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More Care, Less Cost

March 1, 2004
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Related Topics: Benefit Design and Communication, Health and Wellness, Featured Article, Compensation
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In an effort to check spiraling health costs, Hughes Electronics, a parent of DirecTV, is offering a disease-management program that covers more conditions, more acute illnesses and more people. Since 1998, the El Segundo, California satellite-communications company has provided basic disease-management services to its 7,000 employees, and the plan is showing impressive financial results. "It has consistently produced an almost 3-to-1 return on investment," says Pamela Hymel, vice president of human resources.

    Given that kind of return, it made sense to expand the company’s disease-management offerings. The existing program covered a handful of major conditions, including diabetes, asthma, congestive heart failure and coronary artery disease. Now, more than 30 medical conditions will be eligible, including some not typically served under the disease-management umbrella, such as depression, anxiety and alcohol/substance abuse. A voluntary health-risk assessment and wellness component that focuses on preventing major diseases is also part of the plan.

    "As we move forward, we want to offer more than disease management," Hymel says. "We want to offer health management. Our ROI studies show that the program is a good investment, not only for our company’s bottom line, but also for our employees’ health, productivity and performance. With our enhanced program, we can have a much greater impact."

    What’s happening at Hughes reflects an emerging trend. Even as medical benefits shrink, disease-management programs are expanding as part of, or in addition to, a traditional health plan. The reason is simple: employers view disease management as an effective way to control soaring costs. "Five years ago only a relatively small percentage of employers were implementing the programs, whereas today most employers view disease management as a competitive issue, if not a necessity," says Robert Stone, executive vice president and cofounder of American Healthways, the nation’s largest disease-management provider. "With impressive financial outcomes justifying their investment, more health plans and employers will adopt programs that reach broader populations and drive meaningful change in health and costs."

    A Hewitt survey of large employers with an average of 11,875 employees shows that almost three-quarters now offer or plan to implement disease-management services. Almost two-thirds of employers say that disease management has helped control their health-care expenditures, with an approximate 2-to-1 or higher return on investment. Cost depends on which conditions are covered, how the program is structured, and whether fees are based on the total number of employees or the number of enrolled participants, but it averages about $5 to $12 per employee/per condition/per year, according to Watson Wyatt.

    Study after study shows that a small fraction of patients with major chronic conditions are responsible for the majority of health-care costs. A January 2004 Watson Wyatt report states that "claimants with annual expenses over $500 for therapeutic services who are treated for 11 (mostly) chronic conditions…account for about 44 percent of health plan payments, but [represent] only about 9 percent of claimants." Through early patient identification, education, nursing support and care coordination, disease management reduces the number of inpatient admissions and emergency-room visits, helps avoid or minimize complications and improves the employee-patient’s quality of life. While every disease-management company operates slightly differently, typically a nurse works with the patient to help promote positive lifestyle changes and ensure compliance. The nurse also coordinates with the primary physician and other providers to ensure that established guidelines for specific diseases are being followed.

    "People don’t opt for transplants or defibrillators because their employer or the government is paying for them. They need these procedures because their condition has progressed to a point where such costly interventions are required," says Lonny Reisman, a cardiologist and founder of ActiveHealth Management, which offers disease-management services to more than 700,000 members of large employer health plans and their dependents. "The demands of the sick person …can be mitigated by optimizing care early on in the illness. Attention to the mundane needs of a diabetic regarding sugar, lipids, blood pressure and kidney-function control is not terribly expensive. What is expensive are [complications like] blindness, kidney transplants, amputations and heart attacks."


"Addressing a wider array of medical conditions is the main focus of today's disease-management programs."


More diseases, more people
    Until recently, most disease-management programs covered just a few major chronic conditions, usually heart disease, asthma and diabetes. Now many programs cover a dozen or more ailments. "Addressing a wider array of medical conditions is the main focus of today’s disease-management programs," says Terry Fouts, chief medical officer of Great-West Healthcare, a national employee-benefits provider, which recently introduced neonatology and oncology programs and will begin to cover pain and depression later this year. "For example, there has been a trend in addressing high-risk maternity, renal disease and coronary artery disease predictors."

    Like Great-West, many disease-management companies are moving toward covering depression and other mental illnesses, as both a secondary and a primary condition. "A large percentage of people with chronic conditions are depressed," says Frederic S. Goldstein, president of Specialty Disease Management Services, whose nurses are trained in depression, alcohol and substance abuse, bipolar disorders and schizophrenia. "But in the past, there wasn’t good coordination between mental health and medical care. Now disease-management programs are bridging the gap. We make sure that the mental-health providers understand the physical issues and vice versa."

    As employers seek more comprehensive health-care packages tailored to their specific workforce needs, many are contracting directly with disease-management vendors rather than working through their medical-plan or pharmacy-benefit administrator. Such administrators may offer a watered-down or less robust program or simply not cover the diseases that the employer wants to cover, whether it’s arthritis or allergies. Hughes, for example, had previously offered disease-management services as part of its Aetna health-insurance plan, but now is contracting directly with CorSolutions for its expanded program.

    "Employers are identifying the most prevalent and high-cost claimants and choosing the specific disease-management program that best fits their workforce profile," says Diane Matousek, employer market segment director for AdvancePCS, which owns Accordant, a disease-management company that specializes in complex, high-cost conditions such as multiple sclerosis, Parkinson’s disease, seizure disorders, sickle-cell anemia and cystic fibrosis.

Tailor-made packages
    By examining their health-insurance and pharmaceutical claims and evaluating their employee population, employers can custom-design packages that not only cover more ailments, but also serve employees who aren’t sick but may be at risk. "The net is being cast more broadly," says Bruce Kelley, a Minneapolis-based senior consultant at Watson Wyatt. "Programs are morphing from ‘disease management’ to ‘population health.’

    Disease-management firms used to target just a very small percentage of high-severity claimants, whereas now they are identifying all employees and spouses with a given chronic condition, stratifying them from low to high severity and providing services appropriate to the degree of severity."

    In order to provide an array of comprehensive offerings in both sickness and in health, vendors may partner or subcontract with other specialty providers. "Such partnerships are organized around a single ‘health-care coach’ or ‘care concierge,’ who serves as a focal point," Kelley says. "This is an exciting development because it allows a partnership of vendors to serve participants, but it appears seamless to the employee and the employer, who deal with only one company. Vendors are trying very hard to become one-stop shops not only for monitoring diseases but also for health and utilization management."

    The focus on health--not just on disease--was important to Hughes’ Hymel, who is also a physician. "We wanted a coordinated approach that integrates lifestyle and wellness to help prevent or lessen the severity of disease," she says. "By monitoring family history, lifestyle and such measurements as blood sugar, cholesterol and blood pressure, we can identify and monitor employees at risk and funnel them into stress-management, smoking- cessation or weight-loss programs that may prevent them from developing a full-blown illness. For example, we can work with someone who is pre-diabetic to lose weight and change their diet so they don’t end up in the diabetic disease-management program."

Workforce Management, March 2004, pp. 55-58 -- Subscribe Now!

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