Fiscal Fitness: How States Cope

Washington state disease management stakes a claim for controlling costs, improving care

Recognition of Washington state’s Medicaid disease management program as Best Disease Management Program — Medicaid by the Disease Management Association of America is helping focus attention on the value of such programs for controlling costs and improving health care in Medicaid. Washington’s program, most of which is operated under contract by McKesson Health Solutions, focuses on high-risk clients diagnosed with one of four chronic conditions — congestive heart failure, diabetes, asthma, and kidney disease. Officials say the program, which started in April 2002, has saved more than $2 million in its first year. 

The officials say the key to success in disease management is to center on patients with chronic conditions who can be stabilized or improved by more intensive management. That means adding nurse managers who can assess and educate clients as well as help providers sidestep the complications and other problems that otherwise might further erode clients’ conditions and add significant cost to their care.

Doug Porter, assistant secretary for Medical Assistance administration in the Washington Department of Social and Health Services in Olympia, tells State Health Watch the state tried several programs in the past, which were unsuccessful, but kept looking for a way to address needs of the 30% of the Medicaid caseload, the disabled and the elderly, who take 50% of the dollars. Mr. Porter says McKesson originally projected savings of $1.3 million, but the contractor and state agency were pleased to see that the savings were outstripping the projections. 

He said the program is voluntary for clients, but very few of those who have been targeted decline to participate. Anecdotal information from clients, their families, and providers indicate that the effort is being very well-received. For example, according to Mr. Porter, congestive heart failure patients tend to be overweight, and it is known that rapid weight gain can signal fluid retention. Without the focused disease management program, there would be no one to remind patients to weigh themselves or to provide a special scale for use in monitoring their weight. There also has been success in getting people to comply with a medication regimen. Program nurse consultants keep in touch with the high-risk patients, Mr. Porter tells State Health Watch, and "it must be a breath of fresh air to have someone check up on you to make sure you’re OK."

Incentives for vendors, patients

He tells State Health Watch that lessons learned from the first year of experience include fine-tuning incentives for vendors to deliver significant savings and for clients to participate in the program.

According to Mr. Porter, Washington started with a flat rate for the vendor and a commitment to evaluate the savings. At this point, he says, they are willing to structure the next contract so that savings can be shared. He says they don’t want to charge blindly into a capitation arrangement because they want to be sure how the savings are being generated and confident that people still can get the care they need. But capitation definitely should be explored, he says, because that’s where the money is.

Care Coordination Section manager Alice Lind tells State Health Watch they have learned the importance of working with providers and ensuring that any disease management contractor wants to work closely with providers. It also has been important, she says, for the vendors to have an in-state presence that can facilitate participation in on-site training and problem-solving activities.

"Very few providers initially were predisposed to be receptive," Ms. Lind cautions. "They didn’t like what they saw as interference in their practice or that they would be judged by an outside entity. Also, some providers have been working on their own on chronic care and didn’t see what they would learn from our vendor. But we’ve managed to win over even the most resistant doctors, and they now see that our nurse case managers are there to help them." Ms. Lind says the response from patients has been "fabulous" because they appreciate the support and service and express surprise that Medicaid would develop such a program to help them.

From the contractor’s perspective, McKesson vice president of medical management services Sandeep Wadhwa tells State Health Watch they have identified two key success factors. First, he says, there has been a good working partnership with the state Medicaid staff. The state officials have helped their McKesson counterparts navigate the Medicaid bureaucracy and have been an invaluable partner in introducing McKesson and the program to doctors and to the community. The second key success factor Mr. Wadhwa cites is the involvement of community stakeholders. He says they have worked with many state groups to encourage them to view the program as a resource rather than as a threat.

It has been important, he says, that services initially have been offered to fee-for-service Medicaid patients and that McKesson has done a thorough analysis of the populations to be covered to assess the potential for financial and clinical improvement. It also matters, according to Mr. Wadhwa, whether the state decides to fund the program through a waiver or an amendment since different types of funding can give a different flavor to the initiative.

McKesson doesn’t have a preferred financing mechanism, according to Mr. Wadhwa. "We’ve learned to be nimble and to work with states in whatever way they want to work with the Centers for Medicare & Medicaid Services," he says. "It’s probably cleanest with a waiver, and the state has more ability to shape the program. Amendments can be easier, but there can be configuration issues to be sure that all conditions are met. If waivers were easier, we’d enthusiastically support them."

Improved outcomes during the first year have included: 1) an increase in the rate of asthma clients receiving flu shots from 45% to 59%; 2) an increase in the percentage of congestive heart failure patients who weigh themselves daily from 28% to 67%; and 3) an increase in the percentage of diabetics who take aspirin daily from 41% to 57%.

Other accomplishments claimed for the program include: 1) more than 150,000 clients have access to a 24-hour nurse hotline operated by McKesson with calls averaging 1,600 per month, including 900 requests for guidance for symptoms of illness; 2) care coordination includes referrals to other state agencies and local community groups, assistance with access to medical providers, and referrals to the tobacco quit line; and 3) disease management education for more than 200 physicians, reinforcing the importance of standards-based medicine and improving quality and delivery of care.

[Contact Mr. Porter at (360) 725-1915; Ms. Lind at (360) 725-1629; and Mr. Wadhwa through McKesson public relations manager Jordan Gruener at (303) 664-6410.]