Prepared Witness Testimony

The House Committee on Energy and Commerce

Evaluating Coordination of Care in Medicaid: Improving Quality and Clinical Outcomes.

Subcommittee on Health
October 15, 2003
10:00 AM
2123 Rayburn House Office Building 

Ms. Chris Selecky
Chief Executive Officer
LifeMasters Supported SelfCare, Inc.
15091 Bake Parkway, Suite 200
Irvine, CA, 92618

The Disease Management Association of America (DMAA) is a non-profit, voluntary membership organization, founded in March of 1999, which represents all aspects of the disease management community.
Creation of the association was in response to the continued growth of disease management in the United States.  The increasing number of stakeholders dependent on the "promise" of disease management for cost effective, quality healthcare in this new millennium has created a need for a single voice and a more scientific approach to the measurement of the success of disease management programs. 

DMAA has established an industry-standard definition of qualified DM programs and entities. The DMAA definition, established in consultation with primary care and specialty physicians and representing private practice, health plan, and institutional perspectives, is as follows:  

• Disease management is a system of coordinated healthcare interventions and communications for populations with conditions in which patient self-care efforts are significant, supporting the physician/patient relationship and their plan of care;
  
• Emphasizes prevention of exacerbations and complications utilizing evidence-based practice guidelines and patient empowerment strategies; and
  
• Evaluates clinical, humanistic and economic outcomes on an ongoing basis with the goal of improving overall health.

• Disease management services provided to an individual must include:

  • Population identification processes;

  • Evidence-based practice guidelines

  • Collaborative practice models to include physician and support-service providers;

  • Patient self-management education (e.g. primary prevention, behavior modification programs, and compliance/surveillance);

  • Process and outcomes measurement, evaluation and management, and routine reporting; and

  • Feedback loop (e.g. communication with patient, physician, health plan, and ancillary providers and practice profiling) 

The Disease Management Organization which I am privileged to lead, LifeMasters® Supported SelfCareSM, Inc., has extensive experience in and NCQA accreditation for providing disease management programs to patients with CHF, COPD, CAD, Diabetes, and Asthma and has demonstrated that a multi-disciplinary Disease Management program including patient education, interactive vital sign and symptom monitoring, nurse support and physician intervention can significantly reduce unnecessary utilization and improve quality of care. The company was founded by a physician in 1994 and currently provides services to more than 300,000 individuals nationwide through its contracts with healthplans, employers, and government agencies. The LifeMasters' service model has served as the basis for five major published outcomes papers. 

States are experiencing unprecedented budget deficits as a result of the economic recession and its resultant impact on tax revenues. Following more than a decade of economic expansion, state tax revenues are falling for the third year in a row and most states have already dipped into their "rainy day" funds to make ends meet in the previous 2 years. This year's budget balancing promises to be the most difficult in recent times.  

State Medicaid agencies are having an exceptionally difficult time making ends meet as the result of rising health care costs and increasing enrollments over the past several years.  

Most states are contemplating Medicaid program reductions in the form of:  

1. Reduced benefits;

2. Tightened eligibility requirements;

3. Lower health care provider rates; and

4. Moving Medicaid fee-for-service beneficiaries to managed care.  

For most poor people, low-income children, the frail elderly, and the blind and disabled, Medicaid is often the only source of health care coverage available to them. Reducing eligibility and access to care for these groups may offer short-term savings by shifting costs from the state to the safety net providers and the community.  But the economic hardship placed on safety net providers today, however, will likely have to be swallowed by the state in subsequent years. To stop this cycle, we must explore alternative strategies that do more than shift costs. 

To identify successful cost-cutting strategies for Medicaid it makes sense to begin with an understanding of what drives health care costs in this population. A report by the Centers for Disease Control and Prevention's Chronic Disease Center estimates that 70% of the nation's medical costs are attributable to the treatment of people with chronic disease(s). In addition, 75% of the nation's deaths result from complications associated with chronic disease. In a recent report in California, where LifeMasters is headquartered, the Legislative Analyst's Office (LAO) estimated that more than 25% of adult beneficiaries, or over 700,000 people, enrolled in Medi-Cal have at least one chronic condition. The greatest concentration of chronic disease is among the aged, blind and disabled (ABD) population where the California LAO estimated that 440,000 ABD beneficiaries cost the state $5.3 billion in 2001, an average annual cost of $12,000 per beneficiary.   On a national basis, the elderly and disabled constitute 25% of Medicaid beneficiaries but account for two thirds of the healthcare costs.

