Last week, the Congressional Budget Office released some disappointing news: several demonstration projects aiming to contain growth in healthcare spending are not showing cost savings. Specifically, the Centers for Medicare and Medicaid Services have been focusing on programs involving either disease management and care coordination or value-based payment systems for the fee-for-service Medicare population. A CBO issue brief reviews programs in both these categories that have been conducted over the past two decades, and I’m particularly interested in what it says about the disease management/care coordination projects.

CBO reports on six major demonstration projects involving 34 disease-management programs that focused on the management of chronic conditions — mainly diabetes, congestive heart failure, and coronary artery disease — among Medicare beneficiaries. All of the programs relied on nurses functioning as case managers “to educate patients about their chronic illnesses, encourage them to follow self-care regimens, monitor their health, and track whether they received recommended tests and treatments.”

The programs aimed to improve beneficiaries’ management of their chronic conditions, which would reduce costly hospitalizations; the goal was to reduce those costs by enough to cover the costs of the program. Several of the programs, CBO reports, succeeded in reducing hospital admissions, but not by enough to offset the program costs. (Seven reduce admissions by between 6% and 15%, and four reduced them by 15% or more.)

The Affordable Care Act gives CMS the authority to expand demonstration projects without specific Congressional approval if the Secretary of Health and Human Services determines that they reduce spending while maintaining (or improving) care quality or improve care quality without increased cost. So, it would’ve been wonderful news if CBO had announced that health professionals had figured out how to reduce healthcare costs by enrolling Medicare beneficiaries in disease management programs. Since that’s not the case, it’s worth a reminder why chronic disease management is such an important issue – and what we are learning about doing it cost-effectively.

Rising prevalence, rising costs
A study by Kenneth Thorpe, Lydia Ogden, and Katya Galactionova, published in Health Affairs in 2010, examined the diagnoses behind Medicare claims in 1987, 1997, and 2006 and found:

Increased spending on chronic diseases among Medicare beneficiaries is a key factor driving the overall growth in spending in the traditional Medicare program.

In the case of heart conditions (one of the top ten most expensive conditions the researchers investigated), the treated prevalence remained the same in the three years they examined, although spending attributable to heart disease accounted for 6% of Medicare’s increased costs between 1987 and 2006. This suggests that the cost growth for heart disease is due to a rise in the cost of treatment, not in the proportion of Medicare beneficiaries being treated for it.

By contrast, a group of six other chronic conditions — diabetes, arthritis, hyperlipidemia, kidney disease, hypertension, and mental disorders — accounted for more than one-third of the increased spending Medicare experienced during the study period, and the treated prevalence of these conditions did increase. The authors note that an increase in treated prevalence might be due in part to a lowered clinical threshold for treatment, and that cost growth may be partly attributable to new treatments (e.g., technologically advanced kidney transplantations) that cost more. Either way, Medicare is spending a lot of money treating these conditions, so efforts to contain cost growth in this entitlement program requires addressing chronic diseases. The authors state in their discussion:

More than half of beneficiaries are treated for five or more chronic conditions each
year, and a typical Medicare beneficiary sees two primary care physicians and five specialists
working in four different practices. System fragmentation means that chronically ill patients
receive episodic care from multiple providers who rarely coordinate the care they
deliver. Because of this structural deficiency, patients with chronic illnesses receive only
56 percent of clinically recommended medical care. That gap in care may explain a nontrivial
portion of morbidity and excess mortality.

… The U.S. health system remains predicated on providing acute, episodic care that is inadequate to address the altered patterns of disease now facing the American public.

The existence of the Medicare demonstration projects shows that there’s an interest in providing disease management, not just episodic care for acute events. We’re still learning how to provide such big-picture, coordinated care cost-effectively. Here, the CBO brief has some advice. Because an important element in cost-effectiveness is saving enough money to cover the intervention costs, keeping intervention costs as low as possible (while achieving the objective) will reduce the amount of savings required. Meanwhile, the savings can increase if the intervention is targeted at the highest-risk enrollees. Those likely to have the most hospitalizations in the shortest amount of time have the most room for improvement – reducing their admissions by 10% or 20% would save a lot.

