what is the return on investment associated with diabetes disease management?

Dis Manage Health Outcomes 2003; 11 (9): 565-570LEADING ARTICLE 1173-8790/03/0009-0565/$30.00/0

© Adis Data Information BV 2003. All rights reserved.

What is the Return on Investment Associatedwith Diabetes Disease Management?A Report from One Managed Care Organization in Pennsylvania, USA

Jaan Sidorov, Peter Paulick and Lila Sobel

Department of Care Coordination, Geisinger Health Plan, Danville, Pennsylvania, USA

In this article, we review the reduction in healthcare costs associated with a health maintenance organizationAbstract(HMO)-sponsored diabetes disease management program in Pennsylvania, USA. The program emphasizesprimary care-based nurse education and case management of patients with diabetes mellitus. We foundparticipants in the program experienced a slight increase in health insurance claims related to diabetes care but anotable decrease in total healthcare claims, with a return on investment that exceeded $US3 saved for everydollar expended. The changes we observed appeared within a year of program entry, and were sustained on amonth-to-month basis.

Other potential competitive advantages for our HMO created by our disease management programs include adecreased variation in month-to-month costs, greater physician loyalty, and greater local marketplace recogni-tion of quality.

While further studies are necessary to truly gauge the overall value of disease management, our data suggestdisease management is an important consideration for health insurance companies faced with increasing costsamong enrollees with diabetes mellitus.

Disease management is an emerging system of healthcare, failure, osteoporosis, and diabetes mellitus management. The lat-ter was initiated on April 1, 1997. In this paper, we review thedefined as ‘an approach to patient care that emphasizes coordina-development of the GHP diabetes disease management program,tion, comprehensive care along the continuum of disease andoutline the financial outcomes achieved and review the factorsacross healthcare delivery systems’.[1] Disease management ‘bun-underlying the return on investment.dles’ multiple healthcare resources and interventions, such as

nurse-based patient education, case management, telephone- and1. Program Descriptioninternet-based outreach, clinical guidelines, and other strategies

that enable patient self care. Disease management is characteristi- GHP provides managed care health insurance in 38 counties incally coordinated in population-based clinical programs devoted to a largely rural area of Pennsylvania in the US. While individualsimproving outcomes, avoiding unnecessary complications and can purchase GHP health insurance, most enrollees in GHP obtainreducing healthcare costs. There has been a growing adoption of insurance through employer-purchased group plans or throughthis approach; in the year 2000, US health insurers paid out at least participation in the US government’s Medicare + Choice program.$US500 million to an estimated 160 disease management vendors. Since this insurance is managed care, enrollees choose a prima-This figure could grow to $US20 billion by 2010.[2]

ry care physician who is considered the enrollees’ principal physi-The Geisinger Health Plan (GHP) has been offering disease cian and is also a ‘gatekeeper’ for specialty care services within a

management programs to its 240 000 enrollees in central, north- defined network of healthcare providers throughout the four geo-eastern, western, and south central Pennsylvania, USA, since graphical areas of Pennsylvania described earlier. There are a total1995. These programs include tobacco cessation, asthma, hyper- of 720 primary care provider sites with a total of 1272 primary caretension, chronic obstructive pulmonary disease, congestive heart physicians. While primary care physicians receive capitation pay-

566 Sidorov et al.

ment for their services,[3] each encounter is billed against and standards. The program actively promotes teaming of patientsdeducted from the capitation, except for certain services (such as closely with physicians to facilitate the use of clinical guidelines,immunizations) that can be billed separately using a fee schedule. provides didactic clinical lectures at the clinics by physician-Specialty care services are covered exclusively on a fee schedule. experts as well as web-based, on-line medical education for prima-

ry care providers, and encourages early and appropriate specialtyGHP is one of seven managed care plans competing for thereferral. In the event that a patient would benefit from participationhealthcare insurance needs of a population of over 1 150 000in another disease management program, patients are encouragedindividuals in the 38 counties. While all seven offer diseaseto enter it. Since the individual nurses offer multiple diseasemanagement programs, GHP is unique because it offers its pro-management programs at each primary care site, patients in multi-grams through a single dedicated department relying on primaryple programs still rely on a single nurse.care-based patient education and case management nurses.

