Disease Management Advisor, February 2008


Physicians need DM in medical home model

DMAA backs medical home tenets

Medical home concept still fuzzy

Rocky Mountain gives PCPs tools, learning, reimbursement

Physicians say any new payment must be aligned with services provided

P4P has its drawbacks

Survey-based predictive modeling goes beyond claims

Physicians need DM in medical home model

Collaborative effort between docs, industry expected

There are signs that the advanced medical home concept is gaining steam: The increasing drumbeat emanating from physician groups, the reported success of Medicare's Physician Group Practice (PGP) demonstration projects, and two documents released in December 2007 that noted the benefits of having PCPs at the center of patient care. "People are realizing that if you are going to have any way of controlling the costs of healthcare and costs of premiums for people, we have to find effective ways to treat chronic illnesses," says David S. Herr, MD, chief medical officer at Rocky Mountain Health Plans in Grand Junction, CO. "This is really a win-win approach. You are promoting the idea of more care for your patients, not limiting care. You're giving the care when it's most effective, and with a healthier patient, you're avoiding a higher hospital cost later."

The two documents released in December that promoted the medical home model are:

1. DMAA: The Care Continuum Alliance's Advancing the Population Health Improvement Model, which supports a system in which the patient-physician relationship is at the center of a "comprehensive, coordinated team approach."

2. The Commonwealth Fund's report Bending the Curve: Options for Achieving Savings and Improving Value in U.S. Health Spending, which highlights several cost-saving ideas and notes that a medical home with "a per-member per-month fee for care management services in addition to usual fee-for-service payments" and "additional quality- and efficiency-based incentives" could save $60 billion in five years and $193.5 billion in 10 years in national health expenditures. Most of the savings would come from a decrease in hospital and physician expenses resulting from "higher-quality and more-efficient care delivered by medical homes."

The medical home movement is full steam ahead, which makes one wonder: What will happen to the DM industry if the medical home concept becomes the norm?

DM leaders say the medical home does not signal the end of DM companies, but instead DM will play a major role in the concept.

The advanced medical home concept with care coordination in the physician's practices is quite a different model than DM, but Gordon Norman, MD, MBA, chair-elect of DMAA and executive vice president and chief science officer at Alere Medical, Inc., in Reno, NV, says the medical home is not a substitute for the DM industry; rather, DM is a complementary tool that physicians will need.

"DM has about a 15-year learning curve of developing techniques for improving population health that is not going to be learned or adopted overnight by primary care physicians," says Norman, who describes his vision of the medical home this way: care coordination services funneling through a single focus and point of contact (the physician) so the patient doesn't have to become a healthcare expert to chase down all the information from separate sources.

Vince Kuraitis, JD, MBA, principal of Better Health Technologies in Boise, ID, says the medical home model has the potential to become "a blending of the best of both worlds" that will include doctors properly reimbursed for care coordination that is supported by DM's infrastructure, such as call centers, predictive modeling software, diabetes educators, and remote monitoring.

Rick Kellerman, MD, board chair of the American Academy of Family Physicians and a practicing family physician in Wichita, KS, says DM and PCPs working in "parallel universes" is a "waste of money."

The patient-centered medical home is supported by physician organizations, such as the American Academy of Family Physicians, American Academy of Pediatrics, American College of Physicians, and American Osteopathic Association. The four groups released a joint statement in support of the concept in March 2007 that described care in the medical home this way:

The patient is in control of care with a strong ongoing relationship with the PCP

The physician oversees a team of individuals who collectively care for the patient

Care coordination allows the patient to receive the proper care when it is needed

"We know many patients change behaviors just on the recommendation of their physician," says Kellerman. "There's great value in having a physician who provides most of the care that most of the patients need most of the time and helps coordinate and integrate their care across the healthcare system when they go to the hospital or see a consultant. Having that integration function is important and improves quality and controls costs."

A common complaint among physicians is that DM companies do not communicate with them. Kellerman says greater communication is needed in the medical home. "We're all going to have to align in terms of helping patients manage their own illnesses," he says.

Although pediatricians have been talking about the medical home idea since the 1960s, particularly for children with severe disabilities, new technology that allows for greater care coordination is making DM interested in the medical home model.

Ariel Linden, DrPH, MS, president of Linden Consulting Group in Hillsboro, OR, says a new chronic care model via the medical home concept could actually benefit DM. With the physician in control of managing chronically ill patients, DM won't have to prove ROI.

