In the past two weeks, chronic disease prevention and management have been described as key cost reducers in several TIME Magazine articles. Check them out at http://www.fightchronicdisease.org/media/news/index.cfm.

“Special Health Report,” TIME Magazine (June 22, 2009)

“The 5 Big Health Care Dilemnas ,” TIME Magazine, by Karen Tumulty (June 15, 2009)

“New Lessons from the Old World,” TIME Magazine, by Eben Harrell (June 8, 2009)

If one looks closely at the over 300 hospital referral regions pulled together by the Dartmouth researchers, a couple of notable things jump out. Yes, spending varies by over 60 percent between the lowest quintile and highest quintile regions. But what are the characteristics of these high cost regions? They really fall into two generic groups.

The first are large urban areas with large concentrations of teaching hospitals and low income patients.  Major metropolitan areas such as New York (including New Jersey), Boston, Baltimore, Chicago, San Francisco and Detroit-Ann Arbor are among the highest spending areas in the country.  These areas also have little system integration that, combined with the substantial base of academic teaching institutions and cost of these urban areas, all contribute to the spending disparities.

Under the Medicare payment system, teaching hospitals and those serving uninsured patients (and thus receiving a disproportionate share adjustment) receive substantial (and likely legitimate) add-on payments for treating the same patient in a non-teaching hospital with higher income patients. These add-ons can be substantial—for many hospitals adding over 50 percent to the Medicare hospital payment for the same patient treated elsewhere.  To make the point,  the share of teaching hospital beds in the highest quintile spending areas are over 2.7 times higher than in the lowest quintile spending areas.

But what accounts for the high per capita spending levels in the second group, less urban areas like Louisiana and Texas? Well, if you overlay the familiar CDC map of obesity by state, you will find both states have among the very highest rates of obesity in the country. The prevalence of diabetes, hypertension and pulmonary disease among others is very high here and it is reflected in their high rates of overall use of health care. In contrast, the lowest cost areas—Colorado, Montana, Utah and the mountain west — have very low rates of obesity and relatively lower rates of chronic illness. And yes, this is reflected in their lower rate of use of services.

Does this mean the current proposals to reduce variation are doomed to fail? No. It just means that in addition to unit payments, and the lack of system integration, there are other factors in play that need to be addressed. Primary prevention and care coordination are essential and needed through community health teams or other approaches to be a central component of a broader Accountable Health Organization. Reviewing payment policies toward academic teaching centers and the sheer volume of beds in these urban areas will also attract attention. Finally, innovative approaches for reducing obesity across the board and, with it, the rising tide of chronic illness, will serve as an important tool for slowing the rise in spending and reducing the variation in Medicare spending across the country.

On Monday MedPAC released another valuable report, “Improving  Incentives in the Medicare Program.” It was a thoughtful and (as usual) fact-filled report that reminds us of the large volume of high cost care that apparently produces little quality on the margin.  The inefficiencies are traced to the fee-for-service payment system retained by the program, the lack of prevention and care coordination, and integration.

MedPAC calls for a continued move toward bundled payments and payment reform, broader adoption of medical homes and encourages the development of accountable care organizations (ACOs).  The ACO model consists of primary care physicians, specialists and at least one hospital.

Moving toward more integration and bundling is a good idea. However, the ACO model is incomplete and is not well-aligned with respect to the medical conditions driving growth in Medicare spending. While the use of bundled payments and ACOs will certainly help to compress the variation in per capita Medicare spending, other initiatives not outlined in the report may also be needed to wring out additional savings.

Over the past 10 years, five conditions — diabetes, arthritis, hypertension, hyperlipidemia and treatment for mental disorders — account for over nearly 40 percent of the growth in Medicare spending.  Spending for some of these conditions (diabetes and co-morbid depression) is driven largely by rising incidence of disease; much of it associated with obesity.  Given the nature of these conditions, most of the care is ambulatory care-based and relies on medication therapy. They rarely involve inpatient hospital spending. In fact, among Medicare beneficiaries, inpatient hospital spending as a share of total spending has declined sharply over the past 20 years.

So if integration and payment reforms are to address the root causes of rising spending among Medicare beneficiaries, the ACO approach would need to include community-based primary prevention and care coordination to work with physicians and hospitals. This is particularly important since 83 percent of primary care practices have fewer than 3 physicians. Merely linking physicians to hospitals is a necessary but not sufficient answer to address the integration issue—community health teams as envisioned by the Senate HELP and Finance proposals arguably are a cornerstone of this integration. If fact, we need a new, broader name of Accountable Health Teams to recognize the fact that integration cannot focus on the narrow link between medical services and morbidity and mortality, but needs to include population-based primary prevention and care coordination as well.