Care Coordination nurses are not involved in any decisionsregarding utilization management, preauthorization of services,2. The Care Coordination Department andconcurrent review or coordination of benefits.Disease Management

3. Diabetes Disease ManagementCare Coordination is the department within GHP responsiblefor the development and ongoing support of the disease manage-

On April 1, 1997, Care Coordination began to offer diabetesment programs. The department employs 51 Care Coordination

disease management to GHP enrollees. Under this program, Carenurses who act as either primary care educators or case managers.

Coordination nurses encourage early patient referral to a certifiedThey are physically located at the primary care clinics that are

diabetes educator, dietitian or endocrinologist, and educate pa-reimbursed for clinical services;[3] depending on member enroll-

tients about the proper use of a glucose meter, the role of dietment and geographic proximity, each nurse is responsible for 1–15

choices and exercise, the meaning and importance of the glycosy-clinic and/or primary care sites.

lated hemoglobin (HbA1c) test, the proper use of medicationsThe nurses’ responsibilities include promoting and offering

(along with their mechanism of action), and the management ofdisease management program content amongst the primary care

hyper- and hypoglycemia. Nurses see patients one-on-one or inphysicians and their patients. Each nurse is specially trained in

small groups at each of the primary care clinic sites for educationdiabetes mellitus patient education, as well as tobacco cessation,

based on the principles listed above, under the direction of each ofcongestive heart failure, hypertension, osteoporosis, chronic ob-

the patients’ primary care physicians.structive pulmonary disease and asthma management.

At the same time, GHP distributes copies of Staged DiabetesThis disease management program offers its services to GHP

Management Guidelines®[4] to each of the physicians at the prima-members on an ‘opt-in’ basis, meaning participation in the pro-

ry care clinic sites. Care Coordination nurses rely on these guide-gram is voluntary. Any GHP enrollee with one of the targeted

lines to enable patients to engage in a higher level of self care.illnesses, regardless of the date of onset, is eligible to see a Care

Nurses are allowed to accommodate local physician practice pref-Coordination nurse, and because the service is available at the

erences in the application of the guidelines to specific patient care.primary care site, no gatekeeper referral is necessary. Physicians

Physicians are free to (and encouraged to) utilize the guidelines forare encouraged to facilitate appointments for patients with the

the management of all their patients with diabetes, including thoseCare Coordination nurses. The scheduling is often arranged by

patients who are not enrollees of the GHP, or those who are GHPprimary care clinic personnel, or by directly contacting the depart-

enrollees but have not seen a Care Coordination nurse.ment at GHP’s business offices.

The Care Coordination Department also uses past International 4. Data AnalysisClassification of Diseases (ICD-9)–linked insurance paymentclaims to identify potential participants who may be candidates for For this paper, we report members’ baseline and follow-upthe nurse-based interventions outlined above. All potential patient- monthly paid claims for diabetes care and total care using the dateparticipants identified using past claims are sent periodic newslet- of program entry as the index date. We chose this methodologyters that provide useful information regarding the diseases covered because most health insurers in the US characteristically reviewby Care Coordination and remind readers that the program is economic outcomes on a monthly basis. To estimate the overallavailable to them and where to call for additional information. impact of disease management, we collected data on all baseline

Once agreement on program participation is achieved, the and follow-up paid claims, up to a maximum of 365 days beforenurses oversee coordination of services to achieve optimum care and after the index date, and calculated on a pro rata basis the

© Adis Data Information BV 2003. All rights reserved. Dis Manage Health Outcomes 2003; 11 (9)

Diabetes Disease Management: Return on Investment 567

amount of claims per member per month. However, to ensure thatthere were sufficient data, only patients with greater than or equalto 3 months of claims data were included in this analysis. Thenumber of patients excluded from this report for this reason isunknown.

