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Case Management: You Really Do Get What You Pay For


Multiple studies have confirmed the cost-containing effectiveness of case management and?unlike more restrictive tactics?the public actually likes the way it works. Here&s how employers can maximize the potential.


Case Management:
You Really Do Get What You Pay For

Jump to:
Choose article section...Making a case

Multiple studies have confirmed the cost-containing effectiveness of case management and–unlike more restrictive tactics–the public actually likes the way it works. Here's how employers can maximize the potential.

By Sandra Lowery, BSN, RN, CRRN, CCM, and Lauren Hoffmann, BS, MA

Case management originated in private sector workers' compensation insurance in the 1970s. It produced significant savings and was imitated first by health insurers and employers, then hospitals, home care agencies and physician groups that felt pressured by the financial risk of capitated contracts. Rapid growth and diverse application were undoubtedly spurred by case management's softer image as a cost containment tool.

A recent survey of 2,200 corporate executives by Alexander and Alexander found that 86 percent used case management to control workers' comp costs. A 1999 Washington Business Group on Health/Watson Wyatt survey of 178 large employers incurring an average of $30 million a year in direct disability costs showed that case management was the cost containment strategy that led to the biggest savings. Moreover, it was equally successful for work and non-occupational injuries or illness.

Health insurers embraced case management in the early 1990s when their primary cost containment strategy — utilization review — was met with employee outrage, lawsuits and legislation. Equally important, the insurers realized that the costs of utilization review programs often exceeded the savings generated. A 1997 study of more than 2,000 physicians reported in the journal Inquiry found that the ultimate denial rate generated by utilization review was less than 3 percent.

Unfortunately, some organizations still fail to make a clear distinction between utilization review and case management. Utilization review assesses whether care delivered is medically necessary and appropriate and therefore reimbursable. Case management is a collaborative process that assesses, plans, implements, coordinates, monitors and evaluates the treatment options and services required to meet an individual's health needs to attain the best outcomes in the most cost-effective manner.

Effective case management reduces costs by the early identification and prevention of complications, and the removal of medical and psychosocial barriers to recovery and return to work. It also fosters collaboration, employee satisfaction and timely return to work. The case manager enjoys a uniquely close relationship with the patient as the two work together on each element of multiple treatment settings and payment sources, with the case manager in charge of identifying the gaps in efficiency and effectiveness, and using problem-solving skills to overcome them.

Many of the savings generated by case management stem from events that did not happen — things like hospital readmissions, medical complications, lawsuits — or on less tangible benefits like improved patient compliance, employee retention and improved quality of life. This has led some critics to dismiss them as "soft savings," but the results can withstand rigorous comparison of aggregate expenditures pre- and post-case management. For instance, a 1996 Annual Report of the U.S. Department of Labor Office of Workers' Compensation Programs found the average cost per case dropped from $1,450 in 1991 to $1,250 in 1996 despite rapidly rising health care costs. The savings were directly attributed to the increased use of case management.

Making a case

Interestingly, even though case management has gained broad acceptance, most purchasers contract for this costly service without knowledge or guidelines to make an informed decision or evaluate results. Case management should meet the unique needs of the employee population as well as match the organization's structure and goals. The earlier a potentially high cost case is identified, the greater the return will be from effective case management. Therefore, there must be an efficient employer-based referral process. The most successful encourage referrals from multiple sources including claims personnel, health care providers, individuals, employers and utilization management.

To be successful, a case management program should incorporate the philosophy that cost containment is achieved when the best treatment is provided in the most appropriate manner at the appropriate time and at the best available cost in a coordinated manner across the care continuum.

Case management is often advanced as the most effective strategy for providing qualitative and quantitative benefits for health care and disability products. It also remains the one managed care strategy that is well received by both employees and employers.

In order to maximize the benefits of case management, employers must become more informed purchasers of such services. Prime sources of information are the Case Management Society of America, the Utilization Review and Accreditation Commission, and the Commission for Case Manager Certification. Among them they have established definitions of case management, standards of practice and ethical guidelines that help protect consumers and provide valuable tools for purchasers to assess the quality of case management services.

Sandra Lowery is past president of the Case Management Society of America and president of CCMI Associates in Francestown, NH, where she consults nationally for payers and providers in case management planning, operations and training. Lauren Hoffmann is a professional health care writer, editor and researcher.  

More Business & Health Articles on This Topic:

Case Management Communicating real savings (March 1996)

The case management explosion (Oct. 1, 1999)

Resource Links:

Case Management Society of America

Commission for Case Manager Certificationwww.CCMcertification.org

Utilization Review and Accreditation Commissionwww.urac.org

Figure 1
Cost Savings from Case Management

case management

Average cost per case
Average days of disability
Hospital admissions
ER visits per year
Overall costs
Increased 13%
Decreased 4%
Cost of 27 high-risk patients

1U.S. Dept. of Labor Office of Workers' Compensation Annual Report, 1996
2 U.S. Dept. of Labor Office of Workers' Compensation Annual Report, 1992
3 Kaiser Permanente Extended Care Services-Fontana; Care Coordination Program report, 1996
4 Rand Corporation study, 1992
5 Poudre Valley Health System, 1998 report

Figure 2
Components of a quality case management program

Program Characteristics
    Distinct program
        - definition, process, and goals
        - outcome criteria and evaluation
        - dedicated staff
    Onsite capability and protocol
    Meets URAC's Case Management Organization standards
    Case management training and continuing education program, covering
        - clinical protocols and resources
        - funding sources/benefit systems
        - case management role and process

Referrals/Case selection
    Referrals encouraged from multiple sources
    Based on periodic data analysis
    High risk population assigned per analysis to case management

    Follows national CMSA case management standards
    Early intervention
    Intervention focused on outcomes

Staff Qualifications
    RN for medical case management/RN, OT, PT, RRT, or MSW for appropriate
    populations/CRC for vocational case management
    Minimum of 3 years professional experience
    Experience in a minimum of one community setting
    National CM certification for managers; CM certification for staff within 2 years

Outcome Reports
    Clinical, functional, financial, litigation, and satisfaction factors
    Individual or aggregate reporting

Risk Management
    Consent required for case management
    HIPAA-compliant confidentiality policy
    Case manager not responsible for benefit or clinical decisions


Sandra Lowery. Case Management: You Really Do Get What You Pay For.

Business and Health


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