[Senate Hearing 107-818]
[From the U.S. Government Publishing Office]
S. Hrg. 107-818
DISEASE MANAGEMENT AND COORDINATING
CARE: WHAT ROLE CAN THEY PLAN IN
IMPROVING THE QUALITY OF LIFE FOR
MEDICARE'S MOST VULNERABLE?
=======================================================================
HEARING
before the
SPECIAL COMMITTEE ON AGING
UNITED STATES SENATE
ONE HUNDRED SEVENTH CONGRESS
SECOND SESSION
__________
WASHINGTON, DC
__________
SEPTEMBER 19, 2002
__________
Serial No. 107-36
Printed for the use of the Special Committee on Aging
-----------
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SPECIAL COMMITTEE ON AGING
JOHN B. BREAUX, Louisiana, Chairman
HARRY REID, Nevada LARRY CRAIG, Idaho, Ranking Member
HERB KOHL, Wisconsin CONRAD BURNS, Montana
JAMES M. JEFFORDS, Vermont RICHARD SHELBY, Alabama
RUSSELL D. FEINGOLD, Wisconsin RICK SANTORUM, Pennsylvania
RON WYDEN, Oregon SUSAN COLLINS, Maine
BLANCHE L. LINCOLN, Arkansas MIKE ENZI, Wyoming
EVAN BAYH, Indiana TIM HUTCHINSON, Arkansas
THOMAS R. CARPER, Delaware JOHN ENSIGN, Nevada
DEBBIE STABENOW, Michigan CHUCK HAGEL, Nebraska
JEAN CARNAHAN, Missouri GORDON SMITH, Oregon
Michelle Easton, Staff Director
Lupe Wissel, Ranking Member Staff Director
(ii)
?
C O N T E N T S
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Page
Statement of Senator Larry E. Craig.............................. 1
Panel I
Dan L. Crippen, Ph.D., Director, Congressional Budget Office,
Washington, DC................................................. 2
Ruben King-Shaw, Jr., Deputy Administrator and Chief Operating
Officer, Centers for Medicare and Medicaid Services,
Washington, DC................................................. 29
Panel II
Sister Anthony Marie Greving, Director, Area Agency on Aging,
Pocatello, ID.................................................. 46
John Rusche, M.D., Senior Vice President and Chief Medical
Officer, Regence BlueShield of Idaho, Lewiston, ID............. 53
Alan Wright, M.D., Senior Vice President and Chief Science
Officer, Centers for Health Improvement, AdvancePCS, Hunt
Valley, MD..................................................... 65
Matthew A. Michela, Senior Vice President, American Healthways,
Nashville, TN.................................................. 75
APPENDIX
Testimony by American Dietetic Association....................... 91
Statement of Richard M. Wexler, Medical Care Development Inc./ME
Cares, Augusta, ME............................................. 93
(iii)
DISEASE MANAGEMENT AND COORDINATING CARE: WHAT ROLE CAN THEY PLAY
IN IMPROVING THE QUALITY OF LIFE FOR MEDICARE'S MOST VULNERABLE
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THURSDAY, SEPTEMBER 19, 2002
U.S. Senate,
Special Committee on Aging,
Washington, DC.
The committee met, pursuant to notice, at 9:31 a.m., in
room SD-628, Dirksen Senate Office Building, Hon. Larry E.
Craig (ranking member of the committee) presiding.
Present: Senator Craig.
STATEMENT OF SENATOR LARRY E. CRAIG
Senator Craig. Good morning, everyone. The Senate Special
Committee on Aging will convene. Thank you all very much for
joining us this morning to discuss the topic of disease
management and care coordination. A very special thanks to
Chairman Breaux who allowed me to facilitate this hearing and
to chair it. He will be here in a few moments. I think he just
called in tied up in downtown traffic and was there earlier for
another engagement, so he will be joining us in a few moments.
He is as interested in this topic as am I.
Disease management is an emerging technology with the
potential to improve patient quality of life and may reduce
health care costs. Disease management can best be described as
a coordinated and proactive approach to managing care for
patients with chronic illnesses.
Chronic illness is common among Americans on Medicare, and
I would like to call attention to some charts that now have
been turned in my direction. The yellow bar chart--why do we
not spin that around. I have got a copy of it here at the desk
so we can show it to the audience. The yellow bar chart shows
several diseases with a high prevalence among America's
seniors. Two of the chronic diseases shown are found in over
half of Medicare beneficiaries.
Even more striking is the fact that almost half of Medicare
beneficiaries have three or more chronic conditions. The pie
chart shows that 47 percent of those on Medicare have three or
more chronic conditions. These citizens are especially
vulnerable to medical complications. They also have high
medical costs paid out of their own pocket and by Medicare.
Unnecessary hospitalizations are one of the costly
consequences that disease management programs are designed to
prevent. These unnecessary hospitalizations are often a result
of cross-drug interaction, poor medication compliance,
deviation with treatment plans, and a lack of patient self-
management skills. Lack of coordination and fragmented
monitoring of seniors with chronic health conditions can also
contribute to unnecessary health spending.
Our population is aging. As the baby boom generation begins
to retire, the share of chronically ill seniors is expected to
increase. Future Medicare costs are certain to reflect both
increased numbers of seniors as well as extraordinary medical
inflation.
Evidence-based disease management is a promising technology
for helping to reduce avoidable spending and improve the
quality of life for Medicare's most vulnerable in the near and
the long term.
We are here today to learn more about the opportunity that
disease management presents. We hope to learn about the
challenges faced in moving these techniques into the Medicare
population. We also hope to learn about the breadth of disease
management programs and lessons learned from models already
underway in the non-Medicare marketplace.
Today's hearing will consist of two panels. The first panel
that is before us now, we are pleased to have and to welcome
Dr. Dan Crippen, Director of the Congressional Budget Office,
and Mr. Ruben King-Shaw, Jr., the Deputy Administrator and
Chief Operating Officer at the Center for Medicare and
Medicaid.
The second panel of experts includes Sister Anthony Marie
Greving, Director of Pocatello, Idaho Area Agency on Aging; Dr.
John Rusche, Senior Vice President and Chief Medical Officer,
Regence BlueShield of Idaho, headquartered in Lewiston; and Dr.
Alan Wright, Senior Vice President and Chief Science Officer,
Center for Health Improvement, AdvancePCS, in Fort Hunt, MD;
and Matthew Michela, Senior Vice President for American
Healthways in Nashville, TN.
Well, ladies and gentlemen, to all of you welcome. As I
have said, this is an area that I believe Congress must
explore, as we move toward Medicare reform and a prescription
drug program for our most needy, and to do both with two
thoughts in mind, providing better health care to our seniors
and controlling costs through more effective management.
With that, let me welcome our first panel of witnesses, and
Dan, we will let you start. Thank you.
STATEMENT OF DAN L. CRIPPEN, PH.D., DIRECTOR, CONGRESSIONAL
BUDGET OFFICE, WASHINGTON, DC
Mr. Crippen. Mr. Chairman, thank you. I really appreciate
the opportunity to be here today. This is an important topic,
not only to me, but perhaps more saliently to my kids and my
grandkids. We all thank you for holding this hearing.
I hope to make three points. One, Medicare is a program in
need of reform. Hopefully, that point will not take a lot of
convincing.
Two, there is a part of the Medicare population that, as
you said, Senator, is fairly expensive. The question is,
are they the same people each year--or who are these people?
There is a concentration of expenditures within the Medicare
population that invites further examination.
Third, disease management, or case management, as is more
probably the case with this population, has great potential, we
expect, to reform the delivery of Medicare services. We think,
however, that it is not yet proven that it will provide
significant cost savings in this program. But that is not
because we think it does not. We just simply do not have enough
evidence yet.