The period of analysis was from July 1, 2001 through August31, 2002. The study included all patients (with ≥3 months data)who were participating in the diabetes disease management pro-

Table I. Diabetes mellitus-specific and total healthcare paid claims forenrollees in the diabetes disease management program (n = 4239); com-parison of baseline (prior to program entry) and follow-up (after programentry). Claims are per member per month

Diabetes-specific claims Total healthcare claims($US) ($US)

baseline follow-up baseline follow-up

Mean 33.71 37.07 539.00 412.86

SD 1.93 0.73 53.36 21.50gram at any time between July 1, 2001 and August 31, 2002 (thestudy period). Patients were included regardless of when they

figure 2). The pattern suggests that the changes we observed instarted in the program, with the index date being the date of entrymonthly claims expense were sustained over the first year afterinto the program. For instance, the calculation for a patient whoentry into the disease management program.entered the program in April 1997 (index date) would be based on

data from April 1997 through April 1998 and compared with datafrom April 1996 through April 1997. During the study period, 6. Discussionmembers were free to drop out of the program or to drop their

This disease management program was associated with a smallinsurance with GHP. Therefore, the number of patients in thebut consistent increase in claims paid for diabetes care afterdisease management program varied from month to month. As aprogram enrollment. However, there was also a significant de-result of monthly fluctuations in membership in this disease man-crease in total paid claims. Participants in diabetes disease man-agement program, measures of mean age, gender and other demo-agement had an average increase of $US3.36 PMPM in disease-graphic variables also changed from month to month and are notspecific claims, but experienced a notable average decrease ofreported herein. No inflationary adjustments were used in the$US126.14 in overall total healthcare claims. Compared withanalysis of claims.baseline expenses, this translated into a reduction of $US534 707It is important to note that the pro rata approach annualizes theper month in paid claims for the 4239 patients who were in ourpatient’s claims and reduces the claims back to a monthly amount.program at the end of the study period. This amounts to a total ofFor example, if a patient has $US600 of claims over 6 months, on a$US6 416 484 in reduced costs per year. Since the total number ofpro rata basis it is assumed that this trend will repeat over thepatients cared for in all other disease management programsfollowing 6 months, giving the patient a total of $US1200 in(diabetes as well as tobacco cessation, asthma, hypertension,claims for the year. This is then adjusted to a monthly average (i.e.chronic obstructive pulmonary disease, congestive heart failure,$US100). This methodology was used to calculate the patients’and osteoporosis) during the period of study numbered 11 216,per-member-per-month (PMPM) claims reported below.and 4239 (38%) of these were entered into diabetes disease man-agement, we estimate 38% or $US1 738 872 of the Department’s5. Resultsbudget was used for diabetes disease management. Accordingly,for every dollar spent on the management of diabetes for thisAt the start of the period of study, there were 3152 eligiblepopulation, we estimate there was a decrease of $US3.69 in totalparticipants in the GHP diabetes disease management program. At

the end of the period of study, there were 4239 eligible partici-pants.

After enrollment in the diabetes disease management program,diabetes claims tended to increase slightly; the mean baseline paidclaim PMPM for diabetes care prior to entry into disease manage-ment was $US33.71, while the mean follow-up PMPM claim fordiabetes care after entry into the program was $US37.07. How-ever, there was a decrease in overall healthcare claims; the meanbaseline PMPM claim for all healthcare was $US539.00, whichdecreased to $US412.86 PMPM after program entry (see table I).

We compared the monthly pattern of mean PMPM claims fordiabetes care and all healthcare over the period of study (figure 1,

0

10

20

30

40

50

$US

PrePost

0 1 2 3 4 5 6 7 8 9 10 11 12 13

Month

Fig. 1. Comparison of monthly mean diabetes-specific per-member-per-month paid claims ($US) observed at baseline (pre) and after entry indisease management (post) [n = 4239].


