Employers Embrace Disease Management to Control Costs, Improve Quality

Hopes High Despite Limited Evidence of Savings and Quality Improvement

News Release
Oct. 8, 2003

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ASHINGTON, D.C.—With managed care's promise to reduce costs and improve quality fading, more employers and health plans are aiming extra attention at patients with chronic conditions and costly, complex illnesses, according to a study released today by the Center for Studying Health System Change (HSC).

Lacking other tools to control costs, more employers are turning to disease management programs in hopes of slowing double-digit health insurance premium increases. Disease management programs typically focus on patients with chronic conditions, such as asthma or diabetes, where practitioners' adherence to evidence-based treatment guidelines and patient self-care and compliance are important to managing the conditions.

Employers also are experimenting with intensive case management programs that use highly individualized care coordination for high-risk patients with multiple or complex medical conditions—typically patients most at risk for hospitalizations and other potentially costly care.

"In theory, if patients get the right care at the right time in the right place, it should help control costs and improve quality. In practice, however, evidence of disease management reducing costs and improving care is quite limited," said Paul B. Ginsburg, Ph.D., president of HSC, a nonpartisan policy research organization funded exclusively by The Robert Wood Johnson Foundation.

About 10 percent of patients account for 70 percent of overall U.S. health spending annually, and research shows significant gaps exist between evidence-based medical practice-especially for patients with chronic conditions-and the care many patients actually receive.

"The potential for both reducing costs and improving care helps explain why so many employers and health plans are experimenting with disease management and intensive case management programs despite limited evidence of effectiveness," said Glen Mays, Ph.D., an HSC consulting health researcher from Mathematica Policy Research and co-author of the study, along with Ashley Short, a former HSC research analyst, and Jessica Mittler, a former HSC consulting health researcher from Mathematica Policy Research.

The study's findings are detailed in a new HSC Issue Brief—Disease Management: A Leap of Faith to Lower-Cost, Higher-Quality Health Care. Based on site visits to 12 nationally representative communities in 2002-03, the study examines disease management trends in Boston; Cleveland; Greenville, S.C.; Indianapolis; Lansing, Mich.; Little Rock, Ark.; Miami; northern New Jersey; Orange County, Calif.; Phoenix; Seattle; and Syracuse, N.Y.

The retreat of tightly managed care has left employers with few tools to rein in costs other than increased patient cost sharing. Many employers admit that shifting health care costs to workers is a temporary fix at best, and they are seeking other options. As a result, more employers and health plans are exploring disease management and intensive case management as potential tools to help control costs and improve quality. Key trends identified include:

• Many health plans have increased disease management offerings and introduced the programs in an expanded array of health insurance products, including preferred provider organizations (PPOs). Plans also have increased outreach activities designed to boost member participation.
• Large employers are identifying the most prevalent and costly conditions in their specific workforces and customizing disease management approaches. For example, standard disease management targets, such as congestive heart failure, might be a poor fit for a firm with mostly younger workers' who might benefit more from a focus on at high-risk pregnancies.
• Some health plans and a sophisticated subset of employers are identifying candidates prospectively for intensive case management programs through predictive modeling applications that use health care claims data or surveys to identify patients who are likely to generate significant health care costs. By identifying high-risk patients prospectively, plans and employers hope to lower future health care costs by avoiding delays in needed care, improving care coordination, eliminating redundant care and encouraging self-management of health conditions.
• Many health plans' experience with disease management programs is still too preliminary to assess how well they work, while plans that have made such assessments report varying results. Much of the research evaluating disease management programs has focused on programs targeting three conditions—diabetes, asthma and congestive heart failure. Several studies have demonstrated that specific disease management programs can improve patient care and reduce service utilization, but the evidence varies widely across health conditions and types of interventions.
• Most health plans are interested in programs that can produce relatively short-term reductions in health care utilization and costs, because high membership turnover makes it difficult for plans to capture longer-term savings. Employers, however, may value outcomes that health plans cannot capture, such as reductions in absenteeism and work-related injuries and improvements in worker productivity and satisfaction.

The Center for Studying Health System Change is a nonpartisan policy research organization committed to providing objective and timely insights on the nation's changing health system to help inform policy makers and contribute to better health care policy. HSC, based in Washington, D.C., is funded exclusively by The Robert Wood Johnson Foundation and is affiliated with Mathematica Policy Research, Inc.