Al Lewis on Disease Management's Value

September 1, 2008

While it is true that actuarial calculations of medical savings from disease management have been controversial, there is enough underlying value to DM that it will not only sustain itself, but also continue to grow as the true value of the concept emerges.

The decibel level of the debate over return on investment from standalone programs has obscured the emerging sources of value-synergies with other payer functions-which are being created and nurtured in relative obscurity.

One such source of value is the PBM synergy. As Healthways and Medco have shown, for example, the time lapse for initial contact with a member once diagnosed falls to almost zero if prescription information is transmitted to the disease manager in real time.

A third is synergy with Medicare risk coding. Risk coding presents a more detailed and accurate look at a member's health status than a claims pull. The members who have the most complex care needs often receive in-person physician assessments, which can lead to an immediate hot transfer to the disease or case manager.

Just like the exaggerated reports of disease management's death, the promise of medical homes is also greatly exaggerated.

The concept of medical homes-providing comprehensive care in a single site for patients who need it-is a laudable one. As a complement for disease management, it should work dynamically to reduce preventable events for some patients. Where the problem arises is in measurement, which is critical to determine cost-effectiveness and hence the added reimbursement.

The proponents of medical homes as a full replacement for disease management are making exactly the same measurement mistakes that DM proponents once made, even though the phenomena of regression to the mean and sample selection bias are now well-known. Medical-home proponents want to measure the "before" and "after" of the sickest patients and measure physician performance accordingly, without taking into account the fact that last year's sick patients often get better and less expensive on their own. With substantial reimbursement being added for these members, one can bet that more members requiring more services miraculously will be found.

Prediction: The medical-home concept will get bogged down in reimbursement arguments and measurement fallacies and will be relegated to a small portion of members.

Another prediction: The measurement debate will be solved, no thanks to actuaries.

Actuaries have typically handled the measurement function that has created all the controversy over return on investment. Now who is telling us that they can solve those same measurement problems? That's right-actuaries.

Even more so, actuaries recently found that North Carolina's Medicaid program had "saved" almost 50% in overall admission reduction, despite the fact that admissions for the conditions covered by their specific intervention hardly declined at all.

Ask any reputable biostatistician, epidemiologist, or health services researcher, and they will concur that the reliance on actuaries creates outcomes which are invalid, unreliable and confusing. It is no coincidence that every health plan executive named as a MANAGED HEALTHCARE EXECUTIVE Leader in Disease Management measures exactly what a biostatistician would measure: the rate of adverse events over time in the conditions being managed.

This approach is valid and transparent and will totally replace the expensive and misleading "pre-post" analysis.

Editor's Note: Al Lewis is the president of the Disease Management Purchasing Consortium and the founder of the Disease Management Association of America (now DMAA: The Care Continuum Alliance). He is credited with conceiving and brokering the first-ever disease management contracts and inventing the "guaranteed savings" concept. A two-time winner of the DMAA Most Influential Person Award, Lewis has created a benchmarking database of disease management outcomes with an event-rate-counting methodology that has been licensed by 28 plans, states and employers since its January release. His certifications for Critical Outcomes Report Analysis, Small Group Measurement and Savings Measurement Validity have heightened his industry recognition. Lewis is also on the MHE editorial advisory board and led the review process of the 2008 MHE Leaders in Disease Management. He was named the Number 1 Leader in Disease Management in 2004 and if not for his participation as a reviewer, would have been Number 1 in 2008.