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BACKGROUND The Patient-Centered Medical Home (PCMH) model of primary care has been developed and disseminated over the last two decades with the goal of making primary care 'patient-centered, comprehensive, team-based, [...], Objective. To determine whether the Patient-Centered Medical Home (PCMH) transformation reduces hospital and ED utilization, and whether the effect is specific to chronic conditions targeted for management by the PCMH in our setting. Data Sources and Study Setting. All patients aged 18 years and older in 2,218 primary care practices participating in a statewide PCMH incentive program sponsored by Blue Cross Blue Shield of Michigan (BCBSM) in 2009-2012. Study Design. Quantitative observational study, jointly modeling PCMH-targeted versus other hospital admissions and ED visits on PCMH score, patient, and practice characteristics in a hierarchical multivariate model using the generalized gamma distribution. Data Collection. Claims data and PCMH scores held by BCBSM. Principal Findings. Both hospital and ED utilization were reduced proportionately to PCMH score. Hospital utilization was reduced by 13.9 percent for PCMH-targeted conditions versus only 3.8 percent for other conditions (p = .003), and ED utilization by 11.2 percent versus 3.7 percent (p = .010). Hospital PMPM cost was reduced by 17.2 percent for PCMH-targeted conditions versus only 3.1 percent for other conditions (p < .001), and ED PMPM cost by 9.4 percent versus 3.6 percent (p < .001). Conclusions. PCMH transformation reduces hospital and ED use, and the majority of the effect is specific to PCMH-targeted conditions. Key Words. Medical home, care, patient-centered, primary care, health services, cost, quality