HD90 - Disease Management and Virginia's Medicaid Program


Executive Summary:
[This report also satisfies the reporting requirement of Item 322 K.]

The 2005 Appropriations Act, Chapter 951, directed the Department of Medical Assistance Services (DMAS) to report on its efforts to contract for and implement Disease Management (DM) programs into the Medicaid program and on the results of the Healthy ReturnsSM DM program. This report combines both legislative directives and provides the history of DM programs in Virginia, the clinical and financial outcomes of the Healthy ReturnsSM program, and highlights the development of DMAS’ new DM program.

DM programs are used by health insurers and companies as mechanisms for managing chronic illnesses, which are defined by the U.S. National Center for Health Statistics as illnesses that last three months or more. Examples of chronic illness include asthma, diabetes, chronic pulmonary artery disease, congestive heart failure, and Acquired Immune Deficiency Syndrome (AIDS). Virginia’s health data reflects national trends for chronic illness. Approximately 25 percent of adult Virginians have hypertension, which increases the risk of a stroke, heart attacks, kidney failure, and congestive heart failure. Another leading chronic illness, cardiovascular disease, caused 35 percent of all the deaths in Virginia in 2002. DMAS spent approximately $825 million in Fiscal Year 2005 on health care expenses related to chronic illnesses.

Health insurers and companies are developing DM programs in an effort to alleviate individuals and society of the physical, psychological, social, and economic pressures associated with chronic conditions and diseases. DM programs attempt to both improve a patient’s quality of care and slow the growth of his or her health care costs. DM programs were once considered experimental in the early 1990s, but their success in helping to improve quality of care and slow the spiraling costs of health care have led to unprecedented growth in this industry. Many health insurers and most states now offer some form of DM services.

In Virginia, DMAS Managed Care Organizations (MCOs) provide the majority of DM services; however, DMAS has gradually expanded its DM programs to fee-for-service (FFS) participants. While Virginia’s initial Medicaid fee-for-service DM programs were instituted primarily for cost saving measures, true cost savings from these programs were not as great as anticipated. Virginia Medicaid has since focused more on developing DM programs for its managed care and fee-for-service Medicaid populations to reduce direct and indirect health care costs, increase the quality of life for patients, and realize improvements in clinical health outcomes.

The most recent developments with Virginia DM programs are part of Governor Warner’s “Healthy Virginians” initiative. “Healthy Virginians” is an effort by the Commonwealth to promote healthy lifestyles in workplaces, schools, and among families who receive health care through Medicaid. The Medicaid efforts include the development of a fee-for-service DM program for individuals with coronary artery disease, congestive heart failure, asthma, and diabetes. DMAS awarded a contract to Health Management Corporation (HMC) to administer this program, and it will be implemented by January 13, 2006. This follows a yearlong DM pilot project administered by HMC known as the “Healthy Returns” program.