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.

 

 

Cut Health Care Costs With Prevention

On May 12, 2010, the Harvard Business Review ran this post by me on their web site. The original is at http://tinyurl.com/2vnpato

Prevention is the key to both better health and lower health-care costs over the long haul. This is where the nation — and each of us as individuals — needs to put energy and resources. In the long run, it is more important than addressing the high cost of new technologies and drugs or their inappropriate overuse.

Today, the U.S. basically has a medical care system rather than a health care system: We focus on treating illness when it occurs but not on preventing it in advance.

According to a recent New England Journal of Medicine article, there are about 465,000 preventable deaths per year in the U.S. from smoking, 395,000 from high blood pressure, 216,000 from obesity, 191,000 from inactivity, 190,000 from high blood sugar, and 113,000 from high cholesterol.

These are mostly due to our lifestyles: One-third of Americans are overweight, another third are obese, and 20% smoke. We eat too much packaged and prepared food rather than nutritious foods, and we do not exercise. Even children's physical activity now declines with age, from about three hours per day at age nine to less than an hour by age 15.
This helps explain why the U.S. ranks 39th for infant mortality, 43rd for female mortality, 42nd for male mortality, and 36th for life expectancy — but is first for per capita spending on health care.

Clearly, there is something terribly wrong with this picture. And unless we get serious about prevention, there will be a diabetes epidemic and more heart disease, cancer, arthritis and other chronic illnesses. Life spans will shorten rather than lengthen, and the costs will be enormous.

I firmly believe that each of us must each take responsibility for our own preventive health care. That said, other players in society should assist us in the following ways:

Our government should insist that restaurants post calorie counts and fat content and schools restrict the availability of sodas and other non-nutritious foods in cafeterias. In addition, it can provide a food pyramid — recommended diets or eating plans — that is not influenced by vested interests.

Our employers should provide wellness programs like Safeway's, which encourages staff to utilize smoking-cessation, weight-reduction, stress-management, and nutrition counseling at no charge. Those who participate are given a reduction (incentive) of their portion of the health care premium. In a Wall Street Journal op-ed describing the program, CEO Steven A. Burd reported that over four years Safeway's per capita health-care costs (including both the company's and employees' portions) did not rise while those for most American companies had increased 38%. In addition, the company had less absenteeism and higher worker productivity.
Insurance plans should offer subscribers lower premiums for not smoking, for being at reasonable weight, and for exercising.

Physicians, especially primary care physicians, should spend the time necessary to provide good preventive medicine, which includes counseling, screening tests (high blood pressure, weight , cholesterol, cancer), and immunizations.

Prevention is valuable at any age. At the Erickson Retirement Communities, residents can opt for a program that includes health-promotion classes for all (similar to Safeway's) and care coordination for those who do develop a chronic illness. The physicians limit themselves to about 400 patients (compared to about 1,300 to 1,500 for most primary care physicians) and offer same same-day visits and as much time as needed per visit. They use an electronic medical record system, nurses to assist with care coordination, visits to each hospitalized patient, and an automatic office visit within 72 hours of a hospital discharge. The results are striking: fewer hospitalizations, shorter lengths of stay for those who are hospitalized, and a drop in the "bounce rate" (i.e., unplanned readmissions to the hospital in the 30 days after discharge) from the national Medicare average of (an outrageous) 24% to less than 10%. In other words, better health, better care and reduced costs.

In summary, a combination of nudges and incentives can assist us in achieving our responsibilities for health promotion and disease prevention — responsibilities commensurate with the new right of all Americans to have insurance.

This would be a start toward a true health care system and away from a medical care system. What else do you think needs to be done?

Stephen C. Schimpff, MD, is a retired CEO of the University of Maryland Medical Center in Baltimore and is the author of The Future of Medicine — Megatrends in Healthcare. He blogs at this website and can be reached at schimpff3@gmail.com

Misconception - Primary care physicians do not deal with the expensive aspects of medical care so they can have little impact on reducing medical expenditures.

Two major reasons for cost escalation are lack of good care coordination of those with complex chronic illnesses and inadequate attention to prevention and screening. PCPs are key to both of these but they have too little time per patient and are not paid for either activity.

About 5% of all healthcare expenditures go to PCPs but they can have a major impact on the other 95%, especially with good care coordination of chronic illness and with a focus on prevention. To fix this, PCPs need to be incented [paid] to deliver care coordination for the chronically ill and good preventive care to all of their patients. This could have a very high return on investment and a huge impact on total costs. It is a logical place to begin to address the high costs of medical care in America.

One Approach To Improving Care Coordination While Assisting PCPs

Good care coordination will improve the quality of care for the individual patient and yet will reduce costs by eliminating excess visits, tests, procedures and, by improving care quality, it will reduce the need for hospitalizations. With primary care physicians [PCPs] not able to take the time necessary, it is clear that something needs to be done to get care coordination for those with complex, chronic illness.