 Nationally, the direct cost of treating people with chronic disease(s) is estimated to be at least $510 billion this year and will soar to $1.07 trillion by the year 2020. Three diseases, diabetes, congestive heart failure (CHF) and coronary artery disease (CAD), account for $250 billion or more in annual direct costs, and $429.2 billion in total costs (including lost productivity, wages, etc.).  Many of these expenditures are related to preventable repeated hospitalizations and emergency room visits. During the next 30 years, as the U.S. population ages, the number of individuals and estimated cost of care for people with chronic disease is expected to grow dramatically. The time for the states and the federal government to devise proactive cost reduction and quality improvement strategies is now.  

Further compounding problems for states are the health care challenges caused by disparities of race, class, culture and ethnicity facing the nation's elderly and disabled poor. Barriers of education and language directly impact a patient's ability to access care. These patients may not seek care, or may rely solely on emergency room visits, and may be non-compliant with follow-up. These factors contribute to the high cost of care, and relatively poor outcomes, for Medicaid eligible patients. The chart displays the disproportionate burden of diabetes facing non-whites.

Age-adjusted Prevalence of Diabetes in People aged 20 years or older, by race/ethnicity United States - Year 2000

Cardiovascular disease is a leading cause of morbidity and mortality for all racial and ethnic groups, but as with diabetes, non-whites disproportionately experience all risk factors (excepting tobacco use) and rates of complications. Hispanics are also more likely to have high blood pressure and elevated cholesterol, major risk factors for cardiovascular disease. In addition, African Americans and other minorities experience death rates from diabetes and heart disease that are 50-100% higher than their Caucasian counterparts.

As Congress and the states ponder solutions to this problem, we urge you to consider implementing an innovative approach to managing health called disease management (DM).  DM has taken shape over the past several years and is showing great promise to deliver better care at lower cost. These results have been achieved while simultaneously increasing beneficiary access to care, enhancing patient satisfaction with their healthcare providers, and improving clinical outcomes. Although there is no singular solution to cure the complex problems facing Medicaid today, DM is one option that can immediately begin to reduce costs while improving health outcomes. Based on experience managing similar populations, it is estimated that DM could save the states many millions of dollars.  

Nearly 25 states have initiated disease management efforts, at least at a pilot project level, and eight have initiated comprehensive programs similar to the ones described below. Furthermore, the U. S. Department of Health and Human Services (HHS) and Centers for Medicare and Medicaid Services (CMS) have gained Congressional approval to begin larger scale demonstration projects with Medicare and Medicare/Medicaid dual eligible populations with chronic disease. Several large awards were made late in 2002 and several other DM demonstrations are expected to be awarded and implemented in 2003 and 2004. 

Description of the Problem  

When Medicaid was created in 1965 (Title XIX), the intent was to improve the medical care being delivered under the public assistance programs. Beneficiaries were expected to enter the program for a period of time while they needed public assistance and then move back into the private sector. Consequently, most Medicaid programs were originally rooted in the provision of acute care under a medical treatment model that largely ignored prevention, self-management, peer support, and management of complex, co-morbid conditions. 

Most people receiving public assistance, however, stay on service longer than expected. Coupled with advances in the pharmaceutical and clinical management of chronic conditions, people now have substantially longer life expectancies, extending the period of eligibility for a larger percentage of the population than was envisioned in 1965. This added longevity has contributed greatly to the steadily growing number of beneficiaries dually eligible for Medicaid and Medicare. The U.S. Census Bureau indicates that life expectancy rates have increased steadily since 1965, as follows: 

 As a result, chronic diseases, such as arthritis, asthma, cancer, chronic obstructive pulmonary disease, CHF, depression, and diabetes account for 60 percent of medical costs in the United States.   Cardiovascular disease (principally high blood pressure, heart disease, and stroke) is the leading cause of death among both men and women and across all racial and ethnic groups. About 58 million Americans live with some form of the disease. In 1999 alone, cardiovascular disease cost the nation an estimated $287 billion in health care expenditures and lost productivity, and this burden is growing as the population ages.    

