WELFARE - MEDICAL ASSISTANCE (MEDICAID);

You asked for a description of Medicaid disease management (DM) models. You are interested particularly in Iowa’s program.

For part of this report we relied on information from two “Issue Briefs” produced in 2001 and 2002 by the State Coverage Initiative, a national initiative of the Robert Wood Johnson Foundation. These can be viewed at http: //www. state. coverage. net/pdf/issuebrief1202. pdf and http: //www. state. coverage. net/pdf/issuebrief. 0801. pdf

SUMMARY

Disease management is an emerging health care delivery tool that many states are using to control upwardly spiraling Medicaid costs, while maintaining patient health. There is general agreement that DM is an integrated approach to health care delivery that seeks to improve health outcomes and reduce health care costs by (1) identifying and proactively monitoring high-risk populations, (2) helping patients and providers adhere to treatment plans that are based on proven interventions (or “evidence-based” guidelines), (3) promoting provider coordination, (4) increasing patient education, and (5) preventing avoidable medical complications.

The number of states with operational or proposed Medicaid DM programs has risen from 11 in FY 2001-02 to 21 in FY 2002-03, no doubt reflecting the added pressure that states are now under to reduce Medicaid costs during this economic downturn. Iowa is not one of these states. The three managed care organizations that serve some of the state’s Medicaid recipients have, however, incorporated DM into their service plans.

Although many states have embraced DM as a policy, they have differed in how they run these programs and the methods they use to measure their success. Some states, such as Florida (see OLR report 2003-R-0097) have contracted with outside DM organizations (DMOs) to run their programs. This model is sometimes referred to as a “buying” model. Others, such as West Virginia, have chosen to keep the program “in-house,” a “building” model.

States have also had to grapple with determining which Medicaid populations (e. g, elderly, children) to include in their DM programs. They must also consider which diseases they want to manage and whether to move slowly via a pilot project versus a statewide approach. The most commonly managed diseases are diabetes, congestive heart failure, asthma, end-stage renal disease, and HIV/AIDS. Some states, such as Utah and West Virginia, are taking a slower approach and currently manage only one disease, while others (e. g. , Florida) recognize that many Medicaid patients may have multiple diseases and are attempting to manage several at a time. States must also decide which providers they want to manage their programs. For example, in Mississippi and Virginia, the pharmacists are the care managers in those states’ DM programs.

Since the DM programs are relatively new, their effectiveness is not at all certain. Early reports from Florida and Virginia were disappointing, showing states not reaping the expected savings. But several states have proclaimed their programs a success, such as Virginia, whose asthma management pilot program resulted in fewer emergency room visit claims. Some states (e. g. , Florida, and Washington) have opted for imposing “guarantees” on contractors to ensure that at least minimal savings are achieved.

Indeed, evaluating the success of DM programs can be challenging. For example, Utah, which runs a hemophilia DM program, experienced increases in the price of the blood factor needed to treat the disease, even though the program succeeded in reducing utilization of the factor. As a result, states are adopting different methods to ensure accurate ways for measuring both costs and clinical outcomes.

States are eligible to receive federal Medicaid matching funds when they run DM programs. Depending on the type of program, the funds are considered reimbursements, either for direct services rendered or for administrative costs. In Connecticut, the federal match for a DM program would be 50%. Where Medicaid rules and DM program rules differ, states may need to get the federal government to waive the rules. For example, Mississippi needed a waiver to be able to reimburse pharmacists to provide educational and other services on top of dispensing necessary drugs.

DISEASE MANAGEMENT IN MEDICAID

Table 1 shows the states with Medicaid disease management programs operating as of January 2003 and the diseases or conditions the programs manage.

Table 1. Medicaid Disease Management in the States

Source: State Medicaid Resource Kit, National Pharmaceutical Council, (January 2003); Missouri State Medicaid, press release, November 2002

Selecting the Diseases and People to Target

When selecting the diseases or conditions to target, states generally look for (1) patient or physician noncompliance with national treatment guidelines, (2) a high potential for successful intervention to improve clinical outcomes, (3) evidence of inappropriate expenses/utilization that can be reduced substantially, and (4) common practice guidelines and accepted treatment methods within their individual state. High utilization can be tracked by looking at indicators such as the number of emergency room visits, hospitalizations, and prescriptions, to name a few. Since many high risk patients may have multiple diseases, states may wish to have programs that manage more than one.

