MANAGED CARE March 2007. ©MediMedia USA
The programs are well received, for the most part, even though it is still hard to measure their value
As employers and health plans spend increasing sums on employee health management services, from health risk assessments to end-of-life case management, the question keeps coming up: Are we getting our money's worth?
Although vendors are quick to answer in the affirmative, the truth is hard to know. The employee health management industry has emerged so quickly that there is no consensus about expectations — for example, how much an employer should save in health care and other costs after implementing a smoking cessation program — or norms, such as the appropriate funding level for a comprehensive health management program.
Rising to the challenge
That is beginning to change, as industry groups and consultants rise to the challenge of helping the fledgling employee health management — sometimes called the care management — industry mature.
"There is a crying need in the employer world for more information about best practices in health management and what types of metrics are being used to measure effectiveness of various programs and what kind of realistic expectations they should have," says David Anderson, PhD, vice president for program strategy and development at StayWell Health Management, part of MediMedia USA, which publishes Managed Care.
Beyond employers, health plans are also looking for the information as they emerge as both purchasers of and, in many cases, providers of health and wellness services.
Michael Wood, senior consultant at Watson Wyatt Worldwide, the consulting company, says health plans' largest clients are requesting employee health management services as a strategy to soften the upward trend in health care premiums.
"Health plans are also looking at their own risk business and want to reduce the risk" associated with poor health habits and health status of their members, he says.
In the early years of employee health management, purchasers relied on intuitive thinking: If a disease management program improves the health of my workforce, fewer health services will be needed and costs will be mitigated.
Where's the return?
That seemed to be a reasonable assumption for disease management, which targets the chronically ill people who rack up high health costs, but it is a less obvious conclusion for other services, such as weight-management programming or telephonic coaching to promote changes in lifestyle, says Blaine Bos, a partner in Mercer Health & Benefits, another consulting company.
"So now we have the bean counters saying, 'You're going to have to show me some real return on investment on these things because I don't feel intuitively that there is necessarily enough of an ROI to justify the expense,'" he says.
Bos says that attempts to measure results of care management programs began in the last couple of years. The metrics and formulas used to calculate ROI are all over the board, as Mercer found out in its annual survey of employers in 2005.
"We asked 'What's your ROI?' and got numbers from 1:1 to 10:1," he says. "That's too big of a spread for us to believe anything about."
The 2006 Mercer survey took a step back and asked "Are you satisfied with your ROI?" Of those employers that said they measure their care management investment, 79 percent said they are satisfied with the return.
That level of satisfaction is not likely to hold for long. The Health Enhancement Research Organization (HERO), a not-for-profit group of health management service vendors, employers, health plans, and other interested parties, sought to reach a consensus on another question: What is the appropriate investment in health management services per employee per year?
Bill Whitmer, HERO's president, says that industry experts weighed in with a range of opinions — from $50 to $600 per employee per year — so wide as to be meaningless. That reflected different definitions being used by experts in the field.
"In other words, when you define employee health management, what's included?" he says. "You have to back up and say, 'Before we start putting numbers out there, maybe we need to concentrate on definitions.'"
The HERO Health Management Best Practice Scorecard is a first step toward doing so. Launched in late 2006, the scorecard was developed by a task force that included Staywell's Anderson and executives from Blue Cross & Blue Shield of Rhode Island, Prudential Financial, Matria Health Care, Kellogg, Kimberly-Clark and others.
The developers drew from best practices identified by the Health Project's C. Everett Koop National Health Awards criteria, the WELCOA Well Workplace Awards criteria, and the Department of Health and Human Services' Partnership for a Healthy Workforce 2010 criteria.
The scorecard is designed to gather data from employers to create standards that allow one employer to compare itself with its peers by industry, number of employees, geographic location, or other criteria.
Before that, however, the scorecard's first use will be to standardize definitions and get people thinking about how to measure the outcomes of their efforts. It asks employers to rate specific elements of their corporate culture, program design, interventions, and outcomes to identify the level of activity, participation, and investment in health management services.
For example, the scorecard considers the level of execution for disease management, employee assistance programs, behavioral health, absence management, disability management, utilization management, and company clinics, along with investment in specific interventions such as a nurse-advice line and health education initiatives.
Other questions probe for information about incentives to participate in health management programs, process measurement strategies, and the level of support coming from corporate leaders.
To see the HERO Health Management Best Practice Scorecard, go to «www.the-hero.org».
Anderson says the scorecard can help employers think through which services they should provide now and in the future.
"The scorecard itself represents best practice," he says. "It is a road map to maximize the value of health management in their company."
Whitmer describes the scorecard as an evolving tool that will help the industry mature to meet the needs of employers and health plans who are purchasing services.
Wood, the Watson Wyatt analyst, takes another approach. By analyzing avoidable claims, Watson Wyatt identifies an employer's best opportunity to reduce future claims by implementing intervention programs.
Typically, between 10 percent and 20 percent of claims are avoidable, and the potential ROI for health management services ranges between 2:1 and 4:1, Wood says.
MANAGED CARE March 2007. ©MediMedia USA
Increasingly, health plans are providing disease, case, and utilization management when a beneficiary receives a cancer diagnosis
- See also accompanying story: Managing Cancer Treatment Begins Before Diagnosis
Increasingly, health plans are rolling out services designed to help cancer patients and, before that, plan members at a high risk of cancer, to improve their health care and, in doing so, limit costs.
The services, which vary by vendors and health plans, incorporate components of disease management, case management, utilization management, and even employee health management in a way that has not been done before.
Overtaking heart disease
As America's War on Cancer, now in its fourth decade, drags on, the chances that an individual will develop cancer are greater than ever. Now in second place after heart disease, cancer is expected to be the leading cause of death in the United States by the year 2010.
On a brighter note, however, the range of diagnostic and treatment options for cancer patients has never been greater. For two of the most common cancers — prostate cancer and breast cancer — the five-year survival rate exceeds 85 percent, and the rate is higher than 50 percent for ovarian, cervical, and colorectal cancers.
"Ten years ago cancer was very much a death sentence," says Nancy Skinner, former president of the Case Management Society of America. "Cancer today is a chronic disease that in some instances is cured and in other instances is managed across a number of years."
Concerned about the difficulty of assessing the quality of care — which treatments should be used for which patients — a group of oncologists and radiologists in Florida began offering cancer management services to health plans in the early 1990s.
"One of the things they were looking for was consistency in medical practice," says Charles Kanach, CEO of Matria's oncology management program. "There was a wide diversity of care, so they were trying to say, 'If we develop some standards, we can really bring costs under control.'" Matria, which had its own cancer program since the mid-1990s, bought the oncologists' company, Quality Oncology, in 2002.
The physicians found that cancer patients wanted round-the-clock access to oncology nurses, and soon they began offering both utilization management and care management services to health plans and employer groups. Healthways, another major disease management company, entered the cancer care management segment in 2005, at the request of a health plan that wanted the services.
The increasing array of treatment options and the cost of side effects of those treatments were pushing demand for oncology care services.
"When we did the research [to develop the program], we discovered that most cancer treatment is done well within the gold standard of practice," says Paula Kelling, Healthways' director of product design and development. "But the mismanagement of side effects was resulting in patients' increased morbidity and additional expenses and the need for critical case management on behalf of the plans."
In fact, considering all side effects in aggregate, almost 50 percent of patients do not have their symptoms managed well, Kelling says. In some cases, that is because patients live far from their oncologists and rely on their primary care physician for side-effect management. Some patients do not understand the instructions about how to diminish nausea and other side effects. They take medications to relieve symptoms rather than avoid them, for example, or do not call for help until they have become dangerously dehydrated.
One selling point for oncology management is that nurses coach cancer patients to manage common side effects so that they are strong enough to stay on schedule with the treatment regimen. That not only increases the effectiveness of treatment but also results in the shortest possible treatment phase.
Perhaps the foremost goal of cancer care managers, though, is to keep patients out of the emergency department or inpatient bed, where, for the immunosuppressed patient, things go wrong — and get expensive — fast.
"The classic case is somebody will be dehydrated, present at an ER, get admitted, and stay for 10 days," Kanach says. "That's not 10 days to get the fluids back in; they pick up some other kind of infection and there's 10 days of hospitalization that could be avoided."
Humana contracted with Matria's oncology management program in 2004 and introduced the services to all markets by mid-2005, says Susan Carol, who manages Humana's cancer program. Nurses call patients to warn them about impending side effects and to make sure their prescriptions have been filled.
"We stage people by acuity level and where they are in their treatment cycle, so there will be times when our nurses are calling them every day, a couple of times a day," says Graham Cherrington, Matria's senior vice president for health enhancement.
Financial counseling is frequently part of the needed services, as patients struggle to pay for prescriptions that could stem their suffering or to decide about treatments that are not covered by their health plan.
"These new therapies are extremely expensive, and oftentimes our patients are faced with some very difficult financial choices," Cherrington says. "We try to play a role in empowering patients to make the best decisions for themselves."
In January 2007, Cigna introduced an oncology management program that sweeps with a broader brush. The insurer is mixing elements of case, disease, and health management.
Cigna has offered case management to cancer patients in the past, but only those who were having complications in their treatment. The new program, by contrast, starts with cancer prevention.