Medicare has recognized that an acute care system is no longer appropriate where the major killers and cost drivers of our era are chronic conditions.  Moreover, it has reacted by exploring high-tech, innovative delivery systems, such as DM. Medicare has thus far lacked the legislative authority, however, to implement its demonstrations on a beneficiary-wide scale to provide fair access to all fee for service beneficiaries.   On the state level, in the past two years, legislation has been passed in several states to fund DM.  As many as two dozen states considered DM legislation in their recent legislative sessions. 

Those states undertaking DM have elected not to cover dually eligible beneficiaries in their DM projects since the state would be primarily responsible for paying the cost of the DM program, most savings achieved through DM, however, would accrue to CMS (this is the result of Medicare being the primary payor and states are generally being at risk for only pharmacy, Medicare co-payments and transportation costs for this population). In fact, many beneficiaries enrolled in DM programs in FFS Medicaid lose this benefit when they become eligible for Medicare. Former CMS Deputy Administrator Ruben King-Shaw made it clear that CMS is willing to approve waivers that would allow states to share in any savings achieved through DM efforts with dually eligible beneficiaries. CMS is also reviewing "unsolicited" demonstration projects for the management of dual eligibles with chronic disease, whereby CMS would fund the DM project. 

Like the ABD population, dual eligibles have chronic disease prevalence rates much higher than the overall Medicaid population. For example, CHF prevalence in the dual eligible population may approach 10% while the prevalence in the general population is less than 1%. The average monthly cost for dual eligibles with CHF is approximately $1,500 to $2,000 compared to a $200 to $300 monthly cost for the overall Medicaid population. Whether or not the states elect to offer DM services for this population will likely depend on the ability of the states to negotiate shared cost savings with CMS or on having CMS fund DM services as part of a CMS demonstration project. 

Historically, a small proportion of Medicaid beneficiaries have accounted for a major proportion of Medicaid expenditures. In the fee-for-service environment, health care for individuals with chronic illness has often been fragmented and poorly coordinated across multiple health care providers and multiple sites of care. Evidence-based practice guidelines have not always been followed, nor have patients always been taught how best to care for themselves. These shortcomings are particularly true for patients served under reimbursement systems in which providers lack incentives for controlling the frequency, mix, and intensity of services, and in which providers have limited accountability for the outcomes of care, such as fee for service Medicaid.

In its current form, the health care system in not equipped to educate, monitor or support these very sick patients on a longitudinal basis to ensure proper coordination of care and compliance with complex treatment regimens. For fee for service Medicaid beneficiaries, this problem is exacerbated by the lack of any medical management or quality improvement infrastructure.  The infrastructure offered by DM programs fills these gaps resulting in better human and financial outcomes. 

Disease managers provide a safety net for seriously and chronically ill patients in between their physician visits, and are frequently credited with helping patients with chronic disease avoid unnecessary hospitalizations, unnecessary emergency room (ER) visits, surgery, and other more invasive care. Instead of relying solely on the physician-based care system (which, under managed care, and even in fee for service, has suffered serious and often irrational restraints from formularies, utilization review, and incentives to reduce doctor-patient consultation time), DM programs typically provide access to health care professionals on a 24-hour per day/ 7-day per week basis. Although disease managers are typically nurses, dietitians, health educators, social workers, and others who do not take the place of the primary care physician, they bridge the care management gap that often exists for patients between physician office visits. Given the propensity by many Medicaid beneficiaries to use the ER for primary care, DM can act as a means of educating patients on the proper use of the health care system, thus directing patients to primary care, as well as coordinating a patient's care across a variety of care settings, i.e., ER, specialist, PCP, etc.  

Disease managers also improve physicians' effectiveness by providing real-time patient data and timely information on disease-specific best practices protocols. Without a DM program, it is unlikely that physicians can monitor patients effectively between (and even during) visits, due to constraints on their time and office staff. 

