The Congressional Budget Office Weighs in (Again) on Disease Management

Today’s Managing Health Care Costs Indicator is 34

The Congressional Budget Office released two important reviews of Medicare demonstration projects last week.  The first report is on disease management and care coordination, and the second is on value based pricing.   

I’ll cover the disease management and care coordination findings in today’s post, and will comment on the value based pricing demonstration projects in the next post.

There were a total of 34 different trials – enrolling almost 290,000 patients.  The first started in 2002 and the last was completed 2009.   A single project (at Mass General Hospital) showed significant savings, and a handful of projects showed lower inpatient utilization.  The programs were expensive; the CBO reports that the programs would have had to lower overall costs by 13% to break even.  You can get a sense of the financial results of these demonstration projects from the graphic below.  (Go to Page 22 of the working paper to see more details)

There are caveats, of course.  Medicare often wasn’t able to transmit timely data to the participating providers.   It’s hard to run a randomized or quasi-randomized trial in the real world; and providers could not make changes “on the fly” because of the study designs.  But these issues don’t change the headline.  The Medicare demonstration projects didn’t save the money that advocates promised.

My conclusions from this report

1)     There were many different trials targeting different patients using diverse approaches. All of the patients were Medicare beneficiaries who are old and are often ill – so the opportunity to improve care was large.  If it’s this hard to demonstrate impressive savings in this population – it will be harder still to show savings from similar interventions on a younger and healthier population. 
2)     The interventions were expensive.  Medical management efforts either have to be very tightly focused (but predictive modeling is notoriously unreliable) or the interventions have to be low-priced.  The CMS demonstration projects were neither
3)     The success of interventions had at least some relationship to proximity to care delivery.  It’s better for a medical management intervention to be delivered by (or with ) the health care system than by a third party on its own. Here’s an essay I wrote about this in 2005)
4) Surprising to me, "at risk" programs were no more likely to lower overall Medicare costs than programs where the program would not have to repay management fees if costs were not reduced.

My recommendations based on this report:

1)     CMS should continue to do demonstration projects.  Careful measurement is crucial to our making the right investments in the right care management.  
2)     CMS and private payers and employers should carefully measure the results of their   medical management programs.  Just because a program seems like it should work doesn’t mean it will! 
3)     Medical management programs need the engagement of patients, their families, and physicians.  Programs that are designed without connection to the provider community and engagement strategies for patients are unlikely to succeed.
Click on image to enlarge.  Source 

Next post: Value Based Payment Demonstration Project