Build on Primary Care, Pay for Services, Save Money

Health care services that pay both a monthly fee and an adequate fee-for-service rate to primary care physicians can save millions of dollars for Medicaid.

That's the result of a case study commissioned by the AAFP state government relations staff in the Academy's Division of Government Relations. The study looked at the results of Carolina Access-Community Care of North Carolina, or CCNC, the state's Medicaid program. The program, which saved millions of dollars in the North Carolina Medicaid budget, may become the model for states across the country as they reform their health care systems, say study authors.

CCNC grew on the foundation of Carolina Access, a primary care case management model that comprised nine networks and 20 primary care practices. Today, CCNC consists of 15 not-for-profit health networks that coordinate care among physicians, local health departments, hospitals, social service agencies and other community programs. The networks care for about 74 percent of the state's eligible Medicaid beneficiaries.

The system relies on local control, physician leadership, population management and financial resources that compensate for the program's administrative demands, according to FP Allen Dobson, M.D., assistant secretary for health policy and medical assistance at the North Carolina Department of Health and Human Services. Dobson helped develop and implement the concept in concert with the North Carolina AFP, North Carolina Pediatric Society, and the state's Office of Research, Demonstrations and Rural Health Development.

He and other North Carolina leaders envisioned a program that recognized "we need to spend time on clinical organization of care rather than on regulations and the financial aspect of care." As a result, CCNC developers sought out local physicians who could help build a community-based, collaborative network of services based on primary care.

North Carolina's Medicaid program paid 95 percent of Medicare's fee-for-service payments before establishing CCNC. In addition, CCNC now pays each network $2.50 per Medicaid member per month to pay for a case manager who works with network practices. The program also pays each participating physician $2.50 per Medicaid beneficiary per month, in addition to the fee-for-service payment.

"We recognize that to do this requires time other than face-to-face care that's billable," said Dobson. "We recognize that the medical home responsibility exceeds evaluation and management codes that are billable. So much of what we do as family physicians is expected but not reimbursed, so there's a cost (to practices for participating in CCNC). But for every dollar we spend on community care, we get $10 in savings."

True. A study by Mercer Government Human Services Consulting found the Carolina Access program, when compared to historic fee-for-service benchmarks, saved between $195 million and $215 million in 2003 and between $230 million and $260 million in 2004.

Those data raised eyebrows when the Wisconsin AFP presented the CCNC concept in testimony before a state Senate Select Committee on Health Care hearing in August, according to Larry Pheifer, executive director of the Wisconsin AFP. The hearing was called to investigate several health care issues, including options for reforming Wisconsin Medicaid and providing universal access to health care. The Wisconsin AFP testimony said CCNC -- with its patient access, improved outcomes and impressive cost savings -- was an opportunity to meet the state's goals, said Pheifer.

"They want to learn," said Pheifer of the state senators at the hearing. "That's why they were so interested in the North Carolina program, not only because it's new for them, but it's information with a track record and it works."

CCNC's success rests on primary care as a foundation and local control as an operating philosophy, said Dobson.

"Health care is like politics," he said. "It's all local. We organized all the community providers in a collaborative system centered on Medicaid, made primary care the foundation and gave each network resources. It's amazing what a group of dedicated family physicians, pediatricians and other health care providers can do if they're given a few resources."

CCNC could have a national impact as states move to implement provisions of the Deficit Reduction Act of 2005, which gives states new latitude to reform their Medicaid program, said AAFP's state government relations senior manager Diana Ewert.

"The CCNC case study can be a great resource for chapters to shape this reform," she said.

The AAFP Division of Government Relations is distributing the study first to constituent chapters followed by a wider release to organizations and stakeholders in the Medicaid program.

"Our focus is on enabling all family physicians to provide a medical home that gives high quality, cost-effective care such as that provided in North Carolina," Ewert said. "We encourage chapters to follow the Wisconsin AFP's example and use the study and other resources we've made available to support their ongoing advocacy efforts."