Given the few Medicaid Managed Care plans available to Medicaid beneficiaries in rural settings, DM could serve to fill the access to care and quality gap now being experienced in these areas and greatly reduce overall costs. Since most DM services can be fully implemented telephonically or via the Internet, rural patients in DM programs enjoy significantly improved access to care. In addition, to the extent that the DM programs succeed as expected, rural patients should not need as many visits to hospitals or specialty facilities, which may be distant from their homes and therefore avoided. Finally, on-line and telephonic DM programs frequently offer patient self-management and informational tools without cost, which improves access to services by the uninsured and poor. 

DM programs address issues raised by the Institute of Medicine (IOM) regarding medical errors and quality of care. The IOM reports on medical errors and the deteriorating quality of healthcare in America[1] argue that DM is not only integral to preventing medical errors, but also to protecting and improving overall health care quality, especially for the chronically ill. In the reports, the IOM Committee on Quality of Health Care in America cites extensive evidence that "the nation's health care industry has foundered in its ability to provide safe, high-quality care consistently to all Americans. Reorganization and reform are urgently needed to fix what is now a disjointed and inefficient system."  

The IOM quality of care report properly stresses the issues posed by chronic conditions, and concludes that:

"clinicians, health care organizations, and purchasers -- companies or groups that compensate health care providers for delivering services to patients -- should focus on improving care for common, chronic conditions such as heart disease, diabetes, and asthma that are now the leading causes of illness in the United States and consume a substantial portion of health care resources. These ailments typically require care involving a variety of clinicians and health care settings, over extended periods of time."

To address these issues, the IOM suggests that private and public purchasers, health care organizations, clinicians, and patients should work together to redesign health care processes in accordance with the following rules:  

• Care based on continuous healing relationships. Patients should receive care whenever they need it and in many forms, not just face-to-face visits.
• Customization based on patient needs and values. The system of care should be designed to meet the most common types of needs, but have the capability to respond to individual patient choices and preferences.
• The patient as the source of control. Patients should be given the necessary information and the opportunity to exercise the degree of control they choose over health care decisions that affect them.
• Shared knowledge and the free flow of information. Patients should have unfettered access to their own medical information and to clinical knowledge.
• Evidence-based decision-making. Patients should receive care based on the best available scientific knowledge.
• Safety as a system property. Patients should be safe from injury caused by the care system. Reducing risk and ensuring safety require greater attention to systems that help prevent and mitigate errors.
• The need for transparency. The health care system should make information available to patients and their families that allows them to make informed decisions when selecting a health plan, hospital, or clinical practice, or when choosing among alternative treatments.
• Anticipation of needs. The health care system should anticipate patient needs, rather than simply reacting to events.
• Continuous decrease in waste. The health care system should not waste resources or patient time.
• Cooperation among clinicians. Clinicians and institutions should actively collaborate and communicate to ensure an appropriate exchange of information and coordination of care."

With regard to medical errors, the IOM emphasized that one of the chief culprits in medical errors is the lack of care management and coordination, resulting from the decentralized and fragmented nature of the health care delivery system, and the multitude of unaffiliated providers practicing in different settings without access to complete medical record information or coordination.  

The IOM reports are, in all respects, a call to action for, and a validation of, the critical need to support and promote DM as a solution to many of the problems besetting the health care system, both public and private, managed care and fee-for-service. High-quality DM programs focus directly on the chronic conditions that the IOM reports consider most costly and ripe for new models of intervention, and improve clinical and financial outcomes in every one of the areas considered most problematic by the IOM. 

Enhancing Care Coordination - Disease Management 

The central premise behind DM is elegant in its simplicity. Simply stated, the value proposition for DM is that "healthier people cost less." Put another way, if we can improve the health of the population, we will reduce their demands on the health care system and that reduced demand translates into lower costs. Chronic illness is a major driver of health care costs. One reason for this is that many chronically ill individuals experience acute episodes that require expensive (and often traumatic) treatment in institutional settings. The incidence of such episodes can be reduced or entirely avoided through proper management of chronic conditions, as can the progressive worsening of chronic conditions that leads to complications and co-morbidities. Thus, if health care payors can efficiently deliver interventions that result in improved management of their chronic condition to those beneficiaries, quality improvement and cost savings will result.  

