Despite lingering doubts as to its effectiveness, disease management is finally coming of age.
Health plans nationwide are funneling millions of consumers into programs designed to control costly chronic illnesses such as asthma, diabetes and heart disease. The goal, they say, is to maintain or improve members' health in an attempt to reduce emergency-room visits and hospital stays that cut deeply into their profits.
Disease management is not a new idea. Insurers have long known that 20% of the population accounts for about 80% of all medical costs, and that much of those dollars are spent on caring for patients with chronic conditions. But until as recently as a decade ago, disease-management programs were largely viewed as risky ventures or, worse, gimmicks used by drugs companies to push their products.
Times have changed. With consumers demanding fewer coverage restrictions, HMOs have been hard pressed to contain skyrocketing healthcare costs by limiting utilization. Instead, many are now exploring prevention as a better way to keep medical claims in check.
"After 20 years, we're just starting to look at the `M' word in HMO: maintenance," says Warren Todd, executive director of the Disease Management Association of America, a Washington-based trade group created in 1999 in response to the rapid adoption of prevention programs. "For years, the industry has been trying to cut costs by squeezing prices and restricting access to care. Now we're finally realizing the cost benefits of maintaining health."
Indeed, almost all health plans now have at least one disease-management program in place, up from only a handful 10 years ago, experts say. Meanwhile, spending on such programs has ballooned to about $1 billion this year from $68 million in 1997, and it's projected to top $10 billion by 2010, according to the Boston Consulting Group.
In-house and out
Insurers' approaches to prevention programs run the gamut. Some health plans, including Oakland, Calif.-based Kaiser Permanente and Minneapolis-based UnitedHealth Group, have developed their own in-house programs, while a growing number of others are recruiting disease-management vendors, of which there are now about 170 nationwide.
The question, though, is how much cooperation insurers will get in their new push to manage care. Although most doctors like the notion of preventive care, many view insurers' disease-management tactics as an annoying intrusion. And statistics show that while more than 1.5 million people are enrolled in such programs, fewer than 25% of them are actively engaged in the self-monitoring/reporting process, thereby limiting the programs' effectiveness.
Insurers also face the challenge of ensuring that their interventions are both effective and cost-efficient. Some observers doubt the benefits, partly because the industry hasn't, until recently, done a good job of--or invested much money in--measuring outcomes. And some employers still are reluctant to invest in the programs, worried that workers may not stay with one company long enough to make them profitable.
Disease management doesn't usually generate immediate cost savings for insurers, largely because reducing hospital admissions means initially spending more in other areas. Proper prevention often involves the increased use of prescription drugs, as well as more frequent laboratory tests and physician visits. There's also the added cost of retaining a team of nurses or call-center operators to coordinate patients' care. Some insurers even provide participants with high-tech monitoring equipment, such as electronic scales that transmit results over the Internet.
Health plans and disease-management vendors, however, are generally optimistic about the long-term impact of such prevention programs--both clinically and financially.
American Healthways, the nation's largest disease-management company, estimates it can cut an insurer's costs for a particular disease population by 12% to 20% in the first year, with savings expected to continue increasing over the next four to five years.
"The results of an outcomes-based approach are very real," says Robert Stone, co-founder and executive vice president of the Nashville-based company, which manages about 850,000 patients. "The longer you work with a given population . . . the greater the reduction in complications and comorbidity over time."
Cigna Corp. first hired American Healthways in 1997 to monitor its members with diabetes. It has since expanded its disease-management program, which enrolls more than 700,000 patients, to include asthma, lower-back pain and cardiac ailments, and is launching a program for chronic obstructive pulmonary disease next year.
The Philadelphia-based insurer says its diabetes and asthma programs combined have reduced participants' rate of hospital admissions by 25%, inpatient days by 24% and emergency-room visits by 8%. That translates into medical savings of 13% and a total cost impact--which includes the reduction of time away from work--of more than 20%, says David Ferriss, M.D., specialty medical director of Cigna programs.
"We've seen improvement in clinical outcomes and improvement in the management of costs," Ferriss says. "It's a win-win situation for both our members and the company."
Despite all the testimonials, there's reason for caution, says Al Lewis, executive director of the Disease Management Purchasing Consortium, a Wellesley, Mass.-based coalition of 72 health plans, employers, unions and government agencies formed in 1995 to help members make wise decisions when buying disease-management services.
After reviewing more than a dozen recent disease-management studies, the consortium concluded that most of them contained design flaws that skewed the outcomes and savings, Lewis says. When insurers and employers eliminate the biases in their studies, he adds, they could find that their returns don't cover their program costs.
Florida's Medicaid program, for example, is redesigning its disease-management strategy after discovering last year that its prevention measures, instead of saving an anticipated $113 million since 1997, had actually cost the state $24 million in additional administrative costs.
"My biggest concern is that there will be a big backlash when employers (and insurers) run the numbers and realize that their cost savings are not really as great as what the benefit consultants and vendors have been telling them," Lewis says.
Indeed, American Healthways and Hartford, Conn.-based Aetna severed ties on July 1, ending a three-year contract two years early because of fundamental "organizational differences."
According to a source who asked to remain anonymous, Aetna complained when it failed to see the savings it had expected from its congestive heart failure program, for which it had hired American Healthways to manage in July 2001. But American Healthways contended that the insurer had set an overly ambitious enrollment goal and had failed to provide the claims data and operating structure needed to maximize results.
"The approach Aetna took for operationalizing the program was not one that was compatible with our way of doing business," Stone says. "We realized that we were not in the position to deliver the outcomes that we traditionally deliver to our clients, so we got out."
