CareFirst finds success by tailoring local payment reform


Jim O'Neil
As many insurers make headlines for taking large, overarching steps to revamp the fee-for-service payment system, one health insurer hopes to drive change through the local community by creating the largest patient-centered primary care home program in the country using an oldie-but-goodie method--money.

CareFirst Blue Cross Blue Shield, which is the dominant private insurer in the Washington, D.C. metropolitan area, is tailoring its overhaul to the specific circumstances of the local area it serves. The Washington, D.C. area, which includes Maryland, faces rising healthcare costs and increasing provider consolidation like the rest of the country, but it differs in one key factor--that small, one-to-three-physician practices prevail in the market.

"Just under 90 percent of all of the primary care doctors in the region are independent, and they are not employed by larger hospital-centric health systems," CareFirst CEO Chet Burrell told Health Affairs.

So the problem, Burrell said, is that D.C.-area providers are too small and financially unstable to realistically assume the inherent risks of current payment reform approaches like accountable care organizations. "At that scale, it's often very difficult to afford electronic health records, to deal with the administrative complexity and requirements you have to deal with," Burrell said. "And they have limited patient volume."

Instead of trying to force the local market to adapt to national trends, CareFirst is tailoring its payment reform by incentivizing the small primary care physician practices into forming virtual panels of 10 to 15 physicians that operate like patient-centered medical homes. These panels served two purposes: to allow doctors to provide backup coverage to each other and establish incentives for better overall performance. The average CareFirst panel has 10 doctors, seeing between 2,500 and 3,500 patients, Burrell said.

CareFirst then calculated a per-member-per-month global expected cost of care target; for example, 10 primary care physicians with 3,000 members have a cost target of $12 to $15 million a year. The insurer credits each panel's monthly target budget toward a patient care account, form which any patient service rendered is debited. If credits exceed debits, CareFirst shares some of the savings with those doctors.

But here's the clincher: CareFirst provides financial rewards--and lots of them--to these doctors. In fact, the insurer gives an extra 12 percent to doctors just for participating in the program and then pays an additional $200 per patient for each care plan the doctors create. But there's more still. CareFirst pays $100 every time doctors maintain the care plan by, for example, reviewing the plan, talking with the patient to ensure recommended steps are taken and determining whether additional actions are needed.

The program's success thus far is evident in the numbers. Since its Jan. 1 inception, CareFirst has amassed about 300 panels, half of which are virtual, with roughly 3,100 primary care doctors and 300 nurse practitioners. "So we have just about 80 percent of all of the available primary care providers in the region," Burrell said.

That's not too shabby for a few month-old program. While other big insurers may steal the spotlight in the effort to reform current health payment methods, I think we should also keep our eye on the little guy. They just may make some extraordinary advances in the industry. --Dina (@HealthPayer)