"There are some very positive benefits for the disease management industry," says Linden. "First of all, it gets away from the ROI argument. [In the medical home model, DM companies] would no longer be on the hook for that. They are there to support the physician. If the physician can manage patients better and keep people out of the hospital, they will benefit financially from the payer. That said, the program fees will have to be low enough to entice a physician to use these services."

Kellerman says the medical home is needed because the country's healthcare system is "behind the eight ball." He likened attempting to change healthcare to trying to turn the Titanic.

"The baby boomers are starting to retire, there's more chronic disease, costs are out of control, we're in a global environment, there are so many reasons to change the system, and yet there is incredible inertia that prevents change," he says. "Inertia is the major barrier."

DMAA backs medical home tenets

DMAA: The Care Continuum Alliance added its voice to the advanced medical home model discussion with the release of its paper Advancing the Population Health Improvement Model in December 2007.

DMAA's statement offers a model with an integrated, physician-guided delivery system with reimbursement for targeted improvement goals for population-based chronic care that mirrors much of what has been backed by physician organizations. (For the list of key components of DMAA's Population Health Improvement Model, see below.) DMAA's population health improvement is based on three core components:

1. Central care delivery and leadership roles of the PCP

2. Importance of patient activation, involvement, and personal responsibility

3. Patient focus and expanded care coordination provided by wellness, disease, and chronic care management programs

Gordon Norman, MD, MBA, chair-elect of the DMAA board, a member of the Physician Engagement Committee, which developed the paper, and executive vice president and chief science officer at Alere Medical, Inc., in Reno, NV, says the advanced medical home discussion is an "opportune time to talk about how we can help realize that vision with the learned skills, tools, techniques, and intellectual properties that [DM has] developed in the last 15 years."

Norman says the paper is not a major change in focus for DMAA. "I think it really codifies a lot of things we have been saying and believing for some period of time but just haven't been organized and put on paper. For as long as I have been involved in disease management, I think most of us believed physicians, and particularly primary care physicians, are central to our ability to impact population health," he says.

Norman says DMAA developed the principles to clarify its perspective, open dialogue between the DM industry and others in healthcare, and inform physicians about DM's potential role in improving care via the advanced medical home.

Norman says the medical home theory is still in the discussion stage and it's premature to define what will comprise a medical home. He adds the concept will also differ by the locale, type, and size of an organization; community resources; and the patients being served.

"I think that it's a good thing that we not start with a rigidly defined model but try lots of different formulations and learn which seem to be most suitable under what circumstances," he says.

One of the reasons the medical home has become such a hot topic is the expected PCP shortage. DMAA's model promotes group visits, remote patient monitoring, and telehealth, which Norman says could help resolve some of the shortage concerns.

"Under those circumstances, everything we can do to extend the reach and touch of the primary physicians that we have is going to be very important. There are roles that nonphysicians can play in terms of monitoring patients remotely and working with physicians that can multiply their ability to manage a population. I think those will become more prominent," he says.

One of the sticking points that needs resolution is physician reimbursement for leading care coordination via the medical home.

Norman says PCPs already perform some of those duties but are not being reimbursed. In order for the medical home to become the norm, the physicians will need to get paid for those services.

Although DMAA's model doesn't promote a specific reimbursement model, the proposal stipulates the need for increased reimbursements for services.

However, in order for physicians to receive higher reimbursements, Norman says, physicians will have to prove success in clinical process and outcomes indicators, assessment of patient satisfaction, function status and quality of life, economic and care utilization indicators, and effect on known population health disparities.

"There is no free lunch in healthcare in America," says Norman. "I think the bar will be raised on tracking, measuring, and quantifying outcomes of care far beyond what exists already. That's a good thing."

Norman says DMAA's model is an attempt to show that DM and physicians are complementary partners in population health improvement.

He adds that both sides shouldn't "get caught up in quibbles over who's getting what portion of the healthcare premium. It's really about who is best situated to serve efficiently in a role of population health improvement, and neither of us can succeed, I think, as we might without utilizing the skills, tools, perspectives, and abilities of the other."

DMAA's Population Health Improvement Model

The following are the key components of DMAA: The Care Continuum Alliance's Population Health Improvement Model:

Population identification strategies and processes

Comprehensive needs assessments that assess physical, psychological, economic, and environmental needs

Proactive health promotion programs that increase awareness of the health risks associated with certain personal behaviors and lifestyles

Patient-centric health management goals and educa-tion, which may include primary prevention, behavior modification programs, and support for concordance between the patient and the PCP

Self-management interventions aimed at influencing the targeted population to make behavioral changes

Routine reporting and feedback loops, which may include communications with patients, physicians, health plans, and ancillary providers

Evaluation of clinical, humanistic, and economic outcomes on an ongoing basis with the goal of improving overall population health

Medical home concept still fuzzy

The advanced medical home has gained traction, and the phrase has made its way into legislation and the industry's lexicon, but it is still largely a concept with inconsistent definitions. Vince Kuraitis, JD, MBA, principal of Better Health Technologies in Boise, ID, says when it comes to the medical home, "the devil is in the details."