568 Sidorov et al.

savings within a year of the initiation of diabetes disease manage-ment, which appear to be partially explained by a prompt decreasein hospitalizations.[26,27] The data in figures 1 and 2 also demon-strate that the decrease in utilization compared with baselineoccurred early in the course of disease management. If thesefindings can be confirmed in other settings, this may represent anadditional advantage for disease management and an importanttopic for future research.

Some of the savings we observed may also have been achievedas a result of participants in the diabetes program entering other

$US

PrePost

0

100

200

300

400

500

600

700

0 1 2 3 4 5 6 7 8 9 10 11 12 13

Month

Fig. 2. Comparison of monthly mean per-member-per-month paid claimsfor total healthcare ($US) observed at baseline (pre) and after entry indisease management (post) [n = 4239]. disease management programs. The relative contribution of this

cannot be quantified, since the nurses frequently provide servicesclaims expense compared with the previous year. Of course, this encompassing multiple programs simultaneously during an en-number should only be viewed as an approximation. Patients who counter with a patient. We believe that this ability to managewere excluded from the analysis because of insufficient data have coexisting medical conditions among our diabetes population con-not been considered. tributed to the savings, and caution that this is an important

consideration for other healthcare entities implementing diseaseIt is estimated that diabetes mellitus affects up to 7.8% of allmanagement programs.adults in the US, and accounted for approximately $US98 billion

of healthcare costs in 1997.[5-9] Published data suggest aggressive We also note that paid claims variability, represented by thecontrol of diabetes may decrease the frequency of complica- standard deviation, also seemed to decrease after entry into thistions.[10-18] The number of patients with this disease can be expec- disease management program. To our knowledge, this has notted to grow significantly over the next decade.[19] Since payment been previously reported as a consideration in disease manage-mechanisms for diabetes care are an important consideration in the ment, and may also be an area that warrants future research.success of such care, the growing burden of this disease and Among health insurers variability in claims expense is a verygrowing evidence that aggressive care can reduce complications important consideration in projecting anticipated costs. Unstablehave important implications for providing health insurance for month-to-month expense among any group of enrollees has seri-people with diabetes mellitus. ous implications for insurance reserves and can alter the profitabil-

ity of a health maintenance organization (HMO). Our data suggestIn response, many health insurers have turned to disease man-that this threat is lessened when disease management is applied toagement.[20] The content of disease management programs variespatients with diabetes.widely, and may include varying levels of case management,

primary care physician education, telephone- or web-based patient The reduction in claims expense we observed aids the profit-coaching or education, use of research protocols, physician or ability of the GHP, which in turn ultimately contributes to support-patient incentives, and quality assurance interventions. Our dis- ing a lower and, therefore, more competitive insurance premium inease management program emphasizes case management and our service area. In addition to the reduced resource utilization andpatient education, based on a growing consensus that a collabora- savings, however, we believe there are other palpable advantagestive team-based model of healthcare can be a powerful tool in to offering disease management programs. Internally conductedimproving health outcomes and reducing unnecessary healthcare surveys of physicians in the GHP network have indicated that theyutilization.[21-23] generally welcome the patient care support provided by the Care

Coordination nurses in the course of their day-to-day clinic activi-Our data indicate that plan members with diabetes enrolled in aties. We have found through our survey tool that the GHP’sdisease management program experience a significant and sus-disease management program had the strongest influence on pro-tained decrease in insurance claims for the healthcare servicesvider satisfaction among providers surveyed. Compared with otherprovided in a ‘real world’ setting. Diabetes mellitus is a progres-HMOs participating in the survey, GHP’s disease managementsive disease characterized by increasing complications of diseaseprograms received almost twice the favorable rating score of otherover time.[6,23] With standard medical care, a reduction of compli-health plans.[28]cations of diabetes would be expected to occur over prolonged

periods of time.[24,25] In contrast, our disease management program From a physician’s point of view, we believe the nurses’appeared to result in significant savings among program partici- support enables greater clinical efficiency by aiding a clinic’spants within one year. Others have also observed significant throughput of patients, freeing physician time for patients with


Diabetes Disease Management: Return on Investment 569

significant needs, and ultimately enabling individual physicians to Acknowledgementsserve a larger population of patients. This differentiates and buildsloyalty for the GHP among our physicians, the majority of whom The authors received no sources of funding nor have any conflicts of

interest directly relevant to the content of this review.also contract with other competing managed care organizations.

