Medical Homes, Physician-Led Networks Can Improve Care, Cut Costs

North Carolina's Medicaid care management program shows how medical homes and physician-led networks can improve care, enhance access and decrease overall costs. And now, many other state Medicaid programs are studying the North Carolina model in an effort to replicate some of the program's most successful features, said the director of the program's quality improvement efforts at a Feb. 23 forum here. The forum was part of an ongoing dialogue on the future of primary care sponsored by the Agency for Healthcare Research and Quality.

"I think (other) states are very intrigued by what we are doing," said Denise Levis Hewson, R.N., M.S.P.H., senior consultant and director of quality improvement for the program, known as Community Care of North Carolina, or CCNC. "In the last year and a half, we have had many calls, and many states have visited us. We have also gone to other states to provide technical assistance."

North Carolina launched CCNC in 1998, basing the program on physician-led networks that employ the medical home concept to provide care and enhance access to services. The program began with nine pilot networks covering 250,000 Medicaid enrollees and has since expanded to 14 networks covering 740,000 recipients across the entire state, said Hewson. Every county in the state is now in the program, she added.

Since its inception, CCNC has sought community physician involvement, relying on physicians to design and implement the program, Hewson said. The result is a physician-friendly, physician-directed program that has simultaneously enhanced access and quality while decreasing costs. "These community-based networks led by local physicians can really make a difference in cost savings and quality," Hewson said.

CCNC saved the state $60 million in Medicaid costs in 2003 and about $120 million in 2004, according to an analysis conducted by Mercer Human Resources Consulting Group. The consulting firm also noted increases in quality and access to care, Hewson said.

Not surprisingly, the state legislature wanted to expand CCNC when it became apparent the program was saving money, leading to the program’s rapid expansion during the past few years, Hewson said. Nevertheless, North Carolina Medicaid officials "continue to fight" with the state legislature to increase physician payment fees, which are at 95 percent of Medicare, she said.

"I urge states to increase their fee schedules," Hewson said. "It is very hard to engage in meaningful conversations (with physicians) when you are paying 50 percent of Medicare, especially in the primary care field."

For care management, North Carolina pays each network $2.50 a month for each Medicaid recipient, and it pays an additional fee of $2.50 to each physician for each Medicaid patient in the practice, a total investment of $5 for each patient, Hewson said.

North Carolina Medicaid officials began using medical homes for the state's Medicaid population in 1991, when the state initiated primary care case management programs, or PCCMs -- the precursor to the current CCNC. The PCCMs, like the CCNC, were physician-driven, which was a critical component of their success and a point that Hewson repeatedly emphasizes.

"Physicians have to be a part of the dialogue because they are part of the solution," Hewson said in a separate interview with AAFP News Now after the forum. "They become your ambassadors for the program. Having them lead the program comes back 10-fold at the state level.

"This has to be community-driven," she added. "That is our basic philosophy."