North Carolina will become a healthcare reform test bed through a new public-private partnership that aims to see if a Medicaid management program that has saved more than $1 billion can also bring savings and efficiencies when applied to the private sector.

The state’s Secretary of Health and Human Services Lanier Cansler announced the “First in Health” initiative on Monday.

Participating companies are GlaxoSmithKline (NYSE: GSK), software firm SAS Institute, pharmacy chain Kerr Drug, and Blue Cross and Blue Shield of North Carolina as well as the State Health Plan of North Carolina. They’ll work with Community Care of North Carolina, or CCNC, the non-profit organization that provides care coordinators who work with the state’s Medicaid recipients.

CCNC provides coordinators who help Medicaid recipients navigate the healthcare system. The organization uses a concept called “medical home,” in which a coordinator uses health information technology and direct communication with the patient the patient’s physicians to streamline healthcare delivery. A large medical practice might have one coordinator assigned to the entire practice. In rural North Carolina, coordinators work with multiple practices.

A coordinator’s duties include reminding patients to schedule appointments for chronic conditions. Coordinators also make sure all of a patient’s caregivers have access to the patient’s medical records. Savings come from avoiding expensive emergency room visits resulting from neglected preventative care as well as reducing duplicative tests. CCNC also has pharmacists that help patients manage their medications. An analysis from consultant Treo Solutions found that from 2007 through 2009, CCNC saved Medicaid nearly $1.5 billion in three years.

“CCNC has shown that effective primary care – supported by ‘high-touch’ care management, solid healthcare IT and population-based quality improvement – can be a game changer that saves money and dramatically improves the quality of health care received by patients,” CCNC President Dr. L. Allen Dobson said in a statement released prior to the First in Health announcement.

First in Health companies will start to offer the new medical home option to their employees in upcoming benefit enrollment periods. Workers will retain their current health plan choices. But if they decide to also participate in First in Health, a care coordinator will be an additional benefit.

The State of North Carolina is phasing in the program for state employees in targeted counties starting this fall.

GSK will begin offering the medical home option to its employees in January 2012. Company spokeswoman Mary Anne Rhyne said that GSK participants in the program will have co-payments for primary care doctors waived. Also, the company will pay doctors who participate in the program a monthly fee for each member assigned to a medical home.

Kerr Drug expects to offer its employees access to the program in the 2013 benefits year.

SAS’ participation will come from providing analytical software tools and health data consultants to the pilot program.

Public policy group The Brookings Institution will conduct an independent analysis and evaluation of First in Health’s impact on the cost and quality of healthcare. Brookings will evaluate the program over the next two years. In the meantime, a lot of eyes will be watching the program to see whether it can bring savings to the private sector.

“The (federal) government is very interested in this initiative and what happens with it,” GSK’s Rhyne said.

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