New form of U.S. healthcare saves money, improves quality, one insurer finds

[July 10, 2014]  By Sharon Begley

NEW YORK (Reuters) - In one of the largest tests of a novel way to deliver and pay for healthcare, insurer CareFirst BlueCross BlueShield announced on Thursday that 1.1 million people receiving care through its "patient-centered medical homes" last year were hospitalized less often and stayed for fewer days compared to patients in traditional fee-for-service care.

Medical homes, a centerpiece of President Barack Obama's healthcare reform, have been heralded as one of the best hopes for reducing the cost of U.S. healthcare, the highest in the world, and improving its quality, which lags that of many other wealthy countries.

Medical homes are basically groups of primary-care providers who pledge to coordinate care, adhere to guidelines meant to improve patients' health, and avoid unnecessary tests, among other steps.

According to CareFirst, its medical home program, in its fourth year, also delivered high-quality care, measured by yardsticks such as whether doctors gave recommended cancer screenings and immunizations. The organization said it saved $130 million or 3.5 percent compared to projected spending under standard fee-for-service.

The savings reached a level "I wouldn't have thought possible," said CareFirst President Chet Burrell. The non-profit covers 3.4 million people in Maryland, Washington, D.C., and northern Virginia.

Providers who hit the mark receive higher reimbursements from CareFirst: 12 percent above the standard rate just for participating in the medical home program and up to 36 percent more for quality outcomes. A physician could therefore receive $148 for a procedure usually reimbursed at $100.

The insurer can afford that because better primary care, which accounts for just 6 percent of all medical spending, can reduce hospitalizations and visits to expensive specialists.

A key element of the medical homes model is data, including information about which specialists are especially pricey, and electronic medical records alerting doctors about check-ups, medications and other care for patients with chronic conditions such as asthma and diabetes.

The $130 million in savings was driven largely by 6.4 percent fewer hospital admissions, 11 percent fewer hospital days and 11 percent fewer visits to outpatient facilities.

The last reflects the fact that medical homes have evening and weekend hours, so patients don't need to visit clinics and emergency rooms for non-urgent care after-hours.

Medical homes have not been uniformly assessed as successful, however. A study of 32 of them, published in the Journal of the American Medical Association this year, found they did not reduce hospitalizations or costs and missed 10 of 11 quality goals.

Other studies have been more encouraging, said Marci Nielsen, chief executive of the Patient-Centered Primary Care Collaborative. A year ago, BlueCross Blue Shield of Michigan reported its medical-home program saved $155 million and cut both emergency-room visits and hospital stays.

The varying results underline the need to identify which aspects of medical homes such as being open on weekends and evenings or aggressively managing the care of the sickest patients - are key, she said.

(Reporting by Sharon Begley; Editing by Cynthia Osterman)

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