LAS VEGAS—The change in payment from the government and private payors has already forced thousands of providers to convert to a patient-centered medical home (PCMH) model, and providers need to forsake the concept of owning the entire care continuum, said Paul Grundy, MD, MPH, president of the Patient-Centered Primary Care Collaborative, and director of healthcare transformation at IBM, during a Feb. 20 presentation at the 2012 CIO Forum.

The concept of the PMCH, or a system integrator in which data can flow through and then be held accountable for that, has really taken hold of healthcare over the past five to six years, he said. “Organizational change is mainly driven by the flow of money,” as Grundy suggested the money flow from payors has stopped being directed solely to the hospital network, so “the way in which providers get paid has fundamentally changed.”

He said that, historically, the world officially changed on Jan. 27, when one of the largest U.S. private payors, Wellpoint, announced that they would be completely redesigning how they reimbursed for care or delivered care in the U.S. Also, on Feb. 8, UnitedHealthcare made a similar announcement. “This will only serve to drive the concept of the medical home model into further acceptance,” he said.

This trend is coming from two directions: payors are working with primary care providers to support them in delivering integrated, coordinated care from the bottom up; and from the top down, hospital systems are starting to develop accountable care organizations. “The base unit of these healthcare transformations will be driven by the medical home,” Grundy said. “This will all be built on IT structures, in order to move away from considering healthcare management as episodes of care.” 

Specifically, he said that three forces are driving this change: unsustainable healthcare costs; the next generation of patients will demand different, more virtual interactions with providers; and the most important, data, which can now be used to assess and improve actionable outcomes. However, Grundy pointed out that now that healthcare has access to these data, they need to be held accountable.

In a recent Blue Cross Blue Shield pilot in Colorado, New Hampshire and New York, the preliminary two-year highlights demonstrated an 18 percent decrease in acute inpatient admissions per 1,000 compared with an 18 percent increase in the non-medical home arm; and there was a 15 percent decrease in total ER visits per 1,000, compared with 4 percent increase in the control group. 

Another example is CareMore, which resulted in a hospital readmission rate of 24 percent below average, 38 percent shorter hospital stays and an amputation rate among diabetics that is 60 percent lower than average.

Finally, one of the largest PCMHs, Blue Cross Blue Shield (BCBS) of Michigan, which includes 2,770 physicians, has continued to show improved benefits. For instance, there was a 6.6 percent decrease in ER visits in 2010, but the decrease rose to 9.9 percent in 2011. 

Conservatively, 30 percent of the 2.5 trillion U.S. healthcare spending is estimated to be waste, equaling to approximately $700 billion annually, according to Grundy, who encouraged the crowd of CIOs to aspire to take 50 to 70 percent of waste or 15 to 20 percent of medical costs out of the system over time.

What is the cause for the current problems? Mostly unregulated fee-for-service payments and an overview reliance on rescue/specialty care, according to Grundy. “This is stark evidence that U.S. healthcare has been failing us for years,” he said. “It is a failure of the delivery system. Healthcare is no longer a benefits issue, but rather a cost issue for those of us who will have to buy it.”

There are four foundation pillars, according to Grundy: redesigning benefits; expanded access through innovation; aligning care management with the delivery system; and the exchange of meaningful information. 

For redesigning benefits, the Centers for Medicare & Medicaid Services is shifting 11 percent of payments away from fee-for-service to other methods of payment. Also, in the WellPoint PCMH model and under BCBS Hawaii, the organizations are not awarding new fee-for-service reimbursements.

Thus, the payors, which are barely functioning as insurers in this case, currently are pushing the PCMH model, along with the ACO recommended in the healthcare reform act.

Grundy stressed the importance of coordination under this new model, where providers will not be the sole owner of a particular patient or his or her data. “It needs to be a team, where the data flows in different directions,” he said.

The CIO Forum is an annual meeting hosted by the College of Healthcare Information Management Executives (CHIME), which runs concurrently with the Healthcare Information and Management Systems Society (HIMSS) annual conference.