Displeased with the money they’re paying to DM vendors and dissatisfied with DM’s results, more health plans are moving those services in-house.
For example, a pair of Minnesota health plans announced in April that they’ll offer DM services. Blue Cross Blue Shield of Minnesota in St. Paul and Medica in Minnetonka, MN, are part of a trend that is moving health plans into the DM space.
Those who support in-sourcing DM services say internal programs allow for flexibility, faster interventions, and can cut costs. Those who side with outsourcing point to DM vendors’ extensive knowledge and product line.
Randall Williams, MD, CEO of Pharos Innovations in Northfield, IL, says many employers and health plans are questioning the value and place of traditional DM because it hasn’t always fulfilled the promise of saving money. “There is no doubt in my mind that the industry is undergoing a seismic shift away from outsourcing programs to third parties ... and has begun to reinvigorate internal building or assembling of disease management programs,” Williams says. “Others are exploring outsourcing to physicians directly under pay-for-performance or medical home reimbursement models.”
There is a trend toward greater in-sourcing, but Ian Duncan, FSA, MAAA, president of Solucia, Inc., in Farmington, CT, says he’s surprised there hasn’t been an even larger in-sourcing movement. One of the largest expenses for a health plan is paying for DM, says Duncan, adding that he doesn’t understand why more health plans don’t explore offering services in-house.
“It seems that the outsourced DM industry that took off around 2000 has managed, despite the fact that it is expensive and has difficulty demonstrating successful ROIs, to keep a very strong hold on health plans and employers,” he says.
George Bennett, chair and CEO of Health Dialog in Boston, uses a nautical analogy to describe the current in-sourcing versus outsourcing situation.
“Strong currents and high winds always favor the effective navigator,” Bennett says. “The care management industry has been characterized by strong currents and high winds for a decade. Current sailing conditions include the fact that many large health plan payers are changing the mix of in-sourcing and outsourcing services they are using to meet their customers’ care management/disease management needs.” Third-party care management/DM firms must understand “the strong currents and high winds and ... navigate with the trends rather than sail upstream,” he adds.
For example, one way to stay on course is to license intellectual property to help plans carry out their in-sourcing strategies and provide outsourced services to those who want them.
The trend is not just with health plans looking to in-source, but health plans with DM programs seeking services from outside vendors, says Alfred Lewis, JD, executive director of Disease Management Purchasing Consortium International, Inc., in Wellesley, MA. Lewis says the current climate shows both sides of the in-sourcing/outsourcing debate think the grass is greener on the other side.
Lewis says health plans are looking outside their companies because they’ve found that hiring call center nurses is more difficult than expected, there are lengthy accreditation processes that health plans must undertake to provide DM services, and health plans usually have different hours than what is needed for call center nurses. Adding night nurses raises HR and security issues, too, Lewis says.
“This is just one example of the many logistical details that no one thinks of when deciding to in-source,” he says.
However, Premila Kumar, MD, PAHM, manager of care management at Horizon Blue Cross Blue Shield of New Jersey in Newark, hasn’t seen those issues at her health plan. “I don’t think there are any drawbacks in administering programs in-house,” she says.
In addition to health plans in-sourcing DM programs, Kumar says she sees insurers develop hybrid models in which they in-source some services and outsource others.
Bennett says care management, which runs the gamut from chronic illness to other conditions, has become an important part of the competitive landscape, and many health plans now view care management as a strategically important component of their service offerings.
“They are very interested in having a mix of care management services that can give them a competitive edge. The right mix of services is still in question. Different firms answering the question in different ways is creating a lively, competitive landscape,” says Bennett.
He says some health plans are creating their own care management programs, and some benefit from intellectual property from third-party vendors while using their own staff. “Most are mixing and matching the various in-sourcing and outsourcing options. For a health plan to not have a care management function in 2008 to help people better navigate the healthcare system puts them at a serious competitive disadvantage. They have to have presence in this arena given that there is significant and growing evidence that it has a high impact,” says Bennett. Kumar says in-sourcing DM gives a health plan such as Horizon better control of its members. If a health plan signs up with a DM vendor, the plan is bound by contract limitations. By in-sourcing services, the health plan can change programs, look for gaps in member care, and provide interventions without having to go through a vendor. One example is Horizon’s home telemonitoring program for HF patients, which was expanded to include diabetes patients and may soon be further expanded to patients with obesity, says Kumar. “That is something we can do by looking [at] and analyzing the data from time to time, and we have better control. If a vendor is [offering DM services], it’s limited by the contract’s outline,” says Kumar.
