MEDICAL CARE;

You asked for information on Florida’s disease management program.

SUMMARY

Disease management (DM) seeks to improve patient care and outcomes and reduce health care costs by concentrating services on people with chronic conditions. Such people often receive fragmented care, do not follow treatment regimens, and experience a high rate of preventable complications and high use of costly services. DM integrates chronic disease treatment through support to both patients and physicians. A DM program helps patients follow appropriate treatments, use less costly outpatient interventions, and learn how to self-monitor their conditions. It encourages doctors to use best practice treatment guidelines and helps them communicate better with patients to prevent treatment gaps or duplication.

Florida began its DM initiative in 1997 when it authorized the Agency for Health Care Administration (AHCA) to implement DM programs for selected Medicaid clients with asthma, diabetes, HIV/AIDS, and hemophilia. The next year it authorized initiatives for hypertension, heart disease, cancer, sickle cell anemia, and end-stage renal disease.

Between 1998 and the end of 2000, ACHA contracted with eight disease management organizations (DMOs) to manage six diseases. The first contracts were designed to be cost neutral. In anticipation of reduced Medicaid spending, ACHA advanced to vendors the amount of administrative costs it anticipated they would have to spend. If a DMO’s costs exceeded spending reductions, as determined by comparing annual spending to spending during a baseline period, it had to repay the advance. Later contracts had similar conditions, plus the DMOs guaranteed that client costs would be 6. 5% under the baseline period.

In 2001, the legislature adopted a Medicaid preferred drug list and prior authorization law and directed ACHA to negotiate supplemental rebates with drug manufacturers. The law permits manufacturers to provide services that offset Medicaid expenditures instead of cash rebates. As a result of this legislation, Pfizer, GlaxoSmithKline, and Bristol-Myers Squib have recently agreed to provide DM programs.

ACHA officials believe the DM programs have been successful in improving quality care and reducing expenditures, although program costs have generally offset these savings. But the legislature’s program auditing agency, which reviewed the DM initiative in a May 2001 report, said that the ACHA had not completed cost analyses or received enough information to determine if patient outcomes had improved. It also found that ACHA was slow to implement the program, each DM program served only a portion of its eligible population, and provider knowledge of the programs was limited. ACHA acknowledges most of these deficiencies.

DISEASE MANAGEMENT

Disease management is a recent approach that seeks to improve patient care and outcomes and reduce health care costs by concentrating services on people with chronic conditions. Such people often receive fragmented care, do not follow treatment and medication regimens, experience a high rate of preventable complications, and have a high use of costly services. DM offers an integrated approach to chronic disease treatment that features case management, patient and physician education, and patient monitoring. A growing number of states are developing or using DM with their Medicaid clients.

DM programs typically focus on

• identifying patients with diseases subject to management,

• identifying medical practices that research shows to be most effective,

• supporting adherence to these practices by providing treatment guidelines to medical providers, reviewing patients’ compliance with the guidelines, and helping physicians monitor patients;

• educating patients in self-management and adherence to treatment plans; and

• collecting and analyzing process and outcome measures.

FLORIDA EXPERIENCE

Initial Phases, 1997 to 2001

History. Florida began its DM initiative in 1997, following a recommendation by a Medicaid reform task force. The legislature required AHCA, the state’s Medicaid administrator, to (1) identify costly or medically appropriate health care utilization and price patterns in the Medicaid program and (2) assess new ways of providing and monitoring service. It specified that these new methods could include DM, which it defined as an integrated and systematic approach for managing the health care needs of recipients who are at risk of or diagnosed with a specific disease by using best practices, prevention strategies, clinical-practice improvement, clinical interventions and protocols, outcomes research, information technology, and other tools and resources to reduce overall costs and improve measurable outcomes (FL. Stat. Ann. , 409. 912 (14)(a)).

The 1997-98 budget authorized ACHA to implement DM programs for asthma, diabetes, HIV/AIDS, and hemophilia. The next year’s budget authorized new initiatives for hypertension, heart disease, cancer, sickle cell anemia, and end-stage renal disease. In anticipation of savings it expected from the DM initiative, the legislature reduced the Medicaid budget by $ 112. 7 million between FY 1997-98 and 2000-01 (it later added back $ 46. 1 million for a net reduction of $ 66. 6 million).

The DM programs are available only to that portion of Florida’s Medicaid population who are enrolled in its primary care case management program (MediPass, a managed care system with a specific case management element). This population, principally families in the Temporary Assistance to Needy Families program, comprises about one-third of the state’s 1. 5 million Medicaid clients. ACHA estimates that about 19% of the MediPass population meets the criteria for disease management.

Operation. Between 1998 and the end of 2000 ACHA contracted with eight DMOs to manage six diseases. The first contracts (asthma, AIDS, diabetes, and hemophilia,) were designed to be cost neutral. Based on the number of clients ACHA identified as eligible for a particular DM program, it advanced anticipated administrative costs to the DMO in anticipation of savings. If spending reductions did not cover program costs, as determined by comparing annual spending on eligible clients to spending during a pre-DM baseline period, the DMO had to repay the administrative fees. Later contracts for end-stage renal disease and congestive heart failure had similar savings clauses, plus the DMOs guaranteed that client costs would be 6. 5% less than the baseline period.

ACHA identifies potential DM candidates through paid claims. Patients are notified of their eligibility both by ACHA and the relevant DMO and are advised of the additional care management benefits they can obtain. ACHA also notifies these clients’ primary care physicians. Providers may refer to the DMOs their MediPass patients who are not already enrolled and who may benefit from a program.

