HMO's, CHT's and the Medical Home Model

By John Ballard

An eye doctor, a heart surgeon and an HMO executive die and are in heaven.

God asks the eye doctor why he should be let into heaven, and the doctor explains to God that he helped people save or regain their sight. God says, ''Welcome to heaven, my son.''

God then asks the heart surgeon what he had done in life that should allow him into heaven. ''I saved people from death from heart attacks and heart disease,'' the doctor replies. ''Welcome to heaven, my son,'' God says.

God then turns to the HMO executive. God asked him what he was, and the man replied that he worked for an HMO. ''Welcome to heaven, my son,'' says God, ''but you have to leave in two days.'' 

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It's a sad old joke with many variations but they all drive home the same grim point: medical care stops when profits are threatened.  The record of health maintenance organizations was stained by over-zealous, ill-advised, profit-driven behaviors of insurance companies in the Eighties before they discovered the efficacy of recision and refusing to cover pre-existing conditions.

Those early clumsy attempts to control costs overlooked the real goal of effective medial care which is not profits but better health. Or in the case of chronic conditions, manageable care with outcomes that are as good as modern medicine can furnish within reasonable limits. One reason for health care inflation, however, is a billing system -- Fee For Service --  that equates "more" with "better." 

Three decades of runaway costs have finally caught up with us and although they won't admit it, even the dullest of elected representatives know that if something is not done to correct the problem health care inflation will soon sink our economic boat. Despite whatever ignorant public postures they may present, even the stupidest of those who claim to be opposed to health care reform know that something has to change.

There is no single solution, including single payer, but just as Dr. Gawande found outliers in both directions in Medicare, Maggie Mahar points to a few Medicare Advantage HMO plans that deliver better outcomes at lower per-beneficiary cost than Medicare.

...I found the 2009 Medicare Policy Advisory Commission (MedPAC) report on Medicare Advantage, which confirmed that all MedPAC plans are not alike. It also told me that we don�t need to pay for-profit insurers a double-digit bonus to persuade them to offer Medicare Advantage.

After reading the MedPAC report, and thinking about what both Kelley and Grunt had written, here is what I ultimately said in the Washington Post:

Kelley is right: there are individual MA insurers out there providing value for tax-payer dollars. But it is crucial to realize that, by and large, these are insurers that offer Medicare Advantage HMOs �plans that do a much better job of managing costs than Medicare Private Fee-For-Service plans (PFFS). (And, unfortunately, the PFFS plans have been growing far faster.)

The average PFFS plan feeds, pig-like, at the Medicare trough. It receives $114 more per member per month than traditional Medicare would spend on the same senior. Meanwhile, it delivers "extra" benefits worth $35 a month. And who is paying the $114 tip? Medicare Advantage is financed by traditional Medicare.

Thus, the 78 percent of Medicare beneficiaries who have stuck with traditional Medicare are funding the bonus for PFFs. (They pay higher deductibles and co-pays to keep Medicare going while it dispenses such largesse to MA insurers.) Not only that, seniors in regular Medicare are spending $3 for $1 of extra benefits going to someone else. This hardly seems fair.

Why are PFFS so expensive? They are not designed to rein in spending. Quite the opposite, "fee for service" encourages over treatment: the more a provider does, the more he is paid. There are so many gray areas in medicine, and this is where fee-for-service creates incentives to "do more."

Similarly, another variant on the medical home model is already making its way into practice even before official reform gets legislated. This from Health Affairs illustrates the point.

Preventing and more effectively managing chronic illness are critical national health priorities. Patients with chronic disease currently account for three-quarters of overall health spending. Multiple morbidities are common: More than half of Medicare beneficiaries are treated for five or more chronic conditions yearly. Nine chronic ailments account for nearly 60% of the recent rise in Medicare spending�conditions typically treated with prescription drug therapy and managed chiefly by patients at home and in outpatient settings. Despite significant health care outlays, though, chronically ill patients receive just 55% of clinically recommended services, and that gap in care may explain a nontrivial portion of preventable morbidity and premature mortality.

In response to these trends, chronic disease management programs have proliferated in the private sector and are common in the Medicaid and Medicare Advantage programs. They are notably absent in traditional fee-for service Medicare�a crucial lacuna, given that 81% of Medicare beneficiaries are enrolled in FFS Medicare and account for about 79% of the program�s overall health care spending.

Clearly, there are no quick remedies, but a collaborative approach coupled with a rational treatment model entirely different from the fee-for-service approach is obviously more economical.

One emerging model is to link provider practices with community-based care coordination teams (community health teams or CHTs). CHTs apply key clinical functions and processes used by larger successful physician group practices and integrated plans and replicate them in less resourced and organized settings. Teams include care coordinators, nutritionists, behavioral and mental health specialists, nurses and nurse practitioners, and social, public health, and community health workers. These trained resources already exist in many communities, working for home health agencies, hospitals, health plans, and community-based health organizations. To better leverage their systemic impact, CHTs are needed to work seamlessly with small provider practices. In combination, CHTs and provider practices could meet the requirements of a medical home as defined by NCQA.

This is rather dry reading for laymen, too dull to make the news. But for professionals and policy wonks this is really good stuff. More links to support readings abound at the links provided here.