Medical Home Incentive Plans Look to Cut Costs, Coordinate Care ‎

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Published May 24, 2011

| FOXBusiness

Come June 1, Highmark Inc. will join 50-plus private U.S. health plans to become an early industry adopter of the patient centered medical home (PCMH).

Under the PCMH delivery model, primary care physicians (PCP) provide comprehensive care for patients in a setting that facilitates partnerships between patients, their personal physicians and their families. The structure employs a pay for process/ pay for performance model in replace of the traditional fee- for-service tied to episodic care.

The  model, which has already been implemented in several Centers for Medicare and Medicaid Services (CMS) pilots as well as in the United States military, monitors patient- health status and follow up to keep healthy patients well and patients with chronic conditions compliant to help prevent serious, and often costly, complications.

Highmark’s two-year pilot program aims at helping coordinate physician care by supplying and financing a care coordinator to ensure consistency across 13 physician practices throughout Western and Central Pennsylvania and West Virginia, covering 29 locations, 160 physicians and 45,000 members.

The coordinator will help ensure certain patients have access to disease management programs and expert resources, including the integration of a homecare component, so that patients needing chronic care can avoid excessive office visits, but still correctly take meds and schedule necessary follow-up appointments.

Knowing that chronic health conditions are money drainers for any insurer, Highmark will promote   preventive or wellness care by alerting patients to schedule annual physicals, getting recommended age-appropriate screenings and providing weight maintenance.

“It’s every bit as important for the invincible 22 year-old male to have a check up as it is to make sure the  50 year-old gets a colonoscopy,” says Dr. Mary Goessler, Highmark’s medical director of quality management.

Improved outcomes improve quality and reduce costs

According to Goessler, adoption of the model will help reduce medical errors, the duplication of medical tests, and drug interactions as well as visits to the emergency room, hospital admissions and the length of hospital stays—occurrences that complicate care and also spike costs. 

A 2010 report authored by Dr. Kevin Grumbach, a professor at the University of California in San Francisco, and Dr. Paul Grundy, director of health care transformation at IBM and president of the Patient Centered Primary Care Collaborative (PCPCC) , reiterated that investing in primary care patient centered medical homes result in improved quality of care and reductions in expensive hospital and emergency department utilization.

Reducing medical costs is a win-win: health insurance companies pass on costs to consumers, so when costs are being cut at the ground level and wellness and prevention become a focus consumers should expect savings.

The investment also “bends the cost curve” with several major evaluations showing that PCMH initiatives have produced a net savings in total health-care expenditures for PCMH patients.

BlueCross Blue Shield PCMHs in South Carolina reported a 10.4% reduction in inpatient hospital days per 1,000 enrollees per year among patients and 12.4% drop in ER department visits per 1,000 enrollees per month.

In North Dakota BlueCross Blue Shield PCMHs, tell a similar story. According to Grumbach and Grundy, in 2005 total costs per member per year were $530 lower than expected in the intervention group based on historical trends. Between 2005 and 2003, total annual expenditures per patient increased to $7,433 from $5,561 compared with a much larger increase among control patients, $10,108 in 2005 from $5,868 in 2003.

Financial Incentives

Physicians who follow the PCMH model receive financial incentives. Currently, these incentives trend between $6 and $10 per member, according to Grundy.

According to Goessler, Highmark assigns points to different aspects of the PCMH plan to compare how different practices are evolving over time and how they compare to others across the country.

“In a fee-for service world physicians get paid for doing things but they don’t get paid for doing them well,” says Dr. Bill Bird, family physician Penn State West Hershey Med Center which is participating in the Highmark pilot.

How practices use the bonuses varies; in Bird’ practice, bonus money is sunk back into the practice. About a year ago, when the practice received some state funding for following care management practices the group hired its fourth diabetic educator.

While there’s not a lot of dollars on the table right now, there is enough to get the systems started. “There has to be enough money on the table or we’ll build a great model but have no primary care physicians to go into it,’ says Bird.

Bird says that academic medical centers like those affiliated with Penn State are building these parameters into physician incentives. Additionally, universities like Duke are training medical students and residents to participate in interprofessional teams, according to Lloyd Michener, professor and chairman of the department of community and family practice at Duke.

Bird and Michener agree that the PCMH design may not be as well-suited for the solo physician or small private practice. The country is heading toward accountable care organizations comprising large, integrated multispecialty groups.

“Given extra resources, we’ll be able to do a better job for our patients and show cost savings,” says Bird.

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