I have, I am sure, imposed this first chart on you,
Senator, somewhere else, in some other forum, because I use it
all the time. It essentially shows what we are now spending on
the programs for the elderly at the Federal level: Medicare,
Medicaid and long-term care, and Social Security.
Senator Craig. Again, why do we not turn that to the
audience who is here to listen and gain information. I have got
copies here, and the chairman will also have, so we can share
that with everyone. Thank you.
Mr. Crippen. We are currently spending a little over 7
percent of gross domestic product (GDP), or a little more than
a third of our budget, on these programs for the elderly. But
as my generation retires, we will quickly, over the course of
only two decades, drive that up to over twice as much--and
those are relatively conservative projections. So we will be
spending 15 percent or 16 percent of GDP on these programs--and
we are now spending about 18 percent or 19 percent of GDP on
the entire budget.
What this means, of course, is there is likely to be a
dramatic change in our fiscal policy. We will either need to
dramatically raise taxes when the time comes, increase
borrowing from the public, or significantly cut other
government spending--and we have not seen that kind of tidal
change for a long, long time. We could end up with a tax
system, for example, that looks a lot more like a European
country's than like what we have experienced here.
For example, since World War II, we have taxed at the
Federal level at an average of 18 percent of GDP. One could see
a future here where that would be 28 percent. So it is a
daunting challenge, to be sure, and something we cannot really
avoid. The demographics are baked. The folks who will retire
are alive today, and most of the folks who will be working are
alive as well today. We cannot change those factors. All we can
hope to do is change the growth of the economy, which is the
denominator here, and perhaps reform the programs so that the
numerator is not quite as onerous for our children. That brings
us to the topic of today's hearing, Mr. Chairman.
A little over 2 years ago, we began to ask the same kinds
of questions you have posed for us today. That is, can we
identify high cost procedures as well as high cost
beneficiaries in the Medicare population? We quickly discovered
that existing data were inadequate to thoroughly examine those
questions, so we joined with a team at Stanford, who had
received funding from the National Institute on Aging, to take
the literally millions and millions of records that the Centers
for Medicare and Medicaid Services (CMS) has accumulated over
the years and construct a database, which at the moment covers
1989 through 1997. We will be adding 1998 and 1999 soon, so we
will have records covering essentially 1989 through 1999.
What we have done is accumulate, over these years and for
each Medicare beneficiary, a great deal of detail on the nature
of their health care needs and the services that they are using
from Medicare. In fact, we have a month-by-month rack-up for
each beneficiary over those 10-plus years of data. So we can
now identify individuals as they enter the program, as they
incur illness, and as they incur expenditures throughout
Medicare, which is something we have not heretofore been able
to do.
We will soon publish a series of three papers, essentially
explaining this database and how it was constructed, as well as
the characteristics of the beneficiaries that the database
covers. But I can tell you some of the preliminary findings
today, which I think will enlighten the discussion of this
topic.
First, and of importance to this hearing, we confirm what
earlier analysis has suggested--that is that there is a
relative handful of beneficiaries each year who incur most of
the expenses. Five percent of Medicare beneficiaries account
for about 50 percent of the program's total costs, and 25
percent incur 90 percent of the costs.
I am going to repeat that second point because I think it
is an important number; that is, in any given year, 25 percent
of the Medicare population incurred 90 percent of the program's
total costs. That is not a new fact, Mr. Chairman. CMS and
others have determined through sampling that it is a very
heavy, very skewed distribution.
But we can start from that point and further analyze our
data now and see what some of the implications are. First, it
might suggest that if 75 percent of the folks are only
incurring 10 percent of the costs, we might want to figure out
a way to handle them differently than we do the more expensive
patients.
That 75 percent might be able to go to any doctor they
wanted to fill prescriptions or to do other things that an
average Medicare recipient might do today without all of it
being funded by the government and without all the current
limitations in the Medicare program. Again, because this 75
percent of beneficiaries only incur 10 percent of the costs, it
may not be worth imposing all of the limitations of the current
Medicare program on them.
But more to the point of today's hearing, that finding
suggests that we need to examine the 25 percent of
beneficiaries with the highest costs because as Willy Sutton
has reportedly said, the reason he robbed banks is because that
is where the money is. Certainly if we are going to examine
this program from a cost view point, we need to look at that 25
percent. But it is also the 25 percent of the population in a
given year that needs most of the health care, and so we can
examine them as well from the point of view of determining
their illnesses and, how they are being treated, in addition to
their costs.
There are questions we might ask as a first cut to look at
both the data and the issue you have placed before us. Is it
many of the same folks who incur high costs each year because
of chronic conditions? If it is, that would suggest a
particular kind of approach. What are their clinical
characteristics, and can they possibly be treated in another
way, such as with disease management, to produce better
outcomes? That is the question you posed at the top of the
hearing.
Another question is, are these folks high cost largely
because they are at the end of their life? We know that is a
phenomenon that can be quite expensive. If it is, the case,
what are we buying for those high expenditures? Heroic
measures? Extended stays in hospitals? The question then is is
there a better way to provide care for these elderly dying
patients as well?
Fortunately, we can now begin to answer some of those
questions with a little more precision, but before I do, I want
to offer a definition of disease management so that my
statement, at least, can be taken in that context. Basically,
and admittedly simplistically, disease management identifies
the best evidence-based protocols and practices for a specific
condition and tries to get both the patients and providers to
follow those protocols.
It is important to remember, however, that most of the best
practices referred to here were developed for a single
condition, not for one condition among multiple co-morbidities,
and do not often account for unique characteristics of the
elderly population, such as dementia.
Many disease managers also try to predict which patients
will ultimately become expensive, so as to target preventative
measures more efficiently. Generally, the savings accrue
because of fewer hospitalizations and emergency room visits.
To begin answering some of the questions we identified, we
examined in our data a cohort of beneficiaries for the years
1993 through 1997, beneficiaries who were the most expensive 25
percent in any of those 5 years. We then looked for patterns of
expenditures and found that while many high-cost patients do
die from one year to the next, a significant number have high
expenditures in two or more consecutive years.
It is those persistently expensive patients, Mr. Chairman,
that I think disease management or case management might
address more straightforwardly. Those patients account for only
20 percent of beneficiaries but nearly 60 percent of all
spending.
The clinical characteristics of this population, as you
have already suggested, are quite complicated. Most of the
spending is accounted for by patients with multiple chronic
conditions rather than just, for example chronic heart failure.
In fact, nearly 90 percent of spending--to translate the
numbers of individuals you have in your charts--90 percent of
Medicare spending is incurred by patients with three or more
chronic conditions.
Often, one or more of those conditions is among those that
have been treated with disease management in a private, younger
population, but as I noted above, it is unclear how
successfully those protocols developed for single conditions
for younger folks could be applied to an older population with
several chronic conditions.
An additional complication is that there is not anywhere
near a perfect correlation between exhibiting a condition as a
patient and incurring high, persistent costs. For example, 50
percent of those persistently high-cost patients that we
identified have coronary artery disease, but only 35 percent
of the patients with coronary artery disease are persistently
expensive.
In other words, persistently expensive patients--by our
definition, patients with high expenditures in two or more
consecutive years--are likely to have multiple chronic
conditions, but having any one of those conditions does not
mean the patient will become high cost in the future. So the
conditions are not a good predictor of who the high-cost
patients are going to be.
It becomes difficult to identify, therefore, which patients
should receive the additional attention of an intervention such
as a disease management protocol in order to avoid
hospitalizations. For non-Medicare populations, disease
management companies use predictive modeling and additional
data to increase the likelihood of picking out those with
future high costs.
Some of those additional data, such as pharmaceutical
spending, are not readily available for the Medicare
population, and the models may not fit the elderly very well.
Because we do not have a pharmaceutical benefit as part of
Medicare today, we therefore, do not have, pharmaceutical data
for this same group of elderly people.
