Sec H DM Programs

Question 1

Key metrics in the design of disease management programs

Answer 1

1. The number and risk-intensity of members to be targeted - the number must be large enough to produce savings that offset implementation costs, but not so large that marginal costs exceed marginal savings
2. Types of interventions to be used in the program - such as mail or automated outbound dialing
3. The number of nurses and other staff needed for the program, and program costs
4. The methodology for contacting and enrolling members
5. The rules for integrating the program with the rest of the care management system
6. The timing and number of contacts, enrollments, and interventions
7. The predicted behavior of the target population if there were no intervention, and the predicted effectiveness of the intervention at modifying that behavior

Question 2

Issues that affect disease management evaluations for chronic populations

Answer 2

1. Regression to the mean - a high percentage of high-cost patients in one period will not be high cost in the next period, simply because the high-cost event was a one-time event that is not likely to be repeated
2. Identifying patients - due to regression to the mean, it may not be appropriate to use patients’ past data as the comparison group. A common alternative is to use the population approach (uses the entire population)
3. Establishing uniform risk measure for comparability - objective, consistent definitions should be used to identify candidates for the care management program (this will ensure equivalence)
4. Patient selection bias - this results when a study is based on those volunteering for a program
5. Patient drop outs - drop outs may also create a bias (e.g., those who feel better may drop out)
6. General versus specific population - some interventions are performed on an extremely small population, making some methodologies inappropriate for measuring results

Question 3

Issues related to determining and controlling exposure for a disease management study

Answer 3

1. Managed versus measured populations - the population to be measured does not need to be the same population that is being managed
2. Eligible members - eligibility is first determined for the health plan membership, then for DM services
3. Member months - in any given month, a member is uniquely classified into a single category. Members can move between categories from one month to the next
4. Chronic and non-chronic (index) members - the assignment of chronic status is determined monthly
5. Excluded members - some members are eligible for health plan membership, but are not eligible for inclusion in the DM program
6. Measured and non-measured members - tests for inclusion in the measurement population may include the continuous coverage test and a claim-free period
7. Enrolled, targeted, and reachable members - to avoid bias in the results, outcomes should be measured for all targeted members (whether enrolled, not enrolled, or unreachable)

Question 4

Methods for calculating trend to use in evaluating a disease management program

Answer 4

1. Group-specific trend - most savings calculations use trends based on the employer’s non-chronic population. But this trend is subject to random fluctuation, even for large groups (a study showed a 3.6% standard deviation for groups of 40,000 members)
2. Population trend - to reduce the random fluctuation, a very large trend source should be considered, such as the health plan’s trend for all groups combined
3. Truncated trend - random fluctuation can also be reduced by truncating claims at $50k. But then savings for these larger claims don’t get counted because of truncation
4. Utilization trend - could calculate the reduction in admissions instead of the reduction in claims costs. This results in credibility being achieved at much smaller group sizes
   a) A claim cost savings can be calculated if a reasonable cost per admission can be estimated
   b) But this approach doesn’t count savings that result from reducing length of stay

Question 5

Financial measure for disease management programs

Answer 5

1. Return on investment - this is the most common metric. DM programs typically use Gross ROI
   a) Net ROI = (gross savings - cost)/cost
   b) Gross ROI = gross savings/cost
   c) Program costs generally include direct costs (such as salaries), indirect costs of supporting activities, management costs, overhead costs, and set-up costs
   d) Gross savings come from decreased utilization as a result of the DM program or intervention
2. Total savings - this metric may be more useful, since it represents the dollar savings for the plan
   a) Average savings equals total savings net of program cost, divided by the total population
   b) Marginal savings per chronic member equals the increase in savings (net of costs) due to intervention on the marginal population, divided by the number of members in the marginal population

Question 6

Reasons a member may be excluded from a disease management program

Answer 6

1. The member class is not receptive to disease management
2. The member is a candidate for a program administered by another vendor (such as mental health)
3. The pattern of claims that the member exhibits is subject to sharp discontinuity, and can thus distort a trend calculation
4. The member’s claims are significant, and the experience is likely to dominate the group, or introduce noise to the calculation