States must also decide whom to target in their DM programs and may wish to limit the numbers further by choosing a subgroup for intervention. For example, states may wish to target only people who are dually eligible for Medicare and Medicaid, who typically receive Medicaid on a fee-for-service basis, or it may go after those people who are enrolled in Medicaid managed care. (Some states’ Medicaid managed care contractors (e. g. , Iowa) have built DM into their service package for enrollees. ) Other states are targeting people enrolled in primary care case management (PCCM) programs. (In Medicaid PCCM programs, enrollees work with a primary care provider who coordinate their care and is paid a fee on top of any fees that would normally be paid for services rendered. )

Once a state determines what its target population will be, it needs a valid method for identifying that population, as well as the ability to access and share useful data. For example, a speaker at a recent care coordination and disease management conference, when discussing the identification of people with special health care needs, suggested the use of self or parent-reported consequences-based criteria, rather than relying on diagnosis or condition checklists, as a more effective identification tool.

Deciding Who Should Run the Program

States Using Contracts with Outside DM Organizations (DMOs). According to the Centers for Medicaid and Medicare Services (CMS), the federal Medicaid agency, Florida, Washington, Indiana, and Missouri, and Oregon have, or have considered entering into, contracts with DM organizations (DMOs) to run their DM programs. Florida’s program is described in great detail in the above-mentioned OLR report.

Last fall, Missouri’s Medicaid agency awarded a contract to a Virginia-based company to develop a DM program for patients with any of the following diseases or conditions: asthma, depression, diabetes, and heart failure. Identified high-risk enrollees must use only program sanctioned “teams” (consisting of licensed physician and pharmacist) for treating targeted diseases. (They can continue to use their current providers for services not related to the diseases. ) The enrolled provider team members are reimbursed at the following fixed per encounter rates: $ 75 for an initial assessment, $ 40 for problem follow-up and new assessments, and $ 25 preventative follow-up assessments. In order to participate in the program, providers must complete a training program, which can be done through a live program or by videotape.

Washington entered into contracts with two separate companies to manage its DM pilot program, which it launched in 2002. The larger contract went to McKesson Corporation. A unique feature of that DMO is its comprehensive CareEnhance 360, a state of the art service where nurses speak to potential DM patients at a time when they are already seeking information and most open to the idea of participating in a program designed to improve their health and quality of life. Its operators claim that this approach has led to 70% of members with covered conditions accepting referrals to a DM program.

The program places a 100% risk on McKesson, with 80% based on a cost savings guarantee and 20% based on improvements in clinical indicators.

The program is expecting to receive federal approval in April 2003.

States with In-House DM Programs. Maryland’s Diabetes Care Program operated from 1991-1997 as an adjunct to the state’s Medicaid PCCM program. Under the program, physicians and nurses who completed a five-hour continuing education course received a $ 20 monthly care management fee per member served. This fee was apparently paid regardless of whether the care manager saw the patient in that month. Patients received preventive services (e. g. , nutrition counseling and therapeutic footwear) that were not covered in the state’s other Medicaid managed care programs.

According to the Issue Briefs, average annual Medicaid spending decreased by $ 1,738 for Aid to Families with Dependent Children recipients but increased by $ 1,147 for people eligible for Supplemental Security Income. For both groups, emergency room visits declined and physician visits increased.

According to CMS, the state no longer has a stand-alone DM program. Like Iowa, the state pays its Medicaid managed care organizations a capitated rate and they use this to provide DM.

Mississippi’s DM program has used pharmacists to manage the state’s Medicaid enrollees with diabetes, asthma, hyperlipidemia, and coagulation disorders. There, the pharmacists evaluate patients referred by physicians, review drug therapies, and educate patients about the importance of staying on their drug regimens and managing their diseases.

The state received a waiver from CMS to allow pharmacists to be reimbursed by Medicaid for providing these services. Pharmacists must be certified by the state’s pharmacy board, which entails participating in at least 32 hours of continuing education courses in each specific disease area, participating in a one-day clinical workshop, and successfully completing an exam. Separate certification is required for each disease and re-certification is required annually. And the pharmacists must develop a care plan or protocol in conjunction with the physician, provide a separate area in the pharmacy for patient consults, and maintain a pharmaceutical care record. Medicaid pays the pharmacists for up to 12 one-on-one patient consultations per year.