Don Hawley, chief strategy officer at Health Dialog in Boston, doesn’t fault health plans for examining the numbers or bringing DM services in-house. In the current climate, DM vendors should embrace health plans in-sourcing DM and find ways to add value to those programs.
“We work hard to help our clients structure solutions that reflect their view of the best mix of in-sourced services and outsourced services. In our view, the mix often changes over time,” Hawley says.
Smaller health plans outsourcing
Bennett says big health plans tend to use a mixture of in-sourced and outsourced solutions, but that health plans with less than 500,000 members are mostly outsourcing care management/DM programs.
Health Dialog, with outsourced services that are now available to more than 24 million people, has not seen a drop in outsourced business in recent years. In fact, its licensing business for large plans that want to in-source and its outsourcing businesses have grown. Bennett estimates that Health Dialog will grow about 30% this year, breaking the $300 million mark.
Bennett says the company is growing despite in-sourcing because it offers its intellectual property and outsource services á la carte rather than only offering bundled outsourced services.
The firm is as interested in licensing intellectual property as it is in outsourcing. The health plan client can decide whether to use its own staff (in-source) or Health Dialog’s staff (outsource).
In fact, Bennett estimates that only 30% of Health Dialog’s costs are associated with call center nurses. A large fraction of the firm’s resources are focused on predictive modeling, reaching and engaging members, developing sophisticated software tools, and licensing intellectual property.
“If you are a third-party vendor and your definition of care management is narrow, then you will experience more stress in the near term than if you define your service offerings more broadly,” says Bennett about DM’s need to go beyond the strictly call center nursing model.
Bennett says Health Dialog broadcasts the availability of its support services to members of a client’s served population. The firm also has an extensive library of predictive models, which allows them to take a half-million people and find the 15,000 members who are at risk of “falling into the vortex” of the intense use of healthcare services, says Bennett.
Once the high-risk individuals have been identified, Health Dialog also has cost-effective reach-and-engage tools to help convince the high-need individuals that they could benefit from health coaching support (e.g., online and telephonic).
The outreach tools include segmentation approaches that can characterize the neighborhood where a high-need individual lives.
With that information, the company is able to effectively tailor its message.
“A smaller health plan simply cannot duplicate that kind of marketing capability,” Bennett says. “The cost for a small health plan to set that kind of marketing is prohibitive.”
Bennett says the future of in-sourcing versus outsourcing will depend on the evolving strategies of the large health plans. He observes that decisions to in-source or outsource are often reversed after several years.
However, in his view, as long as there are health plans with fewer than 500,000 lives, the care management/DM outsourcing model will grow and prosper, he says.
Lewis expects to see more health plans test in-sourcing, but he’s not sure it will be successful.
“I think you’ll continue to see a slow trend toward more in-sourcing that will ultimately reverse itself when people sort of throw in the towel and start getting their first outcomes and realizing they don’t have anything to show [from in-sourcing DM services],” says Lewis.
Horizon slowly brought DM in-house
In-sourcing DM programs is not new to Horizon Blue Cross Blue Shield of New Jersey in Newark, which began moving those services in-house in 2003.
The first internal DM program it launched focused on asthma and COPD. In the past five years, Horizon has added DM programs with telephonic health nurses for patients with chronic kidney disease, diabetes, hepatitis C, multiple sclerosis, HF, CAD, and patients with weight management problems. Horizon also offers a mail-only program to hypertension patients.
Premila Kumar, MD, PAHM, manager of care management at Horizon, was the third person hired by the company when it began bringing DM services in-house.
Horizon’s DM unit now has a staff of more than 100 employees who serve about 185,000 members in DM programs.
Kumar says the costs were not the only reason the health plan brought the DM services in-house.
Kumar says in-sourcing DM services allows Horizon to more effectively control its products and members and provides integration between DM, case management, and inpatient case management.
Developing a program from scratch not only requires employees, but technology integration as well.
As time progressed and programs were added, the health plan found that the internal DM computer system could not communicate with other parts of Horizon’s services.
Kumar says Horizon transitioned all DM services, including care specialists, case managers, and utilization management nurses, to the same computer platform in 2007. This allows Horizon to offer a better coordination of care.
Alfred Lewis, JD, executive director of the Disease Management Purchasing Consortium International, Inc., in Wellesley, MA, has a different take on technology. “Technology goes the other way because vendors can get technology and spread it out over many more people than in-sourced programs can,” says Lewis.
Finding those at risk
Horizon finds at-risk members through claims data, including medical, pharmacy, and laboratory, and a health risk assessment. Instead of contacting at-risk members months after discharge, a health plan should have that information within a few days or weeks.
