Patient-centered medical home program saves CareFirst $1.2B, pays off for doctors

Doctor putting money in pocket
Under CareFirst's primary care program, doctors can earn major incentives. (Getty/Niyazz)

It has quite literally paid off for primary care physicians who have participated in CareFirst BlueCross BlueShield’s patient-centered medical home model and demonstrated both quality care and cost savings.

The program—which requires doctors participate in a patient-centered medical home (PCMH)—has netted CareFirst, the Blue Cross insurer $1.2 billion in savings since it began in 2011.

And for the average primary care doctor in the insurer’s program, it's meant an additional $37,000 in annual income.

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That’s money that is hard for primary care physicians to ignore, Burrell, who will retire from the insurance company at the end of the week in an interview with FierceHealthcare.

RELATED: 4 ways PCMH practices differ from traditional medical offices

The savings for CareFirst, which operates in Maryland, Washington, D.C., and Northern Virginia, have been fueled primarily by reductions in hospital admissions and readmissions and shorter hospital stays, as well as fewer emergency room visits.

Chet Burrell
Chet Burrell (CareFirst)

Nearly 4,400 physicians who work in several thousand practices participate in the PCMH program, which accounts for nearly 90% of all actively practicing primary care doctors in the company’s mid-Atlantic service area, he said. They provide care to over one million CareFirst members.

In a patient-centered medical home, a team of doctors and other healthcare professionals, coordinate patient care across the spectrum.

A way to bend the curve

In addition to lowering the expected cost of care for CareFirst, the program contributed to an even larger savings of $5.5 billion against historic trends that saw medical costs growing at a rate of 6%-9% per year for a decade.

Bending that cost curve that was on an upward trend for years was the primary goal of the PCMH program, said Burrell.

It's not an easy goal to meet, as one recent analysis found that while value-based payment models are often viewed as a panacea for rising health costs, most have not led to significant reductions. 

RELATED: Report—Value-based payment models haven't cut costs yet

Yet, CareFirst was looking at care costs that were increasing at an average rate of 7.5% per person per year, an essentially unsustainable rate. Now in its eighth year of operation, data released by the insurer shows the program has helped slow the rate at which medical costs are increasing, while also improving quality of care.

RELATED: PCMH programs cut costs and improve quality. Collaboration is the key to their success

Physicians who participate in the program run the gamut from single practitioners to those in practices with hundreds of doctors. It includes practices that are owned by large integrated health systems, as well as independently owned practices.

Primary care physicians who participate are accountable for a patient’s total care, across all settings and experiences, including referrals to specialists.

How it works

The program is structured around primary care providers who are organized into teams that CareFirst calls panels. The usual panel is made up of just over 10 physicians who care for somewhere around 2,700 to 3,000 CareFirst members. They earn incentives as a team in a shared savings model.

CareFirst has paid out over $440 million as additional performance-based payments to primary care physicians in the program.

The panels are given an annual budget for their patients. That global budget is based on a target for each CareFirst member. The insurer pools those expected expenses to create a target for the panel. A typical budget is around $12-$14 million per year. By providing better care, doctors can cut costs by helping keep patients out of the hospital and emergency room. They cannot earn more than their budget targets, but expenses for each patient are debited against the budget for the panel.

At the end of the year, it’s a question of whether the physicians were able or live within their panel budget or not. If credits or expected costs exceed debits or actual costs, physicians can earn value-based incentives. However, to be eligible they must have achieved quality standards as measured on a series of consensus measures developed by the government for private payers, as well as measures of how engaged a physician is in the program. CareFirst shares with providers any savings they were able to achieve. There’s no risk to the doctors if a patient’s care is over budget.

Doctors are paid on a base fee and then earn incentives on top of that. They start with a base salary that averages about $60,000. They can earn an incentive fee for participation, fees to set up patient care plans and maintain them, as well as that outcome savings award. That outcome savings award is earned if the group of doctors achieves better outcomes for their whole panel of patients. Some 72% of doctors get that award paid as increases to their fee schedules based on both the level of quality and the degree of savings they achieve against projected costs each year. It can add well over 60% to a doctor’s income.

“As far as we know, this is the largest value-based system in the country,” Burrell said. “It’s built around primary care and it’s a uniform model throughout our region.”

Doctors are able to spend more time with patients who need it the most—about 2%-3% of CareFirst members are seriously ill and account for 40% to 45% of healthcare spending, Burrell said. Those are patients with serious, chronic conditions who often take multiple medications. “We said to primary care doctors, don’t do a quick 10-minute encounter,” he said, but be the judge of what care each patient needs.

The PCMH program works in conjunction with CareFirst’s supporting Total Care and Cost Improvement program. CareFirst assigns registered nurses to work with practices to help set up care plans and provide follow-up to patients. The insurer contracts to provide enhanced home monitoring, complex case management, diabetes management, pharmacy coordination and other services that can help patients and support physicians.

The results? Since the PCMH program’s inception in 2011, all CareFirst members experienced 21.3% fewer hospital admissions, 22.5% fewer emergency room visits and 7.8% fewer days in the hospital.

RELATED: CareFirst taps Brian Pieninck to succeed CEO Chet Burrell

CareFirst’s overall medical trend—a measure of annual total growth in all healthcare costs, including pharmacy—averaged just 3.5% from 2013 to 2017, compared with an average of 7.5% rise in cost per year in the five years prior to the PCMH program’s launch. “We cut it in half,” Burrell said.

Both doctors and patents like the PCMH model. Only 1% of physicians have opted out because they did not like the program, Burrell said. Patient satisfaction rates are at 4.5% on a 5% scale with close to 1 million of CareFirst's 3.2 million patients in the program.

Burrell says the PCMH is the "centerpiece" of CareFirst's overall strategy to control costs. With 90% of physicians participating, the focus is now on getting even better performance and having doctors do more. 

Burrell calls the PCMH program a bold experiment. “I would say it’s been a distinct success,” he said.

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