Earlier this week I posted about Blue Cross of North Carolina and how instead of trying to incent physicians to provide better care they have elected to pay more for the same old care and hope doctors do better. I also mentioned Community Care of North Carolina and they have facilitated change in North Carolina which may make the North Carolina Blue Cross “experiment” appear to be more effective than it should be. It is worth looking more closely at Community Care, especially when compared to a more traditional Medicaid “managed care” model.

I’ll use Alabama’s plan as an example. Alabama has a traditional Medicaid Patient Management program started in 2004. Called Alabama Patient 1st, it offers every Medicaid recipient in Alabama an opportunity to designate a primary care physician. All of the doctors get paid “fee-for-service” (they get money for seeing patients in the office) but this designated physician gets a small amount of “capitation” (approximately $3 per month per enrollee) and in return is expected to provide some coordination function (the most apparent one is to provide referral requests for patients who need specialty care). In addition, the primary care provider has an opportunity to collect “shared savings.” The shared savings is calculated annually and is based on

  • Efficiency – the amount Medicaid spent on behalf of a PMP’s panel compared to expected
  • Performance – Utilization of generic drugs, non-emergency services, and office visits as compared to expected.

This is calculated on a point basis with each point being worth $0.2190 from the efficiency pool and $0.0660 from the performance pool.

I feel like I understand this pretty well and yet have trouble translating my practices action into dollars in our pocket.

North Carolina had a very similar  program to Alabama’s, called North Carolina Access. In 1999 North Carolina looked at their Access program and determined that although they had accomplished a key goal (an identified primary care provider for every Medicaid recipient) they were not achieving the desired results of better care for less money. They then began work on the North Carolina Care model, discussed in detail here. This program was based on 4 principles:

  • local control and physician leadership
  • primary focus on improving quality
  • the need for public/private partnerships
  • shared responsibility at a state and local level to develop management tolls needed to provide actionable information

Currently, the plan is throughout the state. A series of local networks take responsibility for the enrolled recipients as a group (population medicine). Each network has a physician leader who serves as a medical director and focuses activities as they relate to quality improvement, cost containment, and care management.

In addition to providing traditional physician services on a fee-for-services basis, physicians are expected to follow recommended guidelines, participate in patient education activities, provide information back to the network, and provide 24/7 coverage. They get $2.50 per patient for providing these services, another $2.50 to hire non-physician case managers, and additional money will follow for providing quality care.

Easy for the docs to understand and budget for.

In short, as the Patient Centered Primary Care Collaborative has pointed out, doctors need to be paid differently:

  • The most effective way to re-align payment incentives to support the PCMH would be to combine traditional fee-for-service for office visits with a three part model that includes:
  • A monthly care coordination payment (“bundled care coordination fee”) for the physician work that falls outside of a face-to-face visit and for the heath information technologies needed to achieve better outcomes. Bundling of services into a monthly fee removes volume- based incentives and promotes efficiency. The prospective nature of the payment recognizes the up-front costs to maintain the required level of care. Care coordination payments should be risk-adjusted to ensure that there are no inherent incentives to avoid the treatment of the more complex, costly patients.
    • A visit-based fee-for-service component that recognizes visit-based services that are currently paid under the present fee-for-service payment system and maintains an incentive for the physician to see the patient in an office-visit when appropriate.
    • A performance-based component that recognizes achievement of quality and efficiency goals.

Or, put another way, when we paid people like the HMOs did, the patient didn’t get enough care. When we pay them fee-for-service like we do now in Alabama the patient gets too much care. We need a more creative system of payment.