2004 McKesson Payor Solutions Conference, PM-O5 Assessing the Economic Impact of Case Management on Diabetics in a Commercially Insured Population. Presented by Felix Bradbury, RN, ScD, FACHE.

1. PM-O5 Assessing the Economic Impact of Case Management on Diabetics in a Commercially Insured Population Felix J. Bradbury, RN, MHA, ScD*, CHE Blue Cross Blue Shield of Louisiana 2004

6. QUESTION 1: What is the ROI for the Various Departments within Medical Management?

7. Summary of Medical Management Cost Savings, 2003 Medical management cost-savings are generated via a combination of the following activities: ( Note that cost savings due to non-certified days and changes in level of care (LOC) are based on per diem reimbursement. Case rates and DRG rates are not included in the current cost savings methodology.) -Changes in level of care, i.e., acute day to sub-acute day using M&R criteria and directly attributable to care management activities. -Non-certified care, i.e., denied days or services because of lack of medical necessity or pre-existing condition. Any admission day this was subsequently denied. Non-certification days may be applied to acute care, rehabilitation, SNF, LTAC, home health or hospice rates -Medical policy review, i.e., denial based on experimental or investigational procedures, or therapeutics. -Pharmacy benefit management, i.e., increasing generic utilization relative to brand utilization and leveraging pharmacy tiers.

8. Examples of Cost Savings from LOC Changes or Non-Certified Care in Per Diem Facilities Cost-savings are calculated by subtracting the median value for a lower level of care from the median value for a higher level of care. For example, the median allowed amount for a SNF day is $500/day; the median allowed amount for an acute day is $1,592.50. The difference between $1,592.50 and $500 is the cost savings. In this example, the cost savings for this change in level-of-care is $1,092.50 per change in level-of-care. All cost-saving estimates are based on the median allowed dollars. Median values across levels-of-care were used to generate estimated reimbursement amounts; median values were used in lieu of averages because the former is less susceptible to the influences of outlier values.

10. QUESTION 2: What is the Cost-Benefit of Case Management Activities for Diabetic Members Over the Short-term Period of a Single Year?

15. The Basic Model

20. An Example of the Data

21. What Do We Hope to See? 1500 Estimated Savings in Dollars 2.6 2.8 3 3.2 3.4 RR Score 0 5 10 15 Time Period (Months) Baseline Score Observed_RR_Score Savings Source: Blue Cross Blue Shield of Louisiana, MMRD, 2003 N=2,500 active members from January 1-December 31, 2003 Hypothetical ROI Analysis for High-Risk Members 0 500 1000

26. QUESTION 3: How Can We Model the Cost-Benefit of the Long-term Savings Associated with Case Management Activities?

28. Markov Transition State Models for Diabetics Enrolled and Not Enrolled in Case Management Programs

29. Setting Up the Markov Model (Cohort Simulation model)

30. The Markov Model - Continued

32. QUESTION & ANSWER SESSION

35. THE END