Healthcare Business News

Medical home initiative reduces costs

By Melanie Evans
Posted: June 7, 2013 - 3:30 pm ET

One of the insurance industry's medical home experiments has slowed costs and significantly lifted quality scores in its second year of operation, raising hopes for pilot programs initiated under the 2010 healthcare reform legislation.

CareFirst BlueCross BlueShield of Owings Mill, Md., announced Friday that its medical home trial covering 3,600 doctors and nurses had reduced costs by 2.7% last year compared to projections. The savings amounted to $98 million for the estimated 1 million privately insured patients in the 279 medical groups or panels participating in the program.

CareFirst's patient-centered medical homes, in Maryland, Virginia and the District of Columbia, offered financial incentives to providers who achieved pre-specified quality and savings targets. The model also gave the primary-care providers extra money to coordinate care for complex, chronically ill patients or those at great risk for such ailments. Doctors also earned a flat bonus for participation. The program operates in Virginia, Maryland and Washington, D.C.

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The effort, and others like it underway in the public and private sector, gained momentum after passage of the Patient Protection and Affordable Care Act, which included various initiatives to test new payment models. CareFirst said it received $24 million in federal funding last year to extend its medical home model to Medicare.

Patient-centered medical home have proliferated and their models vary greatly. One survey found that at the beginning of 2010 there were more than 4,700 physician practices with over 14,000 physicians participating in medical home pilot projects.

At CareFirst's pilot project, savings among the privately insured patients during the second year of the medical home initiative were more pronounced than first year results, according to Michael Sullivan, a spokesman for CareFirst. Quality scores improved by about 9% in the second year compared with the first year. Efforts during the first year slowed spending by 1.5% against projections compared with 2.7% in the second year.

Two-thirds of primary care groups in the medical home model earned bonuses based on savings and quality performance in the second year, the insurer said in a news release announcing the results.

Healthcare costs at those groups were 4.7% below projections, on average.

Reform advocates touting the medical home model say its greater emphasis on primary care and prevention will result in fewer hospital admissions, and thus result in major savings. CareFirst's savings came from less hospital care, Sullivan said.

“Patients of doctors in the program have fewer hospital admissions, fewer readmissions, they spend less days in the hospital” compared with CareFirst enrollees not in medical homes. The insurer's total enrollment is about 3.3 million. “There's a dramatic difference,” he said.

Follow Melanie Evans on Twitter: @MHmevans

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