We hope at some point in the future to be able to augment
our database with things like that. A number of companies have
offered to let us try applying their models to the Medicare
population, and it is an exercise that we will pursue shortly.
As I suggest, though, it is likely that the lack of comparable
data on the Medicare population will prove to make these models
less effective for predicting future expenditures.
Before I move on, let me simply sum up at this point. While
there are Medicare beneficiaries who exhibit persistently high
costs, it is not clear that disease management as it is now
practiced could be utilized successfully for that population.
But if we assume for a moment that it could, then we can
examine what we know about the health results and potential
savings, at least, of utilizing disease management as it is
currently practiced in the private sector.
A recent study by the Employee Benefits Research Institute
found that while case studies of particular programs have shown
positive results, there is no--and this is a quote, I believe--
``There is no conclusive evidence that disease management
programs in general improve health or reduce costs in the long
term.''
We at the Congressional Budget Office (CBO) are reviewing
other research, but many studies examine the process of health
care delivery, not the outcomes or the frequency of utilization
of services. Admittedly, evidence on quality and cost is
difficult to construct, especially for this population, and I
know many are loathe to conduct what is usually considered to
be a rigorous study--with a control group that does not receive
the better treatment, to provide comparisons.
It may well just be that we are going to have to let more
time pass to see the results of some of these interventions.
My colleague here on the panel obviously is in a much
better position to describe to you in more detail the various
studies and demonstration projects being conducted by CMS to
begin to answer some of those operational questions and
questions of savings.
In the meantime, or at least for the moment, until more
clear and compelling evidence materializes on health outcomes
and costs, I cannot tell you how CBO would evaluate a
legislative proposal promoting disease management.
First, of course, there are a great many design issues
that, as outlined in my written testimony, come into play. But
more to the point, we remain to be convinced of significant
savings from disease management as it is currently practiced,
especially when applied to the Medicare population.
I would hasten to add, however, that we are not agnostic on
the issue. We expect that the continued examination of
persistently expensive Medicare patients will enlighten us
further, and perhaps, if companies offering disease management
were willing to take on some of the financial risk for the
medical care provided to those patients, as opposed to putting
only their own fees at risk--we would be more confident that
companies would have incentives to watch those costs more
closely.
The key, ultimately, at least to savings is the avoidance
of hospital costs through lower admission rates and the
avoidance of emergency room visits probably both for
persistently expensive patients and for those at the end of
their lives. So on both sides of this distribution, Mr.
Chairman, we have work to do in identifying both the patients
who are likely to become high cost and these who are at the end
of their lives and how they are being served through Medicare.
Thank you.
[The prepared statement of Mr. Crippen follows:]
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Senator Craig. Well, Dan, thank you very much. Before I ask
questions of you, let us hear from our second member of this
panel, the Honorable Ruben King-Shaw, Deputy Administrator,
Chief Operating Officer, Centers for Medicare and Medicaid
Services.
Ruben, welcome before the committee.
STATEMENT OF RUBEN KING-SHAW, JR., DEPUTY ADMINISTRATOR AND
CHIEF OPERATING OFFICER, CENTERS FOR MEDICARE AND MEDICAID
SERVICES, WASHINGTON, DC
Mr. King-Shaw. Thank you, Mr. Chairman. I appreciate being
here. It is always good to talk about what we are doing over at
CMS, and particularly on this very important topic as it
relates to our overall strategy to modernize Medicare for all
the people that we serve.
As the Chief Operating Officer of CMS, I am very much, you
know, responsible for the day-to-day operations of the
nation's, if not the world's, largest insurance company and
financial services firm.
In that sense, I have got two major product lines in the
insurance business, an indemnity fee-for-service Medicare
product and Medicare+Choice product. My comments in the oral
testimony will be focused on the fee-for-service, or indemnity
environment. The written statement does have more information
on what we are doing on managed care.
But, as you can appreciate, most of the world outside of
Medicare has moved away from the indemnity model toward more
types of managed indemnity or managed care or care
coordination. In the insurance benefit administration field we
are a good 20 years if not more behind in that.
So there are implications for that for Medicare, and as you
heard from Dr. Crippen's testimony, in fact, a relatively small
number of beneficiaries do account for a disproportionately
large amount of our expenditures, and so we are looking at the
possible ways that a disease management, population management,
care management strategy can impact those costs, and beyond
that improve our product, again, referring to the fact that we
are very much an insurance company among other things.
We need to make sure that we continue to improve our
product, better serve our beneficiaries and deliver on the true
promise of Medicare, and so disease management gives us an
opportunity to talk about ways we will do that.
My comments will go through some of the environmental
factors that we are looking at and the demonstrations we are
currently pursuing to answer some of the very same questions
that we have talked about already here this morning, keeping in
mind that the promise of disease management is most realized in
having a positive impact on both the performance, the outcome,
the clinical condition of the patient, as well as the cost, the
overall cost of care.
So it's the integration of resources, of information, of
strategies, of data, the elevation of evidence-based practices,
best practices, in a patient-centered way where these outcomes
and cost savings can be realized.
So we do look to disease management as a way of identifying
the best ways to improve or increase access to care, the best
strategies for intervening in the development of disease or the
maintenance of illness--I'm sorry--of wellness for
beneficiaries.
We are looking for ways we can improve the clinical
outcomes by having clinical performance of caregivers and
physicians and patient participation brought to the mix so that
we can produce a better outcome for the patient, the Medicare
system overall.
So as we are looking at the ways to do this, we have a few
demonstration programs under way. One of these consists of 15
different demonstrations that are the more the disease
management variety. These demonstrations are focused on
conditions such as congestive heart failure or coronary heart
disease or hypertension or asthma.
These individual vendors come from a variety of sources.
Some of these are proprietary, commercial vendors that have
been successful in the commercial market. Some of these are
academic medical centers including historically black colleges
and universities and other types of institutions. Some of these
are not-for-profit entities that specialize in, for example,
coronary heart disease.
But through a variety of combinations of expertise, these
vendors, if you will, partner with us to bring these best
practices to organize a delivery system on behalf of the
patient in a way that they believe will have a positive impact
on the cost and the outcome of the patient.
They are free to use various degrees of technology. Some of
them are quite technologically advanced in their applications;
some of them use a more traditional model of coordination of
care. Some of these are telephonic. Some of these are face-to-
face.
Our objective here would be to have these 15 different
demonstrations that serve currently over 3,000 Medicare
beneficiaries explore the different strategies so we can
collect data at the end of demonstration to identify some of
these best practices and what the cost implications were, what
the performance measures were, as a result of different
interventions, different types of organizations, different
populations, and, in fact, different parts of the nation.
Another type of these demonstrations were enabled by BIPA
legislation, where again these demonstrations do give us an
opportunity to include a prescription drug benefit, not just
for a specific disease, but for all of the prescription drug
needs of the enrolled population. It is commonly known that if
you are going to do an effective job at managing the overall
care of a patient, then a major part of that care plan would be
the inclusion of the appropriate prescription drug therapies.
So by including prescription drugs in the mix, the attempt
here would be to have a disease management organization work
with the entire continuum of care including pharmacology to
produce this outcome. We have just, you know, recently gone
through a process. We are finalizing that information. We hope
to get those underway very quickly, but again that is a second
variety of demonstrations that we are pursuing.
We are looking soon to move into a demonstration
environment for various strategies to better improve the
performance of the ESRD, end-stage renal dialysis patients, a
significant cost factor in the Medicare program, and also one
that is very ripe, we think, for the kind of interventions a
disease management program can bring.
So in a very few words what I hope I have done in this
introduction is give a sampling of what we are doing in this
field of disease management with the understanding that we at
CMS, the Federal Government as a whole, the trust funds, are at
full risk in the fee-for-service environment. There is no
intervening force, and so if you have a disorganized, if you
will, non-coordinated system of delivering care, which is what
we have in fee-for-service, and you have a small number of
people who are disproportionately consuming your resources, one
of the strategies would be to have an integrator, a
coordinator, use data techniques to identify those individuals
and build a community of care, a system of care, coordination
of care, to have a positive impact on those individuals, but
again the Medicare program overall.
