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 

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“Government Study Debunks Stroke Treatment”

Today’s Managing Health Care Cost Indicator is $20 million

It’s not often you see such a headline in the New York Times.  The paper is reporting on a paper published in JAMA that showed those with history of “prestroke” with proven blocked neck arteries who received surgery to increase brain blood flow had no fewer strokes than those who were treated without surgery.  The study was stopped early when there was not even a trend of improvement among those treated, and far more early strokes.

A JAMA editorial writer wrote that “doctors liked new technology, were paid well to use it and tended to believe in what they were doing, even without data.”

The thing is –the procedure worked!  Those who had the bypass surgery did have greater brain blood flow.  Unfortunately, the intermediate outcome measure (more brain blood flow) was not especially correlated with the desired outcome measure (fewer strokes.)

This is the kind of effectiveness research we need so that we spend precious health care dollars on services that genuinely improve health,  and the kind of research that only the government is likely to fund.  It’s a small investment –since if 24,000 Medicare recipients a year would have been candidates for this operation, the total cost if it was widely adopted would have approached a billion dollars.   But who besides government would spend $20 million to study this?  Alas, funds for the NIH are being cut,  and this kind of important research will be threatened.

There were two reports in the NEJM this past week also reflecting the importance of large, multi-year, government-funded studies of interventions that seem like a good idea, but had never been rigorously studied.  Alas, both also showed little of the financial savings promised by boosters.

RTI reported on the Medicare Health Support trial, which was terminated in 2008 when none of the disease management companies appeared to be on target to save as much money as their interventions cost.   The study is flawed, of course, since the information available to those companies about the “at risk” Medicare beneficiaries was often available far too late.  Still, most of us deeply believed that these programs would be more successful at preventing hospitalizations in the Medicare population, a target-rich environment.   


The other is a commentary about the Physician Group Practice Medicare demonstration project.  The groups improved quality substantially.  However,  high hopes of dramatic declines in health care spending were not realized.  2 of the 10 groups had savings of over 2% at one year, and half had savings of over 2% at five years.  These were all groups with robust infrastructure, committed leadership, and cultures of prudent use of resources.   This shows that creating Accountable Care Organizations from physicians in practices that are currently fragmented and disorganized will be very hard indeed.  

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Flawed measurement can suggest illusory savings

Today’s Managing Health Care Costs Indicator is 10

I gave a series of talks in 2003 about how poor measurement in the disease management industry generated misleading claims of cost savings.  

Fast forward to this decade, and we see promises from the wellness industry of “returns on investment” appear too good to be true.  If they seem too good to be true, they are probably false.

When employers, health plans, government or others reviewing claims of cost savings, here are a few things they should look for

What’s the comparison group?

We should insist on comparison groups that are really comparable.  It’s useless to compare refuseniks to those who voluntarily participate in an optional program.  Even propensity matching to control for differences between groups can only adjust for known cofounders – like age, gender and job class.  The differences that matter, like readiness to change, are often not adequately adjusted for.

What’s the participation in the intervention?

What if I offered an intervention, no one participated, but the results were good anyway?  Would you give me credit for my intervention?  I don’t think so.  This is a face validity issue- let’s be sure that enough members really participated to have the type of impact claimed by a medical or health management company.

Is it plausible that the intervention would lead to the promised cost savings?

Does it make sense that the intervention would have the impact claimed? Some wellness programs offer no intervention beyond serial health risk assessments, but infer huge claims savings from changes between the first and second HRA administration.  HRAs can be instructive – but they are not likely alone to lead to huge behavior change.

Are all costs of identification, enrollment, and intervention included in the evaluation?

There is a tendency to only include a limited portion of the total costs of a program when evaluating the results.  For a health plan which hires a medical management company, there are substantial interface costs, including data transfer, contracting, and supervision, that are easy to overlook.

Are any substitute claims costs included in the return on investment calculation?

If a hospitalization is averted through the appropriate use of home services, it’s important to look at the net savings, removing the incremental costs of home care. 

I suggested in 2003 that there were ten ways to “cook the books” and make an intervention seem more effective than it really was.  They were:

1. Overstate the savings
2. Understate the costs
3. Report only some of the data
4. Ignore effects of timing
5. Mistake “gross” for “net” savings
6. Inappropriately extrapolate from experience
7. Ignore risk of failure
8. Claim credit for savings realized by other parties
9. Overstate the inflation factor
10. Tell a story that is “too good to be true”

These observations appear as appropriate in 2011 as they did almost a decade ago.

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RAND Cost Saving Estimates, August (MA) and November (US)

(Click on graphic to enlarge)
The Mass Division of Health Care Policy and Finance sponsored an impressive review by RAND researchers of potential cost-saving opportunities in Massachusetts, which was published in August. I blogged about this late this summer, and have always felt that this extensive analysis didn't get nearly enough attention.

The NEJM last week published an article by same RAND researchers extending this analysis to the rest of the country.

This remains an important study - and I'm glad to see an extrapolation getting new press.

I'm also intrigued by the differences in findings.

Hospital rate setting: Maximum savings in MA 4%; US 2%
Healthcare IT: Maximum savings in MA 1.8%; US 1.5%; Maximum increase in costs in MA 0.6%; in US 0.8%
Expand scope of practice for NPs and PAs: MA range savings 0.6%-1.3%; US 0.3%-0.5%
Medical home: MA maximum savings 0.9%; US 1.2%
Disease management:  MA maximum savings 0.1%; US maximum savings 1.3%

It makes sense that rate setting might be more effective in Massachusetts to the extent that prices are higher. In fairness, this might not be a 1:1 comparison since the NEJM lumps a few different options together.  Scope of practice savings might be different based on supply of physician and non-physician providers.  I'm surprised to see higher projections of savings for medical home, since our specialist:primary care ratio is high in Massachusetts.  I also can't explain why disease management would have so much higher projected maximum savings in the US overall compared to Massachusetts.

This analytic work is especially important as we consider what cost-control mechanisms should be included in health care reform.

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Planning Hospital Discharges Pays Off

The most recent issue of the Annals of Internal Medicine has a thoughtful study from Boston Medical Center showing patients who have a "discharge assistant" coordinate discharge instructions and receive a followup call from a pharmacist after discharge have a dramatically lower rate of emergency department visits and rehospitalizations over the 30 days after discharge.  It's a small study (under 400 patients), and it might not be replicable in different kinds of hospitals.  The average age was under 50, and nursing home and skilled nursing facility discharges were excluded I believe the researchers underestimated the cost of the incremental ambulatory visits - but the savings in hospitalizations in the intervention group were enormous

(Harvard Link) 

Here's a scary thought.  In Medicare, 18% of patients discharged from the hospital are readmitted within 30 days at a cost of $15 billion per year.  35% are readmitted within 90 days.   

So, while disease management programs (see last post) have not shown huge savings, there are some provider-based programs that can both improve quality of care AND decrease costs.

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