News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups

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News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups

Hosted by Robert Michel
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In Its Second Year, Medical Home Program of CareFirst BCBS Produced $98 Million in Savings, along with Significant Quality Improvements

One of the nation’s largest patient-centered medical home  (PCMH) programs has reduced costs dramatically and improved care quality for the second consecutive year. It recently reported the achievements produced during its first two years of operation.

This accomplishment is more evidence for pathologists and clinical laboratory executives that a properly implemented medical home program can deliver measurable gains in patient outcomes and corresponding reductions in the overall cost of care. In January 2011, CareFirst BlueCross BlueShield started a PCMH program for primary-care physicians (PCPs). It serves about 1 million members in Maryland, Washington, D.C., and northern Virginia.

Savings of $38 Million in Year One

After one year, participating PCPs cut costs by $38 million (about 1.5%), when compared with previous estimates. By the end of the second year, the primary-care physicians had cut costs by $98 million (about 2.7%), when compared with previous estimates. These results were published in a press release issued by CareFirst.

Medical Lab Managers: Check Out the Improved Reimbursement

For medical laboratory professionals interested in how value-based reimbursement will reward providers, one notable outcome was this: CareFirst reported that about two thirds (66%) of the 3,600 primary care physicians (PCPs) and nurse practitioners (NPs) participating in the PCMH program, earned higher payments as a result of controlling costs and achieving certain quality goals.

Most of the savings came from reduced hospital admissions, fewer emergency room visits, and less spending on drugs, stated CareFirst CEO Chet Burrell.

The result is a 29% increase in physician reimbursement rates overall. However, these increased payments were offset by reducing inpatient hospital stays and specialist visits, Reuters explained. PCPs and NPs focused on measuring and achieving quality improvements and other factors that helped to prevent providers from cutting back on delivering necessary care, noted the Reuters report.

Elliott Fisher

CareFirst Blue Cross Blue Shield established a patient-centered medical home program serving patients in Maryland, the District of Columbia and Northern Virginia that delivered $38 million and $98 million of savings, respectively, it its first and second years of operation. Elliott S. Fisher, M.D. (pictured above) is a health-policy expert at Dartmouth Institute for Health Policy and Clinical Practice. He told a Reuters reporter that this was an “important finding.” (Photo copyright Dartmouth Institute for Health Policy and Clinical Practice.)

Commenting on the savings, Elliott S. Fisher, M.D., a health-policy expert at the Dartmouth Institute for Health Policy and Clinical Practice told Reuters, “This is a very important finding, that a major health plan is able to achieve savings” of this level.

CareFirst’s PCMH program rewards physicians for coordinating care and delivering high-quality care.

For participating in the program, the PCPs get a 12% increase in reimbursement. They can then earn additional payments as a result of controlling costs and achieving the quality goals, called outcome incentive awards (OIAs). The health insurer provides additional support to the PCPs in the form of care coordinators who work closely with patients.

Success of This Patient-Center Medical Home Program

For the PCP groups that did not earn an incentive award, costs were 3.6% higher than expected on average and their quality scores were lower, reported Reuters. It went on to predict that the success of this program is likely to accelerate other efforts to move away from a traditional fee-for-service payment system that pays physicians and other providers more for doing more tests. Instead, health insurers would focus on making payments that reward efficiency and higher quality, Reuters added.

In an article about the CareFirst PCMH, The Commonwealth Fund explained that the central idea behind the initiative is for all patients—particularly those who have multiple chronic conditions—to get coordinated care. “Doctors are expected to talk to each other, compare notes, and share test results. If a patient doesn’t show for an important visit, a staff member finds out why and makes an effort to follow up,” the fund reported.

For this coordination, CareFirst pays participating primary care practices an amount that equals about a 12% increase to participate. Carefirst also pays doctors $200 for each care plan the physician prepares for a high-risk patient. Physicians will also be paid an additional $100 each time a care plan needs to be revised, the The Commonwealth Fund report said. Care plans document all tests, therapies, medications, and other care, making them a resource for any member of the medical home’s care team.

CareFirst Is Largest Health Insurer in Maryland

The Daily Record Maryland Business reported that the nonprofit CareFirst is the largest insurer in Maryland. Under a $24 million grant from the federal Centers for Medicare & Medicaid Services (CMS), the PCMH program is being expanded this year to serve 25,000 Medicare patients in Maryland, The Daily Record added.

Demonstrating its commitment to the PCMH program, CareFirst announced that it had selected three organizations to analyze the qualitative and quantitative results of the PCMH program. The organizations include researchers from George Mason University and Westat, a consulting firm in Rockville, Maryland. The third organization is a team of researchers from Harvard University, Brandeis University, and the Massachusetts Institute of Technology.

There are insights from this patient-centered medical home program that can be considered auspicious for clinical laboratory owners and pathologists. One reason why CareFirst was able to increase the reimbursement it paid to participating physicians by a substantial 29% is the fact that primary-care spending represents only 6% of medical spending. However, as a point of significant leverage, better primary-care reduces the number of high-cost hospitalizations and specialist visits.

Marketplace Example to Inspire Pathologists and Clinical Lab Managers

This is a marketplace example that should inspire pathologists and clinical laboratory professionals to build a compelling case that increased reimbursement and appropriate utilization of selected medical laboratory tests can generate substantial downstream savings to the healthcare system.

It may be the perfect time for the laboratory medicine professionals to come together to gather the necessary data to create evidence-based medicine guidelines that incorporate appropriate medical laboratory testing that demonstrates major improvement in patient outcomes, along with a substantial reduction in the overall cost of care.

—Joseph Burns

Related Information:

New healthcare model cut even more costs in year two: insurer

Patient-Centered Medical Home Program Trims Expected Health Care Costs by $98 million in Second Year

As CareFirst Tweaks the Medical Home, Doctors Flock and Costs Dip

CareFirst Selects Three Groups To Evaluate PCMH Program

CareFirst coordinated-care program found to reduce health care costs

CareFirst PCMH Program Cut Costs 2.7% in 2nd Year