"What I'm observing is a bandwagon effect of everyone now saying they have a medical home, and there's no definition or standards as to what constitutes a medical home. There are many unresolved, unknown implementation issues that have yet to be worked through, and it is going to take a while to figure those out," Kuraitis says, adding that the National Committee of Quality Assurance's guidelines released in November 2007 were a step in the right direction.

Gordon Norman, MD, MBA, chair-elect of DMAA: The Care Continuum Alliance and executive vice president and chief science officer at Alere Medical Inc., in Reno, NV, says DMAA is meeting with national physician organizations to discuss how DM and physicians can work collaboratively.

After all parties can agree upon the definition of a medical home, Kuraitis says the next issue will involve payment models. In joint principles released by the American Academy of Family Physicians, American Academy of Pediatrics, American College of Physicians, and American Osteopathic Association in March 2007, the groups provided a payment structure based on a framework that:

Reflects the value of the physician and nonphysician staff patient-centered care management work that falls outside of the face-to-face visit

Pays for services associated with care coordination within a given practice and between consultants, ancillary providers, and community resources

Supports adoption and use of health IT for quality improvement

Enhances communication access, such as secure e-mail and telephone consultation

Recognizes the value of physician work associated with remote monitoring of clinical data using technology

Allows for separate fee-for-service payments for face-to-face visits

Provides for physicians to share in savings from reduced hospitalizations associated with physician-guided care management in the office setting

Allows for additional payments for achieving measurable and continuous quality improvements

"Until we get some sense of [the payment structure] and the standards that go up around that, we're still just talking about a concept that is pretty fuzzy," says Kuraitis. "I haven't seen any proposals from the doctor organizations saying the medical home fee should be X dollars per month. It's going to take a while to work through that, and it's both a political and analytical process."

Another area that needs resolution is establishing accountability for improving population health with a set of objective measures that mark progress, says Norman.

If PCPs want to get paid for care coordination, Norman says they will need to demonstrate clinical health improvements as well as cost savings. "Every quid has a pro quo," he adds.

Rick Kellerman, MD, board chair of the American Academy of Family Physicians and a practicing family physician in Wichita, KS, says demonstration projects and state and federal legislation will ultimately flesh out the definition of a medical home. "We will have more data for demonstration projects and at some point come to a tipping point that the medical home is accepted and that we need payment reform to support it," he says.

Rocky Mountain gives PCPs tools, learning, reimbursement

Rocky Mountain Health Plans is not new to the medical home concept. The Grand Junction, CO, health insurer implemented a chronic care model in primary care offices four years ago focused on diabetic patients in Mesa County, a largely rural section of western Colorado.

In Rocky Mountain's project, David S. Herr, MD, chief medical officer at Rocky Mountain Health Plans, says the PCP plays a key role in coordinating care.

"With the chronic care model, what we are trying to do is to give physicians more tools so they can do more effective case management in the medical home setting," says Herr.

Rocky Mountain Health Plans' project includes four chronic care training sessions for physicians and office staff based on the Institute for Healthcare Improvement's program. After the initial training, representatives from the offices meet on a monthly basis to share successes, failures, ideas, and data. "We have some interesting discussions. I think that, in general, drives things in the right direction," says Philip J. Mohler, MD, of Family Physicians of Western Colorado, also in Grand Junction. Mohler is one of the approximately two-thirds of Mesa County PCPs who are taking part in the project.

The program's foundation is coordinating the patient's care in the primary care office, emphasizing patient self-management, creating registries to understand patient population and those who need care, setting up office processes and patient flow, and communicating with patients before and after visits. To get the process started, Rocky Mountain Health Plans paid participating physicians a $30 case management fee per diabetic patient per quarter.

Family Physicians

Of the 1,800 Rocky Mountain patients throughout Mesa County who are enrolled in the project, 300 are served by Family Physicians of Western Colorado, a practice of 15 physicians. Not all of Family Physicians' patients are Rocky Mountain members, but the office resolved the issue of equity by agreeing that all diabetic patients would receive the same level of care regardless of health plan, which included an RN, electronic medical record, and preplanning letter.