Thank you very much, Mr. Chairman. I would be happy to
answer whatever questions you and others may have.
[The prepared statement of Mr. King-Shaw follows:]
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Senator Craig. Well, thank you very much. I appreciate both
of your testimonies and let me ask several questions of you.
Dr. Crippen, you have provided I think an excellent testimony
on what appears to be a fairly complicated issue, trying to
understand if, in fact, you can affect the current trends
significantly.
You discuss the problem of identifying best candidates for
disease management and referred to the concept of regression to
the mean. Now that sounds a bit like an economist speaking.
Mr. Crippen. It is.
Senator Craig. I am not. From the testimony I was not sure
if this theory applied to the Medicare population because you
did identify a persistently expensive group in your analysis.
Question therefore is: does the regression to the mean concept
apply to Medicare enrollees?
Mr. Crippen. The answer is yes, but probably not in the
same way. The term regression to the mean is roughly saying
that a person will over their lifetime, exhibit average
spending. These, if we had a Medicare recipient who in one year
was a very high-cost patient, there is some probability that
over the next year they will be a low-cost one--that is, if
their are expenditures episodic, or acute expenditures and not
for chronic conditions.
There are certainly many of those folks in this population.
Indeed, there are two things that you need to look for as we
look at the data. One is unfortunate but true: those folks who
die are not representative of the future costs of beneficiaries
of the program, for an obvious reason: and those who incur high
costs in one year may not be representative of those who will
incur high costs in following years. That is why we looked for
people who had high costs in at least two consecutive years.
That is the population that we think you would first want
to look at to say do they have chronic conditions, are they
treatable in a different way like disease management or case
management, because if they are just an acute health problem,
there is no use trying to manage that very much. You are going
to experience expenditure in the next year that will be out of
this group.
Likewise if folks die. But it's a very important thing, as
you pointed out, to keep in mind. Some of the studies frankly
that have been done over the years looking at this population
have done things, partly because of data necessity, like throw
out anyone who died during the course of the year, and then
look at costs. That is not a representative sample certainly
for this population.
So your question is very much on point. We do not have the
complete phenomenon of regression to the mean, but we certainly
do have that show up to some extent here as well.
Senator Craig. OK. The end of your testimony lays out
several obstacles for achieving direct scoreable savings with
any Medicare disease management program. If successful, will
the Medicare demonstration projects that Mr. King-Shaw is
talking about provide enough evidence to show a scoreable
savings; do you think?
Mr. Crippen. I expect so; it always seem too soon to tell,
particularly for those that are being designed with capitated
payments. That is important so that providers have some
financial risk as well, in looking at the costs, but any
additional data on how much it takes to support this population
and how these disease management concepts could apply will
enlighten this discussion.
As I said, part of our reluctance at the moment to say that
we know this is going to save money is not because we do not
think it will. It is because we do not have enough evidence,
and these demonstration projects should be quite informative in
that as well as other research we and others intend to do.
Senator Craig. OK. Is there a way to design a Medicare fee-
for-service disease management program without creating adverse
incentives among providers?
Mr. Crippen. The answer is yes. I suspect, however, that
there are a lot more ways to create a program that does have
adverse incentives, so it is important to keep our eye on
that--as you are suggesting by this question.
Let me digress for a minute, if I might, because I think,
as my colleague here suggested, that we do not often think of
this population as an insurable pool, even though we are
effectively providing some types of insurance. We think of it
more as the Federal beneficiaries who are participants in this
program, and the benefits we are providing, and how to pay for
them.
But if you think of these groups as risk pools, it can
sometimes be informative. We have, by our simulations,
estimated that it takes about 100,000 Medicare recipients to
have a pool with average risk. We do not have insurance pools
that are in the country, that large although clearly we could,
because we have 39 million, roughly, people in this program.
But given the division between providers and geography and
other factors, we do not have pools that large.
So you need to look at the risk within the pools, which is
one of the things that drives our interest in this topic. If
you look for high-cost procedures or patients, that is the
risky tail of this pool. If you devise a system for removing
those beneficiaries from the risk pool--because you are paying
for them differently, independently--you would then create a
much more average risk for the remainder of the pool. We are
convinced that it takes some financial risk by providers and
probably beneficiaries, as well, to get the incentives right.
By bearing some risk, everyone has a bit of an incentive to
watch how much of a service they use.
That is not to say there has to be a large risk, but at
least there needs to be some. So, until disease management
companies are part of a provider system that bears some
financial risk, they will not have those incentives that we as
economists think are important to control costs.
It is entirely possible, I think, to construct a system
that could avoid adverse selection--or the incentives that
encourage. We also have an opportunity here--and it is one of
the few silver linings to the cloud that is the doubling of
this population, from 40 million to 80 million, over a
relatively short period of time. With all those new entrants,
we would have the ability to assign them to risk pools in, say,
a random fashion.
As a result, there may be some opportunities with the rapid
expansion of this population to compensate for any selection
that becomes evident; even after the fact, a risk pool that
showed lower-than-average spending, for example, or a healthier
population could be repopulated with random assignment of folks
who are coming into the program.
Senator Craig. OK. I thank you not only for your interest
in this and the involvement of the Congressional Budget Office.
I think that is critically important because those of us who
are spending time looking at these issues and seeing this
phenomenal explosion of costs out there----
Mr. Crippen. Yes.
Senator Craig [continuing]. Trying to understand how we get
this all done, and I think your example of talking about moving
from the, well, nearly doubling, 18 to 28, is a very high
factor here.
Mr. Crippen. Absolutely, and this kind of approach might
also be useful as you develop other policies on pharmaceutical
benefits----
Senator Craig. Yes.
Mr. Crippen [continuing]. As my colleague here suggested.
It is entirely possible that you could give pharmaceutical
benefits through a disease management protocol where most of
the pharmaceutical costs probably are anyway.
Senator Craig. Well, in one of the versions of the
pharmaceutical effort, at least here, prescription drug effort
in the Senate this year, a piece of legislation I supported
dealt with allowing pharmacists to become skilled in education,
training, cross-referencing, really working with, if you will,
the client or the patient in a much broader knowledge of the
use of, the application of pharmaceuticals as an important part
of not only understanding and creating and disallowing the
problems that can result, but also bringing down some of those
costs. So, thank you.
Mr. King-Shaw, you talk about, I guess I would have to say,
quite a few different management demonstration projects. Why so
many?
Mr. King-Shaw. Well, I think it is important as we go down
this road to have really good research, good information on
what works and what does not. I think it is also true that
different approaches have been successful in the commercial
sector or in the Medicaid sector. They may not all be
successful in the Medicare space, and so it is important, we
think, to have very good credible data about the range of
activities that are possible before we would select any one or
even a few to become the mainstream effort in disease
management.
I think it is also important for us to stay current with
the developments of technology. For example, one of the
realities in the Medicare program is that there is no natural
coordinating force. We have many different people paying
claims, organizations paying claims on one individual. There is
no easy way to pool data together on either patient performance
or outcomes or utilization or anything like that, and so when
you do not have anyone in the system who has the ability to
coordinate across the system, obviously you have weaknesses and
concerns from that alone.
There are different strategies underway to organize or
galvanize or centralize information and coordination on behalf
of patients. We need to know which ones work better than others
and with which populations.
Senator Craig. OK. In January, you selected 15
demonstration sites for coordinated care projects, as I read
it, four rural, one rural urban, ten urban. The reason I ask
this particular question, my State by definition is a rural
State, is the availability of Medicare+Choice programs is very
low. As an appropriator and a senator from the rural State, I
have worked hard to develop a couple of demonstration projects
to try to bridge this urban-rural gap, and one of those that is
developing a good deal of interest is the tele-health
demonstration projects.
