New Health Care Models Take Lessons From Past Reform Efforts

As a family physician practicing in the 1990s, Joe Scherger, M.D., initially was excited about managed care, believing -- like many primary care physicians -- that managed care would create a central role for primary care while promoting the delivery of appropriate care. But as the 1990s progressed, Scherger became increasingly disillusioned with managed care, concluding -- like many primary care physicians -- that managed care was more about cost control and short-changing the primary care physician than providing quality care.

"There was a lot of money to be made by reducing costs," says Scherger, vice president for primary care and academic affairs at Eisenhower Medical Center in Rancho Mirage, Calif. "A lot of managed care organizations actually forgot about the patient. They forgot the public had certain values, one of which was the choice of their physician and having some degree of freedom of choice."

Today, there is another reform movement sweeping through the health care system. And Scherger again is excited by the prospects for fundamental change and reform. But this time, he is convinced that his faith in the emerging payment and delivery systems is well-founded, grounded in advancements in science and technology, and driven by the increasing availability of data that makes it possible to compare and contrast health care outcomes and costs.

"In the 1990s, especially during the early 1990s, we really did not have the Internet and the information technology that we have today," says Scherger. "Today we are much more sophisticated about data in the information age. That allows us to actually focus on quality while rationalizing cost. That means we have greater opportunities to provide value-driven care."

The ability to capture, analyze and apply data may be the biggest difference between the health care reform efforts of today and those of the 1990s. The emergence of systems that can track comprehensive data is expanding and redefining the role of primary care in the nation's health care system. These systems enable primary care physicians to engage in population health management and deliver care that is more comprehensive and coordinated, says Paul Grundy, M.D., M.P.H., IBM's global director of health care transformation and co-chair of the Patient-Centered Primary Care Collaborative.

"All of a sudden, the role of primary care changes," says Grundy. "Primary care physicians are no longer being paid to do an episode of care. They are being paid to deliver a healing relationship while collecting the data needed to manage their patients."

This, in turn, has paved the way for new and innovative payment and delivery models, such as the patient-centered medical home (PCMH) and accountable care organizations, which are based on a foundation of primary care. The PCMH and other emerging models of care recognize the value of primary care by relying on payment mechanisms that transcend fee-for-service to reward care coordination and the management of population health.

For example, CareFirst, a private insurance carrier in the mid-Atlantic region, launched a PCMH program in early 2011 that included 3,600 primary care practices in Maryland, Washington and Northern Virginia. Before creating the program, CareFirst determined that primary care physicians were in the best position to manage patient populations, particularly patients with chronic diseases.

"One of the drivers of health care costs is the presence of multiple chronic diseases in the population -- these are the people on multiple medications who are admitted to the hospital, readmitted to the hospital and who use the emergency rooms most frequently," says Chet Burrell, president and CEO of CareFirst. "If anyone is in a good position to understand what (these patients) need, it is the primary care physician."

By using data generated by the PCMH model, CareFirst is able to work with the practices to develop care plans for patients with chronic illnesses. "There is an enormous underlying effort to provide data to these (practice) panels," says Burrell. "We track all of the patterns of care for patients in the panels. We show all of this data to the panels."

CareFirst pays primary care physicians bonuses for participating in the medical home initiative and for developing care plans for their most at-risk patients. The practices also receive bonuses for hitting various quality, cost and performance metrics, giving primary care physicians an opportunity to potentially double the amount of money they are making with CareFirst.

In the first year of operation, the PCMH program saved $40 to $50 million in expenses when compared to net dollars saved against the overall projected cost of care -- impressive numbers for the first year, according to Burrell.

The use of data also has made it down to the physician/patient level, allowing physicians to use registries and other devices to collect information to gauge how well they are managing patients with chronic illnesses against other panels of patients with similar conditions.

The 1990s also imparted fundamental lessons that are being applied to health care reform efforts today. In the 1990s, the health insurance industry seized control of health care from physicians and put in place mechanisms, such as prior authorizations, that created barriers between physicians and their patients.

"There was a third person in the (exam) room and that was the health insurance plan," says Scherger. "With managed care, our judgments were always being questioned, and we had to get approval to do almost anything. It was very onerous."

There is a much greater understanding today that primary care is the key to improving care and slowing cost escalation, and that primary care physicians and providers should be in charge of managing patient care, not insurance companies, according to Grundy and other analysts.

"The health plans have woken up to this, and all of a sudden, they are paying the primary care doctors to step up to the medical home level of care," says Grundy. "They are paying them a significant difference in rates for doing this."

Scherger, meanwhile, says the PCMH is symptomatic of larger changes that are occurring in health care. "We are converting from a money-driven entrepreneurial system that is not really in the information age into a true value-driven system," says Scherger. "The whole industry is being hit with the need to become value driven."