The design of the interventions matters, too, of course, and the brief also has an important observation about what distinguished the more-effective programs from the less-effective ones – in-person interactions by case managers with physicians and patients:

Hospital admissions fell by an average of 7 percent and regular Medicare spending declined by an average of 6 percent for programs in which care managers had substantial direct interactions with physicians. In contrast, there was no effect, on average, on hospital admissions or spending resulting from programs in which care managers had little or no direct interaction with physicians. The estimated average reductions in regular spending for those programs were insufficient to yield net savings for Medicare, however, because the programs would have had to reduce regular expenditures by 13 percent, on average, to offset their fees.

Significant in-person interaction between care managers and patients also was associated with reductions in hospital admissions and regular Medicare spending. Hospital admissions were lower by an average of 7 percent, and regular Medicare spending was reduced by an average of 3 percent, for programs in which care managers had substantial interaction with patients in person and by telephone. Programs in which the interaction was primarily by telephone exhibited little or no effect, on average, for either outcome. Again, however, the estimated average reductions in regular spending for those programs were insufficient to yield net savings for Medicare because the programs also would have had to reduce regular expenditures by 13 percent, on average, to offset their fees.

While it’s disappointing that these programs weren’t a slam-dunk right away, the lesson about the importance of in-person interactions will be useful as the researchers and practitioners involved in these projects refine their approaches.

The big picture: a framework for addressing multiple chronic conditions
One encouraging development in the arena of chronic diseases is a Department of Health and Human Services focus on people with multiple chronic conditions. And the goal isn’t just to reduce healthcare costs, but to improve quality of life for a group of people that encompasses a growing share of the US population. The HHS report Multiple Chronic Conditions: A Strategic Framework explains the importance of addressing this topic:

More than one in four Americans have multiple (two or more) concurrent chronic conditions (MCC), including, for example, arthritis, asthma, chronic respiratory conditions, diabetes, heart disease, human immunodeficiency virus infection, and hypertension. Chronic illnesses are “conditions that last a year or more and require ongoing medical attention and/or limit activities of daily living.” In addition to comprising physical medical conditions, chronic conditions also include problems such as substance use and addiction disorders, mental illnesses, dementia and other cognitive impairment disorders, and developmental disabilities.

The prevalence of multiple chronic conditions among individuals increases with age and is substantial among older adults, even though many Americans with MCC are under the age of 65 years. As the number of chronic conditions in an individual increases, the risks of the following outcomes also increase: mortality, poor functional status, unnecessary hospitalizations, adverse drug events, duplicative tests, and conflicting medical advice.This picture is even more complex as some combinations of conditions, or clusters, have synergistic interactions, but others do not. For example, the poor health outcomes of individuals with serious mental illnesses and other behavioral health problems warrants special attention because of the co‐occurrences of those conditions with other chronic conditions.

And here’s their vision and strategic framework:

The vision that drives the department’s efforts is Optimum Health and Quality of Life for Individuals with Multiple Chronic Conditions. Within the vision’s focus on the individual with MCC, development of the framework elucidated four interdependent domains that benefit the individual: strengthening the health care and public health systems; empowering the individual to use self‐care management; equipping care providers with tools, information, and other interventions; and supporting targeted research about individuals with MCC and effective interventions. Accordingly, to achieve its vision, this framework comprises these four overarching goals:

1. Foster health care and public health system changes to improve the health of individuals with multiple chronic conditions

2. Maximize the use of proven self‐care management and other services by individuals with multiple chronic conditions

3. Provide better tools and information to health care, public health, and social services workers who deliver care to individuals with multiple chronic conditions

4. Facilitate research to fill knowledge gaps about, and interventions and systems to benefit, individuals with multiple chronic conditions

Each of these goals includes several key objectives and strategies that the department–in conjunction with stakeholders and those who have or care for those with multiple chronic conditions–should use to guide its efforts. These efforts should build on and potentiate HHS programs and resources focused on the MCC population. Although this framework addresses those individuals with MCC, many of the strategies, including the prevention of additional chronic conditions, also apply to persons with only one or those with no chronic condition.

It will take a lot of work to achieve these goals, but they’re both worthwhile for the population’s quality of life and essential if we hope to contain the growth of healthcare costs.