Candidates for DM services are typically identified through review of their health insurance and available medical data by health insurers and disease management organizations (DMOs), or by their primary care providers. Disease managers then reach out to these individuals and, in concert with their physicians, enroll them in DM programs.  

Many of the interventions that can be provided to individuals with these chronic illnesses are often relatively simple. For example, great progress can be made by promoting smoking cessation, improvements in diet and exercise, and teaching patients to better self-manage many aspects of their condition like blood glucose level self-monitoring and adherence with prescription drug regimens. These interventions are supported by regularized, ongoing communication between beneficiaries, care providers and disease managers through a variety of media including phone, mail and electronic, and, when warranted, in-home visits, that serves to promote adherence, monitor clinical status, ensure a continuum of care, and to proactively identify and address situations that could lead to avoidable acute events. Most DMOs have proven adept at addressing populations with multiple conditions, which is significant because a high percentage of individuals with chronic disease have more than one condition (co-morbidity).  

One challenge in delivering effective DM services lies with the fact that the beneficiary population can be a difficult one to impact. Often, the harmful behaviors and habits that DM programs seek to address have become highly ingrained over decades. In other cases, beneficiaries are depressed as a consequence of their condition, have grown skeptical of health care interventions, and may have developed hostility toward the health care system. DM programs have developed techniques for successfully reaching these populations and are able to uncover and motivate the underlying desire of most chronically ill individuals for improved quality of life.  

Another important feature of disease management is the integration with the beneficiary's personal physician. Many DM programs assist the physician as well as the patient by helping to provide evidence-based practice guidelines specific to their patients and their conditions. DM programs develop programs and techniques for reaching out to physicians and have generally been successful in achieving positive physician satisfaction and participation.  

DM works. Peer reviewed studies show that DM can have a significant impact on both the cost and quality of care and health outcomes.   

Outcomes 

The state of Florida was one of the first states to offer disease management services to beneficiaries eligible for Medicaid fee for service and Primary Care Case Management (PCCM).   In LifeMasters' program for Florida Medicaid beneficiaries with Congestive Heart Failure, we were able to reduce healthcare expenditures over a two-year period by 16.3%, resulting in a net savings to the state (after paying for program costs) of $4.4 million for an average of just 2,500 beneficiaries. Other states have launched their own DM initiatives including Washington, Colorado, Texas, Oregon, Mississippi, Ohio, Kansas, Idaho, Missouri and Arkansas to name just a few. There are several DM Organizations that have extensive experience meeting the distinct needs of Medicaid populations.  

Florida Medicaid Results (Population-based CHF Program)

LifeMasters also provides services to managed care Medicaid beneficiaries through a relationship with Presbyterian Health Plan in New Mexico.  Presbyterian has 133,000 Medicaid beneficiaries.  Of this number, there are 2,100 beneficiaries with Coronary Artery Disease (CAD) and Diabetes enrolled in the disease management program.  While it is too early in the program to have clinical, cost, and quality data available, we have found the same level of receptivity to the program as we experienced with fee for service Medicaid beneficiaries in Florida.  One of our disease management nurses said of one of her program participants: "When I first started calling [the participant] in May, she was stressed and depressed and frustrated with her foot pain. Since that time, she has started walking a few miles 4 times a week and lifting weights.  She has lost 10+ lbs and her energy and spirits are higher than ever.  After a trip to her podiatrist, her feet are feeling better.  She often thanks me for calling her and holding her accountable to keep on top of her DM and exercising.  Without the program she doesn't think she would be doing so well."

LifeMasters has also provided services to managed care Medicaid beneficiaries through a relationship with Fallon Community Health Plan, which has been ranked the number one HMO in America four times over the past several years: twice by Newsweek (1999, 1996) and twice by U.S. News and World Report (1998, 1996). Beginning in 1999, Fallon's members with diabetes were enrolled in the LifeMasters diabetes management program. According to Val Slayton, MD, Fallon's former Chief Medical Officer, the cost savings achieved with the Medicare (9.2%) and Medicaid (42.9% for a relatively small population) populations have been larger than those in the Commercial group (4.7%) for patients with diabetes in the first year on a per member, per month (pmpm) basis compared with baseline figures (see below). Diabetic claims cost on a PMPM basis fell from $691 to $632.  

