How Medicare Can Save Itself (and us)

February 14, 2013

Primary care accounts for just 5 percent of Medicare cost. Physicians are the engine to cut costs, not the culprit.

Primary care is CMS’ natural partner in improving the quality of care and outcomes and cost. Cutting reimbursements is not the way to go. Cutting waste is.

The mechanism is already there in the CPCI (Comprehensive Primary Care Initiative), but initiatives through that program are missing the mark and failing to produce meaningful results.

CPCI’s Patient Centered Medical Home (PCMH) transformation approach focuses on controlling and squeezing money out of primary care, which represents only 5 percent of its spend, instead of freeing, investing in and equipping it to manage the care process to cut waste out of the other 95 percent of CMS’ budget. That lesson was learned by HMOs 20 years ago. Managing physicians does not work. Managing patients does.

To get results, CMS should instead invest in common-sense policies that are tried and proven:

Achieving Short-Term Savings

Abundant short term savings are there for a small investment to support and strengthen the patient/care team relationship, build social trust, and build a strong, high performing and efficient referral network and management system. Allow primary care providers to direct patients to go where they and you will get the best value and to manage all of the transitions of care, duplication and redundant services, unnecessary care, drugs, hospitalizations readmissions and more will do the job. In short, doubling down by investing the millions saved by cutting reimbursements today gains tens of billions in eliminated waste this year, and has the potential to save a trillion or more over the next decade.

Long-Term Savings

Investing in primary care to provide the resources to address patients’ chronic disease processes, limiting gaps in chronic disease management, developing care teams, improving access to primary care offices, promoting self-care, wellness, and preventative care will save hundreds of billions more in the next ten years alone.  

Regulations

Of the thousands upon thousands of pages of new regulations that are piling on costs to providers, the one rule that will have the most impact to reduce costs is missing - price transparency. It will lead to price competition, eliminating price gouging from out of network specialists, vendors, and hospitals and clear even more waste out of the entire system. Regulations must reward the taxpayer with savings and protection from fraud and poor practices, not smother the system.

Common Sense Policy

For PCMH's to truly make an impact, they must have a laser-like focus to eliminate waste leading to a reduction in the total cost of care.  

In a targeted program, physicians risk stratify the chronic population and concentrate 95 percent of their efforts on the top 10 to 15 percent of patients who are at risk for short term medical spend while substantially reducing long term costs by halting or reversing progression to more complex states. Everyday patients can be well cared for by physician assistants (PAs) and nurse practitioners (NPs). Forcing physicians to spread their efforts across an entire patient population will materially exacerbate their projected shortage, and do little or nothing to improve population health. It is bad policy.

Strengthening the primary care practice’s awareness, focus, and ability to coordinate what happens when patients leave the office (or never come) circumvents their independently seeking care with specialists, outpatient diagnostic and surgical facilities that adds up to billions more in savings.

Focus on Networks, not Practices

No PCMH alone is going to be able to manage unit costs. They need the ability to move large numbers of patients (market share) in a transparent market. Remove the regulatory roadblocks preventing primary care PCMH's to create their own local preferred vendor, hospital, outpatient, ambulatory surgery and specialist selection. There is nothing more powerful than the ability of a physician organization that can move patients in a local market and negotiate dramatically reduced prices. It’s called variable price contracting, where the big boys pay the freight of the providers sunk or fixed costs, but the provider can sell off surplus availability for $1 more than their variable cost and still make money.

The challenge is to convince primary-care physicians to think like businessmen. Incentivize them to freely engage in population cost management that will allow them to compete and collaborate, and they will.

 Dr. Bonvicino is a former regional medical director at the Garden State Medical Group and former senior medical director of Horizon Healthcare Innovations and Blue Cross/Blue Shield of New Jersey.