Population-Based Disease Management Could Improve Quality,
Lower Costs In Medicare, But Needs To Be Tested

Health Affairs Article Examines Advantages, Challenges
To Programs Proposed In Medicare Reform Legislation

BETHESDA, MD - Population-based disease management programs that target beneficiaries with costly chronic conditions enrolled in fee-for-service Medicare could improve health outcomes and lower costs. However, such programs will face such challenges as helping seniors with multiple illnesses navigate complex drug regimens, according to a new Web-exclusive article published on the Health Affairs Web site.

Sandra Foote of the Health Insurance Reform Project at George Washington University in Washington, D.C., writes that lawmakers in the House have proposed such programs as part of legislation to add prescription drugs to the Medicare benefit package. While Medicare now is testing disease management in several demonstration projects, none is population-based-that is, none identifies potential participants through Medicare data and rewards disease-management contractors for improvements in health status and savings for whole populations, rather than for individual patients.

"Political support seems to be growing for federal leadership in addressing widespread failings in chronic care," Foote says. "The voluntary chronic care improvement programs envisioned in the House bill are intended to help increase adherence to evidence-based care. How well they will work under fee-for-service Medicare remains to be seen."

Many private-sector payers have embraced the concept, and a small industry of subcontractors that handle population-based disease management has grown up around those private-sector efforts. Those firms earned some $600 million in revenue in 2002.

Private-sector plans have not, however, done many rigorous studies of their population-based disease management programs to determine whether they improve health outcomes or reduce costs. But controlled studies may work better in the Medicare fee-for-service population, Foote says, because it is large and extremely stable.
Rather than new benefits, population-based disease management firms offer personalized support services to chronically ill patients and give their physicians patient information that can help prevent complications and avoid hospitalizations and emergency visits.

A demonstration testing population-based disease management ideally would target beneficiaries who have high-cost diseases affecting broad segments of the Medicare population, such as congestive heart failure or diabetes. Congestive heart failure, for example, affects 14 percent of Medicare beneficiaries, but these beneficiaries account for 43 percent of Medicare expenditures if the costs of all their Medicare claims are included. Some 795,000 Medicare beneficiaries with congestive heart failure had avoidable admissions in 1999, costing $4.6 billion, according to the Agency for Healthcare Research and Quality.

Foote says, however, that Medicare should avoid relying solely on a "single diagnostic label" to determine whether an enrollee should be eligible for such a program. Instead, several criteria should be considered, such as risk-adjustment scores, to identify beneficiaries who are likely to benefit from the programs.

Other precautions for Medicare to consider include:

• outreach to ensure that eligible beneficiaries know the that programs are voluntary, are free of charge, and will not affect their benefits and that the privacy of their data will be protected
• linking contractor payment methodology to performance standards and savings guarantees with detailed specifications for determining how adherence to performance standards will be measured

Foote warns that the lack of studies so far, combined with differences between the Medicare population and enrollees in commercial managed care plans, could mean that population-based disease management programs may not necessarily succeed or may have bigger challenges in the Medicare population.

"Elderly and disabled people tend to have more comorbidities and more complex drug regimens and are more likely than commercially insured populations to be poor, frail and cognitively impaired," Foote says. "Disease management interventions that work under managed care might not translate well to the fee-for-service Medicare context. It is not clear how such programs will affect health outcomes or costs."

She adds: "[Population-based disease management] programs are clearly not a single-source solution for many current failings in the traditional health care delivery system or for Medicare's limited benefit plan, but they might yield incremental improvements of great value in a program the size of Medicare. Ultimately, the greatest impact of pilot programs could be in serving as a catalyst to more federal experimentation and collaboration with the private sector to improve the health of chronically ill Medicare beneficiaries cost-effectively over time."

A Robert Wood Johnson Foundation grant supported the work of GWU's Health Insurance Reform Project.

Health Affairs, published by Project HOPE, is a bimonthly multidisciplinary journal devoted to publishing the leading edge in health policy thought and research.

©2003 Project HOPE–The People-to-People Health Foundation, Inc.