Second Phase, 2001 to Present

In 2001, the legislature adopted a Medicaid preferred drug list and prior authorization law and directed ACHA to negotiate supplemental rebates with drug manufacturers that wished to assure that their products would be considered for the list. (Under this type of arrangement, physicians who want to prescribe a drug that is not on the list must first obtain authorization from a state contractor. ) The law permits drug companies to provide services that offset Medicaid expenditures instead of cash rebates (FL. Stat. Ann. 409. 912(38)(a)(7)).

As a result of this legislation, ACHA has reached agreement with three drug companies to provide DM programs. Pfizer is funding a hospital-based program for patients with asthma, congestive heart failure, diabetes, and hypertension. (It is also funding a health literacy program. ) It guaranteed $ 33 million in Medicaid savings in FYs 2001-03, plus it is contributing $ 8 million to finance the new programs. Bristol-Myers Squib is financing a large-scale health management and faith-based model targeted to minority community members with diabetes and mental illness. It guarantees $ 16. 3 million in Medicaid savings between October 1, 2001 and June 30, 2003. GlaxoSmithKline is funding a medication error reduction demonstration program and a pilot program for improved patient compliance with asthma medication. It anticipates saving $ 14. 85 million over two years.

Outcomes and Issues

Cost Savings. The legislature enacted the DM initiative in order to save money, and it reduced the Medicaid budget to reflect anticipated savings. ACHA officials believe that the program has generated spending reductions (e. g. , unnecessary emergency room visits), but DM program costs have generally offset those savings.

Evaluations of the initial diabetes program (since ended) showed that annual prescription drug costs increased by an average of $ 125 per while in- and outpatient costs dropped by $ 200. But these savings estimates did not factor in DMO program costs. Both hemophilia and HIV/AIDS programs showed overall savings of about 40% against the prior year’s spending for participants, but evidence of savings was inconclusive when measured against nonparticipants.

But a May 2001 evaluation of the DM initiative by the legislature’s Office of Program Policy Analysis and Government Accountability (OPPAGA) found that ACHA had not completed cost analyses even though several contracts had been in effect for two years. This report was issued a few months before ACHA’s evaluative data was released.

OPPAGA also claimed that the agency had not established and included in contracts with DMOs an explicit methodology for determining cost savings. This failure resulted in a dispute with the diabetes DMO over ACHA’s claim that the vendor exceeded baseline costs and its request that it return $ 7. 6 million in advance fees. ACHA later rescinded this request pending an agreement with the DMO on a method to assess cost savings. ACHA notes in a January 2003 report that “savings reconciliations have been very difficult to accomplish,” in part because the system requires it to predict future costs for a specific disease population.

The ACHA report also states that certain DM components, particularly case management, are costly, and these substantial staffing costs make it more difficult to realize savings.

Patient Outcomes. Improved patient outcomes are the other expected benefit of the DM initiative. DMOs are required to measure outcomes and report results within 45 days after the service year ends. These reports should, OPPAGA said, include information on hospital admissions, emergency room visits, clinical outcomes, and clients’ knowledge of their specific disease. OPPAGA found that only two of five DMOs under contract as of March 2001 had submitted reports.

ACHA acknowledged that data analysis and reporting has been “less than robust,” and that this has limited DMOs’ ability to determine adequately changes in patient care and outcomes. ACHA paid for an independent evaluation of the asthma DMO. This evaluation revealed that “very few” clients actually received services, which limited the consultant’s ability to evaluate the program’s effectiveness. It did find some improved outcomes and decreased costs for those clients who received services compared to eligible clients who did not receive services. For example, service recipients spent on average $ 117 per year less on prescription drugs.

Other Issues

Implementation Schedule. OPPAGA found that ACHA had approved programs for only five of the nine diseases the legislature had identified, and two of those did not cover the entire state. This number has grown since drug manufacturers began participating. Now, DM programs cover seven of the nine targeted diseases (sickle cell and cancer are not covered).

Table 1 shows the number of MediPass clients and providers participating in disease management programs according to a January 2003 ACHA report.

Table 1: Disease Management Enrollees

Coverage Rates. OPPAGA found that the DM programs served only between 6% (asthma) and 58% (diabetes) of the eligible population. Low enrollment rates , it asserted, made it difficult to attribute patient outcomes to the initiative. ACHA agreed that enrollment was a challenge, but it asserted that its DMOs had, on average, “engaged” 40% to 65% of enrolled patients. ACHA identified two barriers in the enrollment process:

1. identifying eligible patients though administrative data was imprecise and locating them was difficult because contact information (e. g. , telephone numbers) was often outdated, and

2. interruptions in Medicaid eligibility status made effective care management difficult. It reported that 20% of engaged patients lost eligibility in the first six months after enrollment.

Provider Acceptance. While DMOs must provide services to providers, physician participation is voluntary. During their start-up phases, DMOs reported difficulty gaining physician cooperation. And OPPAGA found that doctors and their staffs often had little or no knowledge of the program.

Multiple Contracts. OPPAGA contended that a holistic, patient-focused approach should replace the existing disease-focused approach, that is, it recommended contracting with DMOs to manage patients not diseases. It noted that as the industry matured, some DMOs were moving in this direction, which could reduce the number of contracts ACHA had to negotiate and manage and provide better patient care.

OPPAGA argued that chronically ill people often suffer from multiple chronic conditions, but under the current scheme ACHA allows them to enroll with only one DMO, which may not have the expertise to manage issues unrelated to its specialized program. OPPAGA also claimed that contracting with multiple companies could lead to inconsistent risk assessments and service level determinations. For example, one DMO might use clinical indicators to determine service levels while another might base its service decisions on claims costs.

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