In addition to the advantages experienced by our physicians, wealso believe offering disease management programs is perceived Referencesas an important advantage among our GHP enrollees.[3] We be- 1. Ellrodt G, Cook DJ, Lee J, et al. Evidence-based disease management. JAMA

1997; 278: 1687-92lieve consumers of healthcare will increasingly use price (the2. Matheson D, Robinson T. Disease management takes flight [online]. Boston

amount charged for the premium) as well as quality (multiple Consulting Group. Available from URL: http://www.bcg.com/publications/files/disease-management_taxes_flight_oct_od.pdf [Accessed 2003 Jul 28]measures of clinical outcomes) in the selection of one managed

3. Bodenheimer TS, Grumback K. Capitation or decapitation: keeping your head incare insurance plan over another. From the insurer’s viewpoint, changing times. JAMA 1996; 276: 1025-31however, the possibility that offering disease management pro- 4. Mazze RS, Etzwiler DD, Strock E, et al. Staged diabetes management: towards an

integrated model of diabetes care. Diabetes Care 1994; 17 Suppl. 1: 56-66grams could lead to increased enrolment of patients with chronic5. American Diabetes Association. Diabetes 1996 Vital Statistics. Alexandria (VA):

costly illnesses need to be considered. Given the ‘managed care American Diabetes Association, 19966. Rubin RJ, Altman WM, Mendelson DN. Health care expenditures for people withbacklash’ in the US, having an established track record of reducing

diabetes mellitus. J Clin Endocrinol Metab 1992; 78: 809A-12Aunnecessary expense through lower rates of complications not

7. Center for Economic Studies in Medicine. Direct and indirect costs of diabetes inonly represents an important advantage in the competition for the United States in 1992. Alexandria (VA): American Diabetes Association,

1993enrollees but also generates considerable, if unquantifiable, public8. Harris MI, Flegal KM, Cowie CC, et al. Prevalence of diabetes, impaired fasting

goodwill. glucose and impaired glucose tolerance in US adults. Diabetes Care 1998; 21:518-24

We caution that our data have significant limitations. This 9. American Diabetes Association. Economic consequences of diabetes mellitus inthe United States. Diabetes Care 1998; 21: 296-309analysis of our disease management program is restricted to pa-

10. Diabetes Control and Complications Trial Research Group. The effect of intensivetients with diabetes who participated in our program, without thetreatment of diabetes on the development and progression of long-term compli-

benefit of comparison with a control group. Accordingly, regres- cations in insulin-dependent diabetes mellitus. N Engl J Med 1993; 329: 977-8611. Ohkubo Y, Kishikawa H, Araki E, et al. Intensive insulin therapy prevents thesion to the mean or selection bias could account for the finding we

progression of diabetic microvascular complications in Japanese patients withobserved. In addition, there is no assurance that the savings we non-insulin dependent diabetes mellitus: a randomized prospective 6 year

study. Diabetes Res Clin Pract 1995; 28: 103-17observed can be generalized to all patients with diabetes, or to12. Abraira C, Colwell JA, Nuttall FQ, et al. Veterans Affairs Cooperative Study onother settings. However, we believe that since our program is

glycemic control and complications in type II diabetes (VA CSDM): results of aprimary care-based, and is offered equally to all HMO members feasibility trial. Diabetes Care 1995; 18: 1113-23

