Patient-centered care critical to Medicaid programs

States battling spiraling Medicaid costs may have a friend in DM.

Two recent studies provide a glimpse into two Medicaid programs that not only improved care but contained costs. Containing costs is especially critical for Medicaid programs, which devote nearly 80% of funding toward chronic diseases. Both Medicaid programs, one in Virginia and the other in Washington state, controlled costs and improved care by involving physicians and engaging beneficiaries in a patient-centered system.

Researchers reviewed a DM program contracted with the Heritage Information System that was an extension of the Virginia Health Outcomes Partnership (VHOP). The researchers included Thomas T.H. Wan, PhD, along with Ning Jackie Zhang, Louis F. Rossiter, Matthew M. Murawski, and Urvashi B. Patel (Wan and Zhang are consultants for Heritage Information System). The result was a report, “Evaluation of Chronic Disease Management on Outcomes and Cost of Care for Medicaid Beneficiaries,” that appeared in Health Policy. The study showed that the DM program improved patient drug compliance and quality of life while reducing ER, hospital, and physician office visits.

The other report, compiled by Milliman Consultants and Actuaries in Seattle, reviewed McKesson Health Solutions’ Medicaid program in the state of Washington and showed a $13.3 million savings and 3:1 ROI in the program’s final year (August 2005 to June 2006).


Researchers from the University of Central Florida, The College of William and Mary, Purdue University, and Milliman reviewed the Virginia DM program that focused on five chronic diseases and comorbidities (diabetes, hypertension/CHF, depression, gastro-esophageal reflux disease/peptic ulcer disease, and asthma/chronic obstructive pulmonary disease) from 1999 to 2001.

The DM program required providers, including 5,995 physicians and 1,410 pharmacists, to offer monitoring, assessments, and interventions for patient self-management. VHOP hosted an introductory videoconference before the first intervention and sent quarterly educational mailings to providers. The mailings included up-to-date practice guidelines, claims data–based feedback sheets, and clinical measurements for each disease. The program asked the providers to consult with patients about their lifestyles, treatments, and drug uses, according to the study authors.

To find program savings, researchers compared hospitalizations, ER visits, and physician office visits for the 35,628 people in the experimental groups (broken into two subgroups: physician/pharmacist-intervention and physician-intervention) and compared them with the 29,504 beneficiaries in the control group.

“Results show that patients in the experimental groups with single diseases generally reduced their medical utilizations more than those in the control group did, but at a different rate for each disease,” wrote the researchers.

Although medical utilizations decreased after interventions, the researchers noted that statistical significance wasn’t found for depression and/or diabetes patients. This could have been because depression and diabetes patients “rarely have acute symptoms and are less likely to require emergency room visits,” wrote the study authors.

Another finding in the study is that groups with physician/pharmacist interventions reduced ER visits and hospitalizations more than the physician-intervention group—although this was not statistically significant for the majority of the target diseases. The three statistically significant differences between the groups were ER visits for hypertension/CHF and gastro-esophageal reflux disease/peptic ulcer disease patients, and office visits for comorbidity patients.

“Disease management programs that include the education of physicians and pharmacists represent coordinated care that reduces medical utilizations and adverse drug events and improves patients’ quality of life while saving costs, although these impacts of the program were not evidenced throughout all disease groups,” wrote the study authors.

“I think the message to take away is there is something we can do to improve the coordination,” says Wan, a professor of public affairs, health service admission, and medicine, and associate dean for research at the University of Central Florida’s College of Health and Public Affairs.

According to the authors, the average payments per hospitalization per patient over the assessment period for the experimental and control groups were $1,548 and $1,896 respectively. The authors estimated that if every person in the study had been in the experimental group, the Medicaid program would have saved at least an average of $2.99 million over the two-year assessment period. The program also achieved a 1.7:1 ROI, according to the researchers.

Having a system in which the physician, pharmacist, and DM company work together, which was the case in the Virginia program, can improve care and reduce costs—particularly in the Medicaid population. The healthcare system should further explore that model, says Wan. “I think the entire delivery system is in the wrong direction,” he says about the current system. “The focus should be on the patient. Patient-centric care management should be implemented.”


Milliman Consultants and Actuaries performed the computations for Washington’s Medicaid DM program that ended in June 2006. The program managed four diseases: asthma, diabetes, CHF, and chronic obstructive pulmonary disease.

The DM program included a 24/7 nurse advice line that beneficiaries used for recommendations about acute medical issues and informed decision-support.

Ricardo Guggenheim, MD, MBA, vice president of product management and program outcomes management at McKesson in Broomfield, CO, says the Washington Medicaid program was an earlier-generation DM program. Since creating the Washington program, Guggenheim says McKesson has expanded its programs and focuses more on the total needs of patients rather than the particular chronic disease. McKesson now has Medicaid programs in Illinois, Pennsylvania, Texas, Oregon, New Hampshire, Montana, California, and Florida.

Guggenheim says McKesson learned from the Washington program. “Working with the state on this program, we learned a lot, which helped shape our approach to programs going forward,” he says.

The clinical outcomes showed improvements in all four disease states, including patients using prescribed medications and receiving the proper testing.

Guggenheim says a key to McKesson’s Medicaid program was identifying gaps in care by reviewing medical claims.

For instance, the American Diabetes Association recommends diabetic patients have A1c tests twice per year. If a diabetic patient had not received an A1c test, McKesson informed the physician and patient. Knowledge gaps about chronic care are common not only within Medicaid populations. “You would be surprised by the percentage of people across all demographic groups and education levels that really don’t know much about the chronic disease they have. It’s a universal issue,” says Guggenheim.

However, caring for Medicaid populations complicates those issues further. There are often significant barriers to care that may include:

Challenges to remaining in contact with beneficiaries. Medicaid beneficiaries are often a more mobile population and may regularly change their addresses

Transportation issues that make it difficult to keep doctor appointments or working conditions that make it challenging to miss work to go to the doctor

Difficulty in finding physicians who accept Medicaid, which provides lower reimbursements than Medicare or commercial insurers

Prevalence of severe mental illness (Guggenheim estimates that 25%–30% of Medicaid costs are because of mental illness)

“You want to engage with these members, but it is far more difficult to engage with Medicaid members than with commercial members because they are more mobile and difficult to find,” he says.

A key aspect of that engagement is getting physicians involved with the DM program, which is consistent in both successful Medicaid programs featured in this article.

Guggenheim says DM companies must allay physician fears and make it clear that they are there to help the physician with the goal to get the Medicaid beneficiary into the doctor’s office for care.

Guggenheim says the roles of vendors and doctors are changing, with providers taking the lead in the delivery of care for patients.

“It won’t be long before providers are the primary care managers of their patients. Programs like ours will support this new role of providers and will play a critical role supporting the needs of patients so they can effectively interact with providers around their medical needs,” says Guggenheim.




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