CareFirst Blue Cross Blue Shield has established one of the largest patient-centered medical homes (PCMH), which already yielded $40 million in cost savings in the program's short 18-month lifespan. To better understand how CareFirst became so successful so quickly, FierceHealthPayer spoke with Chet Burrell (pictured), the insurer's chief executive officer.
FierceHealthPayer: How does CareFirst's PCMH differ from other payers' similar programs? It has achieved fast results and quick growth--what are the keys to that success?
Chet Burrell: There are a few reasons for our success. The first is the way we set up accountability for primary care physicians. It's way beyond just primary care; it's for all care in all settings for their patients. They are accountable for the aggregate outcome, including cost and quality, for their patients.
The second difference is that the incentives in our program are very powerful and are tied to their accountability. Their accountability is for global costs and their incentives are based on global cost savings. So if you can prevent hospitalizations at least to some degree by stabilizing these patients then you share in the savings of the aggregate medical dollar, not just the primary care piece of of that.
That means there are very powerful rewards so you can get what amounts to anywhere between 0 percent or 1 percent increase in fees to 70 percent of fees. So it's not some little tiny marginal thing. It's not paying them $20 per member per month. If you save on the aggregate medical dollar even 5 percent or 6 percent, you get really big rewards.
The third thing is the sheer mass of infrastructure that supports the physicians. We give doctors enormous amounts of data, including who their high-risk and high-cost patients are. We'll help them focus on the right people, show what those patients' care patterns are outside of the primary, who their specialists are, what drugs they're on.
We also assign a nurse to the doctors--who they don't have to pay for--to help them set up care plans, ensure patients go to their appointments and get the services they need, prevent the patients from breaking down and being readmitted to the hospital and going to the emergency room. We have a care plan template on the web that tracks everything that happens to the patient, so with a few clicks of the mouse it's available--to anyone on the care team.
So when you take in combination the global accountability for the whole outcome of the patient, powerful incentives and massive infrastructure to support them, low and behold you get a change.
FHP: The PCMH saved $40 million, largely by reducing unnecessary hospital admissions and ER visits. Can you describe what steps were implemented to reduce the admissions and ER visits?
Burrell: We're beginning to do more by way of home-based services because that's where people break down, get depressed, get confused about their meds. So we're hooking up patients with a home care coordinator nurse who does an assessment of their home situation and makes discoveries of a psychosocial and clinical nature and home safety issues.
Based on that assessment, the nurse and doctor can determine how the services can best be organized for each patient to stay stable at home. So for certain people we know have multiple chronic diseases in a care plan under the direction of a primary care doctor--for example, someone who is obese, has diabetes, heart failure, is on 14 medications and has osteoarthritis and hypertension--could really benefit from this in-home service.
By doing that even marginally better in a more focused way, you can prevent a lot of breakdowns, avoid unnecessary hospitalizations and even cut down the sheer number of drugs that people are on. The combination effect over time actually saves a considerable amount of money.
FHP: How did the participating doctors adjust to the program overall? Were they eager to participate or did it take them time to adapt to new care approaches?
Burrell: We did a very substantial recruitment effort on about 20,000 primary care doctors in the region. We held town hall meetings, sent people individually to talk to doctors, had focus groups, had materials on the web and on paper. We had to educate them about the program, which is completely voluntary, and explain that nothing bad will happen if they don't come into the program.
If the primary care doctors do want to cooperate and they're in good standing in the network, we'll pay them 12 percent more than we otherwise are paying before they've done anything. And then we'll pay them $200 extra to write a care plan beyond what they would have fee billed us. And then we'll give them the chance to have an outcome incentive award, so if they save on the global cost of the patients, then we'll share it with them. And so in exchange for doing some more work for the people who need it the most, we will reward handsomely.
The result of that is we now have 3,600 primary care physicians in the program and that's still growing. We'll probably wind up in the next six months or so passing above the 90 percent mark in terms of all the available primary care doctors in the region. There's a variable level of implementation so far, but it's early at only a little more than 18 months into the program. We think that in three to five years, we will have the whole network fully understanding and engaged in the program. It takes a while for them to trust that it works the way we tell them it will work.
FHP: The idea of incentivizing small primary care practices into forming virtual panels of 10 to 15 doctors to operate as a PCMH is very unique. How did CareFirst come up with that idea and was it difficult to motivate doctors into forming these panels?
Burrell: The idea was born out of our sense of reality, which is that the majority of the doctors in the region practice in practices of one to three. So the first reason for the panels was to pool risk. No individual primary care doctor has enough patients by themselves to form a credible population. You need about 3,000 patients to have insurance credibility, where it's big enough to pool risk. The second reason was for backup coverage. No one primary care doctor could cover patients 24/7 because you yourself cannot be available all the time to your patients. And the third reason was to use the panel for peer review, where the doctors can look at each other's data.
We told the doctors they have to pick their own panels because we will never force fit them. If they can't form a panel, we can't get them in a panel. They can reconfigure as they wish over time. We also said the panels can't have fewer than five doctors or be bigger than 15. But other than that, the doctors can form the panel however they want. The average panel is eight or nine doctors with about 3,000 of our members. We have 403 panels right now and we expect it go to about 450 over the next six months.
FHP: Given the PCMH's strong financial incentives for the participating doctors, has the program yielded any financial results for CareFirst? Or is the program's goal to avoid incurring additional expenses?
Burrell: Our hope is that by doctors acting to better control costs, better focus on the people who are most inclined to break down and need the most service, they will bend the curve. In other words, they bend it downward in the pursuit of self-interest, which is a very basic business concept. We're in it to maximize the community's ability to get access to healthcare and nothing so threatens access as costs that are rising out of control. So what this is an attempt to do, through incentives and accountability and support, is to help the key players--the primary care doctor--bend the curve.
Over the last 10 years, we have operated on an underwriting margin, the difference between the premiums we charge and the costs we incur, at about 1 percent or less. So with that skinny of a margin, premiums basically reflect the cost. We can't run at a loss, but we don't seek to make anything other than the 1 percent, which is necessary to keep the financial solvency of the company. Any improvements or results go right to the policyholders.
FHP: What are CareFirst's future goals for the PCMH program in the next few years?
Burrell: We received a grant from the federal government to bring Medicare fee-for-service patients into the program. So we're in the process of working with the Centers for Medicare & Medicaid Services to bring Medicare beneficiaries into this program under the exact same rules, infrastructure and information sharing. Our goal is to make it a common set of goals and rules for the biggest private and public payer in the system. By doing that, we think it accelerates provider PCP attentiveness to the incentives of the program and behavior change and should produce accelerated bending of the cost curve. And that's a game changer on a big scale.
Editor's note: This interview was edited and condensed for clarity.