To Monitor Readers:

Although the Trust's concentration is on outcomes related to functional status and well-being, this article by Louis Rossiter that reports process and cost outcomes resulting from disease manage- ment among Medicaid beneficiaries is of sufficient promise to warrant publication here. We expect that functional status and well-being assessments will be added in future studies of the effectiveness of disease management.

Alvin Tarlov
President

As Medicaid managed care becomes more prominent; disease management and health outcomes are innovations that are becoming increasingly available. They provide states with the opportunity to make immediate improvement in care often with significant cost savings. They can also be used to ease the transition to more complex Medicaid managed care. In this rapidly changing environment, it is essential to keep abreast of the innovations in organization and payment that are occurring to better serve the special needs of the Medicaid population. Emerging opportunities and strategies are now available in the market.

One of the most prominent examples of disease management and health outcomes available in the United States is exemplified in the Virginia Health Outcomes Partnership (VHOP) program, the first disease management effort in Medicaid in the United States. This program has helped Virginia Medicaid decrease service utilization, as well as maintain and invest in its relationship with Medicaid health care providers. The goals of VHOP are to:

1. improve patient health outcomes by improving the general and disease-specific communication skills of physicians and other health care providers; and

2. increase physicians' use of established practice guidelines and appropriate pharmacotherapy for specific disease states.

Now Florida and Mississippi are following the lead of Virginia with their own outcomes research and disease management programs.

Summary of Virginia results:

Recently, a study was conducted to investigate the impact of disease management on outcomes and cost of care of low-income asthma patients. The objective of the study was to determine if an asthma disease management program designed specifically for low-income patients experiencing significant adverse events could substantially improve health outcomes, while lowering costs.

The Virginia Health Outcomes Partnership project aimed to help physicians in a fee-for-service primary care case management program manage asthma in Medicaid recipients. Approximately one third of physicians treating asthma in an area designated as the intervention community volunteered to receive training on disease management and communication skills. A study design and analysis accounts for this self-selection, among 2,145 patients (with moderate or severe asthma) in intervention communities and 4,182 patients in comparison communities averaged over 2 years. This study discovered that the rate of emergency visit claims for patients of participating physicians who received feedback reports dropped an average of 41 percent from the same quarter a year earlier. Although only a third of the eligible physicians participated in the training, community-wide effects on emergency visits and asthma drugs were observed. Emergency visits declined 6 percent relative to the comparison community among moderate-severe asthma patients, while the dispensing of some reliever drugs recommended for asthma increased 25 percent relative to the comparison community.

A cost-effectiveness analysis revealed projected direct savings to Medicaid of $3 to$5 for every incremental dollar spent providing disease management support to physicians. The results of this study demonstrate the potential this program offers, especially for Medicaid programs in other states that want to improve the care of their primary care case management networks and, at the same time, manage costs.

Selecting Disease in Your State

Concerns about the health outcomes and costs of care for Medicaid recipients with chronic diseases led to the development of a model program to enhance the quality and reduce the overall cost of care for Medicaid patients enrolled in the primary care case management program in Virginia. The Virginia Health Outcomes Partnership (VHOP) project aimed to provide Medicaid programs with the means to deliver high-quality patient care and thereby produce more favorable outcomes. At the same time, this program focused on helping physicians and patients avoid less effective treatments and expensive settings for care, such as inpatient hospital services and emergency rooms. The program was designed for easy replication or adoption in other states, particularly those with primary care case management programs (Hawks and Levy 1996).

To determine the best candidates for intervention, the program began by studying numerous diseases among the fee-for-service Medicaid population in Virginia. Asthma was selected primarily because of the prevalence of the disease, the national medical consensus about treatment protocols, the ability to measure specific outcomes, and the cost of services and related medications to Virginia Medicaid (Jones et al. 1996). Although effective pharmaceutical therapy for asthma is available, the prevalence of deaths associated with asthma and outpatient clinic visits for asthma have risen nationally by 50 percent in the last ten years (CDC 1995, Knapp 1996).

Prior to the intervention, Virginia Medicaid was spending over $16.7 million in the fee-for-service sector for asthma services: $1.9 million for inpatient hospital stays (11.4 percent); $5.8 million for hospital emergency room visits, excluding urgent care visits (34.7 percent); $1.8 million for hospital outpatient visits, including urgent care visits (10.8 percent); $3.8 million for physician office visits (22.8 percent); and $3.4 million for medications (20.4 percent).