"This program goes way beyond the needs of a subset of individuals with a diagnosis of cancer and focuses on the continuum of care," says David Ferriss, MD, national medical director for clinical program development at Cigna HealthCare.
Recognizing that obesity, smoking, and lack of exercise portend increasing prevalence, Cigna's oncology management effort will kick in before cancer is diagnosed. Using claim data and health risk assessment information, Cigna will identify members at risk of cancer who have not had appropriate screenings and start pushing for action.
"If there's no evidence that they've complied with that, then reach out to them in an even more personal way to reinforce those messages and try to achieve a higher level of compliance with recommended guidelines," Ferriss says.
The surveillance, or maintenance, component of the program targets individuals who have had a cancer diagnosis in the past but no longer have active disease. Cigna will push information through its Web site, mailings, or telephone calls, to encourage those members to keep up with screenings, healthy habits, and ongoing follow-up with their physicians.
Inferring a diagnosis
If claims suggest a Cigna member has received a cancer diagnosis, a new level of services kicks in. "When we see a first fill for a drug that is typically used to treat some type of cancer, then we validate what the diagnosis is and assess what their needs might be and provide them with the resources they need," Ferriss says.
In addition to supporting the patient undergoing treatment, nurses can help with financial issues — for example, finding ways to pay for treatments that are not covered by the employer's health plan — and provide information about hospice care and end-of-life decision-making.
Cigna estimates $2 in savings for every $1 invested in oncology management services. Plan members can opt out of the services, although, as data accumulate to show the outcomes and cost effectiveness of the services, employers may provide incentives to participate, Ferriss says.
"They may do that through positive incentives or they may say we won't provide coverage for that particular condition to the same extent if you're found to be appropriate for this program and you decide not to take advantage of it," he says.
- See also accompanying story: Managing Cancer Treatment Begins Before Diagnosis
MANAGED CARE June 2006. ©MediMedia USA
An exercise in "point-counterpoint" at a recent disease management meeting showed dramatic swings in views
*Four members of the National Managed Health Care Congress (NMHCC) Disease Management Outcomes Workgroup debated the pros and cons of six different issues before a group of knowledgeable listeners, and discovered that even in a short period, opinions could change significantly. Six issue statements were presented to the participants who were asked to respond to the statements with "agree, somewhat agree, neutral, somewhat disagree, and disagree" using wireless keypads. (The issue statements are below the graph.)
After the tally for one issue was displayed, one panelist spoke three minutes in favor of the statement. A second panelist spoke for three minutes against the statement. Then the poll was repeated. Dramatic shifts were evident in the responses to half of the statements. This indicates that discussion and debate is a valuable tool for the DM industry.
Jeff Gruen, MD, MBA, had assembled the DM Outcomes Workgroup for an earlier NMHCC conference to help attendees improve their comprehension of the complex financial and methodological elements of impact assessment in DM programs.
The workgroup has now presented successfully seven times at National Managed Health Care Congress/Disease Management trade shows, has produced a publication based on these results (Joint Commission Journal on Quality and Safety. November 2004, Volume 30, Number 11, Page 616. "Assessing Return on Investment of Defined-Population Disease Management Interventions." Authors: Thomas W. Wilson; Jeff Gruen; William Thar; Donald Fetterolf; Minalkumar Patel; Richard G. Popiel; Al Lewis; David B. Nash), and continues its work.
At the September 2005 Disease Management Congress in Orlando, Fla., the workgroup conducted a session titled "Who Wants to Avoid the Millionth Error? DM Reality Show Explores Issues Driving the Outcomes Measurement Debate."
Before each debate began, the question was read to audience members who were given the choice of five answers. The audience had about 30 seconds to respond, and the sums were displayed immediately.
One panelist defended the statement for three minutes (the pro position), followed by a three-minute speech from one panelist who argued against the issue (the con position). The poll was repeated for each issue, with the post-debate sums and pre-debate sums displayed.
Responses of "agree" and "somewhat agree" were combined into one category and "somewhat disagree" and "disagree" into another. Statistical significance tests were performed after the debate.
On 5 of the 6 issues debated, the percent that strongly agreed or agreed dropped as a result of the debate. Half of the time, the percent who strongly agreed or agreed showed a statistically significant difference after the discussion.
The three issues that show the most changes in participants' opinions were, in descending order of change: 1) uniform ROI measurement standard needed (number 1 in chart below); 2) controls regression-to-the-mean (number 4); and 3) DM dies in 3–5 years if federal projects fail to find value (number 6).
General conclusions from those polled, to the degree that they represented their respective institutions and the industry, would include the following:
- Following this nonscientific market poll, the disease management industry should certainly consider the creation of a single universal ROI methodology, as 58 percent agreed or somewhat agreed with that statement after the debate. However, the industry may want to carefully think over how best to proceed on this issue, as prior to the debate a full 81 percent agreed or somewhat agreed with this statement. This was the biggest shift in opinion that was seen in the six questions. This shift in the audience's outlook after six minutes of discussion suggests that this effort should proceed carefully.
- Disease management program studies that have been published are overwhelmingly believed to not include sufficient methodological adjustments to establish equivalence between the reference group and the DM intervention group. The debate did not appreciably change the opinion on this issue. This is a potentially challenging problem as most studies conducted in DM are not randomized control trials. The randomized control trial study design is most likely to lead to equivalent reference groups, but there is no guarantee that randomized control trials will achieve equivalence.
- Participants in the meeting strongly felt that disease management outcomes are not primarily a result of reduction in health care provider practice variation, but rather, the change in patient behavior. This position was improved by the debate, with 9 percent of the audience shifting position toward patient change as the primary driver.
- The problem of adequately controlling for regression to the mean (RTTM) was identified as the most serious negative of all the issues. After the debate, 86 percent of the participants — up from 62 percent prior to the debate — did not believe that DM had adequately controlled for this phenomenon. Simply put, RTTM refers to the observed decline in costs and utilizations in many DM populations when using a pre-intervention/post-intervention study design. But the decline seems to occur even when DM is not present, suggesting that the programs are not responsible for the change, but that it is a natural phenomenon.
- For DM initiatives, the belief that a ROI of only 1:1 (i.e., where DM costs = DM benefits) was consistent (41 percent to 38 percent, not statistically significant). Most importantly, over 50 percent believed that this statement was not supported, presumably because evidence supports the contention that DM ROIs are greater than 1:1. In other words, the audience believed that DM did, in fact, have a positive ROI in both published and nonpublished studies.
- The conference participants were initially skeptical regarding the future of the DM industry, given a hypothetical unfavorable Medicare Chronic Care Improvement Project (CCIP) evaluation (now called the Medicare Health Support project). However, the audience changed its position after the debate, most likely because of the recognition by the con position that disease management offers a variety of multidimensional contributions, including clinical improvement, patient satisfaction, productivity improvement, and other softer outcomes that result in overall better health. The results from DM are not and should not be single-dimensional.
We believe that the audience informed us that the industry must move toward more standardized methodologies that can more adequately adjust for regression to the mean and nonequivalence between the DM intervention population and the reference (e.g. trend, pre-period, concurrent period, nonparticipants, classic control group, etc.). We agree with this sentiment.
The fact that there were significant changes in opinions in one half of the issues leads us to believe that there is a great need for civil, structured discussion and honest and respectful public debate of the important issues facing DM. These discussions should take place at conferences, at other meetings, and in the pages of magazines.
Given the issues in the peer-reviewed literature, we encourage more space be devoted in peer-reviewed journals for letters to the editor. This would constitute an on-going public peer review of peer-reviewed literature.
A similar debate will be conducted at the Health Management Congress in the fall.
MANAGED CARE May 2006. ©MediMedia USA
The problem is outpacing insurers' resources and perhaps even their commitment. Can the chronic care model help?
Diabetes is creating an escalating economic crisis for our health care system. Health plans use a handful of approaches, but "many insurers remain unaware of the scale of the problem," says Thomas Bodenheimer, MD, MPH, an adjunct professor in the department of family and community medicine at the University of California, San Francisco and a leading authority on the management of chronic disease. "Health plans need to step up to the plate. Their active involvement is absolutely critical."
Some plans are making efforts. Aetna has implemented what the company calls its "Integrated Comprehensive Diabetes Program," designed to coordinate care between the large insurers' various departments to encourage patient self-management and physician recognition of the disease's dangerous comorbidities, including depression and heart disease. Cigna has a similar program.
Kaiser Permanente's Care Management Institute emphasizes care coordination, a key to managing diabetes, in its staff-model practices. The plans shared America's Health Insurance Plans' 2006 Innovation and Excellence Award for Chronic Care in the large/affiliated category.
Intensive management required
"The key to success is placing the patient at the center of care," says Paul Wallace, MD, former executive director of Kaiser Permanente's Care Management Institute and currently Kaiser's medical director for health and productivity management programs. "Complex comorbidities require intensive management."
The AHIP Innovative Award winner for smaller/independent plans was Rocky Mountain Health Plans (RMHP) for improving diabetes outcomes in Mesa County, Colo. RMHP's truly innovative program combines pay for performance with a physician practice redesign at the primary care physician level for patients with diabetes.