Can you tell me if any of your disease management
demonstration projects are using tele-health or tele-monitoring
devices?
Mr. King-Shaw. We believe that there are programs out
there, disease management vendors, who will use and, in fact,
are beginning to implement those strategies. All of them will
not. We have encouraged these disease management demonstration
proposers to come up with the best approaches based on who they
are and where they are. The tele-medicine/tele-health
capabilities are extremely applicable in the rural areas and in
some of the urban environments as well. So it is our
understanding, it is our belief, and, in fact, our expectation
that those tele-medicine/tele-health applications will be used
in some of the demonstrations, and at least one of them in the
rural areas.
Senator Craig. OK. Your written testimony discusses
potential payment options and the idea of a competitive bidding
process is notably absent. Is this an oversight or an omission
by design?
Mr. King-Shaw. Actually neither.
Senator Craig. OK.
Mr. King-Shaw. There is a competitive process that we use
for identifying these disease management programs. We have a
process that can work in two ways. We can actually release a
statement saying we are interested in proposers in this way,
and so individuals can submit their responses to us. They are
vetted thoroughly. We select the best ones. There is a series
of criteria that we use. There is a panel of experts that we
bring together from throughout CMS, and at times we will
consult with entities outside of CMS.
But there is a competition for the best, most robust, most
tested proposals. Now, that is slightly different from
competitively bidding for a commodity where you would just pick
the lowest price or the best deal, so to speak. Many of these
proposals are submitted with nuance and strategies and
different approaches, and so you are comparing the various
strategies that people will use to achieve an outcome.
So a commodity like competitive bidding process is probably
not well suited, but they are quite competitive. The selection
criteria, you know, is quite intense, and so when we do have a
series of winners, they have been thoroughly vetted.
Senator Craig. OK. Of course, the ultimate question is how
long? How long before we see any published final results in
these demonstration projects?
Mr. King-Shaw. We think that the final results are about 2
years, at least a year beyond the completion of a
demonstration. So we have these demonstrations that are running
from 1 to 3 years, more often 2 to 3 years in length. So a year
after that, we would have some conclusive data. They are
staggered, and so we will begin to have some data coming in
over a period of time.
I think what is also important to note is that many of
these disease management demonstrations, population management
demonstrations, are built around evidence-based practices, and
once evidence-based practices are made available and
disseminated to the delivery system, there tends to be
relatively rapid adoption of them among the caregivers, the
clinical community.
So you can begin to see very quickly changes in behavior,
patterns of utilization, some outcome data. We will be getting
regular reports from these disease management demonstration
projects that we can compile into some type of interim report
card or update. But for something final and conclusive, that
would take longer and it would include some external
verification as well.
Senator Craig. Well, gentlemen, thank you. Thank you both
very much for your time and your valuable testimony this
morning. Of course, as you all know, this committee is not an
authorizing committee; it is an investigative committee, an
information-gathering committee, a record-building committee,
that we hope can supply information and evidence to authorizers
as we get into these critical areas of policy design and
decisionmaking. Thank you both very much.
Mr. King-Shaw. Thank you.
Mr. Crippen. Thank you.
Senator Craig. I would ask our second panel and panelists
to come forward please. Thank you all very much. That is the
difficulty of cell phones when you do not turn them off. I
apologize.
Let me welcome our second panel and let me start with
Sister Anthony Marie Greving, Director of the Pocatello, Idaho
Area Agency on Aging. I always foul that up, Sister. I
apologize. We welcomed you before the panel. Please proceed.
STATEMENT OF SISTER ANTHONY MARIE GREVING, DIRECTOR, AREA
AGENCY ON AGING, POCATELLO, ID
Sister Greving. Thank you very much. I appreciate the
opportunity to showcase our health promotion program in
southern Idaho. As Senator Craig says, I am Sister Anthony
Marie Greving, Director of the Area Agency on Aging in
Pocatello, ID.
The southeast Idaho area encompasses 9,200 square miles of
rural and desert areas, sagebrush and juniper trees. The area
is dotted with people not in large metropolitan areas or
cities, but in small rural towns. Elderly in southern Idaho
number a little over 22,000 or 15 percent of the total
population.
I come today to share with you our health promotion program
for the low income elderly. The Area Agency on Aging contracts
with the Southeast Idaho Community Action Agency, Retired and
Senior Volunteer Program, to provide health promotion services
to some 1,500 rural elderly. This program has seen a monumental
growth.
Over the past 7 years, the Southeast Idaho Health Promotion
Program has received a total of some $90,000 in Older American
Act funds, an increase of 38 percent since initial funding in
1996.
The current year contract, however, with the RSVP program
is not $90,000, but a mere $18,300. In service numbers, 176
people were served the first year, and now over 1,500 rural
elderly are being served, a monumental 752 percent over the
past 7 years. We are talking about commitment of dedicated
staff and volunteers who see the need for services to the
underserved and vulnerable.
This program began with medication reviews called brown
baggers in local senior centers, and has now grown beyond
belief in assisting the homebound elderly with home safety
checks, as well as a medication assistance program for those
elderly who cannot afford the full cost of prescription drugs.
Permit me to cite an example here which happened in
southern Idaho. We have an elderly gentlemen who is 66 years of
age, who has no primary physician, yet he has many diseases for
which he takes many medications daily. On his kitchen table
were two coffee cups. He would fill each coffee cup with 23
medications, take one cupful in the morning with breakfast, the
other cupful in the evening with dinner, whether he needed them
or not.
Through our health promotion staff medication review, we
assisted him in getting a primary doctor, who prescribed only
seven medications on a daily basis. I am here to say that now
he is serving as a volunteer within his local community.
Elderly people have voiced to me that greater coordination
is needed between physicians and pharmacists on prescribing
drugs for elderly people. So many doctors do not take the time
to know what drugs elderly people are now taking, all the while
prescribing another better pill to ease the pain.
They have also stated that pharmacies need to write not
only in large print, but also give very specific directions on
the medication label when to take the meds, not just the phrase
``take as directed.'' Those are two of the concerns that local
elderly people have.
Besides the standard health promotion program, the RSVP
staff coordinate with Idaho State University Senior Health
Mobile Clinic to provide medication review for the rural Idaho
homebound elderly.
This interdisciplinary mobile team travels the isolated
areas of southeast Idaho in a van clinic that is equipped with
health-related supplies, equipment, and educational resources.
Yes, Idaho is a very rural State. Its population is made up of
a shifting trend from those who have aged in place to those who
are moving around the country as they age.
In our health promotion program, we are seeing a number of
older adults who are taking 16 to 18 medications daily,
prescribed by a number of health care professionals to make the
individual feel better. But the picture is by no means bleak. I
highlighted what one health promotion program can do with
drive, determination, and a readiness to solve problems in
small rural communities.
Disease management is possible in some rural areas,
especially to those elderly desirous of a home and community-
based service system, those who are homebound and those who
wish to remain independent. I have given you a brief portrayal
of how southeast Idaho has utilized the Older Americans Act
funds to implement an effective health promotion program with a
limited budget.
There is always room for more services to our vulnerable
elderly. I would ask for greater support of a disease
management program like health promotion and medication
management under the Older Americans Act, so elderly as
Medicare beneficiaries can continue to maintain their health
and quality of life and gain greater longevity and
independence. I thank you for this opportunity.
[The prepared statement of Sister Greving follows:]
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Senator Craig. Sister, thank you very much for that very
valuable testimony about effective utilization of resource.
Now, let me introduce before the committee Dr. John Rusche,
Senior Vice President and Chief Medical Officer, Regence
BlueShield of Idaho, headquartered in Lewiston, ID. Doctor, I
am traveling to Lewiston, ID tomorrow morning.
