Sustaining the Medical Home: How PROMETHEUS Payment Can Revitalize Primary Care


Publication Date: May 2009

Publisher: Prometheus Payment, Inc.; Robert Wood Johnson Foundation


Research Area: Health

Type: Report


As U.S. policy-makers debate various approaches to reform the nation's ailing health care system, efforts to improve quality and reduce costs have never received more attention. One potential solution that is gaining support is to restructure primary care practices to incorporate essential principles of the "patient-centered medical home" clinical delivery model. Some early evidence shows that aggressive clinical care coordination, intense communication with patients, concentrated adherence to evidence-based measures and attention to avoiding hospitalization results in better-quality care being delivered at a lower overall cost. The PROMETHEUS Payment® model is designed to encourage these better care patterns and can support the creation and sustainability of medical homes.

By avoiding the pitfalls of current and past incentive models, payment can be reformed, and primary care practices can return to the solid and central place they deserve in a better American health care system. At the core is recognition that existing fee-for-service (FFS) and capitation-based payment systems encourage volume-driven health care rather than value-driven health care. Providers are rewarded for "doing things" (either too many or not enough), rather than delivering quality services that are proven to keep people healthy, reduce errors and help avoid unnecessary care.

In analyzing a large body of national claims data, the PROMETHEUS Payment developers found that a significant percentage of total cost of care spent today on six chronic diseases is attributable to "Potentially Avoidable Complications" (PACs). On average, close to half of total costs for these conditions are attributable to PACs, and they present a powerful mechanism to sustainably fund the patient-centered medical home model of care delivery.

The PROMETHEUS Payment model presents a blueprint for physician payments based on packaging a comprehensive "episode" of medical care that covers all patient services related to a condition. The model uses an "Evidence-informed Case Rate®" (ECR), which creates a patient-specific, severity-adjusted prospective budget for a patient with a chronic condition. Each patient is assessed a budget based on his or her condition and its relative severity. These budgets can be added up across a specific patient population and represents a global budget for the physicians caring for these patients, irrespective of whether the physicians are incorporated in a "system."

Patients access care as they do now; physicians who care for the patients get paid under their current negotiated fee schedules; and all claims get accumulated against the prospective budget for each patient. At the end of the year, the actuals are compared to budgets, and any excess is the upside opportunity for the physicians. This report details how episode of care payment can be operationalized today, without any major disruption to payer or provider operations, or forced integration into "accountable care organizations," and yield significantly improved margins for physicians that deliver coordinated, patient-centered care.

The current national health reform dialogue provides an opportunity to correct the deficiencies in health care value and usher in meaningful changes in the way we pay for care. The PROMETHEUS Payment model may serve as a viable example to effectively power the medical home concept, resulting in better patient outcomes and greater affordability of care.