Their plan is based on the chronic care model, which pays doctors directly for improved outcomes. The model is similar to pay for performance except that it rewards physicians for managing the overall care of their patients' chronic illness, including making community referrals and planned nurse visits to patients' homes. Unlike disease management, it rewards physicians, not a third-party vendor.
"Traditionally, physicians are not trained in management techniques to deal with ongoing chronic conditions," says David Herr, MD, chief medical officer. "We wanted to address that problem."
These are meaningful efforts, and they are plan-based. But the national plans fail to address the needs of the large majority of their populations. Aetna's program only enrolls 6 percent, for example. Medicare has waited until just this year to implement pilot studies on chronic disease management. That's despite the fact that the program has by far the highest incidence of diabetes of all health plans.
Study after study shows that people with diabetes are not getting the help they need. A survey by researchers at the University of Michigan, the results of which were published in the April issue of the Journal of General Internal Medicine in an article titled "Indications for and utilization of ACE inhibitors in older individuals with diabetes," found that less than half of all people with diabetes 55 or older were receiving ACE inhibitors. Endocrinologists have long advocated that almost all people with diabetes in this age group take the medication.
Insurers and Medicare simply do not pay enough for what is needed to treat patients with diabetes, says Irl B. Hirsch, MD, a professor of medicine at the University of Washington Medical Center in Seattle, in an editorial in the journal Diabetes Care. "Our system rewards physicians doing procedures, and diabetes care is classically a matter of evaluation and management," he said. "The current system is nonfunctional, if not dysfunctional."
It is a problem of enormous urgency, says K.M. Venkat Narayan, MD, chief of the Centers for Disease Prevention and Control's Diabetes Epidemiology & Statistics Branch in the Division of Diabetes Translation. According to the CDC, about 18.2 million Americans (6.3 percent of the population) have diabetes, a four-fold increase in the last 50 years. Of those, more than 5 million are unaware they have the disease.
And more than a million new cases are diagnosed every year, which predicts that the number of diagnosed cases of diabetes will increase by 165 percent by the year 2050. Without preventive care, 1 in 3 children born in 2000 will develop the disease.
"There has been some improvement in treatment and management, so we know we can make things better, but the disease is reaching epidemic proportions. There is still a great deal to be done," says Narayan. "There are good treatments available, but it's no time for complacency."
"This trend is extremely disturbing," says Robert Rizza, MD, a professor of medicine at the Mayo Clinic and president for medicine and science of the American Diabetes Association, adding that our health care system "isn't set up to address the complexity of chronic disease, especially diabetes."
Five chronic diseases — heart disease, cancer, stroke, chronic obstructive pulmonary diseases, and diabetes — account for more than two-thirds of all deaths and consume 75 percent of the nation's health care cost. Diabetes is the fifth most common cause of death, according to the ADA, but among its most significant comorbidities are heart disease and stroke. And heart disease is the most common killer.
Says Rizza: "We need to create incentives for patients and within the system to do a better job in preventing the disease and, once you have the disease, preventing its complications."
Tools and information about management techniques are certainly available. The ADA has an extensive database of community resources available to health plans that develop referral systems. Aetna, for example, works with local diabetes coalitions to promote compliance with recommended ADA guidelines. The company recently implemented a pilot project with a collaborative named the Network to Improve Community Health (NICH) in the Mid-Atlantic region by providing regional physician offices and blood lab draw stations with the NICH's Patient Guidelines for Diabetes Care brochure to educate patients.
Chronic care model
The Institute for Healthcare Improvement offers a detailed program to health plans and medical groups that outlines and implements the Chronic Care Model designed by Ed Wagner, MD, director of the MacColl Institute for Healthcare Innovation at the Group Health Cooperative of Puget Sound, Seattle. The model "recognizes that a substantial portion of chronic care takes place outside of formal health delivery settings," says Wagner. "Its purpose is to capitalize on a full array of possible treatment options." It has traditionally been used in staff model HMOs, large group practices, and community health clinics, with positive results, says Wagner. "Yet few provider settings are prepared to execute the model," he adds.
So why aren't more plans more aggressive in managing diabetes? "The main barrier to that involvement is that managing diabetes has yet to establish a return on investment to the satisfaction of many plan leaders," says Bodenheimer.
Health plans may continue to be in the dark about the need for widespread diabetes management, but apparently many payers are seeing the light. Recognizing that employees with diabetes take eight times as many sick says at their coworkers who don't have the disease, it is employers — not health plans — that are taking the most aggressive steps toward managing diabetes.
The University of Michigan, for example, is starting a two-year pilot program to provide no-cost or discounted medications to employees and dependents with diabetes. The program, named "MHealthy: Focus on Diabetes," begins July 1. More than 2,000 university employees and dependents enrolled in the university health plan will receive no-cost generic medications for diabetes and related complications such as hypertension, heart and kidney problems, and depression. And the university will reduce copayments for brand-name medications for diabetes and related complications by 25 percent to 50 percent, and will distribute educational materials about how diabetes patients can manage their health. The purpose is to measure whether reduced copayments for medications for chronic conditions improve access to care and reduce complications.
But in spite of payer initiatives, health plans too often fail to recognize the need for physician and community involvement in efforts to manage chronic disease, say Bodenheimer, Wallace, and many others.
"Taking care of chronic conditions over time is different from the way we, as plans, deliver health care," says Wallace. "It is a huge irony. Health care is really about how we deal with sickness. Disease management is how we pursue health."
Some plans are initiating pay-for-performance programs if their network physicians make the necessary test referrals. Many plans and employers hire disease management vendors to manage the disease. But very few insurers pay their physicians directly for actually getting results, says Bodenheimer.
"The key to effective management of diabetes is the active involvement of the primary care physician, who treats 80 percent of all diabetes cases," says Bodenheimer. "The chronic care model involves the entire community, and is centered on the primary care physician."
Bodenheimer believes the chronic care model offers the most effective management technique and is an improvement over disease management because it compensates physicians directly and emphasizes utilization of community resources.
External DM programs remain the most popular form of diabetes management, however. Sixty-two percent of employers have contracts with diabetes disease management programs, according to Mercer Human Resource Consulting. Every national plan and most regional plans offer an internal or an external DM program, although not always for diabetes management.
Poor cholesterol control
And that has made some difference. DM programs and health plans have reported through HEDIS measures that in the last decade, cholesterol control in diabetics has improved.
However, according to the CDC, blood pressure control and blood sugar control measures have not improved. The agency reports that 2 out of 5 people with diabetes have poor cholesterol control, 1 in 3 has poor blood-pressure control, and 1 in 5 has poor control of blood-sugar levels, according to the CDC.
Some plans are starting pay-for-performance programs for diabetes treatment, which some physicians say can be effective. Blue Cross Blue Shield of Minnesota, for example, recently implemented a P4P program that ties clinical tests and values for diabetes to added compensation. According to Douglas Hiza, MD, BCBSMN's medical director, about 55 clinics signed up for the voluntary program, which includes about 80 percent of BCBSMN members.
Statistically significant comparisons
The P4P program is almost entirely based on outcomes and derives data from chart reviews, not claims data. It is part of the Minnesota Community Measurement Project, which is made up of all of the major health plans in Minnesota and produces statistically significant comparisons of clinics across Minnesota by combining plan data. "We believe we'll find that incentives do make a difference, because when you combine financial rewards with recognition of quality rankings, you get powerful results," says Hiza.
Popularity and hope notwithstanding, P4P and disease management have yet to truly demonstrate their cost effectiveness, say some experts, and that may be in part because they fail to enroll complete populations. Return on investment in DM programs is an especially controversial issue, says Ron Goetzel, PhD, vice president for consulting and applied research at Thomson Medstat, a health care information company. He also serves as director of Cornell University's Institute for Health and Productivity Studies.
"It is a relatively new idea that DM is cost effective, although it has shown good outcomes," says Goetzel. "We have found, however, that little evidence currently exists that clearly demonstrates DM's financial impact. Much of what has been done doesn't really meet standards of being scientifically rigorous."
But as far as KP's Wallace is concerned, it is the chronic care model's emphasis on placing the patient at the center of care coupled with primary care physician and community involvement that has the most potential for addressing the diabetes epidemic.
"Why keep reinventing the wheel?" he asks. "It is simple, complete, and effective. We just need to put our brains into the game."
MANAGED CARE April 2006. ©MediMedia USA
While DM is now mainstream, it can still be difficult to judge a program's worth. Health plans faced with renewing DM contracts have a lot to think about.
When Bill Popik was chief medical officer at Aetna last year, it was his job to renew or terminate Lifemasters' three-year disease management contract. Lifemasters was running Aetna's diabetes, heart failure, and other programs. Before making a second commitment, Popik, who was spending tens of millions of dollars on DM, needed assurance that the programs were earning their way, especially since Aetna was reselling DM to large self-insured companies. "We had a lot of skeptical employers to convince that this was worth investing in," Popik says.
Aetna's internal audit showed an overall return of about $3 for each $1 spent on DM, a good return on investment (ROI). Most savings came from the sickest patients, such as those with heart disease, while asthma programs were close to breaking even. Popik, president-elect of the Disease Management Association of America DMAA, the industry trade organization, gladly extended the contract.