Dr. Rusche. Say hi for me.
Senator Craig. I will do that. I think I am going to beat
you home. Welcome before the committee. Please proceed.
STATEMENT OF JOHN RUSCHE, M.D., SENIOR VICE PRESIDENT AND CHIEF
MEDICAL OFFICER, REGENCE BLUESHIELD OF IDAHO, LEWISTON, ID
Dr. Rusche. Thank you, Senator. I appreciate the
opportunity to give testimony to the committee. I am Senior
Vice President and Chief Medical Officer of Regence BlueShield
of Idaho. We are a mutual health insurer and an independent
licensee of the BlueCross BlueShield Association.
We are a member of the Regence Group, which is four
northwest Blues, BlueCross BlueShield of Utah, BlueCross
BlueShield of Oregon, Regence BlueShield in Washington, and
ourselves.
I appreciate this opportunity to discuss disease management
programs from the health plan point of view. I believe that
this model of care coordination will be an important tool over
the next few years as we continue to struggle with the issues
of cost and quality.
Disease management works by focusing effort and limited
resources on those individuals who are most likely to utilize
services and whose clinical course can be improved by the
intervention. You saw from the charts before that in the
Medicare population, half have three chronic diseases. From an
analysis of our population, 2\1/2\ percent of our insured
population account for 60 percent of the cost. It really is
concentrated.
The range of interventions can extend from patient
education and self-management to medication and therapy
management and reminders to intense, individually crafted care
plans involving the entire array of physician, facility, drug
and nursing care available.
In our experience, there are four components of a
successful population health program. First is identification.
Of any population, only a subset has a condition.
Second is stratification. Once you have identified the
members with the condition, you need additional data. Not all
people with a condition are of the same likelihood to incur
expense.
Third, the intervention has to be palatable. The program
must be acceptable to the members and providers it supports.
Simplicity, ease of service, and customer service are really
important.
Finally, outcome data. Any program needs to be able to show
that the end effects are there in order to be able to judge the
value of the intervention, or if you make later changes, that
you have had a positive effect.
In my more than 15 years of clinical practice, it has
become clear that optimum care of complex chronic disease could
be handled in better ways than our current one-on-one physician
and patient behind a closed door system. As the managed care
organizations of the 1990's become the care management
organizations of the future, we will be doing a lot less
utilization management, the authorization and approval
approach, and more guidance in the best evidence-based approach
to care.
We will be more focused on the opportunities for greatest
success. The written testimony I have provided describes our
use of a cardiovascular program and a high risk psychosocial
program for our Medicare HMO population. We will be looking at
other chronic conditions that have modifiable courses.
Currently, we are evaluating renal disease, cancer, depression,
and arthritis programs.
Some will be internally managed with our staff. Some will
be contracted with vendors. The nature of the population served
really defines the best model, I believe, for financing these
programs.
For example, we operate our maternity program internally.
We could get a good result at as low or lower cost than from a
vendor. The services and expertise in our cardiovascular
program provided by QMed could not be replicated internally, so
contracting was our best bet.
A predictable rate of complications or disease incidence in
a large population ordinarily allows a health plan to accept
risk or retain the risk. Unpredictable risks, small
populations, make risk-sharing or guaranteed return contracting
with a vendor more attractive.
Chronic disease increases with age. Complications and co-
morbidities increase with age. Our senior population is what
one might call a target-rich environment for disease management
tools. If there is any population that the tools will benefit,
if there is anywhere they will prove their value in health
improvement and cost avoidance, it is among seniors.
Senator, this concludes my oral comments. I would like to
thank the committee for this opportunity to discuss disease
management programs, and would be happy to answer any questions
that you might have.
[The prepared statement of Dr. Rusche follows:]
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Senator Craig. Thank you very much, Doctor, for being here
and for offering the testimony and the experience that your
companies are going through.
Now, let me introduce before the committee Dr. Alan Wright,
Senior Vice President and Chief Science Officer, Centers for
Health Improvement, AdvancePCS--I will let you explain that--in
Fort Hunt, MD. Doctor, thank you.
STATEMENT OF ALAN WRIGHT, M.D., SENIOR VICE PRESIDENT AND CHIEF
SCIENCE OFFICER, CENTERS FOR HEALTH IMPROVEMENT, ADVANCEPCS,
HUNT VALLEY, MD
Dr. Wright. Thank you, Senator Craig. I would like to thank
the committee for calling this hearing today.
Senator Craig. Pull your mike a little closer down maybe
just a bit. Thank you.
Dr. Wright. How is that?
Senator Craig. That is better maybe.
Dr. Wright. Our company, AdvancePCS has been creating
disease management programs to improve the delivery of health
care in this country for many years. We are pleased that
Congress is interested in exploring the integration of disease
management into the Medicare program and look forward to
working with Congress.
My name is Alan Wright. I am a physician and I am the Chief
Medical Officer of AdvancePCS. During my tenure at AdvancePCS,
I have been responsible for the development and oversight of
disease management programs. I am currently focused on
integrating new and emerging technologies into these programs.
By way of background, AdvancePSC is the nation's largest
independent provider of health improvement and pharmacy benefit
services, touching more than 75 million lives. Our clients
include BlueCross and BlueShield programs, health plans, self-
insured employers, other employer groups, labor unions and
government agencies including the Federal Employee Health
Benefits Program.
AdvancePCS health improvement capabilities range from
pharmacy benefit management to clinical programs to disease
management programs to specialty pharmacy services. We believe
that these services are critical components in helping our
clients balance their objectives of cost containment and
quality.
What I would like to do in my testimony today is first
describe our current disease management programs and our
approach and delivery of these programs. Second, highlight the
current status and future plans for our programs. Third,
describe the potential value of these programs to Medicare.
Disease management programs are application and management
strategies for the chronically ill, relying on a wide array of
delivery models that improve the overall health of targeted
populations. The benefit of our disease management programs are
numerous. Aggressive management of chronically ill patients
typically enables individuals to require less intensive care
which enhances the quality of life and reduces the medical
costs.
In addition to providing health and financial benefits,
disease management also reinforces care standards and
strengthens physician-patient relationships. AdvancePCS disease
management programs are developed internally, using established
national guidelines such as the Joint National Committee on
Hypertension, sponsored by the AMA; the guidelines created by
the National Institutes of Health; the American Hospital
Association; and the American Diabetes Association.
We select programs for development based on the potential
improvements of quality of life and cost impacts in the
population. Quality and quantitative effectiveness of
AdvancePCS disease management programs are measured using
specific indicators that compare results to clinical benchmarks
or goals. We enhance programs continually based on changes in
clinical guidelines, feedback from practitioners, patient
experience and program effectiveness, basically determining
what works, what does not work, and adopting those things that
work.
We use principles of continuous quality improvement in
collaboration on behalf of our sponsors in execution of
programs so they achieve compliance with NCQA, the National
Committee on Quality Assurance.
AdvancePCS has a clinical research division called
Innovative Medical Research that is devoted to clinically
assessing and improving these programs through cooperation with
numerous Federal agencies.
The agencies that we work with include the Centers for
Education Research and Therapeutics, sponsored by AHRQ. We also
work with the FDA in post-marketing surveillance programs, and
we have participated with other agencies as well in projects.
Our programs have evolved over time. We maximize the number
of methods available to communicate and educate patients and
physicians. Our disease management programs are now tailored to
specific conditions with interventions that extend from
telephone outreach, mail and web-based interventions to
personal nursing counseling.
A good disease management program begins with a specific
plan-sponsored goal, and when we initiate programs with a
sponsor, in this case Medicare, we would begin discussing what
is the objective of the program, and then build a program out
from that objective.
Without that kind of conversation, it is very difficult for
everybody to be satisfied at the completion of the program. I
would like to emphasize that patient privacy is a priority in
our program, and we work closely with our plan sponsors to
ensure protection of patient confidentiality.
