5 new realities of disease management

January 1, 2009

We're winning the war on chronic disease, but we've reached a tipping point in DM strategies

Over the past decade, MCOs have turned to disease management to improve outcomes for patients as well as to gain financial returns. Now experienced industry observers are asking whether disease management is experiencing backlash or if it has reached the tipping point.

In particular, CMS lowered its projected savings target for the Medicare Health Support Program from 5% to budget neutrality, announcing that the project had not met its savings goal. Phase 1 ended August 31, 2008, and CMS is still assessing the results.

Disease management strategies still have benefits, but plans and employers must face new realities in order to truly put DM in context.

MCOs are creating their own disease management programs more often, according to Ariel Linden, DrPH, MS, president of the Linden Consulting Group, Hillsboro, Ore.

"Over the past decade MCOs opted to buy rather than build disease management programs," he says. "One reason that's changing has been DM vendors' tendency to exaggerate the potential return on investment [ROI] on their programs."

Vendors might offer contracts saying they will return their fees if the promised ROI isn't achieved. However, calculating ROI is a highly controversial issue, and many "reconciliations" turn ugly when the vendor claims a large ROI and the customer disagrees.

"I have been brought in as an independent third party in several cases to perform an evaluation to settle the dispute," Linden says. "Many other situations have not been settled quite so amicably. Rather than battle with vendors over the ROI every year, many MCOs have chosen to build their own programs."

They want more control over the interventions, and they are better positioned to coordinate care internally as well as with their provider networks. One of the major barriers for outside programs is physician support.

"MCOs, as payers, naturally have an advantage in this area," he says. "This advantage is even more pronounced with the introduction of pay-for-performance [P4P] initiatives and reimbursement strategies for the medical home."

2. There's a push for greater transparency

In a recent article in the Journal of Managed Care Pharmacy, Brenda R. Motheral, BPharm, MBA, PhD, calls for a revenue model that aligns incentives between vendor and client; greater DM transparency; more rigorous DM evaluation methodology; improved plausibility; and expanded evidence of improvement in outcomes.

"There is an incredible amount of dissatisfaction relating to the performance and outcomes of these programs," Motheral tells MHE. "One of the most important things to do is to push for greater transparency, particularly around engagement and recording."

She notes that plan sponsors want to know the number of members contacted, but this information often isn't available because of limited vendor data. Larger, more sophisticated plan sponsors also want to know which members are contacted, how often, and via which channels, so they can conduct independent assessments of program effectiveness. At present, neither call recording nor intervention notes are standard industry practices. In the future, sponsors might request a paper trail of metrics related to outcomes improvement, such as changes in motivation, behavior, and self-efficacy.

"If other industries are any indication, expect the demand for transparency to drive widespread changes in business practices and perhaps even the competitive landscape," she writes.

3. DM investment generally yields moderate financial results

Current DM spending is at an optimal level, says Al Lewis, executive director of the Disease Management Purchasing Consortium International, Inc., (DMPCI), in Wellesley, Mass., and MHE editorial advisor. Most organizations should not spend more on DM, but they should not spend less, he says.

"Beyond current spending levels, paradoxically, further prevention would cost more than cures," he says. "If payers have extra resources available, they should be spending those resources on problems other than common chronic diseases."

Lewis bases this analysis on DMPCI's database of DM experience covering about 30 million lives. Validated methodologies show that in general, DM programs do save modest amounts of money, Lewis says. However, cost-effectiveness varies depending on the condition.

"It is a mathematical impossibility to save money on asthma, because you have to spend so much on prescription medicines to prevent an ER visit, and perhaps a two-night inpatient stay, which are not very expensive," he says.

In other disease categories, where the cost of an event is much greater, it is possible to save money, he says. For example, one heart attack including follow-up care might cost $20,000. If a program can prevent that heart attack through lifestyle changes or statin use, it will be cost-effective. Also for heart failure, where medications are inexpensive and exacerbations very costly, DM is often cost-effective.

"Our database shows that for these conditions, event rate reductions exceed the costs of disease management by 0.8 to 1.8 times the cost," Lewis says.