It was hypothesized that health outcomes would improve substantially and costs would fall following the implementation of a voluntary, intensive educational program like VHOP. This program would offer physicians a multipronged approach to managing asthma. Key elements of the program include: enhancing the communication skills of medical professionals, especially with regard to asthma; offering information to these professionals about advances in clinical practice and state-of-the-art medications; and providing periodic feedback to participants regarding emergency service encounters for their asthma patients enrolled in the program.

An important objective of this study was to determine the potential this disease management program offered in terms of improving the health of low-income Medicaid patients while achieving cost savings in providing treatment. This potential was assessed by determining the effect of the program on those patients with mild to severe asthma whose physicians participated in the study. Since VHOP was a population-based initiative, it was especially important to assess the community-wide impact of the program. This impact was determined by estimating these measured effects across all eligible physicians and patients in the intervention communities, whether or not the physician participated in the program. Program effects were also extrapolated statewide for all eligible physicians and patients.

Most disease management programs in the private sector operate within managed care and require at least some level of participation by all eligible physicians. Since the VHOP pilot program was voluntary, its overall effect would depend on the proportion of eligible physicians recruited. Despite the voluntary nature of VHOP, we hypothesized that providing incentives to participate and offering opportunities to learn with peers would attract enough physicians to detect some favorable outcomes across the entire intervention community.

Participating physicians received specific instructions on the steps they could take to improve asthma control. They also learned about recommended asthma drugs and communication with patients in ways that improve outcomes. Most were sent feedback reports identifying patients in need of follow-up because of poor asthma outcomes in terms of emergency visits.

Substantial reductions in emergency services for asthma (visits per 1,000 patients) were observed for patients of these physicians compared to their patients the previous year. Physicians with training and feedback reports achieved a sharp reduction (52 percent) during the third post-training quarter, and the reduction persisted into the fourth quarter following the workshop. The number of emergency visits for these two quarters fell 47 percent when compared to the same quarters in the previous year. When this figure is combined with the physicians who participated in training but did not receive feedback reports, the reduction averaged 23 percent. Clearly the feedback reports were an important part of the intervention strategy.

The cost effectiveness of the program in the study communities and for all asthma patients in primary care case management with any service claim. Inpatient hospital emergency visits and urgent care emergency visits cost an average of $540 for each of the 1,583 claims. Based on that average cost, Medicaid spending for asthma was reduced by $54,540 at the same effectiveness as those with feedback. The estimated savings would have been $270,000 over the course of five quarters from the start of the intervention.

The program yielded estimated savings for Medicaid of $839 per physician trained. At the same time, the cost for asthma drugs rose per physician trained by roughly $180. Therefore, net savings were $659. Given a developed program with the same impact as that seen for participating physicians with feedback, the net savings would be $1,170. The incremental costs for VHOP training in asthma and communication skills was $235 per physician. Based on these figures, each dollar spent in training another physician generated $3 program savings. If a program could obtain the same results for the community as those for the physicians with feedback, each dollar spent in training another physician would generate $5 in program savings.

Of all Medicaid recipients in Virginia in the fee-for-service primary care case management system, 16,627 patients had asthma service claims. Had the program been implemented to cover all these recipients statewide, the savings would have been significant. We estimate the program would have saved approximately $218,160 and as much as $1.2 million by reducing emergency visits for asthma care from those observed patients who received treatment. These savings would have been achieved without enhancing the program from its initial intervention phase.

Conclusion

Predictable triggers that patients can modify cause asthma attacks. Using effective communication skills, physicians can educate patients about their role in treatment by helping them develop state-of-the-art skills for managing asthma. A disease management program designed especially for low-income patients facing significant adverse events can substantially improve health outcomes. At the same time, a disease management program can support physicians in partnership with Medicaid to lower the cost of treating these patients.

This study provides evidence of the impact of disease management from a large research database rather than from anecdotes, and demonstrates the potential benefits such a program offers in terms of quality of care and cost savings. This program can be applied to various diseases, such as diabetes mellitus and heart failure with similar results. Implementation of disease management programs not only improves patient health outcomes, but they can also result in significant improvement in health care delivery and financing systems.