We would like to recognize that the Congress and the
administration have made progress in bringing disease
management approaches into the Medicare program, but there is
more work to be done. We believe that Medicare can greatly
benefit from appropriately designed and tailored disease
management programs.
As evidenced earlier in the exhibit from the Kaiser
Foundation, patients in the senior population, the Medicare
population, vary dramatically from those in the commercial
population. The problems are more complex and those issues need
to be directed and addressed when developing programs for a
Medicare population.
However, there are a number of disease management programs
that could be adopted within Medicare today by focusing on
pharmaceuticals and interventions already sponsored by
Medicare. Given the high cost of illness, disease management
programs that are focusing on some of the new and innovative
biotech interventions that are paid for by Medicare Part B are
suitable areas for disease management intervention and continue
and will continue to be a rapidly growing area of both cost and
quality within the Medicare population.
Ultimately implementation of disease management into a
Medicare program on a large scale requires consideration of
payment reform and creation of financial systems that improve
and enhance the deployment of disease managed services. We look
forward in working with Congress to develop flexible payment
systems for these types of disease management tools, and
Congress can support CMS by ensuring that the agency has broad
authority and latitude within the Medicare program to test new
models.
We believe that disease management programs directly
address the challenges faced by Medicare in coming years by
delivering high cost, cost-effective, quality care to
chronically ill populations and would encourage further
studies. That concludes my comments, and thank you for this
opportunity to testify.
[The prepared statement of Dr. Wright follows:]
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Senator Craig. Doctor, thank you very much. Let me turn to
our last panelist, Matthew Michela, Senior Vice President from
American Healthways in Nashville, TN.
Matthew, welcome before the committee.
STATEMENT OF MATTHEW A. MICHELA, SENIOR VICE PRESIDENT,
AMERICAN HEALTHWAYS, NASHVILLE, TN
Mr. Michela. Thank you, Senator. How is that? Is that all
right? My name is Matthew Michela, and I am Senior Vice
President of Operations of American Healthways which is
headquartered in Nashville, TN. Thank you for the opportunity
of appearing this morning to highlight our previously submitted
written testimony.
American Healthways is the nation's largest independent
disease management organization, providing services to
approximately 600,000 Americans with chronic diseases in all 50
States, Puerto Rico and the District of Columbia.
Our programs were the first in the country to be accredited
by both the NCQA and URAC, and are provided to a wide variety
of populations including HMO, PPO, Medicare+Choice, and for
some of our programs the Federal Employee Health Benefits
Program. We are also the only disease management organization
providing services to a Medicare fee-for-service population
today, as we know.
Because of commitment to quality we have led the way in
submitting our outcomes, both clinical and financial, for
third-party validation and peer review. Of particular
pertinence to this committee, we believe, is the unpublished
study reflecting our first 10 months' results with
approximately 6,000 Medicare fee-for-service beneficiaries with
diabetes in Hawaii.
This study shows improvement in all clinical and a net
reduction in total health care costs of about $5.1 million or a
17.2 percent net savings on an inflation-adjusted basis.
Now, disease management is a treatment-support concept
predicated on the principle that the way to reduce health care
costs is to actually improve health. The goal of all disease
management programs is to create and sustain behavior change
among patients and providers to assure the most effective
management of each patient's health.
But while the precepts of disease management are uniform,
program design and the method of delivery reflect significant
differences, and as a result, so do the outcomes. Accordingly,
the key factor in our success is not really a matter of what we
do; rather, it is a matter of how we do it.
Our programs are based on three underlying principles. The
first holds that the fundamental interaction in health care is
the one between the patient and physician, and that the rest of
the health care system exists solely to make that interaction
more effective, more efficient or preferably both.
Between office visits, patients are essentially responsible
for their own care and management. The current delivery system
provides little or no support for them in that effort. That is
what our programs do.
The second foundation principle holds that creating and
sustaining behavior changes necessary to improve the health of
people with chronic disease is best achieved through personal,
trusting relationships between patients and caregivers.
Accordingly, our program interventions are delivered by over
600 highly trained, experienced and caring registered nurses
who not only help patients deal with their condition or
conditions, but also with the reality of living with chronic
disease.
That approach underscores the third principle that holds
that patients we work with are people and are not diseases. By
meeting each patient's needs, wherever that patient is, we are
sure that we always prepared to support whatever behavior
change the patient is willing to make.
Another important issue is accreditation. American
Healthways' early advocacy for accreditation had two bases.
First, we believed that every health care organization ought to
open itself to meaningful third-party scrutiny. Second, the
historical absence of a uniformly recognized definition of
disease management has allowed many programs, really thinly
disguised marketing efforts, to prey on a vulnerable population
by masquerading as disease managers.
Accordingly, we needed, the industry needed a reliable
external body to certify program quality. Whether or not
accreditation programs serve that role effectively, however,
will depend on their acceptance and use by private and public
purchasers.
The last topic I will address in my summary is how Congress
can help. At a conference last week, David Kreiss, special
assistant to the CMS Administrator, said ``The last frontier in
disease management demonstration projects is population-based
projects focused on outcomes.'' That he anticipated a request
for proposals that would be released in the month or two. We
urge this committee to provide whatever support may be required
for CMS' efforts in this regard.
Finally, we would ask Congress to revisit the issue of
Federal preemption with respect to HIPAA and State privacy
laws. Health care while delivered locally is no longer bought
or paid for in that way. Health plans must provide uniform
services to national corporations. The continued ability of
individual States to enact laws more restrictive than HIPAA
presents a significant barrier to meeting that requirement.
So let me conclude, Senator, by emphasizing that disease
management programs properly designed, properly implemented,
and properly delivered improve health care outcomes and reduce
the cost of care.
As we have shown in Hawaii and in many other places,
effective disease management programs can improve the health of
Medicare beneficiaries and reduce the cost of care sustained by
the trust fund. Further, the introduction of disease management
services to Medicare beneficiaries does not require reform of
either the health care system itself or the Medicare program.
What it does require, however, is the support of this committee
and this Congress. Thank you very much.
[The prepared statement of Mr. Michela follows:]
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Senator Craig. Matthew, thank you very much. I am going to
spend probably no more than the next 15 minutes with questions,
because I have got other commitments to make this morning. So
what I am suggesting in asking you questions is there may be
some I will have submitted in writing to you, and if you would
respond, if we do not get to all of them, I would appreciate
that as we build this record.
Sister, I think we are all impressed over time when I have
associated myself with the senior community and programs of the
phenomenal volunteer effort that can be generated in a
community of interest to provide service and educational
training and programming. Have you received any interest from
other area agencies on aging to replicate your pharmacy
management program?
Sister Greving. I would answer yes, and it was probably a
jealous nature that we have such a good program in Pocatello,
ID. I have had inquiries not only from our other five Area
Agencies on Aging Directors within Idaho, but also from
neighboring States, and their question is how do we do it on a
limited budget?
I keep saying to them it is only because of the
coordination efforts that we can really do it. We do not
duplicate what someone else has already done. I think that is
our secret within southern Idaho, and we would really like to
replicate it throughout Idaho and the United States.
Senator Craig. Is your health promotion program linked in
any way to the tele-health demonstration program at Idaho
State?
Sister Greving. I can honestly answer with an affirmative
yes. Dr. Beth Stamm and I are in constant coordination because
we see the needs of the elderly, especially the rural elderly
in Idaho, as someone who really needs these kinds of services,
especially in relation to the lack of transportation that the
elderly people might not have within rural communities. So if
tele-health care serves those rural communities in that way,
the linkage will have been served, yes.
Senator Craig. Thank you.
Sister Greving. Thank you.
Senator Craig. Dr. Rusche, how many disease--I should say
how many diseases does Regence have disease management programs
for at this moment?
Dr. Rusche. Currently, we have five. We started out with
maternity----
Senator Craig. Yeah.
