News & Events

‘Medical home’ approach brings back managed care (MS)

Stronger ties, planning seen cutting costs

By Lisa Wangsness, Globe Staff | April 8, 2009

WASHINGTON – A decade after HMOs provoked an angry public backlash for being too focused on the bottom line, managed care is making a comeback, particularly among Democratic policymakers now shaping a proposed overhaul of the nation’s healthcare system.

The "medical home" is a kinder, gentler approach to managed care, based on the idea that high quality care and stronger relationships between patients and their primary care doctors will save money in the long run. A medical home pays physicians to coordinate all of a patient’s needs – arranging visits to specialists, helping control chronic conditions, even fielding patients’ phone calls at all hours. Doctors often receive bonuses for meeting quality standards and often share in savings from fewer and shorter hospital stays.

Proponents say that healthier people are less likely to use expensive hospital and emergency room care, that doctors can guide patients toward less expensive specialists, and that keeping better track of patient records and needs can prevent duplicate lab tests and other unnecessary expenses.

Policymakers are intent on containing the nation’s spiraling health costs, which are on track to consume 20 percent of the nation’s total economic output by 2018. Medical home proponents point to research showing that 30 to 40 percent of medical care is unnecessary, wasted, or even harmful.

"If we don’t get the consumer into an organized system of care that is focused on the right things, there’s no hope," said Ronald Paulus, executive vice president of Geisinger Health System, which runs hospitals, clinics, a health plan, and research centers in rural Pennsylvania.

Senator Max Baucus, the Senate Finance Committee chairman, highlighted the medical home concept in a blueprint for healthcare legislation he issued last fall. The need to better organize care came up repeatedly last month in a meeting between industry leaders and Nancy-Ann DeParle, the White House point person on a healthcare overhaul.

The medical home is actually a return to what early health maintenance organizations first set out to be 40 years ago – a system of doctors and specialists where the primary care practice acts as the quarterback, only occasionally sending patients outside the network for treatment.

"We’re coming full circle, now that we realize we need a system to take care of a patient, and it’s time to reassemble that system," said Harris Berman, a dean at Tufts University School of Medicine in Boston, who helped develop one of New England’s early HMOs.

As insurers entered the HMO business in the 1990s, they made huge profits by imposing strict rules on patients and forcing doctors to accept increasingly lower reimbursements. Most HMOs at the time also paid doctors a set amount per patient, often without regard to how sick the patient was, which placed most of the financial risk on doctors and gave them an incentive to provide less care and avoid sicker patients.

Patients eventually rebelled against what they saw as a ruthless corporate bureaucracy that tried to block access to care. They fled HMOs for preferred provider organizations, which impose fewer rules on patients but cost more.

Today’s medical homes strive to put a different face on managed care. They emphasize quality and pay doctors or their staffs for checking up on patients, coordinating tests and specialist visits, and talking with patients by phone or e-mail.

"In the 1990s, we had clerks talking to physicians; now we have physicians talking to physicians about whether [a patient] should go directly to an MRI and not have X-rays or CT scans," said Karen Ignagni, president of America’s Health Insurance Plans.

Primary care doctors do not act as gatekeepers who control patients’ access to specialists, but rather as guides, helping patients find the best and cheapest doctors in a vast, fragmented healthcare system. Geisinger’s medical home directs patients toward the least expensive specialists who still rank highest in its quality measures, but patients can ultimately choose other doctors.
"The goal is that the primary care practice is redesigned so that the patient will see their primary care physician as a source to help them navigate the system," said Melinda Abrams, assistant vice president of the Commonwealth Fund.

North Carolina, which has created a virtual medical home for all Medicaid patients by linking small practices with larger clinics and hospitals by region, says it has saved hundreds of millions over the last decade.

But a recent study found that 13 of 15 Medicare medical home demonstration projects showed no significant savings or reductions in hospitalizations.

Lisa Wangsness can be reached at