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March 3, 2010


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The Robert E. Nolan Company is an operations and technology consulting firm specializing in the health care industry. For 35 years, we have helped clients redesign processes and apply technology to improve service, quality, productivity, and costs.

Our staff members are all senior industry experts with 15+ years in the industry. Visit www.renolan.com to for health care articles, white papers, and client success stories.

Getting Serious About Disease Management

Dave Edwards
Senior Consultant

Despite the uncertainty surrounding the final result of health care legislation, it's comforting to know some management challenges transcend the vagaries of politics and regulatory agencies. One of those constants is optimization of administrative spend. Traditionally, it is an area of management focus applicable to all functions including medical management, of which disease management is a part. It is also an area of focus that may be elevated to critical importance if Section 102 of House Bill HR 3962 makes its way through committee and into law. This is the section that mandates, beginning January 1, 2010, at least 85% of premium dollars for large-group, small-group, and individual policies must be spent on medical treatment, leaving (at most) 15% for marketing, sales, administrative expense, other expenses and, for commercial carriers, profit. In that environment, creating and maintaining an effective disease management capability presents special challenges, but this would also present unique opportunities for administrative savings, cost-of-care benefits for self-insured groups, and marketplace differentiation.

The importance of disease management as a means to improve members' quality of life and to help control medical costs should be apparent to even a casual observer. According to an Archives of Internal Medicine study in 2004, 57 million Americans suffered from one or more of the "Big Five" chronic conditions–diabetes, asthma, congestive heart failure (CHF), coronary artery disease, and chronic obstructive pulmonary disease. That number is expected to increase to 81 million by 2020. Seventy-two percent of all physician visits and 88% of all prescriptions filled are for patients with one or more of these conditions, which is 75% of all medical spending in the United States. Yet, despite the enormity of the problem, the verdict on the effectiveness of disease management programs is decidedly mixed and falls into three categories:

  • At one end of the spectrum: Individual plan studies showing meaningful cost of care savings for targeted conditions.
  • At the other end: A recent Congressional Budget Office study stated there is insufficient data from large, long-term studies to make any broad statements about disease management programs' effectiveness in reducing cost of care.
  • And in the middle: A 2005 Society of Actuaries study showed savings for some condition programs but no savings for others. For example, an $11-$145 PMPM savings for diabetes programs; $150-$450 PMPM savings for CHF programs; but no savings for asthma programs.

The unmistakable message from all of this is that health plans are presented with a growing, complex problem that cannot be solved with broad brush strokes. Although daunting, it's a problem we believe can be effectively addressed, accomplishing the goals of clinical staff optimization, cost-of-care reductions, and market differentiation.

Effective disease management begins with two guiding principles: targeted engagement and member behavior modification. Without them, program benefit expectations will simply not be met. These principles have eight key tactical considerations which, in aggregate, produce meaningful, qualitative, and quantitative results.

  1. Integrity of member contact information—accurate telephone numbers and e-mail and postal addresses.
  2. Effective population risk scoring by age, gender, condition, co-morbidity, and location (by zip code).
  3. Engagement outreach supported by customized contact procedures for high-risk/high-potential members. Many programs fail because all members are treated equally from a procedural perspective, often resulting in engagement of a preponderance of lower-potential members.
  4. Member relationship building using a declining-scale intervention frequency and contact duration model. Similar to personal relationship building, contact with members should be frequent at the beginning with comparatively more time invested during each contact, then becoming less frequent and less time-consuming as interim goals are met and trust is developed. Too often, contact protocols call for semi-monthly or monthly contact with members which is an ineffective approach to creating an effective relationship between the plan's clinician and the member.
  5. Optimized post-engagement member contact success ratios enabled by system-generated reminder e-mails and/or automated reminder calls to member-directed contact telephone numbers.
  6. Treatment protocols and associated quantitative and qualitative improvement goals that correspond to the declining-scale intervention process noted in #4. Initial goals should be numerous, incremental toward the ultimate health goal, and easily attainable. Achievement of goals established later in the protocol period should require comparatively more effort on the part of the member.
  7. Quality-of-life and cost-of-care results reporting compared to initial member surveys and similar, unmanaged cohort claim costs.
  8. Manage caseloads by consistently closing cases at the end of protocol periods in which optimal health goals are met or for those members who are in consistent non-compliance with treatment plans.
  9. Although not an easy task, thoughtful implementation of these considerations should help drive success; something that has eluded the vast majority of the industry.

The Nolan Company wishes you good fortune in 2010. As needs arise, we would be pleased to speak with you about your medical management strategies for the new year.

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