delivery and reimbursement are potentially scalable and transferable to other settings and can be more rapidly deployed based upon critical success factors identified in early pilot programs


For more information on the hearing, go to

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