New data help Medicaid target high-need, high-cost populations

Cost-containment programs targeting high-need, high-cost Medicaid populations now have more information to work with. Researchers from the Hamilton, NJ-based Center for Health Care Strategies analyzed prescription drug use in addition to diagnostic claims in the October 2009 report, "The Faces of Medicaid III: Refining the Portrait of People with Multiple Chronic Conditions." Here are key findings resulting from the addition of pharmacy data to the analysis:

• The percentage of Medicaid beneficiaries with disabilities and diagnosed with three or more chronic conditions increased from 35% to 45%.

• The prevalence of cardiovascular disease increased from 32% to 44%.

• Costs for Medicaid-only beneficiaries with three or more chronic conditions increased from 66% to 75% of total spending for beneficiaries with disabilities.

Pharmacy data were particularly valuable in illustrating the prevalence of psychiatric illness among high-cost Medicaid beneficiaries. The frequency of psychiatric illness among Medicaid beneficiaries with disabilities increased from 29% to 49%. Examining diagnostic and pharmacy data together, psychiatric illness is represented in three of the top five most common pairs of diseases among the highest-cost 5% of Medicaid-only beneficiaries with disabilities.

"The use of pharmacy data identifies many more beneficiaries with behavioral health problems than the use of diagnostic data alone," says Richard Kronick, PhD, one of the report's authors and chief of the division of health care sciences at the University of California—San Diego School of Medicine's Department of Family and Preventive Medicine. "This highlights the need for care management and quality improvement programs that are sensitive to the needs of beneficiaries with both behavioral health and physical health diagnoses."

Based on the study's findings, Dr. Kronick says state Medicaid programs should focus care management programs on beneficiaries with multiple comorbidities. "These beneficiaries account for a very large share of high-need, high-resource use beneficiaries," he says. "The disease management industry was established to take care of single diseases such as diabetes or congestive heart failure. But virtually all high-cost, high-need Medicaid beneficiaries have multiple comorbidities. A single-disease focus is not likely to meet their needs or reduce utilization and expenditures."

Focus of DM narrows

Washington Medicaid's approach to disease management has changed in recent years to focus more narrowly on high-cost, high-need beneficiaries. "Our state was an early adopter of disease management, but the program has changed considerably since 2002," says MaryAnne Lindeblad, Medicaid division director. "We have very much narrowed it down to target some of the highest-need populations, including populations with both physical and behavioral health issues."

Targeted reviews are being done of clients who are high users of narcotics. "These clients are often the ones who show up in ERs with drug-seeking behavior," says Ms. Lindeblad. "We are working with physicians to reduce narcotic utilization, get clients into pain management programs, and use other tools to manage chronic pain."

Another area of focus is determining whether Medicaid clients discharged from state mental hospitals are complying with their medications. "If folks are noncompliant with medications, they will often recycle and come back to the hospital," says Ms. Lindeblad. "So, we are trying to identify who those folks are, and what strategies we can implement to improve compliance with medications."

Switch to telephonic CM

Another change involved a switch from telephonic case management to making home visits to individuals, as with a pilot currently under way in Kings County. "For our first year in evaluating that program, we didn't see cost savings. But it didn't cost us anything more to have the program, so it was pretty much budget- neutral," says Ms. Lindeblad. "But we did see a statistically significant change in mortality."

This new approach will be expanded to other parts of the state, partly due to disappointing results from the telephonic model of disease management previously used.

"There certainly weren't any savings for the first couple of years. Maybe there was a little bit by the fourth year, but it didn't give us the kind of benefit or long-term changes that we were hoping to see in the population," says Ms. Lindeblad. "Research is supporting more on-the-ground intensive care management to help patients manage their disease. And we didn't see that happening with the telephonic approach."

The problem with Washington's previous disease management strategy, and some of the early efforts of Medicaid programs in general, was an underlying assumption that there would be near-term savings through these interventions, according to Roger Gantz, policy director for Washington Medicaid.

"The truth of the matter is, I don't think anybody saw that," says Mr. Gantz. "That isn't to say they don't do good things, but I think there has to be a note of caution. These savings don't always accrue in the near term. And unfortunately, we always operate on very narrow time horizons."

In addition, patients are typically not disease-specific, and in fact, have multiple care needs and disease states, including mental health issues. "The truth of the matter is, by the time they come into the Medicaid program, they already have chronic conditions. That is part of what qualifies them for the program. So, to be able to go upstream and do prevention is more challenging for the existing Medicaid program today, given who they are covering," says Mr. Gantz. "That is an aspect that sometimes gets lost regarding disease management strategies for a Medicaid-based population."

Contact Mr. Gantz at (360) 725-1880 or, Dr. Kronick at (858) 534-4273 or, Ms. Lindeblad at (360) 725-1630 or