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E-CareManagement News

August 12, 2000


Medicare is testing the cost-effectiveness of paying for case management and disease management (DM) services. The latest announcement from the Medicare Coordinated Care Demonstration describes plans to select at least eight demonstration projects by early 2001. 

The demonstration is designed to:

  • Test proven models of coordinated care to improve the quality of services furnished to specific beneficiaries and manage expenditures under Parts A and B of the Medicare program;
  • Examine a variety of delivery and payment models applicable to the original Medicare fee-for-service program;
  • Assess the cost-effectiveness of making a monthly payment for coordinated care services; and
  • Test whether models of coordinated care improve clinical outcomes, satisfaction, quality of life, and appropriate use of Medicare-covered services.
  • The Health Care Financing Administration (HCFA) is continuing with its methodical approach to evaluate and incentivize disease management and care coordination approaches. HCFA continues to signal that over time it will adopt payment mechanisms that will encourage DM and case management in its Medicare fee-for-service program.

    Over time, this demonstration promises to eliminate two of the most significant objections to DM approaches:

  • Objection by hospitals and physicians: "We have to pay attention to what we get paid to do by Medicare. Today we get reimbursed for patient admissions, visits, and procedures. We do not get reimbursed for providing DM services."
  • Objection by the health plan Chief Financial Officer: "If we get too good at DM, we'll just attract more high cost and high risk patients. We should not invest in DM programs."

    If you have been wondering how the Internet and E-Care will change the future of disease management and patient care, sign up for The Symposium on E-Healthcare Strategies for Chronic Disease Management. This one of a kind program will feature the best and the brightest in the E-Care space. It will be held at the popular Desert Springs Resort in Palm Springs on September 17-19th. The Disease Management Association of America is also sponsoring a golf tournament on Sunday, September 17th. Additional details and registration information are available at 1-800-684-4549.


    The July 2000 issue of the American Journal of Managed Care contains a superb article examining an intervention approach developed and implemented by StatusOne.  The program was designed to anticipate and care for the most frail and least stable members of a health plan.

    The study found that a sharply focused, Internet-deployed case management strategy achieved economic and functional status results on a population basis and produced system wide savings in its first year of implementation. Worth watching!

    Concentrating on the highest-risk group, which averaged just 1.1% prevalence in the total membership, yielded bottom line results. During the program's first year, the total population's annualized commercial admission rate was reduced 5.3%; seniors' was reduced 3.0%. Among just the highest-risk group, costs dropped 35.7% from preprogram levels of $2,590 per member per month (excluding drugs). Patient-derived cross-sectional functional status rose 12.5%.

    Can't find your copy of the latest AJMC? A copy of the study is available from one of its co-authors, Sam Forman, MD. Write to for a Word version or a reprint of the AJMC article. Include your mailing address for a reprint.

    AND NOW FOR SOMETHING COMPLETELY DIFFERENT.... and The Corporate Partnering Institute have formed a joint venture to develop a series of disease and condition management web sites. Their new company -- -- is organizing a launch of 141 direct-to-consumer, disease-specific web sites. 

    Today there are fewer than 10 diseases which account for almost all the focus of DM efforts. is evidence of how the Internet is greatly expanding opportunities FOR PATIENTS to manage a BROADER RANGE of diseases and conditions.


    A Washington Business Group on Health/Watson Wyatt Worldwide Survey was designed to capture an early picture of how health care costs are shaping up for the year 2001.

    Some key findings:

  • Overall medical costs are expected to increase an average of 12.2% for active employees
  • The cost increases for prescription drug benefits are most dramatic, with employers reporting an average increase of 22.5%
  • The fact that costs are rising at similar rates under all forms of health care delivery highlights the continued difficulties in managing health care cost and quality.
  • Highest priority actions to control costs: 
  • "In the next 12 months, what actions do you anticipate taking to manage health care costs?" (Answers reflect the combined percentage answering "likely" or "somewhat likely".)

    Employee education through the Web..... 88%
    Partner with providers.............................69%
    Targeted interventions.............................64%
    Reduce benefits.....................................45%
    Defined contribution approach................. 31%


    Any time that 22 health plans representing 100+ million Americans can speak with one voice, it gets our attention. The Coalition for Affordable Health Quality (CAQH) has issued its first progress report.

    The CAQH members have agreed upon specific action steps in the following areas:

    1) Access to Quality Care
    2) Simplifying Administration
    3) Working With Physicians

    A common thread among the action steps is that they are focused on simplifying and standardizing administrative and clinical processes across health plans. The steps address complaints commonly heard from patients and physicians that "every plan has its own way of doing things."
    One action step relates specifically to disease/care management approaches: 

    "Plans will select care management areas to develop common best practices across health plans in collaboration with physician organizations. These best practices in care management also will be used as the basis for patient education materials regarding best practices to empower patients to take steps to improve their health outcomes. Preventive health measures, treatment of specific conditions such as asthma, diabetes, and post-MI care, and proper use of prescription drugs are examples of topics that will be addressed."


    A study sponsored by the California HealthCare Foundation and conducted by the Health Privacy Project at Georgetown University examined the question: "If the Internet can prove so useful for relatively simple purchases such as books and toys, how useful could it become in the purchase of something as vital and complex as health insurance?" The study evaluated three health insurance web sites --,, and

    The study concludes that online health insurance sites have considerable potential to influence how the market for health insurance functions:

  • Online evaluation tools could greatly increase the ease with which consumers learn about and compare health insurance options.
  • Online, real-time quotes and enrollment could greatly reduce the time it takes consumers to shop for and purchase health insurance.
  • Easier access to information could result in greater participation in the market.
  • As actual transaction costs decline, pressure to reduce broker commissions or restructure the broker's role may increase.
  • Commentary: As discussed in the July 19, 2000 issue of ECMN, the ehealthinsurance sector is moving extremely rapidly (at least 32 companies are involved today). This study was conducted in February-March 2000, eons ago in Internet time.


    After spending nearly $5 billion in hospital integration activities to include physician integration, insurance integration and horizontal integration, 31 major healthcare organizations nationwide concluded in an independent survey that the benefits from these expenditures are limited and that their future integration of medical healthcare activities would be significantly reduced.

    One implication: don't expect many hospitals to champion DM programs.
    In the 1990s many hospitals attempted to transform themselves into integrated delivery systems (IDSs). This was done to prepare for an envisioned tidal wave of capitated reimbursement mechanisms, but the tidal wave never came.

    A few pioneer IDSs attempted to become leaders in DM programs in their communities. This latest study pronouncing the failure of hospital integration activities leaves hospitals with minimal financial incentives to be active in DM.

    E-CareManagement News is an e-newsletter that tracks a major change in health care and managed care—the paradigm shift from “managing cost” to “managing care”.  This e-newsletter is brought to you by Better Health Technologies, LLC (  BHT provides consulting and business development services relating to disease management, demand management, and patient health information technologies.

    You may copy, reprint or forward this newsletter to friends, colleagues or customers, as long as the use is not for resale or profit and the following copyright notice is included intact. Copyright © 2000, Better Health Technologies, LLC. All rights reserved.

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