Health plan leaders, CMS officials, and others are betting the farm on DM programs. An estimated $1.5 billion will be spent on DM this year, up from $78 million a decade ago, according to Al Lewis, JD, president of the Disease Management Purchasing Consortium. DM's health improvements are incontrovertible — better quality of life, less absenteeism and disability, more productivity. The big unknown is: Do the programs really save money? Executives at Aetna and many other managed care organizations seem to think they do. But there is great uncertainty in and out of DM circles about the formulae that establish positive ROI, such as Aetna's 3:1, causing some to wonder whether bullishness derives from faith alone.
Lifemasters, Healthways (formerly American Healthways), Matria, Health Dialog, and others can claim in contracts that for every dollar spent on call centers, patient literature, and other means to improve patient health, managed care organizations can expect $1.50 to $8 in reduced use of acute care services.
However, any postulation is suspect since there are many ways to calculate financial savings or losses, industry sources agree. Results can be wildly inconsistent. One telltale study demonstrated that using the same data and different methodologies produces three different results: a negative ROI, break even, and a positive ROI. Titled "The Impact of the N," it won an award at DMAA's 2004 annual convention. "The method you choose influences the results you get," says the study's author, Thomas Wilson, PhD, of the Population Health Impact Institute, a not-for-profit provider of evaluation guidelines and other services.
In the early days of DM a decade ago, vendors boasted returns of 30:1, a declaration that experience has shown to be outrageous. Still today, "It's impossible to know whether the results managed care executives are hearing are valid," Wilson says. "Most of the time, calculation methods are not even disclosed."
The Congressional Budget Office examined dozens of peer-reviewed DM studies. "There is insufficient evidence that the programs can generally reduce overall spending," wrote CBO director Douglas Holtz-Eakin to the Senate Budget Committee in 2004. Moreover, the CBO worried that the programs could even raise costs by increasing the amount of medical care patients use.
"Improving health outcomes and mitigating . . . costs do not necessarily go hand in hand," CBO researchers wrote.
The Cornell University Institute for Health and Productivity Studies in collaboration with Thomson Medstat also analyzed ROI for dozens of DM studies. Led by Ron Goetzel, PhD, vice president for consulting and applied research at Thomson Medstat, the group discovered a positive ROI of 2.78:1 for congestive heart failure; only "some evidence" that diabetes programs save more than they cost; mixed results for asthma programs, and a 30-cent loss for every $1 spent for depression.
Depression programs were found to cost more than they save, but may save money when productivity outcomes are considered.
The greatest returns were for managing multiple conditions, from $6.65 to $10.87 per dollar invested. Results were published last summer in Health Care Financing Review.
David Cutler, PhD, the Harvard economics professor who studies health spending, examined two diabetes programs run by insurers in the last decade. He concluded that DM is not a moneymaker because patients change plans before long-term savings can be realized. Thirty-seven percent of the workforce turns over annually, according to a current analysis by the Bureau of Labor Statistics.
"The longer a member is enrolled in a program, the more dramatic results obtained," says Donald Fetterolf, MD, corporate vice president for strategic initiatives at Matria and formerly vice president and senior medical officer at Highmark Blue Cross and Blue Shield in Pittsburgh.
"It could take 18 months to get people signed up and another 12 months to get initial outcome data," adds John Stark, a regional vice president and actuary at WellPoint. In addition, the effects of behavior change are often slow to develop. Imagine a cardiac condition that has developed over a lifetime. While simple dietary changes, weight reduction, exercise and smoking cessation will have significant effect on health, the effect on claims may not be seen for years. Clearly, if all companies had similar DM programs and measurement standards, when patients moved on, DM would be seamless.
For some, like Gordon Norman, MD, formerly PacifiCare Health System's vice president for disease management, the thorny issue of ROI is moot. "We're beyond determining whether DM programs save money," he says. "There are enough cohort and quasi experiments that have caused senior health plan executives and self-insured employers to invest year after year. Their confidence is not predicated on anecdote, supposition, or faith."
Norman is now chief medical officer at the DM vendor Alere Medical, which entered into a long-term DM management agreement with PacifiCare last year. Every year since 2000 that DM had been in place at PacifiCare, the company realized "in excess of $100 million annually in net savings aside from what the program was costing," he says.
Chris Coloian, Cigna's vice president for DM and wellness, agrees: "People have moved past speculating whether these programs work." In 2004, the company released results of a DM study that it had conducted of 43,000 diabetics in 12 states. Overall medical costs declined by an average of 8.1 percent for full parti-cipants, mainly through a decrease in hospitalizations. The program is provided in collaboration with Healthways.
Cigna has the largest DM program as measured by total dollars, according to "Leading Disease Management Organizations," a summer 2005 report by the Disease Management Purchasing Consortium.
DM sometimes gets shortchanged because it is impossible to measure factors that would surely boost ROI. "Where does productivity loss occur?" asks Popik, formerly of Aetna. "Parents who leave work or don't come to work because they have to take their asthmatic children to doctors — we don't measure that but it's very significant. Presenteeism — no one is measuring that and factoring it into ROI." An analysis of the lost work time avoided would demonstrate significant savings, according to Popik.
Few health plans are without at least one DM program. Enthusiasm and high expectation reigns. "The check that the chief financial officer writes for DM is one of the largest, aside from claims and labor," says Ian Duncan of Solucia Consulting, a company that helps negotiate DM contracts.
Even Senate Majority Leader Bill Frist, MD (R-Tenn), boosted DM in February when he said in a speech to the Detroit Economic Club referring to diabetes DM: "We know that through evidence-based interventions and monitoring — things as simple as phone calls from trained nurses — disease management can reduce health costs by as much as 30 percent, and can cut hospital costs by as much as 50 percent."
But as the industry matures, changes are occurring. Only two to three years ago, managed care organizations "were just accepting what was handed to them by their DM vendors and relying on those explanations," says Rebecca Owen, an actuary with Solucia Consulting. Today they are looking under the hood to learn how numbers are derived.
"The president of the company wants to know if it's a red number or a black number," says Matria's Fetterolf. Executives have to consider whether they will come out ahead with alternate uses for their dollars.
To be sure, some health plan executives renewing vendor contracts are calling for independent audits of methodologies with striking results. "We have audited calculations that differ substantially from the written methodology that studies were supposed to represent," Duncan says.
Especially for health insurers, outside auditors have become de rigueur since the federal Sarbanes-Oxley Act of 2002. "We want to validate vendor results to make sure that savings are there, for our peace of mind," says WellPoint's Stark. "We have a lot of people looking at our business." The act was passed after the Enron, Tyco and WorldCom fiascoes to encourage public companies to enhance financial disclosure.
Numerous attempts had been made in the past to create a uniform standard, in the way that the accounting industry has "generally accepted accounting principles" to which all accountants adhere. "It's been one big spitting contest and no one has won," says the DM consultant Vincent Kuraitis of Better Health Technologies.
Wrote Tracey Moorhead, DMAA's executive director, earlier this year: "Our experience shows DM works, but lack of agreement on how to measure that success has hampered our ability to convince skeptics."
Representatives of multiple disciplines have weighed in — academicians, politicians, statisticians, actuaries, economists, epidemiologists, and assorted researchers. Many have created, or are in the process of creating, methodologies that they consider scientific. Moreover, each vendor thinks it has created the gold standard. For example, SHPS, a company in Arizona that describes itself as "an integrated health management provider," used Ernst & Young to validate client savings. SHPS wrote in 2002: "Through the Ernst & Young study, SHPS has established a financial model that will become an industry standard for measuring our programs as well as those of the competition."
A year later, Healthways (then called American Healthways) and John Hopkins University researchers announced that they had developed a Standard Outcomes Matrix that was to be the "benchmark for all program evaluations." Neither is uniformly accepted today, Fetterolf says.
It was big news in January when the DMAA announced that by December, it would establish a definitive methodology for measuring financial and clinical outcomes.
"The ROI issue has become so annoying," says Fetterolf, appointed chairman of the DMAA committee directing the effort. "It's a resource-consuming, fracturing issue. We want to come up with a standard so everyone can get on with life. It's slowing contracting. Expensive people spend lots of hours in windowless rooms arguing over nuances and methodology."
To get the ball rolling, the DMAA sent 300 questionnaires to CEOs, chief medical officers, quality and informatics people, vendors, health plans, support organizations, consultants, and pharmaceutical concerns in an attempt to gain a consensus. "Engaging all key stakeholders early and soliciting their input is crucial, and we're doing both," Moorhead says. Committee members include Jim Pope, MD, chief medical officer of Healthways, Jaan Sidorov, MD, director of care coordination at Geisinger Health Plan, employees of actuarial and accounting concerns, and others. Still, there is so much contentiousness about how to conduct a financial review that it is doubtful that warring factions will accept the DMAA standard. "We fully anticipate consensus on a large number of key elements in the presentation of DM outcomes, but recognize there may not be agreement on some elements," Fetterolf says.
"I'll go on record to say that if the DMAA includes plausibility analysis, I will be a big supporter. Leaving it out wouldn't pass the sniff test," says Lewis, who has his own algorithm. Plausibility indicators adjust for the impossibility of predicting all the members of a health plan who are going to have health events.