Next — the well-known variations in Medicare per capita spending.

Some great remarks by President Obama (see transcript) about prevention, wellness and care coordination/management:

And what I’d like to see, as I said, is that every plan includes not only prohibitions against discriminating against people with pre-existing conditions, but also every plan should have incentives for people to use preventive services and wellness programs so that they can stay healthier.

And later:

Well, look, in some ways you answered your own question because I think that the more we are incentivizing high quality primary care, prevention, wellness, management of chronic illnesses, the one things that it turns out is that about 20 percent of the patients account for 80 percent of the care and the costs of the health care system. And if we can get somebody first of all who is overweight to lose weight so that they don’t become diabetic, we save tons of money. Even after they’ve become diabetic, if we are working with them to manage their regiment of treatments in a steady way, then it might cost us $150 when you prorate the costs for a counselor to call the diabetic on a regular basis to make sure they’re taking their meds, and as a consequence, we don’t pay $30,000 for a foot amputation. (Applause.)

The Wall Street Journal has published an article today that questions the cost savings benefits of prevention. It notes that prevention has broad and bipartisan support in Washington but argues that “the rewards often fail to match the costs.” Obviously, many people would disagree with this assessment.

There are a few major points that the Journal misses, which are key to understanding why prevention has such support and is at the center of health care reform.

First of all, when we say prevention, what we are really talking about is delivery system reform—not just screenings. So when President Obama, Kathleen Sebelius, Nancy-Ann DeParle and Congress talk about incorporating prevention into the health care system, they’re not talking about adding select preventive care efforts onto an already costly system. They’re talking about changing the entire delivery system towards better care coordination and higher quality, which includes prevention and disease management. There’s a difference.

Secondly, the Journal fails to mention some of the key proof points for why prevention is cost-effective and in some cases cost-saving.

1. By orienting the system to slow the growth of disease, we can reduce costs (see RAND, Univ. of Florida studies). When we prevent disease or obesity, these are costs that would never be incurred to the system. For example, were obesity still at 1987 levels, Medicare spending would be $40 billion per year lower than it was in 2006.
2. Prevention does not mean universal screenings — no one suggests we should test all healthy people for diabetes, as mentioned in the article. However, the health and financial benefits of targeted rather than universal prevention—such as the colorectal screenings and diabetes screening for patients over 65 with hypertension—are well-established (see Woolf and Cohen et al).
3. Effective prevention is individual- and risk-specific (see Design Matters). By lumping primary, secondary, and tertiary prevention into one big category, it blurs the important distinctions essential for effective policy and planning.
4. There is increasing evidence from both the public and private sectors that this works in reducing cost. (See Asheville Project, North Carolina Community Care, and Medicare Physician Group Practice demonstration project, as well as many others). What policymakers are attempting to do right now is figure out how to take small private or community-based models of prevention and wellness efforts that work and scale them nationally.

The article mentions Medicare– today’s Medicare program is a perfect example of how costs can remain high and outcomes poor without more effective care coordination and disease management and prevention.  Patients with one or more chronic diseases account for 96% of Medicare spending, and two-thirds of the rise in Medicare spending since 1987 is due to chronic diseases. 

As I wrote in the Huffington Post this week, by better managing these diseases, we avoid the need for costly procedures, such as amputations or surgeries that arise from untreated or mismanaged conditions. By preventing diseases, our system can avoid some costs altogether. This is what policymakers are hoping to do by investing in an infrastructure that includes prevention and disease management—to eliminate costs, not just shift them to another part of the system.

On May 12, President Obama met with employers and unions that have implemented innovative workplace wellness programs that showed success in improving the health of workers and reducing the rising rate of health care spending. It is important that we are actively identifying and examining prevention and disease management practices to find the most efficient, effective way to deliver quality care on a large scale. The PFCD has identified over 150 effective programs in, “Keeping America Healthy: A Catalog of Successful Programs.” This week PFCD Executive Director Ken Thorpe sent a letter to President Obama to further engage him in examining all the examples of where chronic disease prevention really does pay off.

President Barack Obama
The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500
June 10, 2009

Dear President Obama:

On May 12, 2009, you met with employers and unions that have implemented innovative workplace wellness programs that showed success in improving the health of workers and reducing the rising rate of health care spending. This is also a focus of the Partnership to Fight Chronic Disease (PFCD) and we are actively identifying and examining prevention and disease management practices that lower health care costs and improve employees’ health.

