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P E R S P E C T I V E
M E D I C A L  M A N A G E M E N T
W E B  E X C L U S I V E   

19 May 2004  
  

Perspective: Integrating Disease Management 
Into The Outpatient Delivery System During 
And After Managed Care

Disease management represents a second chance to do medical management right.

By Victor G. Villagra

ABSTRACT:

Managed care introduced disease management as a replacement strategy to utilization management. The focus changed from influencing treatment decisions to supporting self-care and compliance. Disease management rendered operational many elements of the chronic care model, but it did so outside the delivery system, thus escaping the financial limitations, cultural barriers, and inertia inherent in effecting radical change from within. Medical management “after managed care” should include the functional and structural integration of disease management with primary care clinics. Such integration would supply the infrastructure that primary care physicians need to coordinate the care of chronically ill patients more effectively.


James Robinson tracked the evolution of medical management through the forces that molded the managed care industry during the backlash.¹ In the rearrangement, care or disease management replaced utilization management. In this paper I discuss how disease management (DM) could support the structural and functional transformation of the outpatient delivery system devoted to the care of chronically ill patients.

Limitations Of The Outpatient Delivery System

Managed care continues to change the way provider networks are organized and medical services are paid for, but it has failed to stimulate a fundamental transformation of the outpatient delivery system. As changing demographics and morbidity profiles drive more patients with chronic conditions to primary care physicians (PCPs), the system’s designated coordinators of care, the physical plant, ancillary technical infrastructure, staffing, professional roles, and workflows of the outpatient delivery system devoted to care coordination have remained largely static. This has given rise to a proposal for its reconfiguration: the chronic care model.² Efforts in office redesign are under way, but a scalable, operational prototype of the chronic care model has been slow to develop.

Considering the sizable burden of self-care of chronically ill patients and the real need for a reliable source of information, it is understandable why DM, armed with data, personalized information, and multimodal mass communication technology capable of reaching even highly mobile patients anywhere and anytime, has been able to step in to provide those services. Importantly, DM concerned itself only with maintenance and supportive care delivered remotely between visits—a previously unclaimed niche—while treatment decisions remained in the hands of patients and physicians, a transaction that ties reimbursement to the patient’s actual presence in the physician’s office.

Expansion Of DM Beyond Managed Care

In the mid-1990s many managed care organizations (MCOs) accelerated their internal development of DM programs. By offering DM services, MCOs gained new ground with employers and satisfied consumers’ growing demand for a role in their own care. In some cases, DM generated new revenue; it also represented a second chance to do medical management right. As demand grew, a number of freestanding DM organizations also emerged, providing MCOs with an “outsourced” alternative. Buying instead of building gave some MCOs “speed to market” advantage and obviated the need for major capital investments. This created a revenue stream for DM organizations to further upgrade their technological infrastructure, which offered a “docking station” for a variety of complementary technologies such as predictive modeling, decision-support software, and multifunction remote monitoring devices. Their clinical offerings expanded from single diseases to more integrated multidisease programs.³ The new model required a redefinition of clinicians’ roles, staffing mix, actuarial competence, and its own financing; however, it continued to rely on MCOs as a source of data. It is estimated that between 2000 and 2002 outsourced DM grew 69 percent and in 2003 generated $715 million in revenues, a 24 percent increase over the previous year.⁴

In the past few years DM programs have gradually expanded to preferred provider organizations (PPOs) and fee-for-service Medicaid and Medicare.⁵ Various permutations of the DM model are also emerging outside the United States. At a recent meeting, representatives from eleven countries presented their early experiences.⁶ These developments are noteworthy because they signal the widespread adoption of a medical management model that is independent of network configuration and payment mechanism and that appears to have broad appeal among payers and policymakers across varied medical cultures.

Can DM Organizations Support Small-Practice Adoption Of The Chronic Care Model?

As discussed by Robinson, MCOs’ retreat from utilization management has defaulted the locus of control of many medical decisions back to the delivery system and increasingly to consumers. However, in most parts of the country, primary care delivery systems remain as poorly equipped to support care coordination or meaningful patient self-management as they were before the backlash. The root causes of this structural stagnation are complex and beyond the scope of this paper. From the point of view of physicians’ day-to-day practice, limitations to care coordination include lack of time, lack of information technology, lack of clinical decision-support tools, and lack of incentives.⁷ Large group practices are building their infrastructure for care coordination, but small practices lack the financial strength to emulate them.

