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Washington State Institute for Public Policy
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Patient-centered medical homes in physician-led practices with utilization or cost incentives (general population)

Health Care: Health Care System Efficiency
Benefit-cost methods last updated December 2023.  Literature review updated December 2016.
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The patient-centered medical home (PCMH) model attempts to make health care more efficient by implementing a set of changes to primary care. Medical homes are designed to provide comprehensive care, treating both acute needs and promoting population health. The medical home model emphasizes care coordination across providers, patient engagement, evidence-based care, use of health information technology, and enhanced patient access.

This category includes PCMH programs we reviewed that were implemented in physician-led practices and where providers were offered financial incentives to reduce utilization and costs, such as shared cost-savings.
For an overview of WSIPP's Benefit-Cost Model, please see this guide. The estimates shown are present value, life cycle benefits and costs. All dollars are expressed in the base year chosen for this analysis (2022). The chance the benefits exceed the costs are derived from a Monte Carlo risk analysis. The details on this, as well as the economic discount rates and other relevant parameters are described in our Technical Documentation.
Benefit-Cost Summary Statistics Per Participant
Benefits to:
Taxpayers $65 Benefits minus costs ($123)
Participants $18 Benefit to cost ratio $0.33
Others $67 Chance the program will produce
Indirect ($91) benefits greater than the costs 32%
Total benefits $60
Net program cost ($183)
Benefits minus cost ($123)

^WSIPP’s benefit-cost model does not monetize this outcome.

*The effect size for this outcome indicates percentage change, not a standardized mean difference effect size.

Meta-analysis is a statistical method to combine the results from separate studies on a program, policy, or topic in order to estimate its effect on an outcome. WSIPP systematically evaluates all credible evaluations we can locate on each topic. The outcomes measured are the types of program impacts that were measured in the research literature (for example, crime or educational attainment). Treatment N represents the total number of individuals or units in the treatment group across the included studies.

An effect size (ES) is a standard metric that summarizes the degree to which a program or policy affects a measured outcome. If the effect size is positive, the outcome increases. If the effect size is negative, the outcome decreases. See Estimating Program Effects Using Effect Sizes for additional information.

Adjusted effect sizes are used to calculate the benefits from our benefit cost model. WSIPP may adjust effect sizes based on methodological characteristics of the study. For example, we may adjust effect sizes when a study has a weak research design or when the program developer is involved in the research. The magnitude of these adjustments varies depending on the topic area.

WSIPP may also adjust the second ES measurement. Research shows the magnitude of some effect sizes decrease over time. For those effect sizes, we estimate outcome-based adjustments which we apply between the first time ES is estimated and the second time ES is estimated. We also report the unadjusted effect size to show the effect sizes before any adjustments have been made. More details about these adjustments can be found in our Technical Documentation.

Meta-Analysis of Program Effects
Outcomes measured Treatment age No. of effect sizes Treatment N Adjusted effect sizes(ES) and standard errors(SE) used in the benefit - cost analysis Unadjusted effect size (random effects model)
First time ES is estimated Second time ES is estimated
ES SE Age ES SE Age ES p-value
43 3 622252 -0.073 0.030 43 0.000 0.000 44 -0.073 0.014
43 3 622252 -0.044 0.031 43 0.000 0.000 44 -0.044 0.150
43 2 604331 -0.022 0.016 43 0.000 0.000 44 -0.022 0.172
43 2 29366 -0.077 0.061 43 n/a n/a n/a -0.077 0.207
1In addition to the outcomes measured in the meta-analysis table, WSIPP measures benefits and costs estimated from other outcomes associated with those reported in the evaluation literature. For example, empirical research demonstrates that high school graduation leads to reduced crime. These associated measures provide a more complete picture of the detailed costs and benefits of the program.

2“Others” includes benefits to people other than taxpayers and participants. Depending on the program, it could include reductions in crime victimization, the economic benefits from a more educated workforce, and the benefits from employer-paid health insurance.

3“Indirect benefits” includes estimates of the net changes in the value of a statistical life and net changes in the deadweight costs of taxation.
Detailed Monetary Benefit Estimates Per Participant
Affected outcome: Resulting benefits:1 Benefits accrue to:
Taxpayers Participants Others2 Indirect3 Total
Health care costs Health care (total costs) $65 $18 $67 $1 $152
Program cost Adjustment for deadweight cost of program $0 $0 $0 ($91) ($91)
Totals $65 $18 $67 ($91) $60
Click here to see populations selected
Detailed Annual Cost Estimates Per Participant
Annual cost Year dollars Summary
Program costs $155 2016 Present value of net program costs (in 2022 dollars) ($183)
Comparison costs $0 2016 Cost range (+ or -) 20%
We estimated an average per-participant cost based on the additional payments that insurers made to medical providers for implementing medical homes. These additional payments were made to fund nurse care managers, to provide bonuses for achieving quality-of-care targets, and, in this case, to provide financial incentives to reduce utilization and costs. Information on the actual incentive payments in these implementations is sparse, and our estimates are based on a single study, Rosenthal et al. (2016).
The figures shown are estimates of the costs to implement programs in Washington. The comparison group costs reflect either no treatment or treatment as usual, depending on how effect sizes were calculated in the meta-analysis. The cost range reported above reflects potential variation or uncertainty in the cost estimate; more detail can be found in our Technical Documentation.
Benefits Minus Costs
Benefits by Perspective
Taxpayer Benefits by Source of Value
Benefits Minus Costs Over Time (Cumulative Discounted Dollars)
The graph above illustrates the estimated cumulative net benefits per-participant for the first fifty years beyond the initial investment in the program. We present these cash flows in discounted dollars. If the dollars are negative (bars below $0 line), the cumulative benefits do not outweigh the cost of the program up to that point in time. The program breaks even when the dollars reach $0. At this point, the total benefits to participants, taxpayers, and others, are equal to the cost of the program. If the dollars are above $0, the benefits of the program exceed the initial investment.

Citations Used in the Meta-Analysis

Cuellar, A., Helmchen, L.A., Gimm, G., Want, J., Burla, S., Kells, B.J., . . . Nichols, L.M. (2016). The CareFirst patient-centered medical home program: cost and utilization effects in its first three years. Journal of General Internal Medicine, 1-7.

Friedberg, M.W., Schneider, E.C., Friedberg, M.W., Schneider, E.C., Friedberg, M.W., Schneider, E.C., Rosenthal, M.B., ... Volpp, K.G. (2015). Effects of a medical home and shared savings intervention on quality and utilization of care. Jama Internal Medicine, 175(8), 1362-1368.

Rosenthal, M.B., Alidina, S., Friedberg, M.W., Singer, S.J., Eastman, D., Li, Z., & Schneider, E.C. (2016). A difference-in-difference analysis of changes in quality, utilization and cost following the Colorado multi-payer patient-centered medical home pilot. Journal of General Internal Medicine, 31(3), 289-296.