Employees with Glaxo SmithKline, Kerr Drug and the state will participate in a new North Carolina program that seeks to lower health care costs by expanding an approach that has proven successful among Medicaid recipients.
The program, First in Health, gives privately insured individuals and their families the option of accessing a system created by the public-private partnership Community Care of North Carolina for Medicaid users.
Called "medical home," the system relies on a patient's primary care physician to coordinate care among various other health providers. The approach, which emphasizes prevention and seeks to reduce costly trips to the hospital and emergency room, has drawn national attention for its ability to save Medicaid nearly $1.5 billion over the past three years.
The pilot program is expected to be watched closely by health care reformers around the country given its size.
GSK, which insures 10,000 employees, retirees and their dependents in North Carolina, plans to join the effort in January. Raleigh-based Kerr Drug hopes to offer the option in 2013. The state of North Carolina plans to extend the medical home option to all of its 400,000 enrollees within two years.
The Brookings Institution, a Washington think tank, will evaluate the program's effect on costs and quality of care. Cary-based SAS, which is making a push to boost its health care-related business, is providing the project with consultants and use of its analytical software.
For GSK, which has its North American headquarters in Research Triangle Park, the program holds the promise of both reducing costs and making the health care system more responsive and easier to navigate for its employees, spokeswoman Mary Anne Rhyne said.
She said the drug maker's health costs have posted annual increases in the high-single digits in recent years.
"We've really tried to hold the line on benefits and co-pays," Rhyne said. "We feel like, if nothing else, this will help us to make a more efficient use of the health care dollars we are spending."
To encourage participation, GSK is waiving copayments for primary care doctor visits for those who sign up. Rhyne said GSK expects that most of its employees won't have to change their primary physician given the size of Community Care's network.
Community Care serves 1.1 million Medicaid recipients and about 95 percent of the state's primary physicians participate in its program. Patients are assigned a care coordinator in their doctor's office who reminds them about necessary checkups, helps them navigate the system and serves as a central depository for health records.
The First in Health program is noteworthy because it is an acknowledgement by the private sector of the importance that a primary physician can play both in improving care and reducing costs, said L. Allen Dobson, Community Care's president.
"It really does represent a fairly significant next step in health reform," he said.
Dobson said much of the cost savings in the Medicaid program have resulted from reducing hospitalizations through improved quality of care, particularly care related to chronic diseases such as diabetes, asthma and heart disease.
Collaboration required
Whether the cost savings achieved among Medicaid recipients can be replicated among private insurance networks remains to be seen. Achieving the full benefits of coordinated care requires both dialogue among providers and the ability of different IT systems to share information.
Medicaid also serves a different population than those on a private health plan, said Kevin Schulman, a health care economist at Duke University.
Schulman said many Medicaid recipients did not have insurance previously, and reducing costs involves getting them to use the health care system appropriately. That means going to see a doctor when they have a problem instead of waiting and ending up in the emergency room.
"Presumably that won't be an issue with the Glaxo population or a privately insured population," Schulman said.
Dobson said it's unrealistic to expect the same amount of cost savings in the private sector as were achieved in Medicaid.
"What we're after is, again, building some community-based systems that will lower the growth of health care expenditures, whether it's public or private," he said.
