October 22, 2002

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PROGRESS REPORT: MEDICARE RECOGNIZING CHRONIC CARE CHALLENGES, CHAMPIONS EMERGING

Will Medicare embrace disease management (DM) approaches? Medicare and lawmakers are doing their homework on DM, and it’s revealing to review some of their notes along the way.

Numerous expert witnesses recently testified before the U.S. Senate Special Committee on Aging. The Committee examined "Disease Management and Coordinating Care: What Role Can They Play in Improving the Quality of Life for Medicare's Most Vulnerable?"  We read testimony from Congressional hearings so that YOU don’t have to; however, if you're curious you can review text and video testimony by clicking here (scroll down to 9/19/02).

The expert testimony shows that 1) Government officials are recognizing the impending challenges of baby boomers with chronic conditions, and 2) that diverse DM champions are emerging to carry the banner.

1) "HOUSTON, WE HAVE A PROBLEM"

This well known distress call from Apollo 13, especially familiar to boomers, summarizes the Congressional Budget Office's new realizations about America's impending chronic care challenges.

Testimony by Dan L. Crippen, Director of the U.S. Congressional Budget Office (CBO) reveals a new understanding of the budget problems facing Medicare.

"...fiscal pressures will only accelerate as a result of the aging of the baby-boom generation...if current law remains unchanged, CBO expects that spending for Medicare will more than double...by 2030.... Addressing these fiscal pressures is one reason policymakers have expressed interest in adding a disease management benefit to Medicare."

As part of its homework, CBO compiled a longitudinal database of Medicare patient expenditure data from 1989 to 1997. Crippen noted that "CBO's effort represents a significant enhancement over currently available data."

...and what does the new data show? Two things:

First, the new data shows CONCENTRATION of expenditures.

In 1997, the costliest 5 percent of beneficiaries consumed about half of total Medicare spending, and the costliest 25 percent consumed almost 90 percent.

Second, the new data shows PERSISTENCE of expenditures.

"Focusing in further on beneficiaries who were among the most expensive quarter of enrollees for two or more consecutive years allowed CBO to look at beneficiaries who were persistently expensive over time -- and whose care might be amenable to better coordination. That group accounts for a large amount of Medicare spending. In its preliminary work, CBO found that from 1993 through 1997, such persistently expensive beneficiaries accounted for 19 percent of enrollees but 57 percent of Medicare spending. In other words, their spending was three times the average for all beneficiaries and nearly six times the average for beneficiaries who were not persistently expensive.

"...Preliminary findings suggest that persistently expensive beneficiaries ...are indeed more likely to have those profiles -- that is, they are more likely than other beneficiaries to have been diagnosed with coronary artery disease, congestive heart failure, diabetes, chronic obstructive pulmonary disease, asthma, and end-stage renal disease."

In plain old English, CBO has figured out that people with chronic conditions 1) cost more in any given year, and 2) cost more over time. (Those of us who have been following DM for a number of years need to remain patient and understand that it takes time for the political process to play out. We should resist the temptation to characterize or color Crippen's statements as "The CBO's exploration has discovered some preliminary evidence that the earth might NOT be flat and that it is, in fact, round. CBO awaits conclusive studies.")

While Crippen does show new understanding of the problems facing Medicare due to aging baby boomers with chronic conditions, does he believe that DM approaches are the solution? "We remain to be convinced," declares Crippen.

The potential evidence to do the convincing is being developed in 15+ Medicare Coordinated Care Demonstration Projects currently under way. These projects could provide the type of evidence needed to expand DM benefits to Medicare.

2) DIVERSE DM CHAMPIONS ARE EMERGING.

Within Medicare, Ruben J. King-Shaw, Jr. is emerging as a cheerleader for DM. King-Shaw serves as Deputy Administrator and Chief Operating Officer, Centers for Medicare & Medicaid Services. His testimony at the Senate hearings shows vision and perspective.

"The almost complete absence of disease management services in the traditional Medicare plan is another striking indication of how outdated Medicare's benefit package has become.

"Disease management is a critical element for improving the nation’s health care and its delivery system. Along with the Secretary, the Administrator and I want to take full advantage of all of the opportunities for increased quality and efficiency that disease management offers."

As an important footnote, politicians on both sides of the aisle are lining up to support innovative disease management approaches.

Senator Larry Craig (R-ID), Ranking Member of the U.S. Senate Special Committee on Aging, voiced his support for DM. "The potential for disease management is phenomenal. It holds the potential to improve the quality of life for Medicare's most vulnerable seniors, and it may reduce health costs. That's why I called for this hearing."

Senator John Breaux (D-LA), Chairman of the Committee, echoed his support. "Disease management programs are valuable to both physicians and patients. By educating people about their illness, disease management programs empower patients and provide a mode of care that prevents the complications often associated with chronic diseases."