Fallon Community Health Plan Results (Diabetes)

Program Results after 1 Year

 Other Disease Management Organizations have had success in deploying DM interventions in Medicaid populations.

 McKesson Corporation has extensive expertise providing disease and demand management experience through direct contracting with State Medicaid programs including contracts with the Washington State Medical Assistance Administration (MAA), the Oregon Medical Assistance Program, Florida's Agency for Health Care Administration (AHCA), the Mississippi Division of Medicaid, and Colorado's Division of Health Care Policy and Administration. Furthermore, the states of New Hampshire and Montana have selected McKesson to provide disease management for their Medicaid fee-for-service population. 

Initial results for Washington MAA (asthma, diabetes and heart failure) have demonstrated significant clinical and economic improvement.   The state of Washington recently released their first year estimated net savings from their disease management programs. The results from the state show greater than $1.5 million of first year savings for the 18,000 Medicaid recipients eligible for the service.  Savings of $900,000 were noted in the diabetes population, $375,000 for heart failure, and $250,000 for asthma.  

Columbia United Providers, a Medicaid managed care provider based in Vancouver, Washington has had significant success in implementing behavior changes among members enrolled in an asthma DM program. At the time the plan's members first enrolled in the asthma program approximately 8% had an action plan; at six months, nearly 46% had such a plan - an increase of 450%. Members taking asthma medication every day to control symptoms increased to 33% at six months from 29% at enrollment. The analysis of medical and pharmacy claims (using a matched cohort design) for this Medicaid Program was quite positive and resulted in a very positive financial return to the client ($2.25 ROI). 

A second managed Medicaid program in the Northeast completed an asthma program for its identified members, showing highly significant reductions in inpatient, emergency room and outpatient symptomatic office visits utilization when compared to a matched cohort of non-participating asthmatics (p< .01 for all comparisons), resulting in a very favorable financial return ($1.61 ROI).  

In addition to these Medicaid-specific analyses, McKesson has completed 9 medical claims analyses for commercial asthma programs; 13 completed studies for commercial diabetes programs; and 10 completed studies for commercial heart failure programs. The results of these studies demonstrate improvements in health status and net reductions in claims costs resulting in favorable ROI. 

The experience of McKesson' Care Support Programs demonstrates their efficacy and relevance to Medicaid populations. These studies strongly suggest that structured DM programs can create positive clinical and financial outcomes while promoting enhanced self-management through continued support, education, and patient involvement. 

LifeMasters and McKesson are not unique in achieving results such as those described above. As the industry matures, other companies are also demonstrating the economic and qualitative value of DM services in the commercial, Medicare+Choice, and Medicaid arenas 

DM programs are budget neutral in the first year of implementation 

Most DM programs expect to generate net savings during the first contract year (defined as savings greater than the cost of the DM program), with the greatest program impact being realized in the second half of the year, once the majority of program prospects are enrolled. Further savings are expected in years two and beyond as the program staff has more time to interact with program participants and their physicians.  Savings are generally calculated by comparing per member per month healthcare costs for the year(s) in which the program was in effect with a per member per month baseline which is adjusted for medical inflation.  In some cases, a control group methodology is employed which compares the cost of people who had access to the program with a group of similar people who did not.   This is particularly useful because chronic disease is progressive in nature and costs can be expected to increase in the absence of a program.  However, there are ethical concerns about denying a program to people who could benefit from it.  The table below illustrates this ability of a CHF disease management program to reduce cost trend as well as actual cost. 

Which disease(s) the states elect to focus their immediate attention on will depend largely on the prevalence and cost of disease(s) in the Medicaid population and the states' specific goals. For example, if the state's immediate goal is to maximize return on investment and savings in the first year, the likely choice is to manage beneficiaries with diabetes, CHF and CAD. People with these conditions are costly, the diseases are closely related (many people with diabetes are co-morbid with CHF or CAD) and a significant reduction in hospitalizations and ER visits can happen very quickly. If the state decides to move in that direction, it is recommended that the state contract with one organization to manage these conditions in a specific geography. This approach leads to much better coordination of care and less confusion among patients and their physicians. 