As part of the chronic care program, Family Physicians hired an RN to handle care coordination. Since implementing the program, Mohler says, the physicians have seen improvements in hemoglobin A1c figures and blood pressure, and patients come in more regularly because of the proactive communication with office staff members.

Health disparities, so common in healthcare, also melted away. "When you break it down by line of business, by Medicare, Medicaid, or commercial, our Medicaid patients do just as well as our commercial members and Medicare members," says Mohler, who also works part-time for Rocky Mountain.

Another benefit associated with the program is the technological advances within the patient registry. Physicians are able to print a report that allows patients to review their A1c, blood pressure, and LDL numbers. "Most doctors use it as a teaching tool," says Mohler.

The first two years showed improved outcomes, but Family Physicians made a change. The physicians reluctantly agreed they simply couldn't afford the nurse.

"The bottom line was that after we paid that RN . . . we were losing $30,000 a year," says Mohler, adding physicians each underwrote the program $2,000 annually.

A little less than three years ago, Family Physicians moved forward without the RN and her duties were spread out throughout the staff. Now, office employees fill out preplanning letters and reports. Mohler says the program is sustainable and the costs are now a wash.

Starting this year, Rocky Mountain is adding cardiovascular disease to the chronic care program. The focus is on a subset of patients who are nondiabetics with a history of cardiovascular disease. Herr says physicians will identify patients around measurable outcomes, and will focus on the high-risk population who may have already suffered a heart attack.

Physicians say any new payment must be aligned with services provided

Many unanswered questions

A lot has changed in the delivery of healthcare since the 1960s when Medicare was born. Now in 2008, the questions about the market value and the cost of providing healthcare for those older than 65 with multiple chronic comorbid conditions are much more complex.

The questions abound: How much is chronic care management worth? Is there a clear ROI? What should government payers such as Medicare and Medicaid pay doctors to manage the care of older, sicker patients with multiple conditions? Should CMS scrap the fee-for-service (FFS) Medicare system altogether? Should risk adjustment methods be incorporated into a revised payment system? What is the cost of managing chronic care elderly patients? Will all doctors be able and willing to take on more centralized care as promoted by the patient-centered medical home? Where do DM companies fit into a new payment structure? Will their voices be heard in the ongoing discussions about a new payment model?

"Fundamentally, [physicians] are a cottage industry right now," says David Weber, MD, CEO of Wenatchee (WA) Valley Medical Center. "We are paid for piecemeal work, and there are little or no incentives to curtail services or keep patients out of the hospital," he says.

Weber is a member of the American Medical Group Association, an Alexandria, VA-based group that primarily represents multispecialty physician practices across the country. Weber says he supports the concept of a patient-centered medical home but wonders whether there will be enough incentive-and enough physicians-to make it a reality.

The American College of Physicians (ACP) in Washington, DC, has been a driving force behind the implementation of a medical home.

"Nobody knows the answer to the question of how much this new model would cost until we get real data," says Michael Barr, MD, MBA, FACP, vice president of ACP's Department of Practice Advocacy and Improvement. "We expect that a new payment model will include some form of risk adjustment payments," he says.

Barr is organizing a 10-month study of the cost of the patient-centered medical home that began in November 2007 and is being funded by the Commonwealth Fund's Patient-Centered Primary Care Initiative. He says the main goal of the study is to identify incremental costs of building a medical home in a variety of practice settings, including Medicare populations.

"We don't expect specific numbers, but we do hope to pull together information on the incremental costs of delivery and some payment options," says Barr.

The Commonwealth Fund, based in New York City, supports independent research of healthcare issues. In December 2007, the group published a report that analyzed 15 potential savings options that could reduce Medicare spending. The report places a strong emphasis on the need to improve Medicare reimbursements to PCPs who support enhanced services, such as care coordination and care management, says Cathy Schoen, MS, the group's senior vice president for research and evaluation.

If all Medicare FFS beneficiaries were enrolled in a medical home, this approach could result in net health system savings of $194 billion, according to the report.1 Schoen says the Commonwealth Fund and its research partner, The Lewin Group, are continuing to study how the medical home and other policy options can affect Medicare and Medicaid cost savings and will "review in greater detail specific ways to spur savings."

IT is a key factor in cost savings, says Anthony Shih, MD, MPH, assistant vice president of the Commonwealth Fund. Shih oversees the Program on Quality Improvement and Efficiency. "There is likewise substantial evidence that the greater role of doctors [in chronic care management] results in better health outcomes and lower costs," he says.