Question 7

Possible reasons why DM studies show improved clinical outcomes but not cost savings

Answer 7

1. The measurement of financial outcomes is not stable enough, or measurement techniques are not sensitive enough, to detect positive financial outcomes
2. Programs are either not focused on financial outcomes or not structured to optimize financial outcomes
3. Program sponsors do not understand the economics of DM programs and therefore do not optimize the programs for financial return
4. Improvements in quality of care do not always lead to lower costs. Some improvements may actually increase costs, but still be worth the investment

Question 8

Considerations when using claims data for evaluating disease mangement programs

Answer 8

1. Fixed time periods - a one-year time period may be too short for outcomes evaluation
2. Enrollment issues/eligibility - the timeliness of enrollment and disenrollment should be factored into the study
3. Claims run-out - due to claims lag, program results may not be known for up to two years after the program begins
4. Outlier claims - these may distort the study’s results
5. Special problems with claims data - when using claims data to identify chronic members, some members are miscategorized (false positives and false negatives)

Question 9

Characteristics of chronic conditions that make them suitable for disease management programs

Answer 9

1. Once contracted, the disease remains with the patient for the rest of the patient’s life
2. The disease is often manageable with a combination of pharamaceutical therapy and lifestyle change
3. Patients can take responsibility for their own conditions
4. The average annual cost is sufficiently high to warrant spending resources to manage the condition
5. The expected cost of the non-adherent patient is high

Question 10

Considerations when evaluating results of disease management studies

Answer 10

1. Has the measurement been performed according to a valid methodology?
2. How has that methodology been applied in practice?
3. Are the results arithmetically correct?

Question 11

Common chronic diseases addressed by disease management programs

Answer 11

1. Ischemic heart disease
2. Heart failure
3. Chronic obstructive pulmonary disease (COPD)
4. Asthma
5. Diabetes

Question 12

Conditions that would exclude a member from a disease management program

Answer 12

1. End-stage renal disease (ESRD) - this condition is excluded because management of the condition may delay cost, but it cannot ultimately reduce or postpone those costs
2. Transplants - claims are high up to a period shortly after the transplant, at which point the claims are reduced and stabilized
3. HIV, AIDS, mental health - privacy issues make it difficult or impossible for a vendor to receive complete data feeds, or manage the member
4. Members who are institutionalized - these members may not be reachable, or may not benefit from disease management interventions
5. Members with catastrophic claims - these members are not manageable by the DM program, and are often subject to management by another program
6. Members who are eligible for other management program

Question 13

Challenges when calculating disease management savings

Answer 13

• when using the actuarially-adjusted historical control design*
  1. Applying the proper trend rate - the trend of the non-chronic population is typically used because the chronic trends are impacted by the disease management efforts. This non-chronic trend must be adjusted for the average risk of the population
  2. Demonstrating equivalence between the baseline and measurement periods - must account for the change in the mix of new, continuing, and terminating members and any changes in conditions and co-morbidities. This can be done by re-weighting the claim costs that are used in the savings calculations

Question 14

Reasons why a savings estimate based on reduce admissions may not reflect the true DM program savings

Answer 14

1) A pgoram may reduce the severity of admissions (e.g., shorter stays) rather than reduce the number of admissions
2) A program may reduce emergency room visits, which are not included in inpatient admissions
3) A program may increase physician visits and pharmacy costs
4) The standardized cost per admission may not be a good estimate of the cost savings for the avoided admissions

Question 15

Measurement issues when designing disease management studies

Answer 15

1) Appropriate outcome to measure - outcomes include medical costs, quality-adjusted life years, and patient satisfaction. But the outcomes of greatest interest to the actuary is the financial outcome
2) Timing of the study - must determine the starting and end points
3) Total medical costs vs disease-specific medical costs - most care management strategies focus on specific diseases, so medical costs may need to be separated by disease. But it is not always possible to isolate costs related to a single disease
4) Data issues - drawing financial conclusions from data requires attention to data quality