Here is what one insurer, CareFirst Blue Cross Blue Shield [CF] of Maryland, DC and portions of Virginia is planning. CF knows that about 65% of their medical expenditures go towards the care of just 5% of patients and 80% go for about 15%. These are patients with catastrophic problems in the 5% and complex chronic illnesses for the remainder. CareFirst also knows that primary care physicians receive about 5% of total healthcare expenditures yet they are in a position to impact the other 95%. So the agenda is to create incentives for them to do so in a way to reduce that total while improving the care of the patient. It would work like this [somewhat oversimplified to account for space limitations here.]

PCPs would form into groups of 5 to 10 and enter into an agreement with CareFirst. In return CareFirst would increase their reimbursement by 15% for each visit. There will be another 5% increment in return for using an electronic system provided by CareFirst that will assist with billing. This system will check their submissions, do edits and corrections and then submit the claim to CareFirst [or any insurer], all automatically and electronically. I am told it is easy to use and will greatly improve the doctor’s office productivity thus creating savings. No longer will there be claims denials over billing errors or the need to repeatedly resubmit until the claim is remediated – it will be correct the first time. In addition, Carefirst will agree to pay the physician within one business day, dramatically reducing the need for working capital.

CareFirst will do an analysis of the PCP group’s patients using claims data from the prior year. CF will be able to “flag” the 15% or so of patients that need care coordination.
The PCP’s obligation in this new system is to give the patient whatever added time is needed per visit and to create a good care plan and post it in an electronic medical record. This will serve as automatic preauthorization, no further calls to CF will be needed for tests, procedures, etc. – another major time saver for the PCP and his or her office staff. When the patient needs to see a specialist, the PCP will refer the patient but also call the specialist and clarify expectations and review the results of the referral when done. Finally, CareFirst will make available a “care coordinator” [a nurse] to call the patient as often as necessary to check on medication use, medication side effects, weight gain or whatever that the PCP has built into the care plan. If the care coordinator cannot resolve an issue or sees a developing problem, she will report in to the PCP.

The expectation is that this approach of incentives for giving the patient the care coordination needed will enhance quality yet reduce the overall expenditures for that patient’s care.

To further add to the incentives, CareFirst will do an actuarial analysis of the expected claims for the coming year for the PCP group’s patients. If, at the end of the year, the patients have had fewer claims, CF will give back a portion through yet higher reimbursements. With this added incentive, it is anticipated that the PCP will be sure to carefully coordinate care so that there are no excess specialist visits, no unneeded tests or procedures and, with better care overall, less hospitalizations. The end results, hopefully, will 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. Of course, the devil is in the details but it seems to be a worthy plan, one that might just have a real impact. It appeals to me because it begins with an attempt to improve quality and improve the PCPs situation as a means of reducing costs – rather than the other way around.

Improving Access to Primary Care and Coordination of Complex Chronic Illness

Primary care physicians find that their income is flat or declining despite rises in practice costs such as office expenses and malpractice insurance. They generally are in small groups so they have little or no negotiating power with the insurers. And antitrust requirements prevent them from banding together for negotiating purposes. The insurers see their costs rising so they look for ways to keep expenses down, including payments to PCPs.
In order to maintain income levels, they resort to many techniques. One, of course, is to see more patients per day but each for less and less time. This means they spend all too little time taking a through history or physical and instead send the patient off for expensive tests and X-rays or to specialists for referral. If a patient cannot get through to their PCP and instead goes to the ER for an urgent problem, the patient will probably spend hours there and the costs will be much more. The ER physician does not know the patient, does not have access to the old record and as a result feels obliged to obtain multiple tests and images to make the proper diagnosis. This is “nuts” – the person’s PCP might have been able to solve the problem quickly, with fewer or no tests. Better, quicker care for the patient and less expense for the insurer.
PCPs also try to increase income by arranging for tests to be done at their office like stress tests. A technician arrives with the equipment and does the test for which the PCP gets a fee. Are more tests done than truly necessary? Should these tests be done only in consultation with a cardiologist and under their supervision?
Something needs to be done to alleviate these problems. Somehow the PCP needs to have an incentive not to have too many patients and to spend the time needed with each patient. This means a higher per visit reimbursement. But it needs to come with incentives. PCPs receive about 5% of the medical care dollar but can and could greatly affect the other 95%. So there need to be techniques tried to allow and encourage the PCP to give good preventive care, counsel about important issues, meet their patients at the ER, use email and the phone more [neither are currently reimbursed] and coordinate care when the patients needs to be seen by a specialist or have a test or procedure. Coordination of care is especially important for the 5-15% of patients who have complex chronic illnesses and hence need a team of providers to give care. The “team” needs to actually function as a team and it will do so only if someone is orchestrating its work. Primary care physicians need to change from the long held practice of being interveners to being orchestrators, especially for their patients with chronic diseases. This will be a culture change but it will also require monetary incentives – it will not occur otherwise.