Overall, just how profitable a disease-management program becomes may vary greatly depending on the approach the insurer decides to take, experts say.
Some companies contend that savings will be greatest by targeting rare ailments, such as lupus, hemophilia or sickle cell anemia, which consume a disproportionately large amount of their healthcare dollars. Others have set out to tackle "major" chronic conditions such as diabetes and asthma, which affect a large swath of the population.
And while most programs involve assessing members' health status and educating patients and their doctors about the accepted standards of care, which combination of delivery methods--phone calls, e-mail, interactive Web capabilities, educational mailings, clinic visits, house calls--works best is still hotly debated.
"Not all disease-management programs are created equal," says Stone, who is president-elect for the DMAA. "Some are more comprehensive than others, and that ultimately has an effect on outcomes."
How members are "managed" depends on their ailments and how sick they are.
Insurers typically ask members to complete questionnaires to determine how well-controlled their conditions are and how much they understand about self-care. Depending on their responses, some members may receive nothing more than pamphlets or videos about their disease as well as reminders to get checkups and medical tests. Others get regular phone calls from nurses who answer questions, monitor patients' progress and encourage them to follow doctors' orders. Some might even get frequent home visits.
Doctors often are asked to answer questions about their patients, too, and usually receive word from insurers when members fail to refill prescriptions or comply with treatments. Insurers insist they don't give medical advice but simply alert physicians to "warning signs" about a member's health--such as weight gain, shortness of breath or heightened blood pressure--to facilitate action.
For their part, many doctors appreciate this collaborative approach to care. Plenty of others, however, resent disease management, seeing it as yet another way for HMOs to meddle in their medical decisions.
Wanted: a little cooperation
Many doctors believe disease-management programs add a further layer of complexity to an already chaotic healthcare system and burden physicians with additional tasks for which they aren't reimbursed. According to a recent study by Cambridge, Mass.-based Forrester Research, 69% of health plan executives named lack of physician cooperation as the biggest challenge in implementing a successful disease-management program.
"For doctors, it's another set of forms to fill out, more follow-up calls, and yet another group to have to interact with," Lewis says. "And if a doctor is notified that there is something wrong with one of his patients, he's obligated to do something about it, or there may be a liability issue."
To spare physicians the hassle of having to deal with calls from three or four disease-management companies, many insurers have begun to consolidate the number of vendors they use, Lewis says. He also suggests that health plans operating within the same market agree to use the same vendors.
Patients, too, also have a mixed response to disease management.
On one hand, participants generally appreciate the personal attention and believe that the programs provide a continuum of care largely absent in today's fragmented healthcare landscape. People with chronic conditions often have several prescriptions and see multiple doctors who otherwise may not communicate with one another.
On the other hand, only a small percentage of patients recruited into disease-management programs actively comply with the regular self-monitoring, record-keeping and reporting that is required. LifeMasters Supported SelfCare, an Irvine, Calif.-based disease-management company that works with such large insurers as Aetna and Blue Shield of California, acknowledges that in a recent study of 8,800 diabetes patients it managed for a northeastern HMO, only 10% of those patients were actively monitoring their vital signs on a daily basis as suggested.
The missing piece in disease management is how to encourage the patient to remain compliant with the program's recommendations, LifeMasters CEO Christobel Selecky said in April at the National Managed Health Care Congress in Baltimore. She suggests that insurers grant participants a reduction in their insurance premiums if they stick with the program for a specific amount of time.
"Ultimately, disease management is up against the biggest brands in the world, such as (fast-food chains and tobacco companies), which are driving the prevalence of disease," Selecky says. "We need to incentivize patients to stay on track."
A high rate of interest
Despite its shortcomings, disease management is showing strong growth potential.
Interest in prevention programs has spurred some the nation's largest healthcare accreditation agencies--including the National Committee for Quality Assurance, the Joint Commission on Accreditation of Healthcare Organizations and the American Accreditation HealthCare Commission (commonly known as URAC)--to each develop their own disease-management certification standards.
"We looked at the direction in which healthcare is moving and realized that companies are really using disease management to build effective health plans," says Liza Greenberg, vice president of research and quality initiatives at URAC. The Washington-based agency has 11 applicants for its disease-management accreditation, which it began offering in April.
Employers also are increasing their sponsorship of disease-management programs as they look for ways to reduce premiums and improve worker productivity.
In the mid-'90s, with a large number of competing health plans, employers switched carriers whenever they could find a better deal, making a significant investment in caring for the chronically ill unprofitable. But as the health insurance industry has consolidated, employers have had to find new ways to keep costs in check.
According to a survey released last year by Tempe, Ariz.-based Pharmacy Benefit Management Institute, 44% of employers offered disease management in 2000, up from 14% in 1995.
Even Medicare, which traditionally has been slow to add new benefits, is moving into disease management.
The Centers for Medicare and Medicaid Services recently launched demonstration projects for Medicare beneficiaries with congestive heart failure, diabetes and heart disease. The goal of these projects is to determine whether fee-for-service Medicare can effectively deliver disease-management benefits without boosting the federal program's net costs.
In April, Ruben King-Shaw, the CMS' chief operating officer and deputy administrator, told members of a House subcommittee that disease-management programs should serve as a "natural progression for Medicare as the baby boom generation reaches retirement age and more seniors with chronic diseases enroll in the program."
Medicare now covers 30 million seniors, the vast majority of whom have at least one chronic condition. That number will only continue to grow.