A New Way To Improve Primary Care Yet Reduce Total Costs

PCPs in the current reimbursement
model are obliged for business reasons to see too many patients per day which
of course means less time per patient. PCPs are frustrated and patients are
less satisfied. With less time it is hard to build a strong doctor – patient
relationship and without it there is less opportunity to build trust. Readers
of my posts know that I am a strong advocate for primary care and for granting
the PCP added time per patient but doing so with no decrement in income. Here
is an innovative experiment by an insurer to incent PCPs to offer more time to
those patients with chronic illnesses while enhancing preventive care to all.

 

Added time and good care
coordination will improve the quality of care for the individual patient with a
chronic illness and yet will reduce costs by eliminating excess specialists visits,
tests, procedures and, by improving care quality, it will reduce the need for
hospitalizations. That was the assumption underlying a
program by a large not for
profit BlueCross/Blue Shield plan – CareFirst
. Fundamentally the plan incents PCPs with opportunities for
increased income in return for giving added time and good care coordination to
those with chronic illnesses along with enhanced preventive care to all
patients.

 

The insurer calculated that about 80% of their medical
expenditures went towards the care of just 15% of patients. These were patients
with complex chronic illnesses. Knowing that primary care physicians receive
about 5% of total healthcare expenditures it was hypothesized that they are in
a position to strongly impact much of the other 95%. The insurer also wanted to
raise awareness of healthy lifestyles to assist all of their enrollees to
remain healthy. So the agenda was to create incentives for PCPs to have an
impact to reduce the total cost for those with chronic conditions while
improving the care and concurrently maintain the health of the remaining
enrollees.

 

Oversimplified, the new program works
like this. PCPs form into actual or virtual groups or panels of 5 to 10 and
enter into an agreement with the insurer which then increases their
reimbursement by 12% for each visit. The insurer also agrees to pay the
physician within one business day, reducing the doctor’s need for working
capital. 

 

An actuarial analysis of the PCP
group’s patients is done using claims data from the prior year to create an
anticipated “global budget” for the coming year.  The 15% or so of patients that need chronic
illness care coordination are “flagged.” The PCP’s obligation is to give those
patients whatever added time is
needed per visit, to create a complete care plan and to post it in an
electronic medical record (for which the PCP gets an additional $200). This
serves as automatic preauthorization; no further calls will be needed for
tests, procedures, etc. – a major time saver for the PCP and the office staff. The
concept also anticipated that with extra time per patient, the PCP would be
able to handle most issues including those of patients with complex chronic
illnesses, reducing the need for specialist referrals. Finally, the insurer
makes available a nurse “care coordinator” at its expense  to call the patient as often as necessary to
check on medication use, medication side effects, weight gain or whatever else
the PCP has built into the care plan. The expectation starting out was that
this approach of incentives for giving the patient with a chronic illness the intensive
primary care and the care coordination needed would enhance quality yet reduce
the overall expenditures for that patient. 
 

If, at the end of the year, the PCP
groups’ total claims came in under the projected global budget, the members of
the virtual group would get back a portion of the savings. With these incentives,
it was anticipated that the PCP would be sure to carefully coordinate care so
that there were no excess specialist visits, no unneeded tests or procedures
and, with better care overall, less ER visits and less hospitalizations. The
end result, it was hoped from the start, would be higher quality care, lower
total expenditures for that care, enhanced income for the PCPs and a more
satisfying practice. It could be a win for everyone. Now three years in, the
plan seems to be working. The physicians are pleased with the added income and the
insurer is pleased that total costs have dropped.

 

The whole concept was to coordinate the care that the
patient receives with the expectation that the patient will be better served,
the providers will be more satisfied and the total costs will be reduced. It is
a transformational change in how the PCP functions. It is an equally huge
transformational change for the insurer –a change that accepts that extensive
primary care with care coordination costs extra money but recognizes that the
end result is better quality at a lower total cost. 

 

After two years, it was reported
that it saved $136 million with the 297 panels of 3,600 PCPs that had joined
the program caring for about one million individuals. All of the PCPs enjoyed
the added income in their reimbursements and two thirds received end of year
incentive payments as a result of the savings. Overall the average PCP in the
program received about 29% more than they otherwise would have under the
standard fee schedule. 

 

At the end of three years and with
enough data to be actuarially credible, there have been quite definite
improvements in ten measures such as costs per
member per month, number of emergency visits, admissions per 1000 members,
length of stay, cost per admission, and readmissions within 30 days after
discharge, etc. while maintaining or improving quality measures. Not all panels
of PCPs were as successful as others and those that were tended to be
successful in each of the three years in the program. At the end of the third
year, about 60% of the panels were granted an incentive award for beating their
projected global budget. The successful panels tended to be those in small
private practices and, interestingly, had sicker patients under care yet they
maintained higher quality scores. Another important finding was that some
specialists tended to much higher utilization (and therefore costs) than others
despite similar patient problems. PCPs who tended to refer to high utilization
specialists were much less likely to achieve an end of year incentive payment.

 

Of course, there are some questions to
raise. If the PCP is spending more time with these patients but still has the
same total size practice, then where is the time coming from? Does it mean less
time for other patients? PCPs have now learned which specialists expend more
dollars per patient than others. Will their referrals gravitate to these
specialists regardless of known or perceived quality? Patients will likely in
the future be offered incentives for choosing the PCPs that are most effective
with this program; is that appropriate? And what about those PCPs who have
converted their practices to direct primary care? They are actually saving the
insurer considerably, probably much more than the incented PCPs in this
program. The insurer should consider paying all or part of the DPC fee for
their insureds since the insurer is benefiting substantially yet at no cost to
itself.

 

Perhaps the most important outcome,
from my perspective, is the recognition by a major insurer that it is possible
to create a new incentive-based approach to reimbursement – in this case within
the old fee-for-service model – which actually costs more for primary care (up
from about 5% of total costs to about 7-8% of total costs) yet significantly
reduced those total costs of care
while improving quality.

 

Note: I talked to CareFirst’s CEO, the former chairman of the board and a vice president about the
program but I
have
no financial relationship; this program is used for
illustrative
purposes only and is not meant to be an endorsement.

 

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