According to the Issue Briefs, preliminary findings from a very small asthma group indicated a 96% reduction in hospital costs and a 58% reduction in emergency room costs. The state also experienced a significant decrease in diabetic HbA1c levels (a measure of diabetic activity). Immediate savings were harder to obtain for the other two diseases. The state has apparently just begun a more comprehensive DM program for patients with asthma, diabetes, and hypertension.

Since 1998, North Carolina has run its Medicaid DM program through the Carolina Access II/III (recently changed to Community Care), the state’s umbrella Medicaid program. The larger program uses both a statewide network of large practices, and countywide partnerships involving physicians, hospitals, and health departments. All Access II/III sites must (1) develop a risk assessment process, (2) implement a care management plan, (3) identify high cost users, (4) review emergency department utilization, and (5) implement disease management programs. The first initiative under the program targeted asthma. The state saw a 34% drop in hospital admission rates for children and an 8% decline in ER visits. The average cost for an asthma episode decreased by 24%.

In 1995, Virginia created a pilot Virginia Health Outcomes Partnership as a DM program for asthma patients. It was considered successful (it reduced emergency and urgent care service use by 41%, increased the appropriate use of medication, and projected a direct savings of $ 3-$ 4 for every dollar spent providing DM support to physicians. Despite these results, the program was deemed too expensive to administer and in 1997, the state out-sourced the program and covered more diseases (diabetes, congestive heart failure/hypertension, chronic obstructive pulmonary disease, depression, and gastroesophageal reflux disorder). For the second phase of DM, the

vendor estimated $ 700,000 in hospital savings and a reduction in patient care problems. For the next round of contracts the state intends to require guaranteed savings from its contractors.

West Virginia ran a pilot DM program for diabetes from 2000-2001. There, the state, via an amendment to its existing Medicaid managed care waiver, provided Medicaid reimbursement to certified diabetes educators who served as case managers and helped improve patient self-management skills, such as monitoring blood sugar levels and improving diet and exercise. In addition, the waiver allowed the state to pay primary care physicians separately for the time they spent completing patient diabetes assessments, individualized care plans, and flow sheet updates.

The state used protocols, guidelines, and educational materials developed by the Centers for Disease Control and the American Diabetes Association.

The Issue Briefs report that participation in the program was very limited. The state hopes to extend the program statewide with additional diseases this year.

Evaluating DM Programs

Evaluating a DM program can be challenging if the measure for determining success or failure is based strictly on costs saved. Cost savings are difficult to determine because (1) states do not have a clear sense of how many Medicaid enrollees have a particular disease (claims data may not be accurate) and (2) the Medicaid population tends to go on and off the program as their eligibility status changes, swinging enrollment from one year to the next.

Even when a state finds an acceptable cost baseline, when it goes to measure cost savings it may be disappointed that the savings are not there. This can result from more utilization of services, as well as increases in the costs of these services and medications. In Utah, which runs a DM program for hemophiliacs, for example, the state found that changes in physician practice patterns, patient severity mix, and the price of health care supplies significantly affected spending and comparisons against their baseline. There, an increase in the costs of the blood factor used for treating the disease increased even though overall use of the blood factor went down.

Getting Federal Approval

States embarking on DM programs in Medicaid must get federal approval in order to receive matching funds. Some states have asked CMS to waive certain Medicaid rules in order to run their programs. For example, those states wishing to run a pilot program in only certain parts of a state must waive the federal Medicaid law’s requirement that the program be run uniformly statewide. Alternatively, states can ask for an amendment to their Medicaid state plans (basically a blueprint for a particular state’s Medicaid program), in which the DM program is available to anyone who is eligible.

In order to get the matching funds, states must show that their DM program is either a medical service or administrative activity or function, says Elena Nicolella of the CMS office overseeing Connecticut’s Medicaid program. To qualify as a medical service, DM must include direct services provided by licensed practitioners. Examples would be patient education or behavior modification and could include programs run by licensed pharmacists as well as physicians. In Connecticut, the match for these activities would be 50% of any DM expenditure.

Alternatively, states can get federal funds if their DM program serves an administrative function necessary for the state to carry out its state plan. For example, a DM program that provided physicians with data on beneficiary utilization practices would qualify for federal funds, writes Nicolella. The matching rate for these expenditures would also be 50%.

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