Underneath that forecast, it’s the cost of managing chronic disease for Medicare enrollees that’s the main fiscal challenge.

Quality of Care, and Health Expenditures Among Medicare Beneficiaries, published in the February 11 2009 Journal of the American Medical Association (JAMA), analyzes the patient outcomes and costs gathered in 15 Medicare disease management pilots conducted between April 2002 and June 2005. Dr. Deborah Peikes and colleagues looked at DM programs targeting heart disease, diabetes, and chronic lung disease, among other conditions.

Their conclusion: disease management in Medicare doesn’t lower costs and improve outcomes. That is, as Medicare is currently designed.

The major cost component in Medicare is hospital admissions and readmissions. The pilots aimed to address care coordination through a variety of interventions.

These pilots were funded through the Balanced Budget Act of 1997 which mandated that the Secretary of Health and Human Services evaluate “care coordination” in Medicare’s fee-for-service program. Contracts were awarded in 2002 to 15 demonstration programs through a competitive bidding process.

Among the 15, only 2 showed some promise of reducing costs to the Medicare Program. There were five key differences between the successful disease management programs and the others:

1. Initiating more in-person contacts per month.

2. Achieving better outcomes for patients that were of middle-risk for hospitalization — neither too healthy nor too sick to prevent hospitalizations.

3. Counseling patients on medications.

4. Working closely with local hospitals, which helped to manage transition to home and reduce short-term readmissions.

5. Interacting more frequently with physicians.

Health Populi’s Hot Points: After combing through this study’s detailed results, two key points rise to the top of the learnings:

1. Care coordinators must interact in person with patients and not simply educate or assist them by telephone. There is high ROI from in-person contact vs. telephonic contact. A team-based approach, not an individual care manager, can also yield fewer readmissions.

2. Closely coordinating with patients’ physicians can better influence care. This will require stronger financial incentives than Medicare currently offers physicians.

The patient-centered medical home is an approach that can provide this linkage. However, PCMH won’t come cheap. The Congressional Budget Office’s estimates for PCMH to cover all chronically ill Medicare enrollees would cost $5.6 billion between 2010 through 2019.

This investment could come from reallocating the Medicare budget away from what doesn’t work toward what does. Thus, comparative effectiveness research and other tools that help make rational decisions are the modi operandi for managing the long-term deficit that Medicare will inevitably drive.