13. Diabetes Control and Complications Trial Research Group. Effect of intensivewith diabetes, the savings we observed amongst thousands ofdiabetes management on macrovascular events and risk factors in the Diabetes

patients provides credible evidence of significant savings asso- Control and Complications Trial. Am J Cardiol 1995; 75: 894-90314. Vijan S, Hofer TP, Hayward RA: Estimated benefits of glycemic control inciated with diabetes disease management. We also failed to pro-

microvascular complications in type 2 diabetes. Ann Intern Med 1997; 127:vide any demographic data concerning our population, which788-95

limits any conclusions about the generalizability of our findings to 15. Reichard P, Nilsson B-Y, Rosenqvist U. The effect of long-term intensified insulintreatment on the development of microvascular complications of diabetesother managed care settings. However, since thousands of partici-mellitus. N Engl J Med 1993; 329: 304-9

pants were recruited into this program out of multiple primary care 16. Krolewski A, Laffel L, Krolewski M, et al. Glycosylated hemoglobin and the riskof microalbuminuria in patients with insulin-dependent diabetes mellitus. Nsettings, we are confident that the results we observed are applica-Engl J Med 1995; 332: 1251-5ble to most populations with diabetes mellitus. We note that other

17. UK Prospective Diabetes Study (UKPDS) Group. Intensive blood glucose controlprovider organizations in the US have developed disease manage- with sulphonylureas or insulin compared with conventional treatment and risk

of complications in patients with type 2 diabetes (UKPDS33). Lancet 1998;ment programs at considerable cost, with an expectation of signif-352: 847-53

icant savings and a return on investment. 18. Gaede P, Vedel P, Larsen N, et al. Multifactorial interventions and cardiovasculardisease in patients with type 2 diabetes. N Engl J Med 2003; 348: 383-93

Given the savings we observed and the benefits to physicians 19. Kenny SJ, Aubert RC, Geiss LS. Prevalence and incidence of non-insulin depen-and patients participating in managed care, we believe our data dent diabetes. In: Harris MI, Cowie CC, Stern MP, et al., editors. Diabetes in

America. 2nd ed. Bethesda (MD): National Institutes of Health, 1995: 47-67add to the growing body of evidence supporting a business model20. Weingarten SR, Henning JM, Badamgarav E, et al. Interventions used in disease

based on disease management. Given the growing acceptability of management programmes for patients with chronic illness: which ones work?Meta-analysis of published reports. BMJ 2002; 325: 925-32disease management, we believe this model of healthcare is an

21. Sommers LS, Marton KI, Barbaccia JC, et al. Physician, nurses and social workerattractive alternative for healthcare organizations attempting to collaboration in primary care for chronically ill seniors. Arch Intern Med 2000;manage populations of patients with a chronic disease. 160: 1825-33


570 Sidorov et al.

22. Kabasakalian LM, Hassett RM. A nurse-driven, carve-in approach for managing 28. Internal communication: The Myers Group. Geisinger Health Plan, Provider Satis-complex chronic conditions. J Clin Outcomes Manage 1999; 6: 26-30 faction Survey, 2002 Project Guide Book

23. Selby JV, Ray GT, Zhang D, et al. The excess costs of medical care of patientswith diabetes mellitus in a managed care population. Diabetes Care 1997; 20:

About the Author: Dr Jaan Sidorov is the Medical Director of Care Coordi-1396-402nation, Geisinger Health Plan in Danville, Pennsylvania, USA.24. Eastman RC, Javitt JC, Herman WH, et al. Model of complications of NIDDM. I.

Model construction and assumptions. Diabetes Care 1997; 20: 725-34 Correspondence and offprints: Dr Jaan Sidorov, Department of Care Coordi-25. Herman WH, Eastman RC. The effects of treatment on direct costs of diabetes. nation, Geisinger Health Plan, Hughes Office Building North, Woodbine

Diabetes Care 1998; 21 Suppl. 3: C19-24Lane, Danville PA, 17822-3035, USA.

26. Testa MA, Simponson DC. Health economic benefits and quality of life duringE-mail: [email protected] glycemic control in patients with type 2 diabetes mellitus: a random-

ized, controlled double blind trial. JAMA 1998; 280: 1490-627. Sadur CN, Moline N, Costa M, et al. Diabetes management in a health maintenance

organization: efficacy of care management using cluster visits. Diabetes Care1999; 22: 2011-7


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