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Disease management proves less of a success: Indiana Medicaid quietly cuts savings estimate

April 23, 2007

In October 2005, Indiana's Medicaid program touted that it could save the state $29 million a year through disease management, a program aimed at reducing the medical costs of patients with chronic illnesses.

But now, those estimated savings quietly have been slashed more than 75 percent. And one critic of Indiana's program says it is likely achieving even less in savings.

The debate over the effectiveness of the Indiana Chronic Disease Management Program comes as the state moves to triple the scope of the effort.

Indiana uses a call center and about 20 nurses to coach Medicaid patients that have a high risk of being hospitalized for heart problems, diabetes, kidney diseasse or pediatric asthma. The goal is to get patients to change their health habits and adhere to their treatment regimens, thereby avoiding expensive health complications.

Indiana aims disease management at those Medicaid patients who are blind, disabled or elderly. Those patients with a chronic illness receive phone calls from the call center, which focus on their medications, nutrition and exercise. The goal is to make sure the patients are managing their illness as best they can.

About 20 percent of them get about six months of personal attention from nurses, who teach patients about their chronic illness and help them set goals to manage it. If a patient is mostly inactive, a nurse might suggest he walk to the mailbox several times a week, and then check on his progress regularly.

Now, Indiana's Medicaid officials are in the final stages of choosing a company to broaden disease management from about 25,000 patients to 75,000. They plan to announce a decision May 18.

The additional patients, who are ill but not at immediate risk for complications, would also receive health coaching. In addition, the state plans to communicate with those patients' doctors, to make sure they know about other doctors their patients see and other medications they take. The state calls this broader program care management.

"We have to redefine the care model," said Jeff Wells, who became Indiana's Medicaid director in March. Otherwise, state leaders know that aging baby boomers and rising costs of health care can overwhelm Medicaid.

Medicaid, a federal program administered by states, pays for health care for poor Americans. Indiana Medicaid, which serves 850,000 Hoosiers, was suffering under spiraling costs when it launched disease management in 2003.

Indiana's program required $886,000 in startup costs, according to a 2005 slide presentation from Regenstrief Institute Inc., an Indianapolis health care research firm. It costs $2.3 million a year to operate.

Research by Regenstrief has shown Indiana can recoup that investment and save an additional $7 million each year.

But Al Lewis, founder of the Disease Management Association of America, said Indiana's savings numbers are suspect, as shown by the sharp reduction.

"They had enough sense not to believe their own numbers after a while," said Lewis, who is now director of the Disease Management Purchasing Consortium International, based in Wellesley, Mass.

Actually, said Tom Inui, CEO of Regenstrief, the estimate of $29 million in savings was based on incomplete data. As the state collected more data, Regenstrief revised its estimate downward in September.

But the state never has publicized the lower figure. In fact, the 2005 press release announcing the larger figure is still highlighted on the Web site of the disease management program.

Lewis contends Indiana went wrong when it decided to build its own disease management program, rather than purchase services from established vendors, which typically guarantee savings.

But Katie Holeman Shipp, who directly oversees Indiana's Medicaid disease management program, said Lewis is just "looking for publicity." She defended Indiana's program as effective and its cost savings estimates as conservative.

"We're very happy with deciding to build it [on our own]," she said. "I think that's why we're realizing these savings."
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