While little seems certain about the current healthcare reform debate in Congress, the transition to value-based care is well underway. We are beginning to see that when providers are paid to deliver better care at lower costs, they can have a real impact on both.
The question now is, what about the population that is responsible for the most healthcare costs—low-income seniors managing multiple chronic conditions? Medicare has seen some promise with accountable care organizations, which generated more than $466 million
in total program savings in 2015. However, a recent study
receiving some attention
suggested that physicians treating high-cost, high-need patients struggle under value-based care models.
We were surprised by that recent study because our experience has been the opposite. We have found that by providing intensive, “concierge-style” care to this population, we can have meaningful impact on their health outcomes and costs.
When it comes to delivering value-based care to seniors, Medicare Advantage (MA) is playing an increasing role. Today, more than one-third of Medicare beneficiaries are enrolled in a MA plan
—that’s a 71% increase in the last 7 years. My company, ChenMed
, has been a full-risk MA provider for years. In this arrangement, MA plans provide a set amount per patient for overall healthcare costs.
Since we were founded, MA growth has surged, but policy makers, payers, providers, and patients may still have questions about whether MA can meet the healthcare needs of millions more US seniors and address the challenges we face to bring down costs while improving care outcomes.
At ChenMed, we have identified some compelling results that suggest MA remains worthy of even greater attention—particularly if the value-based care model and physician culture of service are aligned. Our model and strategic association with MA means we’re rewarded when we keep patients as healthy as possible to avoid costly emergency room (ER) visits, hospital admissions, and complications in their chronic conditions. Recent analysis of our claims data and data collected by our electronic health record show impressive results that, when measured against comparative CMS data
, suggest MA can ultimately lead to lower costs and deliver better health outcomes nationwide.
We have found that investments up front—such as courtesy services, drop-in visits, and smaller patient panels—increase patient access to primary care. With this concierge-style model, doctors are able to spend a remarkable amount of time with each patient. When we examined our data, our physicians averaged 189 minutes in face-to-face appointment time with each patient, while the 2014 National Ambulatory Medical Care Survey
(NAMCS) notes that U.S. patients are seen by general and family practice physicians for an average of 20.9 minutes each year. Increasing time between physicians and patients simply would not work under traditional Medicare fee-for-service.
We’ve found this increased face-to-face time makes a noticeable difference. It allows physicians to focus on preventative care, make earlier diagnoses and timely interventions. For our patients under this model, in 2015, rates of ER visits were 33.6% lower than the average among all Medicare beneficiaries in the counties in which we operate. The impact of up-front investments also applies to hospitalizations: our patients averaged 28% fewer hospital admissions and 25.7 fewer in-patient hospital days than average.
These significant reductions in care utilization ultimately reduced healthcare costs. ER visits are a significant expense for patients and the entire healthcare system. Patients who feel there is no other choice often resort to the ER, even when other healthcare options may be more appropriate. According to a National Center for Health Statistics report
, in 1995, there were 97 million visits to the ER, but by 2010, there were 130 million visits to the ER, even as the number of ERs available declined by 11%. The report also found that an ER visit for people 65 and older resulted in an average expenditure of $1062 per visit in 2010—nearly a 50% increase from the average ER expense for seniors in 2000. The emergency care system is overburdened, and high-quality primary care is one way to reduce the overutilization of ER services.
Comparative 2015 CMS data indicate an average of 753 ER visits per 1000 Medicare beneficiaries. The average for patients in our model was significantly lower—one-third lower than the CMS rate—with just 500 ER visits per 1000 patients. In 2016, our average decreased even further, with just 458 ER visits per 1000 patients.
Using the latest data on the average cost of an ER visit ($1062) from 2012, assuming this amount did not decrease at all, and multiplying these average savings across 1000 patients, these reductions in ER visits conservatively saved $268,686 per 1000 patients in 2015. When extrapolating this across a larger patient population, one can see how the savings accrue. In a hypothetical value-based care practice of 5 doctors, each with 450 patients per panel, the savings from reduced ER visits alone would be more than $600,000 per year.
Reducing hospitalizations has similar cost-savings implications. Patients in our model averaged 1246 in-patient days per 1000 patients in 2015, while the average among Medicare beneficiaries was 1677 days per 1000 beneficiaries. ChenMed’s model led to 431 fewer hospital in-patient days per thousand patients and an overall reduction of 25.7%.
The American Hospital Association Annual Survey stated that the average in-patient hospital day cost $2271 in 2015
. Multiplying these average savings across a larger population, a reduction of 431 in-patient days saved $978,801 per thousand patients. Similar to the savings yielded from fewer ER visits, a hypothetical value-based care practice with 5 doctors, each with 450 patients per panel, would save $2.2 million from reduced hospital in-patient days alone.
These findings are also notable in that CMS averages are not risk adjusted by disease burden, socioeconomic status, or ethnicity. Our patient population overwhelmingly draws from people who are older, with more chronic conditions, of lower socioeconomic status, and diverse minority groups. Roughly 30% of ChenMed patients are dual eligible; more than two-thirds belong to a racial minority group; and, on average, our patients are each managing 5 chronic conditions. These patients typically tend to have worse health outcomes than average and yet, with this “concierge-style” approach to value-based care, their outcomes were significantly better than average.
Our patient data indicate that delivering concierge-style, value-based care can work, even for the neediest—and costliest—patients. If we are looking for ways to effectively deliver high-quality care to those who need it most, we must embrace the significant, tangible results that can be achieved with Medicare Advantage.