Lewis says receiving claims data sooner and, in turn, contacting members faster are ways health plans could gain an advantage over vendors. But, according to Lewis, health plans have not been able to receive prompt claims information.
Another advantage for health plans is their connection to physicians. Kumar says Horizon nurses communicate with member physicians when there is a concern with a patient and may request specific clinical information. She says physicians have been receptive to the interaction, and the health plan reaches out to physicians via newsletters and seminars, including targeting physicians with a high number of diabetes patients.
By bringing DM services in-house, Kumar says Horizon has learned the challenge of getting members on the phone. Horizon hired nonclinical people to make the initial calls. Once these employees get members on the phone, they engage the members and transfer them to a nurse after a few questions. This service allows nurses to perform tasks other than calling members.
Kumar says Horizon bringing the programs in-house is a benefit to members.
“I wouldn’t say anything is hard to duplicate [for health plans]. On the contrary, I think vendors will have a tough time duplicating what we do,” says Kumar.
BCBS of Minnesota creates in-sourced health management model
To gain more control of the health of its members, Blue Cross Blue Shield (BCBS) of Minnesota in St. Paul will sever ties with Healthways and begin offering most of its DM services in-house in January 2009.
David Plocher, MD, chief medical officer and senior vice president of health management and informatics at BCBS of Minnesota, says outsourced DM vendors simply do not have the relationships with providers that health plans enjoy. “We have a responsibility to help our members improve their health status as much as we can, and an outsourced company doesn’t have our linkages to providers and, so, when we want to collaborate with providers, we need to be in charge of the health management programs,” he says.
Plocher says BCBS’ new offerings are not a “me-too approach,” but one in which new features can potentially help all members, not just those with chronic diseases. BCBS will offer Whole Person Health Support, a health management program that goes beyond traditional DM. The health plan says Whole Person Health Support is more expansive than DM in the areas of identification and stratification, consent and engagement, and integration. “We use entirely different methods to find people. We want to concentrate on finding people who really need to be found and whose course we can modify and who are ready to change behavior,” says Plocher.
The health plan is also using advanced claim pattern software that filters claims to find gaps in care, such as failures in medication refills and testing; reviews referrals; biometric screening; hospital discharges; and health risk assessments.
Plocher says the switch to in-sourcing will allow the health plan to revamp the health management programs rather than negotiating changes with a vendor. “The owner, the health plan, always wants control, flexibility, and speed. That’s easier to manage when it’s an in-house–owned program.”
Bringing the majority of DM services in-house in January 2009, BCBS also hopes to gradually in-source additional programs later. Two programs that will remain outsourced for now are an online health assessment and a nurse triage line. Plocher says BCBS also believes that in-sourcing more DM services will allow it to offer Whole Person Health Support at a lower price than the traditional DM program. BCBS will hire 80–100 employees to handle the DM services, a majority of whom will staff a nurse call center. Plocher adds the health plan is investing in technology for the call center and decision health platform. Plocher, who consulted for Healthways until 2001, has been involved with the DM industry for nearly 15 years. In addition to Plocher’s experience, BCBS, as a health plan, was an early leader in turning its focus to disease and health management. Its experience in health management grew significantly starting in 2002, including working with Healthways on several DM programs.
At one point, BCBS had more than 250,000 members enrolled in a variety of DM programs. This gave Plocher and his team knowledge about what works with DM models. In addition, BCBS built and operated its own HF program for Medicare members, which was recognized by CMS as a highly successful model.
This experience gave BCBS the experience and foundation to create the next generation of health management programs it is bringing to the market, Plocher says.
He says BCBS will educate members about the program changes through outreach and on-site tours. “It’s a large communication effort to reorient our purchasers, because this really does change the game from the old days of marketing one disease program at a time.”
Plocher says bringing the DM services in-house and providing a larger health management program will help BCBS members. “It’s easier for us to deliver Whole Person Health Support with our in-sourced programs because we don’t have handoffs, we don’t have data being sent to outsourced companies. It’s fully integrated,” he says.
Difficult to duplicate?
The debate between DM vendors and health plans offering DM falls along the lines of which offers the better products. Each side claims the other has trouble duplicating its products and services.
DM vendors say they have extensive knowledge in areas of data collection, measurement, technology, decision aid, and other tools.
In response, health plans claim that in-sourcing DM allows them greater flexibility and control of their members, they have better relationships with physicians through other health plan business, and they experience a shorter turnaround time to receive claims data, which allows them to contact at-risk members faster. There is also no hassle with having to negotiate contract changes when DM is done in-house, they say.