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PCMH Costs, Benefits and Incentives

Learn about the costs to implement a Patient-Centered Medical Home in your practice. Also explore the benefits and incentives that make the process so valuable.

The Three-Part Payment Model

Major primary care physician groups and the Patient-Centered Primary Care Collaborative (PCPCC) believe that the most effective way to re-align payment incentives to support the PCMH would be to combine traditional fee-for-service for office visits with a three-part model that includes:

  • A monthly care coordination payment ("bundled care coordination fee" that is risk adjusted and reflective of the practice's service capability based on the PCMH model) for the physician and non-physcian work that falls outside of a face-to-face visit and for the system infrastucture (e.g. heath information technologies) needed to achieve better outcomes.

  • A visit-based fee-for-service component that recognizes visit-based services that are currently paid under the present fee-for-service payment system and maintains an incentive for the physician to see the patient in the office when appropriate.

  • A performance-based component that recognizes achievement of quality and efficiency goals.

A more detailed description of this payment model can be found in ACP's policy paper: A System in Need of Change: Restructuring Payment Policies to Support Patient-Centered Care.


The cost for a practice to implement these services will vary based on several factors, such as:

  • Practice size;
  • Existing practice capabilities,
  • Ramp up costs required to be a qualified PCMH;
  • Availability of low-cost or subsidized practice and patient-support
    resources; and
  • Characteristics of your patient population


Policy decisions concerning the PCMH must rest on sound evidence about whether this model of care improves patient outcomes and reduces cost.

The Patient-Centered Primary Care Collaborative released the report "Benefits of Implementing the Primary Care Patient-Centered Medical Home: Cost and Quality Results". This report provides a summary of new and updated results from PCMH initiatives from the past two years, including cost and quality outcomes data.

How are the NCQA PCMH recognition fees being covered for the demonstration projects?

In most cases these fees are being covered. However, how they are being covered varies. In many of the projects, a prospective "care coordination" fee paid upon achievement of PCMH recognition is expected to cover the cost of recognition. This means that the practice will pay for the recognition up front, but will then be reimbursed about a month later, once they achieve that recognition.

Other projects are asking the payers to provide a separate up-front infrastructure payment-prior to PCMH recognition-that includes the recognition fee in addition to other items, such as technology and staff (e.g., Southeastern Pennsylvania Rollout of the Chronic Care Initiative).

Still others are paying the recognition fee up-front for the participating practices through a means other than the payers, such as by a grant or another participating stakeholder (e.g., New York Hudson Valley P4P/Medical Home Project).