American College of Physicians: Internal Medicine — Doctors for Adults ®


How do they do it? Four ways HMOs control costs

From the November 1995 ACP Observer, copyright 1995 by the American College of Physicians.

By Edward Doyle

BOSTON--Whether it's having primary care physicians double as urgent care givers or putting nurse specialists in the ER to find alternatives to hospitalizing seniors, HMOs everywhere are doing what they can to keep patients healthy--and to keep costs down. At the Pri-Med: Primary Medicine Today conference held earlier this fall, two of New England's largest managed care organizations explained how they do just that using these and other low-cost alternatives.

1. Phone triage system

At Boston's Harvard Pilgrim Health Plan, the 300,000 patients enrolled in the staff-model HMO see their primary care physicians for almost all of their care, including problems that would normally be seen in an emergency room (ER) such as lacerations, minor fractures and infections that require IV antibiotics.

Having primary care physicians double as urgent care givers helps the HMO keep costs down, but once their offices close at the end of the day, patients can still end up taking a variety of common ailments to the ER. To make sure that patients use the ER only when necessary, Harvard Pilgrim has set up a phone triage system that screens patient calls and offers alternatives to a late-night trip to the hospital. Between 9 p.m. and 8 a.m., any patient who calls the HMO or a primary care physician's office is automatically routed to a central phone triage area. There, someone from a staff of nurses, physician assistants, nurse practitioners--and sometimes even physicians--talks to patients and determines the best course of action. In most cases, the triage staff is able to keep patients out of the ER by either making appointments for patients to see a physician early the next morning or by calling in emergency drug refills.

Patients who insist on going to the ER are given the go-ahead, according to Joanne M. Wilkinson, ACP Member, physician coordinator for the HMO. But she said that most patients like the service--out of the 50,000 calls the triage program handles each year, there are only five or six complaints--because it provides an alternative to spending part of the night in an ER. "It saves the patients a two- or three-hour wait in the emergency room at 2 in the morning," she said. Besides, she added, the patient with an earache would rather take two aspirins and go back to sleep with a heating pad knowing that she can see a primary care physician the next morning before going to work.

How effective is the program? Plan officials estimate that the average ER utilization rate for most HMOs runs at 250 visits per thousand members (for non-managed care, it's 624 visits per thousand). Harvard Pilgrim has kept its utilization rates down to 80 visits per thousand, in large part because of the telephone triage system, which sends less than a quarter of all adult callers to the ER.

2. Internists in the ER

In nearby Worcester, Mass., Fallon Community Health Plan is also striving to reduce the unnecessary use of costly hospital services, particularly by its elderly patients. Officials at the HMO knew that their 26,000 senior patients used more inpatient services than younger subscribers, but they were alarmed when they discovered that hospital admission rates for these patients were significantly higher than those of HMOs around the country.

To reduce unnecessary hospital admissions among seniors, Fallon began putting seasoned internists in the ER at the hospital in which nearly 80% of its senior patients are admitted. Internists staff the ER during peak admitting hours--typically between noon and 8 p.m. They look for alternatives for those patients the ER physicians decide to admit.

Charles S. Mills, FACP, associate medical director for Fallon, said that internists' broad experience in caring for the elderly allows them to help determine which elderly patients are better off not being admitted to the hospital. "If you have a lot of older patients, you realize that frequently the problem is not a medical problem," he explained. "The patient may have a pelvic fracture and bed rest might be the answer, but there is nobody at home to care for that person."

To address such individual needs, Fallon has put a nurse specialist in the ER to find alternatives to hospital care (arranging for a visiting nurse, for example). In addition, the HMO has made sure that other parts of the system can accommodate patients who are diverted from the ER. A Fallon-owned skilled nursing facility, for example, must make beds available for patients who are not admitted to the hospital at all hours of the day--and not just during normal business hours. And physicians' offices must be flexible enough so that the patient who is not admitted to the hospital but still needs a stress test will be scheduled for the following day, not two weeks later.

So far, the program has been able to divert more than a third of potential senior admissions to other settings, saving the HMO approximately $1.5 million in the program's first year. Where did those patients go? Half were sent to clinics and just over a third went to one of Fallon's skilled nursing facilities.

3. Outpatient elder care

In addition to keeping its older patients from unnecessarily being admitted to hospitals, Fallon has also created a special program designed to care for the sickest seniors who would normally be placed in nursing homes.

As part of its Elder Service Plan, Fallon takes patients who are deemed sick enough to need nursing home care (a state agency makes the decision) and does everything possible to care for the patients either at home or, more commonly, in a day-care environment. The patients spend their days in a medical center where they receive the care they need.

The plan provides all medical care, including hospital stays, nursing home care, specialists, drugs, durable medical equipment, medicines, social services, nutrition and even transportation. The program receives a single capitated fee from Medicaid to care for most patients and has a strong incentive not to overutilize services.

Henry M. Wieman, MD, the program's medical director, explained that all medical decisions are made by the medical team working with patients and family members. He pointed out that patients cannot be dropped from the program if they become very ill and use many resources. Patients, however, have to make one major concession: They must agree to have all their care provided by the program's physicians. Dr. Wieman said that this means that care is better organized, serving both the patient's health and the HMO's bottom line.

Because the program is exempt from many federal regulations, it can accommodate individual patient needs--and still save money. "We don't have to follow the rules of Medicare or Medicaid as to who gets what services in the home," Dr. Wieman explained. The program can pay for a daily ambulance service to pick up a stroke patient from her third-floor apartment and bring her to the day-care center for her medical care. And, Dr. Wieman pointed out, sending an ambulance to a patient's home twice a day is still cheaper than paying for a nursing home bed.

The program offers something for physicians. Dr. Wieman explained that working for the program allows physicians and medical staff to make decisions without outside interference. "We've got more power than we would find in the medical community," he said. "We don't have case managers telling us what we can do. We've got a group of clinicians under a financial constraint making decisions that doctors in private practice don't get to make, like how many days a patient gets a visiting nurse in her home. You can't do that in private practice."

4. Non-hospital care for HIV patients

Another program that's part of Harvard Pilgrim Health Plan's staff model HMO aims to keep a much younger but much sicker population--the nearly 1,000 HIV patients who belong to it--healthy and out of the hospital.

Calvin J. Cohen, ACP Member, an HIV specialist with Harvard Pilgrim, explained that the HMO has begun providing internists with a variety of resources to give HIV patients the care they need outside of the hospital. For example, the HMO has created an infusion program to administer IV antibiotics and care for dehydration in an outpatient infusion unit for patients who do not require any other hospital services. "There is a lot that can be done on the outpatient side," Dr. Cohen said, noting that diarrhea and dehydration can easily be treated in the outpatient setting.

In addition to internists specializing in HIV who are on call 24 hours a day, the HMO also offers HIV patients teams of nurses who take calls 16 hours a day. The nurses function like case managers, helping patients with issues such as how to keep health insurance and disability coverage and generally serving as patient advocates. They also help provide educational resources and get access to cutting-edge drugs and clinical trials. Patients feel like "their world is falling apart around them," Dr. Cohen said. "Having one person with easy access who can help them every two days if need be to figure out how to get through the health care system has been an enormous help for patients."

At the same time, however, the nurse teams make sure that patients do not go overboard. "This isn't an illness in which the phone call from a patient with a headache can be treated with 'Take two Tylenol and call me next week,'" Dr. Cohen said. "This is an illness in which the ante is raised, in which the prevalence of illness is higher. But not every headache in HIV needs a CT scan either."

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