Archive for July, 2011

Insurer’s medical home initiative achieves cost savings double amount invested

The Associated Press reports a two-year-old initiative by Blue Cross Blue Shield of Michigan that provides patient-centered preventative care based on a “medical home” treatment model is proving to be a good investment, producing savings double the $35 million invested by the insurer in 2010.

The initiative involving 2 million lives embodies a conceptual rethinking of the current “sick care” medical treatment model in which multiple fee-for-service providers treat symptoms and co-morbidities of chronic conditions.  Instead of these patients merely counseled to make lifestyle changes, a multi-disciplinary team coordinated by a primary care physician develops a comprehensive care and prevention program.  Patients are provided a large degree of ongoing guidance and coaching to help them permanently adopt healthier lifestyles and reduce high cost medical care utilization.

The Patient Protection and Affordable Care Act (PPACA) requires the U.S. Department of Health and Human Services (HHS) to develop reporting requirements for health insurers by March 23, 2012 on how patient health outcomes are improved through the use of medical homes as well as more effective case management, care coordination, and chronic disease management.  Last month, HHS launched a 3-year pilot program to test the use of the medical homes for high cost Medicare and Medicaid patients as authorized by the PPACA.

Section 3502 of the PPACA also provides for grants to states, state-designated entities and Native American Tribes to establish community-based interdisciplinary teams to support primary practice-based medical homes.

A critical success factor for the medical home model is boosting the supply of primary care and family physicians.  The current fee-for-service model has created strong financial incentive for physicians to instead pursue lucrative specialty practices.  That means over the long run, moving toward a more preventative, health maintenance-based medical treatment model will require changing the underlying economics of medicine as it’s currently practiced in the United States.


When payer becomes provider

Kaiser Health News (KHN) reports on what could become a growing trend:  Health insurers buying medical groups and forming physician management companies.  “It’s the latest sign that the barrier between companies that provide health coverage and those that actually provide care to patients is crumbling,” writes KHN’s Christopher Weaver.

The key driver is payers’ desire to clamp down on rising medical costs that are passed on to consumers as higher insurance and managed care plan premiums.  Those fast rising premiums are threatening the viability of payers’ individual and small group market segments by heightening the danger of adverse selection and insolvency.

The trend also fits nicely with a provision of the Patient Protection and Affordable Care Act allowing providers to form so-called Accountable Care Organizations (ACOs).  Authorized to begin operating in January 2012 under the PPACA, ACOs are designed to incentivize doctors and hospitals to band together to improve value and outcomes for Medicare patients and sharing any reduced Medicare reimbursements with them.  ACOs could also become a template for a new managed care model for privately insured patients as well.

Going forward, there could be tension between the degree of ownership and involvement of payers with physician practices, leading to regulatory and legal scrutiny relative to state laws that bar corporations from directly practicing medicine in order to protect the independent medical judgment of physicians from business management decisions.

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