I expect more from Vermont, if only because I’m a Democrat and Vermont has turned so “blue” that in 2008 John McCain received only 10,000 more votes than Calvin Coolidge garnered in 1924. However, it turns out red states don’t have a monopoly on invalid PCMH data.
A brief summary of the Vermont Blueprint for Health, as described in the enabling legislation, would be: “a program for integrating a system of healthcare for patients, improving the health of the overall population…by promotion health maintenance, prevention, and care coordination and management.”
This is to be achieved by emphasizing the usual suspects — patient-centered medical homes and various support mechanisms for them. The idea is to achieve “a reduction in avoidable acute care (emergency visits and inpatient admissions).”
Growth in participation has been phenomenal. In 2009, only a few practices and a dozen employees were involved, so we can call that the baseline year. The report’s findings take us through 2012, by the end of which two-thirds of the state’s primary care practices (104) and population (423,000) were involved, along with 114 full-time employees.
The State’s Analysis
Through the end of 2012, the state — by using the classic fallacy (also embraced by the wellness industry) of comparing participants to non-participants — was able to show savings of $120,000,000 and a double-digit ROI.
Fallacious comparisons always generate questionable findings. For instance, double-digit ROIs like theirs are never found in care management programs of any stripe, and should be seriously vetted before being released. Further, in almost every cohort studied, the PCMH population handily outperformed the non-PCMH population in acute care utilization while also spending less on preventive utilization than the non-PCMH population, including an “unexpected reduction” in pharmacy spending.
And that – plus declines in outpatient, doctor visits, and “other” – is the clearest red flag. Every component of cost can’t decline – something has to increase in order to save money elsewhere. As Why Nobody Believes the Numbers observes: “Insulating your house will save money on heat, but not on insulation.” Note the absence of “insulation expense” in Vermont’s graph above on the left.
It bears a striking resemblance to the discredited Mercer analysis of North Carolina on the right – every category of resource use in the PCMH outperforms the respective benchmark
So What Really Happened?
Just like North Carolina’s consultants, Vermont’s analysts didn’t perform a simple plausibility test, using statewide admission and ER visit tallies collected by the government for the very purpose of doing this exact type of analysis.
It would have taken them an hour to enter in all the diagnosis codes for preventable admissions (the Blueprint is aimed at avoiding preventable admissions, and the hyperlink provides the official ICD9 codes for them) to see if $120 million worth of preventable admissions were avoided.
Quite the contrary, total admissions climbed ever-so-slightly faster than population, with the greatest increase being in Medicare. This is no surprise given the rapid aging of Vermont’s population. The noticeable reduction in Medicaid admissions, combined with an increase in Medicaid beneficiaries statewide, probably generated about $4-million in savings, which would not have even covered the costs of the program, let alone accounted for the $120-million claimed.
This admissions reduction figure, covering all of Medicaid, is also curious because: (1) many if not the majority of Medicaid beneficiaries still were not enrolled and/or had not visited a doctor in the Blueprint program to establish a preventive care plan by the midpoint of 2012; and (2) the unavoidable admissions in Medicaid also declined, albeit not quite as much as the avoidable ones did.
Plus, even in the state’s own analysis, Medicaid ER visits climbed, partially offsetting that $4-million in savings. This matches the government data, showing that between 2009 and 2011, Medicaid ER visits climbed a little faster than the Medicaid population (2012 is not available yet).
Lesson Learned: Patient-Centered Medical Homes Do Not Save Money
Three statewide “natural control” experiences now show that a PCMH model doesn’t come close to breaking even. Illinois would be the third, having concocted huge and immediate savings simply by having their consulting actuaries – Milliman again – project a high trend and then “outperforming” it.
(There is also a fourth state which found the same result, but for which I am under a confidentiality restriction, having done the analysis for them.)
A recent RAND Report reached a similar conclusion. Offsetting these results are a number of studies comparing participants to non-participants, or starting out with only patients known to have chronic disease, which creates regression to the mean by not enrolling people who are ignoring their chronic disease and are hence more likely to crash but be counted in the control group rather than the participant group.
Additionally, most of these other studies were done by people whose livelihoods are tied to the PCMH movement.
Notwithstanding the financial results, Vermont should be applauded for trying—and I’m sure there are benefits to the PCMH other than savings. I myself appreciate all the attention my own PCMH gives me, despite the risk of overtreatment from all that attention.
And by definition experiments can fail—that’s why they are called “experiments.” This one does not seem to have worked, so far. Perhaps the state should try one more year, and then re-allocate the resources elsewhere. But the answer is not to generate implausible analyses that show results where none exist.
Even so, the Department of Vermont Health Access doesn’t merit the same disparagement as Community Care of North Carolina. Vermont didn’t pay consultants to lie for them four times, or even once. They didn’t claim savings in excess of spending, and they haven’t driven the cost of Medicaid to a level 40% higher than surrounding states, causing their state to cut back on other Medicaid benefits to finance their boondoggle like North Carolina did.
Vermont’s was a good faith effort combined with some wishful thinking, and, speaking of wishing, we wish them the best the next time around.
Disclosure: Consistent with comments to the previous posting I did with Vik Khanna, on Saturday we sent an email to the Vermont Department of Health Access offering the opportunity to fact-check or comment and indicated that publication was happening. This email can be forwarded upon request.
Al Lewis is the author of Why Nobody Believes the Numbers, co-author of Cracking Health Costs: How to Cut Your Company’s Health Costs and Provide Employees Better Care, and president of the Disease Management Purchasing Consortium.