There are even suspicions that since the DMAA represents an industry eager to demonstrate that its programs have financial worth, its algorithm may be faulty. "As a trade organization, the DMAA is going to come up with a method that shows DM provides a ROI," says Medstat's Goetzel. "Perhaps only a government agency can come up with a methodology that is unbiased." Fetterolf strongly rebuts that assertion. "The industry can worry that the fox is in the henhouse, but we've gone to great lengths to make sure that is not the case by including lots of stakeholders,"
Wilson, of the Population Health Impact Institute, argues that it is not even possible to come up with a single credible standard, as there are too many variables for a method to work in all circumstances. He has created a framework of five principles instead of a uniform methodology: data quality, equivalence, statistical quality, causality, and generalizability. "There is not only one way to build a house, but all construction companies follow certain rules, such as that walls have to be plumb and floors level."
It should be simple
Virtually all agree that the Holy Grail for evaluating ROI is through expensive, double-blind randomized controlled trials, with patients assigned to one of two groups. One is the control group receiving no program intervention; the other receives DM interventions. Some doctors and others perceive this as unethical because the vendor withholds services from people who could benefit from them, Solucia's Duncan says.
Wilson, however, argues that "double-blind" trials are not even possible in DM, as the patient will be aware of the DM program. "What's left," he says, "are less rigorous methods, more potential for bias, and the need for even greater scrutiny. To enable credible evaluations, metrics and methodologies will have to be fully disclosed."
One of these methods is "the pre-post method," or pre-DM intervention as the baseline period for comparison, versus post DM intervention. This method is fraught with potential for miscalculations and flaws, such as selection bias and regression to the mean.
Self-selection will no doubt include more highly motivated and perhaps healthier patients. In regression to the mean, members selected for DM during a time of acute illness, such as a hospitalization in the initial year, tend over time to become better and more like the average patient with the disease. Comparison of costs for groups of members in a base year, selected for hospitalizations, have the false result of magnifying the effect of an intervention.
Countless variables easily skew the data. For instance, the introduction of new technologies, new therapies, and new medications can make a vendor seem positively heroic. ROI can rise dramatically if a popular drug goes off patent. "A pill that costs $10 may now cost 10 cents," Solucia's Duncan says. By the same token, a new, coveted, but expensive medication on the market could lower ROI.
Comorbid patients can wreak havoc on DM calculations. Most primary care patients have more than one chronic condition; approximately half of the patients have five or more, according to a study in the May/June2005 issue of Annals of Family Medicine. Financial savings from a single patient who is registered in more than one DM program should count in one program only. One CHF program may monitor patients with a remote device; another can use a nurse reminding CHF patients to take their medication. "Every one of these could have a profound effect on the results," says Wilson of Population Health.
Insurers themselves unintentionally alter ROI. Formulary changes that substitute drugs could affect efficacy. Hiking copayments for doctor visits and prescriptions makes it less likely patients will get the treatments that could keep their diseases in check, irrespective of other aspects of the DM program.
When insurers alter their networks, changing doctors or hospitals, patients may find they have to travel distances to receive care and so may not follow up. "If WellPoint were to shrink its network and get rid of tertiary care facilities, that would affect prior promised savings by the vendor," Stark says.
DM programs work only if patients take the advice proffered. Sometimes, they just can't. About 15 percent of working age adults ages 18–64 with private health insurance and at least one chronic condition did not purchase all of their prescriptions because of cost concerns, according to a 2005 study released by the Center for Studying Health System Change.
In spite of it all, physician leaders remain ebullient about DM because there is a vague notion that even if results are 1:1, that is sufficient. "If the ROI is a wash, would you still do the programs?" asks Fetterolf.
"Programs have other value. Employees like their employers who provide these services; physicians support these efforts to help them practice." Adds William Gold, chief medical officer of Blue Cross & Blue Shield of Minnesota: "We don't want to lose money, and I would have a problem if ROI was less than 1:1, but DM is at least better than the way the health system operates now, such as ordering an MRI that is not indicated or not following up with noncompliant patients."
In 2004, Gold had no hesitation re-enlisting one of its company's outside DM vendors when that contract renewal landed on his desk for the second time. "We'd had very favorable outcomes and we were confident of their methodologies," Gold says, declining to the name the niche vendor. This time around, though, Gold asked to drop performance guarantees, a move that reduced the rate charged to the insurer. In each of the previous years, the vendor had exceeded the guarantee. "We have no doubt the relationship will continue as it always has," he says.
At contract renewal time, Aetna's Popik also made changes. "It became clearer to us we needed to focus on the sickest members. We had to stratify members by risk and to focus activity on levels 1 and 2. "Someone with the mildest from of chronic heart failure might receive some written information, while those with the most severe form would receive much more intensive intervention, including home visits," said Popik at a DM conference at Duke University.
Employers contracting with Aetna also made changes born of experience. "They decided they did not want to pay for people who were not enrolled, so we developed a per-participant pricing schedule," Popik says. "Our customers were saying, 'I want you to have an incentive to sign members up and I'll pay you more for those who sign.'"
The first time around, Cigna was concerned with financial indicators in DM contracts, but at renegotiation time, clinical improvements were equally or more important, Coloian says. "Not just 'Did the patient have the lab test?' but 'What was the value of improvement?'"
While Norman was at PacifiCare, he renewed contracts with Alere. "We were getting value," he says. However, one publicized contract that ended 10 months early in January was a PacifiCare pilot with Uncle Sam for congestive heart failure patients. "There were challenges in recruiting beneficiaries," Norman says. He adds that massive companywide changes were occurring. PacifiCare was acquired by UnitedHealth and all of PacifiCare's DM business was outsourced to Alere.
Time will tell
A young DM industry in the 1990s boasted huge savings that now appear incredible. "There was no intent to mislead. If results were glowing, it was incorrect methodology created by people who did not have experience in clinical trials. They were unsophisticated in the complexities of study design," Fetterolf says. "We are in a different place today. Vendors realize that mocking up a colorful histogram demonstrating large positive outcomes is history," Gold says.
A lot of bright ideas have come and gone in the health field. Physician practice management companies such as MedPartners and Phycor rode a brief wave of popularity in the 1990s, for instance. Time will tell whether DM will succeed or meet the same fate. Popik, though, is upbeat. "You have 78 million baby boomers about to develop chronic diseases. It's a great opportunity for DM and for health plans."
MANAGED CARE September 2005. ©MediMedia USA
The godfather of disease management talks about how the industry went wrong, and is now going right, in describing its own value
To the degree that one person can be credited or blamed for the very existence of a $1.1-billion segment of American health care, Al Lewis is that person when it comes to disease management. If you doubt that, just ask him. Blunt, funny, and supremely confident of his knowledge of the field, Lewis founded and is a past president of the Disease Management Association of America, and now heads the Disease Management Purchasing Consortium International. DMPC is a consultant and broker with 89 members that include health plans, private and public employers covering 80 million lives, the Congressional Budget Office, and leading accreditation groups.
With a potentially huge boost from the Medicare Modernization Act, disease management could be on the verge of a boom, Lewis argues, but only if it overcomes a major obstacle: Nobody believes its numbers. Many employers won't contract with DM companies because they doubt vendors' claims about how much money their programs save. Lewis says these doubts are legitimate, and traces the problem of inflated savings to a flawed methodology — and to the likelihood (he contends) that some DM vendors are "so stupid they don't know how stupid they are."
He also says that he and two colleagues have solved the problem in a recently published white paper. On DMPC's Web site, Lewis indicates that he'll accommodate those who think he should give that document away — as long as they themselves work for free or are card-carrying members of the Communist Party. Others can pay.
Lewis holds undergraduate and law degrees from Harvard University, and is a visiting scholar at Brandeis University's Heller School for Social Policy. He spoke recently with Senior Contributing Editor Patrick Mullen.
MANAGED CARE: What's wrong with how disease management companies calculate return on investment?
AL LEWIS: I used to pooh-pooh skepticism about ROI in disease management as being a result of people not knowing what they were talking about. It turns out they were right, though they didn't know why. The old industry standard that everybody used — myself included — has a fatal flaw. I would claim to have invented the old methodology, but since we figured out that it was wrong, I went from pride of authorship to admission of authorship.
MC: To be followed by denial of authorship?
LEWIS: Right, though I'm not quite at that point. Here's the problem: A huge percentage of employers who don't do disease management don't do it because they don't believe the numbers. Most of the numbers they don't believe are indeed wrong, especially if the vendor is not on the DMPC-recommended list. Employers are right to be dubious of vendors that claim an ROI of four to one.
MC: Can you give an example of a DM vendor's dubious claim?
LEWIS: Yesterday, somebody sent me ROI numbers that her company's DM vendor — apparently a friend of her company's president — had given her. She knew the numbers were wrong, but she's not a financial person, so she doubted management would take her word for it. She asked me for some ammunition to bolster her argument. Within five minutes, it was clear to me that this vendor had no clue whatsoever what it was doing. One obvious reason was that it said it was saving more money on asthma than its client was spending on asthma. It was disguised and I had to do a couple of calculations to determine that, but there it was. Asthma is the canary in the coal mine with disease management. I can tell in a nutshell whether a DM company is doing the whole thing wrong by whether asthma savings exceed asthma spending. It's an easy mistake to make, because the tendency is to measure a patient's entire claims rather than just asthma claims. If an asthma patient's total claims drop by 20 percent, some DM vendor will say they've produced a 20-percent saving on asthma. The problem is that average asthmatics spend only about 15 percent of their claims on asthma. For this company's numbers to work, asthma patients would have to have been spending about 80 percent of total claims on asthma, which simply doesn't happen.