DM organizations have rendered operational nearly all of the attributes of the chronic care model (self-care; information systems; delivery system redesign; community resources; and policy, health care organization, and decision-support tools), but unlike the original vision, which placed the epicenter of the transformation inside the delivery system, MCOs and DM organizations developed and scaled the model outside of it, thus bypassing many of the economic limitations, cultural barriers, and the inertia inherent in effecting radical change “from within.”⁸

However, DM programs and physician practices remain largely disconnected.⁹ If the two entities were to integrate their non-overlapping functions, an operational prototype of the chronic care model might be closer at hand. The technical, organizational, and financial arrangements needed for such collaboration would be complex but workable. The advantages for physician practices would be to satisfy their pent-up desire for advanced care coordination technology and clinical and human resources to support it without having to shoulder the investment needed to reproduce it. If DM services were offered as a direct extension of physicians’ office operations, quality improvements supported by “payment-for-performance” schemes may be more easily attainable, providing needed financial incentives. The high patient satisfaction rates reported by DM programs would accrue to the physician and would enhance professional satisfaction, morale, and competitive advantage. From the patient’s perspective, an immediate transfer of the source of medical advice from the payer to the personal physician would represent a natural alignment with the patient’s most trusted and credible source of medical advice. Surveys repeatedly bear this out.¹⁰

The advantages for DM organizations would be to fulfill their original intent to establish collaborative relationships with physicians and, in doing so, improve the program’s effectiveness, credibility, and legitimacy.

The advantages for MCOs would be to rid themselves of the risk inherent in intervening in medical decisions. This realignment of the medical management function could also lay the foundation for a more collaborative relationship with providers.¹¹

The new medical management model adopted by managed care has found applicability outside its traditional boundaries. This paves the way for a structural and functional integration of DM with the delivery system, independent of network configuration or payment mechanism. Integration can greatly accelerate the retooling of the delivery system toward making the chronic care model operational.

NOTES

1. J.C. Robinson and J.M. Yegian, “Medical Management after Managed Care,” Health Affairs, 19 May 2004, content.healthaffairs.org/cgi/content/abstract/hlthaff.w4.269 (19 May 2004).
2. E.H. Wagner et al., “Improving Chronic Illness Care: Translating Evidence into Action,” Health Affairs 20, no. 6 (2001): 64–78
3. V. Villagra, “Strategies to Control Costs and Quality: A Focus on Outcomes Research for Disease Management,” Medical Care 42, no. 4 Supp. (2004): III-24–III-30.
4. A. Lewis, unpublished data, Disease Management Purchasing Consortium, Wellesley, Massachusetts.
5. Republican Study Committee, “H.R. 1, The Medicare Prescription Drug and Modernization Act of 2003 Conference Report,” johnshadegg.house.gov/rsc/MedicareHR1Summary03.pdf (22 April 2004); and B. Wheatley, “Medicaid Disease Management: Seeking to Reduce Spending by Promoting Health,” State Coverage Initiatives Brief, August 2001, statecoverage.net/pdf/issuebrief0801.pdf (4 May 2004).
6. Disease Management Association of America, “DMAA’s First International Disease Management Summit,” www.dmaa.org/intsummit03 (22 March 2004).
7. L. Casalino et al., “External Incentives, Information Technology, and Organized Processes to Improve Health Care Quality for Patients with Chronic Diseases,” Journal of the American Medical Association 289, no. 4 (2003): 434–441.
8. T. Bodenheimer, E.H. Wagner, and K. Grumbach, “Improving Primary Care for Patients with Chronic Illness,” Journal of the American Medical Association 288, no. 14 (2002): 1775–1779; and T. Bodenheimer, E.H. Wagner, and K. Grumbach, “Improving Primary Care for Patients with Chronic Illnness: The Chronic Care Model, Part 2,” Journal of the American Medical Association 288, no. 15 (2002): 1909–1914.
9. Villagra, “Strategies to Control Cost and Quality.”
10. M.C. Reed and S. Trude, “Who Do You Trust? Americans’ Perspectives on Health Care, 1997–2001,” Tracking Report no. 3, August 2002, www.hschange.org/CONTENT/457 (22 April 2004).
11. Integrated Healthcare Association, “Projects: Pay for Performance,” www.iha.org/Ihaproj.htm. (25 March 2004).

Victor Villagra (Victor.villagra{at}snet.net) is president of Health and Technology Vector Inc. in Farmington, Connecticut.

Read related papers by: James Robinson and Jill Yegian, Alan Garber, Marjorie Ginsburg , and a conference summary by Jill Yegian.

DOI: 10.1377/hlthaff.W4.281
©2004 Project HOPE–The People-to-People Health Foundation, Inc.