Dr. Rusche [continuing]. For a commercial health insurer
makes a lot of sense, but include cardiovascular disease,
psycho-social problems, in particularly our Medicare-managed
care, diabetes and migraine or chronic headache.
Senator Craig. How did you first recognize the value of the
disease management approach?
Dr. Rusche. By an analysis of the data, the Willy Sutton
approach of going where the money is. We had for a long time
identified that there was a small sub-set of members that were
the most expensive, and part of what a health plan does or an
insurance company does is underwrite. You take information and
you assign a financial risk or a price to it. Well, that same
information can direct your services.
Those people that are your members that have a likelihood
of consuming resources deserve an opportunity to do better. It
does not make the disease go away. It just kind of puts things
off, delays or decreases complications, and that is all we are
hoping to get with disease management programs.
Senator Craig. Well, then ultimately the question is have
these management programs met your expectation?
Dr. Rusche. I would have to say definitely yes and no.
Senator Craig. OK. I would like to hear why yes and why no,
but more about why no?
Dr. Rusche. Why yes, because I do think they showed
demonstrated cost savings. No I think is two reasons. One is
that the way the medical system is structured, the way I was
trained, the way most doctors are trained, is to work one-on-
one with a patient without coordination into a system. To do
things otherwise is kind of like walking uphill. You know it
really is not the easiest thing to do. So I think that is
difficult.
The second is that while we have in the subset of the
population that we have looked at or treated for a particular
condition shown an effect in their costs, we have not done a
whole lot to lower the high rate of premium increase for our
members, and that has been somewhat disappointing.
Senator Craig. Not only obviously providing the service but
controlling costs, and then that cost being reflected in
premiums was part of----
Dr. Rusche. That is right.
Senator Craig [continuing]. Your goal that you did not
achieve as well?
Dr. Rusche. That is true, Senator.
Senator Craig. OK. Thank you very much, Doctor. Dr. Wright,
you notice that I picked up on tele-medicine as an extension of
capabilities and services. You have mentioned the technologies.
Could you tell us about any that you have used in the tele-
medicine area?
Dr. Wright. Well, yes, over the years, we have had numerous
tele-medicine pilots, anywhere from devices that were
essentially alarm clocks that would remind people when to take
their medication to peak flow meters that could assess how
lungs were functioning, and you could put these in a holster
and it would upload clinical parameters to glucometers.
One of the issues that we encountered through our pilots
was that the tele-medicine, the medical device industry in this
particular sector is emerging, and is unstable. Companies are
in business. They go out of business, and working with these
new and emerging companies and bringing them along remains a
challenge in that industry.
Currently, we are working with a program looking at blood
pressure cuffs that we distribute in populations and they
upload their blood pressures and make that determination, and
it seems to be working well right now on a pilot basis.
Senator Craig. Good, good. You also discussed the necessity
of Medicare payment reform before a large-scale implementation
of disease management could be undertaken. Would you elaborate
on that statement?
Dr. Wright. I think that the thought process of approaching
management of disease as a system rather than individual
transactions between paying for the device, paying for the
physician, how do we reimburse tele-medicine, for instance, how
do we work that into payment schemes?
How do we make sure when we are modifying physician
reimbursement, we are not adversely affecting the delivery of a
new biotech drug, or does the compensation for a particular
device correctly reflect in the reimbursement of the health
care professional of getting that device up and running or
installed or educating the patient? In particular, with tele-
medicine, training of individuals, you give a senior a
computer-based, internet-based device in the home, that
requires training and installation. As an example, how is that
going to work into the 21st century reimbursement scheme?
Senator Craig. Good points. Thank you very much. Matthew,
you have talked about an unpublished study in Hawaii, 17
percent reduction in health care spending over a 10-month
period. Based on what you know now, do you think those results
are sustainable?
Mr. Michela. Those results are absolutely sustainable. We
have multiple years of experience in the commercial marketplace
working with health plans, and our typical contractual
relationships start at a minimum of 3 years, and are typically
five, and we even have 10-year agreements with health plans
that require sustained clinical and financial improvement every
successive year of that agreement, and we have internal studies
and some studies that are published and to be published that
demonstrate how that is measured and how that is accomplished.
So the answer to the question is, yes, it is sustainable.
Additionally, with our programs, which is very important in the
commercial marketplace, we produce results, both clinical and
financial results, in the first year of operation, which has
historically been a problem in this industry in the sense that
you have an infrastructure investment that you need to buildup,
plus getting out and establishing relationships in many ways
with the physician community takes time to do. But we have been
able to demonstrate that that is achievable in all of our
programs here.
The other thing I guess I would add is we have also
demonstrated to our satisfaction and to our customer
satisfactions with some studies that when you remove the
interventions that you are providing in disease management,
presuming you are applying them correctly, those cost savings
do return.
So as you are effecting behavior change, which ultimately
is improving health, which ultimately reduces cost, if you stop
applying those interventions, then it returns back to the trend
that it would have been previously.
Senator Craig. Good. Good. If you have seen one disease
management program, you have seen one disease management
program. Now that is a comment I heard recently and I guess the
implication is that there are many ways to deliver disease
management services and many different results.
You have mentioned that program design, method of delivery,
and outcomes can be different with different programs. What
contracting arrangements seem to have the best results from
your experience?
Mr. Michela. I think the comment that if you have seen one,
you have seen one is absolutely correct, which is why we
advocate and challenge everyone to become accredited by
external third parties so that that can be obvious on where
those differences are to everyone.
But specifically to your question, disease management
achieves its best success when it interacts with patients in a
variety of settings and interacts both with patients and
physicians. When you talk about contracting for disease
management services, what we would maintain is the best way to
do that is to contract for outcomes, not for the process
itself. Be less concerned about how many pieces of mail or
reminder cards a person gets and be far more concerned with
what actually is achieved on a clinical basis and what actually
is achieved on a financial basis, and that is the umbrella
under which you can balance both costs and quality.
Additionally, we would maintain that you need to contract
for a total population with an identified disease condition. Do
not attempt to identify a condition such as diabetes and then
apply interventions to only 1 or 2 percent of that disease
condition population, because you will over time encounter what
had in the previous testimony this morning been discussed about
regression to the mean.
On a population-based approach, what you do is you start to
prevent folks from becoming more chronic over time before they
would have otherwise been identified in only the sickest of the
sick category here. That is a fundamental part of success of
the long-term viability of these programs is to engage as many
people as possible in a variety of ways.
The third is to support the patient, not the disease.
Manage all of the co-morbidities and conditions that that
patient occurs or may have in the first place, because they do
develop certainly over time multiple conditions that need to be
managed, and one of the problems in the industry historically
has been with an approach that will manage only the impacts of
a cardiovascular problem on a patient and not recognize that
that may be caused by conditions with diabetes or over time
develop into COPD, as an example.
The third in the contracting approach and how we work in
the commercial market is to balance a risk-reward relationship,
not to just pay for services on a fee-for-service unit cost
basis, but provide incentives that if targets are met, clinical
and financial targets are met and exceeded, that there may be
opportunity for bonuses and other incentives that continue to
drive the industry to achieve beyond the targets that are
accomplished within a specific contract.
Senator Craig. Thank you very much. To all of you, thank
you. We appreciate your testimony and the record that is being
built here. This is the first of I suspect a good number of
hearings this committee will hold over the next few years as we
develop a record on this, as other, well, as some of
demonstration programs in CMS mature and evidence comes from
those. Clearly, as we debate and deal with Medicare reform and
prescription drug programs, this kind of information or policy
development is going to be, I suspect, very important in cost
management and quality of delivery over the next number of
years.
Thank you all very much. With that, the committee will
stand adjourned.
Mr. Michela. Thank you.
[Whereupon, at 10:58 a.m., the committee was adjourned.]
A P P E N D I X
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