MC: They took credit for lower claims that had nothing to do with asthma.
LEWIS: Exactly. The vendor had no idea why its numbers were wrong. They were too stupid to realize how stupid they were. That's probably true of 50 small vendors.
MC: Are you describing a two-tier market, with some vendors trying to provide accurate numbers and others more interested in making a quick buck?
LEWIS: It's a three-tier industry. A group of established players does disease management right. A second group of established players does it right under duress when somebody makes them. A very large third group of small companies has absolutely no clue what they're doing. They think they're right, but they're not, and nobody calls them on it because benefits consultants who dabble in this stuff don't have a clue either.
For all I know, these small companies do save their clients a little money, but their reporting is so bad that there's no way to know for sure, which calls their entire performance into question.
MC: What distinguishes one first-tier DM vendor from another? Are there wide strategic differences or is success defined by how well they execute similar strategies?
LEWIS: There are differences in the models, but it's hard to say one model saves more money than any other. It's reasonably easy to say that certain vendors measure their savings more accurately than other vendors.
MC: And the third-tier companies give the entire DM segment a bad name.
LEWIS: Right. A lot of employers are on the sidelines for this reason. I was among the first to figure out what's been wrong with the methodology, but I don't have a monopoly on IQ. A few actuaries at the big actuarial firms know what they're doing, not many, but enough that they can spread the word.
MC: What's the fatal flaw in how disease management companies have calculated ROI?
LEWIS: The fatal flaw is caused by the fact that not all patients with a disease will file a claim during the initial measurement period. This creates a situation where the entire diseased population is not counted in the baseline measurement. As a result, estimated savings for some chronic diseases — asthma and coronary artery disease in particular — will always be overstated. As improvement is measured from an artificially underrepresented baseline, plans will overstate program improvement and report an inflated ROI.
MC: How does your solution fix this measurement flaw?
LEWIS: Ariel Linden, a biostatistician, Ian Duncan, who's an actuary, and I put out a white paper that basically creates the new industry standard for measuring savings from disease management. We now have a proof that fixes this fallacy, which means we have valid measurements of costs pre- and post-disease management. There's now a correct answer for defining ROI in disease management. It can be refined a bit, but the magnitude of what we don't know is likely to be small enough that I'm quite comfortable saying that there is indeed a correct answer.
MC: What's at the heart of the new methodology?
LEWIS: The key to the measurement is that anybody that you find with a disease in any period has to be considered to have the disease in all periods. Let me give you an example. Say you had two asthmatics in your plan. One had a $1,000 claim in 2003 and nothing in 2004. The other one had no claim in 2003 and a $1,000 claim in 2004. Using the industry standard methodology, if you look at claims for 2003, you conclude that your average asthmatic costs $1,000 in that year. You had a prevalence of one and it costs $1,000. In 2004, the vendor finds that prevalence went from one to two, and would claim that the cost-per-asthmatic fell to $500, even after spending $1,000 on one patient in 2004.
MC: Why is the new methodology important?
LEWIS: It puts the whole issue of validity to bed through standards. I'll tell your readers with certainty that if this is the first you're reading about it, then you are not using it. It will be commonplace within one or two years because essentially as soon as people read this article, they'll realize that they're doing it wrong and will change it. So far, only about 15 health plans and employers use this correct answer. Georgia and Wyoming's Medicaid programs use it, and their results are publicly available. Health Industry Research Companies (HIRC), a market research concern in Santa Cruz, Calif., nominates and identifies the best health plans, employers, and states in disease management every year, about 30 in total. I was pleased to see that every health plan and employer that is measuring correctly is on that list. We'll see a big trend away from invalid methodologies.
MC: The concept of disease management is about ten years old. Over that decade, has disease management evolved away from, or more fully realized, its original mission?
LEWIS: It's more fully realized its mission. The definition DMAA put out ten years ago is still pretty good. It could be tweaked, but the mission, charter, and strategy are the same. The tactics and the scope of the industry have increased quite a bit. The industry used to focus on only three or four diseases. While it remains true that the vast majority of savings comes from three or four diseases, there are many other diseases where disease management can improve people's health and keep them at work longer. Employers are willing to pay for that.
MC: How fast is disease management growing?
LEWIS: Industry growth was well ahead of expectations in 2004. HIRC is projecting a fifty-percent growth rate over the next three years. I have a feeling that will turn out to be conservative.
MC: The Medicare Modernization Act includes several disease-management demonstration projects. If they go well, what is the potential effect on the DM business?
LEWIS: If it works, disease management could become a $10 billion industry and be as much a part of the landscape as primary care. The beauty of it is that the measurement that CMS is using is as good as you can expect a real-world measurement methodology to be — and they're not a client of mine, as much as I wish they were. So if they say they've saved money at the end of those demonstrations, they've saved money. It cannot be argued. Likewise, if it turns out they haven't saved money, there's very little ground for challenging the methodology.
MC: Do you expect the demonstration projects to succeed?
LEWIS: My concern is that a lot of vendors that contract with Medicare won't meet CMS's goal of five percent net savings, because the vendors will still be using an incorrect methodology. That's the bad news that might put some vendors behind the eightball. But I predict that the good news will turn out to be that even if the five-percent threshold isn't reached, there will be savings in excess of cost, so it will make sense to expand the program. Another trend we're starting to see with the Medicare population is a move toward better medical management of the frail elderly in nursing homes. These folks are in constant potential crash mode. They end up in the emergency room or other acute care setting, which is debilitating to the patient and expensive. Having a doctor walk through and take a quick look at a napping nursing-home resident won't cut it. Doctors and nurse practitioners need to get into these facilities far more often.
MC: How did CMS arrive at the five-percent figure?
LEWIS: A lot of the CMS methodology, for better for worse, is traceable to stuff I had been doing for years. I invented guaranteed savings by accident while working for a consulting firm that was working for Humana, where disease management originated. The consulting firm's fees for Humana had a strong component of guaranteed savings. For the consulting firm to get its money, when we invented disease management, we passed the same model on to DM vendors. That way, we could include their savings in our savings. Guaranteed savings became part of the landscape because it made it much easier for health plan CFOs who were skeptical of disease management to accept it.
MC: What do you see happening with DM as part of Medicaid?
LEWIS: I do a ton of Medicaid consulting work, and the huge mistake that gets made in Medicaid health plans is the failure to distinguish between TANF population — Temporary Assistance for Needy Families — and the disabled population. They're two very different populations that should get very different approaches to disease management. Yet in many cases, plans just think one size fits all. Sight unseen, I can tell any health plan executive that however much he spends on disease management for TANF, he's overspending, and however much he spends for disabled, he's underspending. The reason is that the TANF population has a low disease burden, very high turnover, and is not easily trackable. The disabled population has a high disease burden, is easily trackable, is underserved, and has low turnover. It takes me half an hour to explain this to people, but when I look at programs put in place by non-DMPC members, it's quite common not to distinguish between those two populations.
MC: In this magazine six years ago, you cited consolidation as a coming trend in DM. Any thoughts on what's stalled that trend?
LEWIS: I always think the industry's about to consolidate and it never does. So I'm not only going to deny that I ever made that statement, I'm going to deny that you and I ever had this conversation.
MC: Fair enough. Talk a little bit about DMPC's certification program.
LEWIS: It the only objective assessment of whether a DM company correctly measures what it does. More than forty companies have applied for certification; thirteen or fourteen have received certification to date. Our certification differs from what the accreditation agencies do because they don't look at the integrity of the financial reconciliation. I've received about 100 inquiries from employers looking for health plans that have been certified.
MC: What separates a certified DM program from others?
LEWIS: When a program is certified, their ROI is pretty darn close to what they say it is. There might be five programs in the country that could be certified right now for their ROI, but for whatever reason, haven't asked. There are probably a hundred or two hundred that could not get certified if they asked.
MC: Odds are they won't ask.
LEWIS: I get calls from people who know they're not up to standard but want to apply to figure out how to get there. We don't decline applicants. You just keep getting deferred until you get it right. I don't keep a list of who's flunked or anything like that.
MC: Do you expect that 10 years from now, disease management will still be around as a distinct market segment, or will its functions be absorbed into health plans or whoever is providing health services?
LEWIS: I don't know what's going to happen in ten years. For the next three years, DM programs are not going to get done by health plans. The trend now is toward outsourcing for the simple reason that benefits consultants and employers want name-brand programs. Smaller employers want their health plans to provide DM services. Health plans have a chance to keep small employers from looking elsewhere for those services. Plans can either get disintermediated or be the intermediary. They want to be in the mix, and here's their chance. If they blow it, they basically just become claims payers.
MC: Thank you.
