Contact: Al Lewis 781 856 3962

Program Appears To Cost $400 Million, Not Save $300 Million

Wellesley, MA July 7, 2009 The Disease Management Purchasing Consortium (DMPC) http://www.dismgmt.com/ announced today that North Carolina Medicaid’s “ACCESS” program may have cost the state more than $400 million in 2006 rather than saving the state roughly $300 million in 2006. "In the likely event that this finding sustains further scrutiny, clearly it will continue to call into question whether the ACCESS model truly saves any money versus other models," says DMPC President Al Lewis.

DMPC found that greater access to free primary care did indeed modestly reduce inpatient claims and even more modestly reduce emergency room visits, but at a high cost. The rate of visits to specialists, and the rate of claims for all other resources (testing and therapies) both climbed dramatically. “Our observation is very predictable, in retrospect,” says Lewis. “More access to primary care generates more primary care, which in turn generates more testing, therapies, and specialist referrals. The data in North Carolina shows that some of that preventive care does indeed replace inpatient care, but most of it doesn’t. In general, I think we are all collectively deluding ourselves that giving people more access to more free care without managing the care would decrease their use of care. Access without utilization controls is a recipe for overuse of care and higher costs.”

Yet the conclusion of the report from William M. Mercer consulting on the North Carolina program is exactly the opposite. North Carolina’s Medicaid agency accepted a report which showed that the ACCESS program saved roughly $300-million in fiscal 2006 alone as compared to its statewide benchmark, more than all population health programs of all kinds published by all organizations (other than Mercer clients) in all peer-reviewed reports in all 49 other states for all payors in all the last ten years combined that have not subsequently been retracted.

By contrast, the “plausibility test” methodology that DMPC uses to certify health plans for valid savings measurement normally reveals that care management savings match or slightly exceed costs. A “plausibility test” has two components. The first is to compare findings to common sense. The second is to count raw medical event rates objectively and compare those rates to the actuarial findings, which include many subjective adjustments for inflation trends and demographic changes

“Using the first test, someone should have asked, ‘Are these counter-intuitive, unprecedented, findings even plausible?’ before publicizing them,” Lewis said. Consider the following:

• Physician costs (11% savings). Plausibility check: Wouldn’t North Carolina’s medical society be complaining if doctors were providing more care but getting less reimbursement?
• Drug expense (5% savings). Plausibility check: Wouldn’t more drugs be prescribed for preventive care?
• Inpatient care (46% savings). Plausibility check: Since a large percentage of admissions is simply not preventable, a 46% savings requires that virtually every preventable admission was avoided. A specific piece of data was used for another plausibility check: For the diagnosis of asthma — perhaps the most preventable reason for inpatient admission and therefore the diagnosis where one would expect the greatest percentage of savings — admissions fell by only a quarter.
• Outpatient services (24% savings). Plausibility check: If the care isn’t being provided in the doctor office or with drugs or inpatient care, shouldn’t outpatient costs be rising?

Next, DMPC applied the second “plausibility test” — a check of raw event rates — to the most extreme, financially significant, and unprecedented finding: 54% savings in children under 1 year old. “Since birth events are by far the biggest reason for discharge in that age category, and normal delivery rates would not be affected while primary care visits would rise, neonatal utilization would have to have fallen massively to justify this overall 54% savings figure. However, the actual statewide number of neonatal discharges and days fell only slightly over the course of the study, and by the end of the period North Carolina’s neonatal discharge rate was still higher than South Carolina’s, which also fell over the period.
While the savings claims are invalidated by this data, the good news is that the North Carolina ACCESS program concept does indeed work, in the broadest sense of the word. “The decline in asthma admissions of roughly a quarter is the largest DMPC has ever found. But at what cost? It appears that overall, each inpatient day avoided correlated with about $18,000 in extra non-inpatient resource use,” Lewis noted.

The DMPC analysis was done using Freedom of Information Act (FOIA) requests for specific pieces of utilization data across the entire Medicaid population, and confirming, publicly available databases from other governmental organizations. The FOIA request purposefully included people not eligible for the ACCESS program because oftentimes, in DMPC’s experience, there is inadvertent sampling error creating regression to the mean, due to the significant number of people with no claims eligible for Medicaid who do not know that they are eligible and therefore do not enroll or get counted. Due to FOIA data limitations, the analysis is intended to spur others to more careful study, rather than be conclusory in and of itself. The DMPC findings are available upon request to any organization that is a member of DMPC, and to the media. Other organizations may make a FOIA request to the state.

ABOUT DISEASE MANAGEMENT PURCHASING CONSORTIUM INT’L, INC. AND AL LEWIS

DMPC (www.dismgmt.com) has been providing procurement and outcomes measurement support for health plans, large self-insured employers and states since 1995. Google credits founder DMPC Al Lewis with having “invented disease management.” Managed Healthcare Executive consistently ranks Lewis as the “#1 Most Influential person in disease management.” He has twice been named the industry’s most influential person by DMAA: The Care Continuum. Books include Emerging Trends in Disease Management: 2009 and Beyond (with Jill Brown) and OOBonomics: The Best Outside-of-the-Box Economic Policy Ideas You’ve Never Heard Of, which will be broadly available in bookstores in September. He also appears regularly on Montel Williams and other national media, and has published many peer-reviewed articles on the subject, most recently “How to Measure the Outcomes of Chronic Disease Management,” Journal of Population Health Management (2009;12:47-54). His Critical Outcomes Report Analysis, Savings Measurement Validity and Care Management Contract Negotiation certifications have been earned by 150+ individuals and 30 payor organizations, listed on www.dismgmt.com. Lewis holds two degrees from Harvard and taught economics there, and was a partner in the international management consulting firm of Bain & Co., Inc.