CHARLESTON, W.Va. -- Cabin Creek community health center saved the state about $40,000 in the past year "while they improved the health care of more than 400 people," according to Public Employees Insurance Agency director Ted Cheatham.
PEIA is pilot-testing a new way to pay for nonhospital health care of the 200,000 state employees and family members.
Instead of paying for each service performed, PEIA paid a flat rate, per patient, per month for all the services Cabin Creek provides.
Instead of paying a "middle person," a managed-care company, the agency is contracting directly with West Virginia providers like Cabin Creek Health Systems.
"The data shows it's working," Cheatham said. "Everybody's a winner: the insurance company, the patients, the provider and the state," Cheatham said. "It saved money and improved people's health."
The Cabin Creek patients used specialists less and were hospitalized fewer days than PEIA patients statewide. They also got more preventive care than PEIA patients do statewide, Cheatham said.
As a reward for saving money, Cabin Creek will also soon receive a PEIA bonus check for about $20,000, Cheatham said. "We split any savings with the provider," he said.
Cheatham wants to expand the model to all 200,000 West Virginians covered by PEIA, he said. "First, we want to test it out in different settings and work out any bugs," he said.
PEIA is arranging new pilots at two hospitals, an internal medicine group, a private doctor's office and other community health centers, he said.
In each case, PEIA will use the three-tiered payment design: provide a flat rate, split any profits, and withhold 10 percent till the preventive statistics are in. The agency will calculate a different flat rate for each provider, Cheatham said, "based on their unique population risk and costs expected for that risk."
The agency doesn't guess at cost or performance figures, he said. They audit the provider's data.
The Cabin Creek pilot saved about $100 per person. If that rate were to hold statewide, the state could save hundreds of millions with this approach.
"I'm a firm believer that we need to change the way we pay for services," Cheatham said. "This is an attempt to do just that, to bring about a comprehensive medical home for patients."
"This kind of payment innovation is directly in line with the health reform law," said Perry Bryant, director of West Virginians for Affordable Health Care.
"People often think quality care has to be expensive care, and that's not true, particularly if you don't pay per procedure."
PEIA paid Cabin Creek $25 per month, per patient. "Whether the patient came 20 times or zero times, we got $25," said Craig Robinson, Cabin Creek CEO. That money covers all services Cabin Creek provides, including X-rays and access to the low-cost prescription drugs community health center patients can get.
PEIA patients in the pilot also did not have to fork over co-pays. Usually, they owe 15 percent of the bill. "The savings are so great under this model, we didn't need co-pays," Cheatham said.
"We expected that, if money was not an issue, people would be more likely to come in for care when they need it," Robinson said. "We found that was true." As a result, fewer manageable problems turned into an expensive crisis involving hospitalization, he said.
PEIA withheld 10 percent of Cabin Creek's payment until year's end, when statistics showed patients had received more than the expected rate of preventive care.