MANAGED CARE April 2005. ©MediMedia USA
Disease management conference focuses on outcomes measures that address issues such as presenteeism that concern most health care purchasers
The timing couldn’t have been better when David R. Groves, PhD, vice president for corporate health management at Comerica, the large banking concern, received the findings of a study on the company’s employee health coaching program early last month. He had been preparing a talk for a disease management conference on outcomes, so he tacked the numbers onto the end of the presentation and knew they’d have an impact (see table below).
|Comerica banks on savings|
|By considering indirect costs such as presenteeism, Comerica showed significant results from a disease management program in 2004. The company saves more than $2 for every $1 it spends on the disease management program that includes personal health coaching.|
|Disease||Savings per participant||Total savings|
|Coronary artery disease||$9,718||$437,332|
|Chronic obstructive pulmonary disease||$2,294||$105,542|
|Peptic ulcer disease||$1,173||$22,599|
|Source: Comerica Inc. Figures annual, 2004 compared with 2003|
In 2004, Comerica reduced medical costs and improved productivity through a telephone counseling program designed to help chronically ill employees manage their conditions. The company reduced its annual asthma costs, for example, by 40 percent — saving $1,009 per employee in the asthma program, for a total of $82,699.
The asthma savings includes a 50 percent reduction in hospitalizations, a 16 percent decrease in physician and clinic visits, and a 64 percent decrease in emergency room visits. It also includes a 43 percent reduction in indirect costs such as presenteeism (having an employee not working to full capacity because of illness) and paying temporary workers to cover for sick employees.
Return of 200 percent
Measuring indirect costs helps Comerica demonstrate that it saves at least $2 for every $1 it spends on its health-coaching program, Groves says. And that was particularly relevant to the conference that Groves had been preparing for. "The goal of the conference was to drill down, look at successful programs, and ask, ‘How can we design disease management programs that we know are going to benefit employers with good functional outcomes?’"
Initiated by the Institute for Health and Productivity Management, the March conference was designed by and for employers, says Sean Sullivan, president and CEO of the institute, a Scottsdale, Ariz.-based not-for-profit organization that works with employers on workplace performance issues. "Employers pay the bills; they should drive the system. Employers are finally beginning to take charge in disease management, and they are telling health plans and other vendors what they really want."
What they want is broader proof of the value of disease management programs, he says. Health plans tend to present savings only in terms of medical costs, Sullivan points out. "You will not hear the providers of disease management programs talking about workplace impact and productivity, but that is what employers really need to base their decisions on."
Not now, but soon
Return-on-investment analyses of medical savings are debatable, Sullivan adds. Late last year, the Congressional Budget Office issued a report stating that the evidence on disease management has not yet demonstrated clear health care savings. The Institute for Health and Productivity Management agreed that the business case for disease management has not yet been made. "But we are convinced that the business case will be there once you start calculating the impact of disease management on productivity in the workplace," Sullivan says.
Lockheed Martin Aeronautics has been striving to educate employees about managing their chronic illnesses since 1991 and has made strides with diabetics in particular, says Pamella Thomas, MD, director of wellness and health promotion. "Quite a few of our employees have been able to manage their condition through diet and activity — and have been able to stop taking medication. Their attendance at work has improved, so overall, it’s making a big difference in terms of their health and productivity."
Until recently, companies relied on anecdotal evidence or "a good feeling" to know that disease management programs were improving productivity, says Thomas. Today, a number of tools have been developed to calculate indirect savings, she says. "Now we can actually measure things like presenteeism and other indices that show us the difference we’re making."
Thomas and others who gave presentations and attended the conference — 320 in all — presented an impressive range of thoughts and ideas, says Jack Mahoney, MD, corporate medical director of Pitney Bowes and co-chair of the event.
One of the key statements made during the conference, he says, came from Catherine Baase, MD, global director of health services at Dow Chemical. "She said that this is a learning process and that we are all learning together to develop these programs. Employers are searching for the right way to implement disease management services in a continuum from wellness to chronic disease management."
Cost shifting in reverse
A major theme that emerged was the need to break through the silo mentality of addressing disease management, benefit design, and medical and pharmacy costs separately, Mahoney adds. That resonated with him. Last year, Pitney Bowes released results of a study in which the company was able to reduce the overall costs of treating diabetics by 6 percent and asthmatics by 15 percent by reducing the copayments.
"We increased our pharmacy costs, but reduced the total cost of care. We looked at the whole thing together," he says.
"Most employers are at the stage where the days of managing cost through cost sharing are over," Mahoney says. "We need to manage total cost. We are getting to the point where instead of managing health care, we want to manage health."
To keep the needs of employers in the forefront after the conference, the Institute for Health and Productivity Management has launched the Disease Management Strategic Advisory Council. Its role will be to serve as an ongoing vehicle for work in this area, setting an agenda and perhaps generating pilot projects that will help make the business case for disease management, Sullivan says.
"This was not just a conference; it was the beginning of an effort to really redefine, focus, and deliver greater value from the whole disease management enterprise."
Employers involved in the council, which has close to 60 members, will meet this month, and a larger meeting with members from the disease management industry will be held in the spring, Sullivan says. "We’d like the council to keep people focused on the employer as the customer, on these larger workplace outcomes as the objective, and on valid, comparable methodologies as the way of proving the case."
MANAGED CARE December 2004. ©MediMedia USA
The pharmaceutical giant says that its disease management program saved Florida $42 million, but a state watchdog group remains unconvinced.
Florida lawmakers may already have turned thumbs down on Pfizer's two-year-old Medicaid drug program, but the drug giant isn't about to just walk away quietly from the epic struggle.
Pfizer recently touted its own fresh analysis showing that its disease management programs saved the state more than $41 million over 27 months — well over the $33 million Pfizer promised when it put the programs in place in exchange for having all of its drugs listed without discount on Florida's Medicaid drug formulary. In addition, the drug giant said that the company had made drug donations and investments worth almost $20 million. And Pfizer said that it reached 150,000 people, triple its original goal.
That's everything that Pfizer promised to do and more, says Hank McKinnell, Pfizer's chairman and chief executive officer. And the company says the numbers should make the Florida legislature think again about killing the program. "The lessons we have learned in the past three years have important implications as both federal and state governments look for new ways to deliver better health care to patients with chronic diseases."
Alan Levine, the secretary of Florida's Agency for Health Care Administration, backed Pfizer up. "Partnerships like this one with Pfizer are good benchmarks for states to use as they, like Florida, struggle with the difficult balance between cost and outcomes."
But some of the program's critics immediately cautioned against betting on a comeback, or relying on any lessons from Pfizer.
"I'm sure that it will be brought up again," says Bernie Horn from the Center for Policy Alternatives, a "progressive" Washington think tank that tracks state health initiatives. "But I think it's unlikely that the [legislators] will reverse their decision."
Pfizer found itself fighting a rear-guard action against the legislature long before its contract had run its course.
It's chief nemesis: Florida's Office of Program Policy Analysis and Government Accountability, a state watchdog group that reported that once Florida made its deal to leave Pfizer's drugs on the list without discount, other pharmaceutical companies that might have cut their prices in order to compete for the business didn't see any need to discount. And the real savings to be had, OPPAGA added, was in rebates — not through Pfizer's DM program.
Those numbers from Pfizer, adds Horn, are just a rehash of earlier figures that the state had already rejected.
MANAGED CARE November 2004. ©MediMedia USA
Congress's financial review agency says that not enough evidence exists to prove that disease management saves money. Many beg to differ.
Uncle Sam isn't too sure that disease management saves money in the managed care world, and has some real doubts that it could ever be applied to Medicare. At least, those are the findings of a Congressional Budget Office study that has proponents, critics, and observers of DM talking.
The report resulted from a congressional request that the CBO look into DM as a way to reduce the entitlement program's costs in light of the launching of disease management demonstration projects as part of Medicare reform. These projects are to be implemented in 10 to 12 sites around the country and cover about 20,000 patients.
"Proponents often claim that disease management programs not only improve quality but also pay for themselves by decreasing the use of acute care services enough to offset the costs of the additional screening, monitoring, and educational services," states the CBO report An Analysis of the Literature on Disease Management Programs. It adds that "there is insufficient evidence to conclude that disease management programs can generally reduce the overall cost of health care services."
Reactions range — or rage. The Disease Management Association of America held a news conference Oct. 21 at which it denounced the findings.
Al Lewis, president of the Disease Management Purchasing Consortium, responds to the CBO report as if it were a personal attack.
"Since I advise over 90 percent of all procurements for plans and states, this is a criticism of my ability to contract since roughly 80 percent of them show savings using my methodologies," says Lewis. "If they were going to pass judgment on my methodologies, they could have called to get a copy of them."
Meanwhile, Lewis takes issue with the CBO's methodology.
"I would say that the entire study overlooks the fact that there are 80 payers in the DMPC and most of them have saved money using our rigorous counting specs," says Lewis. "And the ones that haven't, have gotten their money back. It would have been nice if the CBO had actually called someone who knew what actually happens in the 99 percent of contracts that aren't written up in the peer-reviewed literature, rather than focus on the 1 percent that are. And, by the way, there are far bigger data holes in that literature than in any study design that I would ever recommend."
