Insurer reports $98 million cost savings with medical home program

A major mid-Atlantic health insurer says its patient-centered medical home program is benefiting everything it hoped to help: its own bottom line, patient care and physician pay.

CareFirst BlueCross BlueShield, which covers patients in Maryland, Virginia and the District of Columbia, reported in June that its 1 million-member PCMH program spent $98 million less in health costs than projected in 2012, or 2.7% under expectations. The insurer said that savings is up from $38 million, or 1.5%, in 2011, the program’s first year.

Most of the savings was a result of reducing hospital admissions, emergency department use and drug spending, the company said.

“These results are encouraging,” CareFirst President and CEO Chet Burrell said in a statement. “The PCMH program was designed with the goal of bending the health care cost trend, and our second-year results suggest that the program is having just such an impact. In addition, more participating panels achieved saving, and the vast majority of those who did so in 2011 were able to sustain those results in 2012. It is a measurable and meaningful step in the right direction of slowing the rise of health care costs.”

The company said 66% of eligible primary care panels — independent physicians and nurse practitioners who joined together to participate in the medical home program — earned incentive bonuses in 2012, up from 60% in 2011. CareFirst said their incentive bonuses were 29% higher than in 2011. The company did not release specific dollar figures on bonuses.

The study appeared to show that quality of care translates into cost savings, said Mike Sullivan, a CareFirst spokesman. Quality scores for panels that earned incentive awards were 3.7% higher than for panels that didn’t earn the awards.

Quality scores were based on population health measures, such as whether patients with diabetes had A1c levels checked regularly. Sullivan said scores also are based on office hours, backup coverage and electronic health records.

Panels that received awards had an average 4.7% higher savings against expected care costs in 2012. About 75% of panels that earned awards in 2011 did so again in 2012, according to CareFirst.

“What we are seeing is that some of the panels are performing well and are decreasing hospital admissions and readmissions,” Sullivan said. “Over time, we will have to see whether the metrics are continuing to move in the right direction. It will take about three to five years before we see a full picture and have an understanding of it.”