View the rest of Dr. Coulter’s four-part series on disease management…
Okay, your disease management program has been running for a year or so. You made sure your health plan beneficiaries with diabetes, heart disease and other conditions were identified early, and then made sure that they were actually getting disease management coaching by nurses, instead of “participating” through passive mailings. You’ve paid for a lot of disease management, and now you’d like to know if the program is making a difference. Is it worth what it cost you?
About a year and a half after the program started, you’ll finally get a Return on Investment (ROI) report. And look – you’ve got a return of $3 for every $1 spent, maybe 5:1 or even 12:1. It’s probably highest for asthma, but even the 3:1 ROI for COPD looks pretty good. When you talk to another company that used a different disease management company and they’re only getting a 1.3:1 ROI their first year, you feel pretty good about your results.
But there’s this lingering feeling that maybe those results are a little too good to be true. You check out your asthma costs from one year to the next, and are still going up. You look at hospitalization rates for those conditions, and they haven’t changed. And your health plan claims haven’t gone down, even though chronic illness in general, and cardiac disease in particular, is your major cost driver. What gives?
Hold that thought. Let’s try a mind experiment. Suppose I looked at your health plan claimants, and identified everyone who was hospitalized during one year with heart disease. Suppose I then told you I waved a magic wand over those health plan members, and the following year their medical claims were lower. Would you be willing to pay me to wave my magic wand again the next year?
No, because you know that chronic illness is cyclical, and someone who has a hospitalization one year will not likely be hospitalized again the next. I haven’t done anything to change those who were hospitalized in our mind experiment by waving a wand, and their costs would have been lower the following year, regardless. It’s the same with someone who bowls 300 one night or throws five touchdown passes in a game. The next time out they will probably not exceed their average.
That observation is called “Regression to the Mean,” and it’s the problem with much disease management reporting. Disease management companies most often estimate their savings by picking patients who were very sick with an illness in the "baseline" year, and then measure the results the following year when they were participating in the program and were probably not as sick. Just because costs went down does not mean the program was successful – you have to carefully adjust the results to account for regression to the mean, and preferably to compare the beneficiaries with access to the program to those who did not. There are also other ways to make sure the calculations are fair, and other measure to assure that the program worked as promised.
Disease management programs that are good and effective will demonstrate a return of 1.5 to 1 or even 2:1 the first year, but anything higher is likely due to regression to the mean, and not to any real improvement in the health status of your beneficiaries. If it sounds too good to be true, it probably is.
#1 by Gerald Blaum on December 19th, 2006
Hello Dr. Coulter, We are a TPA specializing in using Medstat data analytics coupled with current bio-metrics to identify “actionnable opportunities” to engage covered people through our “Healthy People” program. We engage a far higher percentage of the covered population than any other model we have seen. I’d be honored to talk to you about our program.