Recommendations  

DMAA believes that comprehensive disease management, if fully employed in Medicaid, can:  

• Achieve the objective of better addressing preventive care and chronic illness under Medicaid

• Improve the safety and quality of care by adhering to evidence-based treatment guidelines and outcomes data, and by providing patients with a safety net between physician and hospital visits, thereby reducing drug and treatment errors and improving care coordination

• Improve access to care by around the clock nursing and high-tech contacts, and by assisting rural caregivers and their patients who do not have the benefit of easy entrée to in-person care

• Improve patient self-management of, and responsibility for, preventing and treating their conditions by its innovations in patient-centered and collaborative education

• Improve financial cost containment without sacrificing quality or patient satisfaction by serving as an alternative to the increasingly unacceptable cost-containment techniques of managed care, such as utilization review, gatekeeper restrictions, referral limitations, and drug restrictions

• Enhance efforts in the public health arena by providing health improvement programs on a population basis; creating financial incentives to promote and deliver preventive interventions on a large scale using advanced outreach technologies, especially secondary preventive measures; and encouraging those segments of the private sector that have not yet embraced DM to do so.

DMAA supports the integration of fully accredited DM programs into fee for service and managed Medicaid according to the following principles endorsed by DMAA:

• There should be no discrimination against beneficiaries who currently lack access to the benefits of DM programs available to some managed care and fee for service Medicaid enrollees

• Medicaid fee for service programs should directly contract with DM organizations to offer such benefits on a population basis.

Congress and the states should focus their initial DM efforts on managing beneficiaries with the highest cost, highest prevalence conditions where evidence exists that changes in lifestyle, monitoring and early intervention reduce costs and improve health outcomes.

With these criteria in mind, the first priority should be to disease manage aged, blind and disabled beneficiaries with diabetes, congestive heart failure (CHF), coronary artery disease (CAD), chronic obstructive pulmonary disease (COPD) or asthma. A secondary emphasis should focus on managing all fee for service beneficiaries and dual eligibles with these same chronic illnesses. States should focus their efforts on beneficiaries with these diseases for a number of reasons including:  

• Diabetes, CHF, CAD, COPD and asthma affect more than 20% of the entire Medicaid aged, blind, disabled and dual eligible populations while accounting for as much as 75% or more of total costs.
• Incidence of these diseases continues to grow at a significant rate - costs will continue to increase over time.
• These debilitating diseases greatly diminish an individual's quality of life and have a high rate of morbidity and premature mortality.
• Non-whites are disproportionately affected by these chronic diseases, experiencing much higher morbidity and mortality rates than their white counterparts. Focusing on managing people with these diseases helps to minimize the impact of the racial and ethnic disparities experienced in health care.
• Diabetes, CHF and CAD are closely related, with a great percentage of people with diabetes developing CHF and/or CAD as a result of the cardiovascular damage caused by their diabetes. People with diabetes are frequently co-morbid with these conditions.
• Typically, investing in DM for these groups delivers a return on investment of 150% to 250% in the first year.
• Asthma prevalence rates among low-income children and adults make it a high public health priority. First year ROI experienced managing people with asthma is break even or slightly positive.
•  Much of the human and economic cost associated with these diseases can be positively impacted through longitudinal health management, lifestyle modification, disease-specific vital signs and symptoms monitoring, and early intervention. These efforts have been shown to reduce or delay health complications while lowering overall costs. 

Conclusion

 Based on documented cost reductions and quality improvements from Medicaid DM programs in selected states, it is likely that a comprehensive DM strategy covering beneficiaries with diabetes, CHF, CAD, COPD, asthma and ESRD could deliver cost savings to the Medicaid program into the billions of dollars annually while concurrently improving access to care, beneficiary quality of life and health outcomes. 

The most innovative states along with Medicare+Choice and private sector organizations have benefited from high quality DM, and these organizations now have irrefutable evidence that these programs have not only improved the delivery of healthcare services, but have also achieved impressive clinical quality improvements and cost savings. Based on the demonstrated evidence of successful clinical and financial outcomes of disease management programs, DMAA and LifeMasters believe that our nation should move to offer disease management services to all Medicaid beneficiaries with chronic disease.

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