To Victor Villagra, MD, president of Health & Technology Vector, a consulting company specializing in disease management, language counts. Saying that there's a lack of evidence of cost savings is not the same thing as saying there's evidence of a lack of savings.
"The CBO statement suggests, but does not really say, the former," says Villagra. "Furthermore, read their statement closely: '...[T]here is insufficient evidence to conclude that disease management programs can generally reduce overall health spending.' There are several well-chosen words here: 'can generally' and 'overall health spending.'"
DM advocates do not necessarily claim to reduce overall health spending in absolute terms, Villagra says. "The DM community states that having DM saves payers money, and implicit in that statement is a short- to medium-term horizon," says Villagra. "Postponement of health care expenditures through DM in the commercial segment until after age 65 may transfer to Medicare some financial burden while it relieves the stress from commercial payers. The CBO is also thinking about the long-term impact of DM — 30 to 50 years ahead — particularly if it enhances the survival of chronically ill Medicare beneficiaries."
The DMAA charges that there were some "rigorous new studies that were not included in the CBO report" and Villagra concurs.
Villagra regrets that the CBO did not review a recent study in Health Affairs about the impact of a diabetes DM program on quality and costs. "Had they reviewed it, it might not have changed their conclusion, but in the continuum of accumulating sufficient evidence, every study should weigh in," he says.
The NCQA has long looked with favor upon health plans that implement DM, and that's certainly going to continue, says NCQA spokesman Brian Schilling.
"I don't think this changes our outlook on DM at all," says Schilling. "I think it's actually wrong to conclude that the report says that DM doesn't save money — my read is that the report concludes that we don't know yet, but that it does seem to improve care quality.
"To us, that's the real issue, particularly when viewed in context of our State of Health Care Quality 2004 report which just came out showing that 42,000 to 79,000 people die every year because of poor quality care. Even if DM turns out to be budget neutral, if it improves quality of care, it is money well spent. Bottom line: We're strong supporters of DM as a means of improving care quality and increasing value for our health care dollar."
Michael J. Reardon, MD, head of member advantage programs at Aetna, says that his company's DM efforts have cut costs and improved outcomes.
"Aetna's disease management programs have delivered definite and significant value — in terms of both cost savings and quality of care improvements when delivered to our commercial population of members," says Reardon.
Reardon agrees with the CBO report that a dearth of data prevents any conclusion about whether DM would cut costs in fee-for-service Medicare. However, he adds that one of the goals of the soon-to-be launched demonstration projects is to find out whether it would.
"Aetna is very interested in participating in the pilot project, viewing this as a forum that will produce legitimate and defensible research findings," says Reardon. "We believe it will deliver sufficient data due to its size, scope, and consistent application of disease management interventions."
An Analysis of the Literature on Disease Management Programs is based on peer-reviewed studies of DM programs for congestive heart failure, coronary artery disease, and diabetes.
"All in all, the evidence on cost savings is limited," the report states. "Most studies do not directly address costs. Instead, they report improvements in processes of care or in intermediate measures of health, from which an overall impact on spending cannot reasonably be inferred. The few studies reporting cost savings generally do not account for all health care costs, including the cost of intervention itself."
The CBO report further states that there's no way of telling whether it would be an effective tool for the older and sicker Medicare population.
This doesn't impress Lewis who, as noted earlier, finds that the CBO report has some flaws of its own. And since the report "started" this debate, Lewis will get the last word.
"It's a trial in absentia without evidence," he says. "If they are going to do that, maybe they should just have me walk over hot coals."
MANAGED CARE October 2004. ©MediMedia USA
CMS has implemented 10 pilot programs that may very well be viewed as a make-or-break test for disease management.
Depending on whom you talk to, Medicare's looming pilot program for disease management is either a "watershed event," a "defining test" of DM's effectiveness, or the industry's "event of a decade." In fact, there aren't many people in disease management who don't think it's a big deal.
"I've spent much of the past six months of my life working on it," says Vince Kuraitis, a DM consultant who's been advising companies on how they can snag a contract. By his reckoning, all of the big disease management groups — like American Healthways, LifeMasters, and Health Management Corp. — are lining up for a piece of the action. And they've helped generate just a few of the perhaps hundreds of proposals that have probably been floated through agency doors to meet an August deadline, he adds.
For the disease management business, the next three years of Medicare results are viewed as a critical final exam — one that will either see DM triumph as the most effective tool in managing chronic illness or crippled in a messy failure that could tarnish the DM approach to chronic case management for years. If successful, these contracts may also ultimately spur industry consolidation, help vanquish expensive performance guarantees, and make a compelling case to those health plans that have so far resisted adopting DM.
But whichever way DM insiders are betting, one thing is absolutely certain: Program results will be intensely scrutinized by everyone with even a small interest in disease management.
The Centers for Medicare and Medicaid Services put up 10 three-year chronic disease management pilot programs for COPD, CHF, and complex diabetes. Working under a mandate to develop consortiums of providers, health plans, local agencies, and DM specialists, each of the contracts will enlist roughly 20,000 Medicare members for a DM program while another 10,000 are identified as the control group — though some smaller pilots could total 15,000 or 20,000 members. Under the Medicare Modernization Act of 2003, CMS has until early December to award the first contract, with the rest expected to go out in the first half of 2005.
Going all out
Add it all up, and more than 250,000 Medicare recipients are likely to be in a pilot DM program by the first half of 2005.
This is a big leap of faith for Medicare. Up to this point, the federal agency has only dipped a regulatory toe in the DM water, content to launch about 20 small experimental programs, most of which are still under way. Now, it's going all out to see if DM will make significant quality and cost differences in treating the chronically ill.
Some 12 million to 14 million Medicare patients suffer from the ailments targeted by the pilots, roughly 30 percent to 40 percent of the entire Medicare population, says Christobel Selecky, who runs the DM company LifeMasters Supported SelfCare. And those numbers are only going to keep getting bigger as the boomers start hanging up their careers by the end of the decade.
"Analysts think this could be a $5 billion to $10 billion market for disease management," says Selecky, who helped hammer out the pilot program rules while running the government affairs committee for the Disease Management Association of America.
Selecky, whose company has submitted a few proposals, focused on two basic approaches to DM, both built around creating consortiums of DM players. In one, the consortiums will include health plans — largely ones already experienced in serving Medicare populations — as prime contractors doing case management and working with physician relations and so on. Medicare has made it clear that it wants local docs involved, says Selecky, which should help to calm potential political backlash from providers. The second approach is likely to be more of a standalone method that looks like a Florida Medicaid project, where the DM companies would be directly contracting with local social service agencies and others to keep local involvement high.
Health Management Corp. decided to team up with a health plan for its proposal. And it's designed to ring Medicare's bells on key points like physician involvement and rural coverage.
"Our model that we've proven to be effective in this age group is a telephonic nurse-based model," says HMC's Jeff Odell, vice president of sales and marketing and a lead player in structuring the company's contract proposal. "We have designed several new program components that will address outreach and physician engagement challenges. I'm not at liberty to reveal a whole lot about our proposal, but I will say we've got some innovative approaches to physician engagement."
CMS left it up to the bidders to define the markets, says Selecky. But there are other rules to play by as well. First, she says, Medicare made it clear that it wants to engage the sickest people with the highest costs. And it won't go into a region where a substantial experimental program is already under way — a rule that excludes California altogether.
But there are plenty of states left over, she says, especially in the Southeast and Rust Belt, where low income and unhealthy lifestyles have conspired to create the agency's biggest concentrations of comorbidities.
Add them all up, says Vince Kuraitis, and they create a "ticking time bomb" for Medicare — which estimates that beneficiaries with five or more chronic conditions account for 20 percent of the Medicare population but 66 percent of program spending.
Hundreds of millions of dollars in contracts are up for grabs — but there's a catch. As with most first-time DM contractors, Medicare is making it clear that anyone who wins one of these contracts is going to have to guarantee a 5-percent cut in costs. Results will be tracked year to year, and failure will be very painful.
"Theoretically, if you have no savings, and you get paid $40 million or $50 million over three years, that's a lot of money to pay back," says Selecky.
For LifeMasters and the others in DM, though, that's a familiar provision. Many built their business plans around guaranteed savings of similar size.
"I think that everyone in disease management is hoping that it will go well," says Kuraitis. "The industry has had a lot of input and Medicare has been quite cooperative in structuring a project that everyone wants to be successful."
And that leaves no room for failure.
Adds Kuraitis: "In the event that none are successful, then it could be death to disease management."
Kuraitis says that the Medicare contracts will play an influential role in shaping the industry. In one extreme, he says, Medicare may decide that only big companies could be effective and provide contracts worth up to a billion dollars — a move likely to spur consolidation. At the other extreme, he adds, Medicare may opt for a locally integrated DM approach driven by doctors groups or home health agencies or hospitals.
5-percent savings rule
Selecky says that Medicare's acceptance of DM is also likely to help lead to an eventual end to the 5-percent savings rule. For DM companies, that standard guarantee has added to their costs, which in turn are passed along to the customers. The sooner Medicare gives its blessings to DM, the sooner the industry may be able to phase the guarantees out altogether.
For its part, Medicare has made it clear that if it sees any of the DM pilots as clear winners, it won't wait until the end of the three years to roll that pilot out for the entire population.