Other diverse constituencies also are voicing support for DM. A conservative think tank, The Heritage Foundation, recently pointed out that "traditional Medicare does not provide for sound coordination of care or disease management programs. These kinds of specialized programs are often found in private-sector health plans."

New Democrats Online has written in support of DM. For example, it recently reported on North Carolina Governor Mike Easley's efforts to design a DM program to deal with the problem of low-income seniors who need prescription drugs to treat serious, chronic diseases.

SUMMARY

To summarize the dialogue to-date:

Crippen: "We understand that Medicare has a problem with aging baby boomers. Show us the evidence that DM is a solution."

King-Shaw and others: "We are developing the evidence and we will make DM happen!"

HEART FAILURE REPORT CARD SHOWS NEED FOR PHYSICIAN AND PATIENT EDUCATION

“Heart Failure Report Card Executive Summary”
Conducted by the University of Pittsburgh and Thomas Jefferson University with support from AstraZeneca LP, September 2002

The Executive Summary reports on physician, patient, and general public interviews relating to heart failure knowledge and treatment.

Physicians gave an overall letter grade "C" to how heart failure is being diagnosed and treated in the United States. They graded patients’ understanding of heart failure, understanding of treatments, and compliance with making lifestyle changes a "D+."

NAM REPORT PROMOTES VALUE OF DM IN SOLVING HEALTH CARE CRISIS

“Health Care At the Crossroads”
National Association of Manufacturers (NAM), September 2002

This report summarizes health care cost and quality perspectives of 800 manufacturing companies. For manufacturers, these issues promise to take on even a larger role than in the past:

• The rising COST of health care...comes at a time for manufacturers when any additional costs cannot be absorbed by profits or passed on to customers.
• Because manufacturers provide such a high level of health benefits for their employees, they are interested in the levels of QUALITY they can offer. ...97 percent of NAM members voluntarily offer their employees health coverage.

The report provides seven recommendations toward better future health care:

1) Expand employee participation in wellness and disease management.
2) Collaborate to reduce medical errors.
3) Bring a HHS (Health and Human Services) voice to health care.
4) Move benefits administration to the Internet.
5) Pave the way for group purchasing arrangements.
6) Put Congress on the right health care track.
7) Use financial incentives to reduce health care costs in the long run.

Unlike many large Fortune 500 companies, most manufacturers have not participated in active health care quality management initiatives. One exception is in disease management, where large and small companies alike are investing in the promotion of the health and wellness of their employees (p. 31).

Online disease management is another area that shows great promise of both reducing costs and improving quality. Nearly 20 percent of NAM members make online disease-management programs available for a specific disease (p. 40).

MATHEMATICA RESEARCHERS REVIEW HEALTH PLAN CARE MANAGEMENT PRACTICES IN 12 CITIES

“Back To The Drawing Board: New Directions In Health Plans' Care Management Strategies”
Health Affairs, September/October 2002
Abstract

Concluding remarks from the “Policy Implications” section:

Health plans' approaches to care management have changed substantively; the changes we observed are more than just posturing by a tarnished industry. Overall, the changes shift the “management” of care away from management of all or many enrollees toward management of smaller groups of sicker enrollees.

We found consensus among plans that the growth of disease management has improved the care experience of participants, and many respondents believed that their programs were improving quality of care.

CHALLENGES OF eDM

“Integrating Technology and Disease Management -- the Challenges”
Healthplan Magazine, September/October 2002

This article discusses challenges faced by health plans attempting to integrate technology into disease management:

1) Effective Patient Targeting
2) Integrating Data with Nurse Workflow and Care Management
3) Demonstrating Return on Investment

WORTH REVIEWING!

“The State of Health Care Quality: 2002”
National Committee for Quality Assurance (NCQA), September 2002

“Making the Business Case for Improving Mental Health Care
How to Maximize Corporate Resources”
National Health Care Purchasing Institute, September 2002

“While Managed Care Is Still Unpopular, Hostility Has Declined”
Harris Interactive; October 21, 2002

“Make Your PDA a Health Partner
Manage disease, get fit, or just be ready in case of emergency”
BusinessWeek Online; October 7, 2002

“The Future of Healthcare is Everywhere
The coming revolution in pervasive computing may be closer than most of us realize—and it is likely to have a profound impact on healthcare and the medical device industry”
Medical Device and Diagnostic Industry, September 2002

“2002 Annual Employer Health Benefits Survey”
Kaiser Family Foundation, September 2002

“Partnership with Providers Leads to Better Asthma Care”
Center for Health Care Strategies Spotlight, September 2002

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We welcome your opinions and comments. Write or call Vince Kuraitis JD, MBA at vincek@bhtinfo.com, (208) 395-1197 or Harry Leider MD, MBA at harryl@bhtinfo.com, (410) 252-7361.