Care coordination can greatly influence PPO delivery systems

April 1, 2007

Care management has become an increasing challenge for America's healthcare system. Given the open-access approach and flexibility in allowing consumer choice, how do preferred provider organizations (PPOs) approach the issue of coordinating care for chronically ill beneficiaries? In 2005, more than 133 million Americans had one or more chronic conditions. Their care accounted for 83% of all healthcare spending. People with chronic conditions tend to have multiple illnesses and multiple providers, making care coordination that much more critical and challenging for all stakeholders. Some key approaches used to coordinate services in PPO models of healthcare include utilization management (UM), case management (CM) and disease management (DM). In addition, PPOs are adopting strategies to identify high-risk patients early and to prevent the onset of chronic conditions.

Care coordination services can be provided through diverse business arrangements. Some PPOs have developed internal capability by creating care coordination programs such as UM, CM, and DM, while others contract or collaborate with stand-alone medical management organizations. In yet another model, third-party administrators may contract with a PPO and a medical management organization that operate in parallel. Regardless of the business model, several issues are paramount for any organization seeking to deliver care coordination services:

PPOs use a variety of strategies to coordinate care by capitalizing on information that becomes available to the PPO through medical management activities and by delivering wrap-around services to maximize the value of services for patients.

Medical management has evolved in recent years to a targeted approach. Targeted interventions, rather than intense utilization control, are viewed as a more cost-effective and efficient approach to improving quality and effectiveness of care. They direct care and services to the individuals at highest risk for bad outcomes or high costs-a better use of resources than the older, broad-based approach.

The number of payers adopting targeted UM, CM and DM as a means to rein in costs and improve quality has increased significantly. PPOs have developed hybrid approaches to coordinating care relying on increased interface between UM, CM and DM.

Case management is a tool often used to help payers and PPOs manage high-cost or high-complexity cases. Case managers play a key role in delivering DM services as well. A 2005 survey reported in Trends & Practices in Medical Management found that PPOs and other companies use a wide variety of CM strategies to coordinate care between providers, health plans and settings such as hospitals and outpatient services. Almost 90% of responding companies work with a patient's provider when providing CM services. Sixty percent of those surveyed conduct onsite CM services; 38% offer field visits to consumers in their home. The key to ensuring effective case management is enabling the PPO to activate care management early and promptly when the need is identified. This requires close monitoring of the PPO's own data or a data feed to a stand-alone medical management company.

Some PPOs have seen the value of integrating utilization and case management. A UM encounter becomes the trigger for activating case management for high-needs patients. The latest PPO trends show many companies integrating disease management activities as well. For example, HMS, a Michigan-based PPO, assigns a single nurse to patients needing both case management and disease management services. HMS has also taken steps to ensure vendor coordination and integration, including electronic interfaces with all vendors, coordination with 24-hour nurse call centers and electronic health-risk appraisals.

PPOs increasingly use DM to ensure that populations of patients-those with a targeted disease condition-receive evidence-based standards of care and have the information they need to improve self care. The PPO often identifies patients using "touch points" such as a UM encounter or hospitalization, and refers them into a disease management program offered by the PPO or by a partner organization.