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Expanding Disease-Management Services

As lawmakers consider ways to pay for health reform, use our glossary of potential offsets to get caught up fast.

Updated at 5:30 p.m. on Nov. 23 to reflect continuing legislation.


The health care industry has actually jettisoned the term "disease-management services" in favor of "population health improvement;" a term that better encompasses the ever-broadening array of services related to preventing and caring for chronic conditions.


Executive Summary

The main problem inherent with selling population health improvement services as an offset mechanism is simple: time.

As Congressional Budget Office Director Douglas Elmendorf noted in his March 10 report before the House Subcommittee on Health, the cost of expanding population health improvement services "would be incurred in the first 10 years, but little of the savings would accrue in that period."

But that shouldn't disqualify population health improvement services as an offset, according to Gordon Norman, chairman of the board of directors at the Disease Management Association of America. On the contrary, burgeoning investment in health improvement services by the private sector is evidence of their promise, Norman said. Annual revenues in disease-management services increased from $85 million in 1997 to more than $600 million in 2002, according to one study.


"It takes a while before you can show a return on investment," Norman said, noting very few medical services show savings in the short term. But "even if there are not cost savings, you can typically demonstrate cost-effective improvements in health outcomes for many of these activities," he added.

These "activities" include enhanced information technology such as Web-based coaching and remote biometric monitoring devices. They also include traditional preventive health and wellness activities like patient support, home-monitoring, data analysis and medication monitoring. Many of these approaches help doctors identify and address gaps in care.

However, lawmakers must be careful about using too broad a brush in evaluating various methods, Norton cautioned.

"One needs to be judicious about giving a broad thumbs-up or thumbs-down to that whole array of services in any sort of a categorical fashion," he said. "The broad issue of 'does disease-management work, does it save money, does it improve outcomes?' is somewhat nonsensical."


Although many of these services are routinely purchased by a combination of private insurers, self-insured employers and public sector entities, one key player that's missing is the Centers for Medicare and Medicaid Services. While Medicaid and Medicare plans have delved into disease management to a certain extent, the pilots and studies CMS has commissioned on disease-management and population health improvement services have not produced definitive results that would allow the government to endorse broad-scale adoption.

Max Savings

In 2004, the Senate Budget Committee asked the CBO to investigate whether disease-management programs could reduce the overall cost of health care. In its analysis, the CBO found "there is insufficient evidence to conclude that disease management programs can generally reduce overall health spending." The report also noted that "such programs could be worthwhile even if they did not reduce costs, but CBO's analysis focused on the question of whether those programs could pay for themselves." The same holds true today. In his March 10 report, Elmendorf reiterated that "expanding the use of disease management services can improve health and may be cost-effective -- that is, the value of the benefits could exceed the costs. But those efforts may still fail to generate net reductions in spending on health care because the number of people receiving the services is generally much larger than the number who would avoid expensive treatments as a result."

Works Best When Combined With

Disease management has benefited greatly from the development of new health care information technologies. Web-based coaching is on the rise, as are remote biometric monitoring devices. Even cell phones are being used to help provide disease-management services.


The House and Senate bills both lay out prevention and wellness strategies designed to encourage better disease management. There are also pilot programs for medical homes, which encourage better disease management and coordinated chronic care. And both bills would increase grants for public health programs.


"What Does The Future Hold For Disease Management?" -- Managed Care magazine

Disease Management Association of America

Return on Investment in Disease Management: A Review (Cornell University/Merck Foundation Study, 2005)

2004 CBO Analysis of Disease-Management's Effect On Health Care Costs

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