Shih and Schoen say that a primary problem with the current FFS system is that payment incentives are not aligned to promote better care and lower costs.

Payment options

A variety of payment options have been studied for the past several years in demonstration projects funded by CMS and other government agencies. Payment has varied widely, as have chronic care services. The Community Care of North Carolina Medicaid demonstration paid $2.50 per member per month.

Pay-for-performance demonstrations, including the Physician Group Practice (PGP) Demonstration, based incentive payments on a percentage of cost savings rather than paying physicians for specific services. These demos began in April 2005. During the first year, two practice sites met eligibility criteria for cost-saving paybacks. Each of the 10 participating sites developed its own quality improvement efforts. CMS has stated that it is pleased with the overall results of the PGP demonstration and has extended it for one year beyond its scheduled April 2008 end date. All 10 participating group practices have been asked to continue in the demonstration.

The After Discharge Care Management of Low Income Frail Elderly (AD-LIFE) trial began in January 2003 and was scheduled to end in 2006, but has been extended to 2009. It is funded by the Agency for Healthcare Research and Quality. The most anticipated outcome of this study was the cost of individualized comprehensive care management of Medicare beneficiaries enrolled in the demonstration.

Kyle Allen, DO, medical director of Summa Health System Post Acute and Senior Health Services in Akron, OH, and head of the AD-LIFE project, says the anticipated costs of a comprehensive care plan for posthospital discharge at the beginning of the trial were between $2,100-$2,500 per member per month. The goal of comprehensive care management is to lower overall Medicare costs by decreasing hospital readmissions and emergency department visits.

Most recently, a group of physicians presented the outline of a Medicare payment system that is based on Ambulatory Patient Groups (APG) rather than current procedural terminology (CPT) codes. APGs were first implemented in 1995 in an Iowa Medicaid contract with CMS and have been revised several times (most recently in 2007). APGs are based on the patient's diagnoses, not on procedures that the physician completes during an office visit as in CPT codes.

Where does DM fit in?

Barr says that one of the reasons why there are so many payment methods being studied is because the model that CMS ultimately chooses for its Medicare and Medicaid beneficiaries will likely be one that is copied by commercial payers.

"There is no doubt that the current payment system is broken, but we don't want to replace it with something that doesn't work in the long run," he says.

There is also some skepticism about the practicality of only one new payment model. "Surely, we will not have one monolithic model," says Gordon Norman, MD, MBA, chair-elect of DMAA: The Care Continuum Alliance in Washington, DC, and executive vice president and chief science officer at Alere Medical, Inc., in Reno, NV. "Any change in the payment model needs to consider the extent to which physicians can be self-sufficient in their practices."

Norman says the alliance sees the role of DM as strongly supportive of physicians as partners in providing care to chronically ill patients. He says that the promotion of the patient-centered medical home has given the false impression that DM is in competition with the proposed new model. In December 2007, DMAA announced its support of a model for an integrated, physician-guided delivery system for population-based chronic care. The model calls for payment for cognitive services, care coordination, referral activities, and adherence to evidence-based clinical practice guidelines.

"Any new payment model will fly or die over time depending on accountability for services provided," says Norman. "We will continue to be a player with CMS in developing policy and new payment models. We want to leverage what DM has learned into any new payment model."

He says the DM industry is still closely watching the major Medicare DM initiative, Medicare Health Support, to determine whether and how this FFS DM effort has improved care and cut costs. "There is a lot invested in not throwing out the baby with the bath water. We have yet to determine what is working in this demonstration, but we do now suspect that the initial ambitions were too grandiose," he says. Of eight companies that began this demonstration in 2005, only three remain, and cost savings have been hard to quantify.

Pay for performance

One of the 10 potential options considered by the Commonwealth Fund in its report is pay for performance. Leslie Norwalk, CMS' acting administrator, said in July 2006 that the PGP demonstration "provides new evidence that paying for quality of care instead of volume of services results in better outcomes and cost savings. It is the right thing to do."

"If you look at pay-for-performance programs, there is a proliferation of different payers, different payment thresholds, and formulas," says Douglas Carr, MD, medical director of the Billings (MT) Clinic, one of the 10 CMS PGP Demonstration sites. "It is hard to get individual doctors behind one particular plan, especially if they have a sense that you are just trying to game the system."

Savings in these demonstrations is based on total Medicare Part A (inpatient) and Part B (outpatient) claims data. The government's actuaries determined that the smallest difference that can be viewed as not having been caused




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