As you know, there are numerous successful programs across the country – the key is to elevate these programs and find ways to replicate their success in other communities. To that end, in 2008, the PFCD identified nearly 150 of these diverse programs in its “Keeping America Healthy: A Catalog of Successful Programs.” The catalog examines programs across four settings - workplace, schools, community and health systems and categorizes as Programs that Work, Programs to Watch, or Programs with Promise based on nine “essential elements” for success.

Key findings include:

• Investments in high-impact, cost-effective population prevention and health improvement programs can increase the affordability of health care, while helping Americans live longer, healthier lives, thus contributing to higher productivity and increased economic performance.
• Prevention programs must be appropriately tailored to specific populations; targeting people who are at higher risk is more effective than programs that screen large segments of the population for a particular illness or condition without regard to risk.
• When directly tied to particular interventions or population groups, prevention can be cost-effective, even in the short term.
• Population health improvement programs range in scale and scope and rely on a variety of means to change behavior and improve health. Despite the variety in scope and scale, successful programs share common elements that appear essential to their success, including the coordination among stakeholders, empowerment and motivation of the target population and integration throughout the organization or community.

We hope that “Keeping America Healthy” will help to bring to light what is at stake for all Americans with this issue. We also hope that you will join PFCD as we look to support public and private policies within and outside our health care system to better promote and preserve the health and wellness of all Americans.
More detail about the programs can be found in the attached compendium and on the PFCD Web site at www.fightchronicdisease.org.

Sincerely,

Ken Thorpe, Ph.D. Executive Director, Partnership to Fight Chronic Disease; Chair, Dept. of Health Policy and Management, Rollins School of Public Health, Emory University

cc: Senator Edward M. Kennedy, Chairman of the Health, Education,
Labor, and Pensions Committee; Senator Mike Enzi, Ranking Member of the Senate Health, Education, Labor and Pensions Committee; Senator Max Baucus, Chairman of the Finance Committee; Senator Chuck Grassley, Ranking Member of the Finance Committee; Senator Kent Conrad, Chairman of the Senate Budget Committee; Senator Judd Gregg, Ranking Member of the Senate Budget Committee; Representative Charles Rangel, Chairman of the House Ways & Means Committee; Representative Dave Camp, Ranking Member of the House Ways & Means Committee; Representative Henry Waxman; Chairman of the Energy & Commerce Committee; Representative Joe Barton, Ranking Member of the House Energy & Commerce Committee

I have a guest post up on Huffington Post in response to the recent Wall Street Journal editorial, “Obama’s Health Cost Illusion.”

http://www.huffingtonpost.com/kenneth-thorpe/disease-drives-demand_b_213230.html

On Sunday, Josh Goodman at CQ Politics wrote about the Massachusetts health reform model, its successes and its current failings. As we move toward the breaking of health care legislation, as well as its markup, I’ve no doubt that the Massachusetts model and other state efforts will continue to hold special interest.

However, as I wrote in April, in addition to moving to universal coverage, national health care legislation cannot be fully successful unless it also reduces the growth in spending. And as other state efforts like Vermont have shown, health care legislation  must also be bipartisan and comprehensive.

So, how do we address these two “requirements” on a national level? The first requires a focus on better disease prevention and coordination of care for chronically ill patients through community level resources like community health teams. It means providing high-quality, efficient medical and preventive care for all Americans, and making it easier for Americans to lead healthy, active lives. 

The second is in many ways the more difficult, as national legislation may find it harder to avoid the partisan pitfalls. State reform efforts have been most successful when they refocused on broader systemic ills, like cost and quality, rather than solely on the contentious and politically-charged issues, like coverage and payment.  There is much to agree upon on health reform regarding prevention and redesigning our health care delivery system. I hope these areas of agreement provide a positive political environment to finally move toward health insurance for all.

Yesterday President Obama received a savings plan from the industry group that several weeks ago announced it would come up with a proposal do their part in achieving the Administration’s goal of $2 trillion in health care savings over the next ten years. While the media has focused on the fact that the plan came up short of the promised $2 trillion, there are many good proposals in the document that, as measures for cost-containment, deserve more consideration. 

For starters, the group identified opportunities to better prevent and manage chronic diseases and obesity, including a focus on community-level resources and support to improve care coordination for the chronically ill. There’s also recognition that in order to bend the cost curve for chronic disease, efforts need to focus heavily on Medicare and Medicaid, where chronic disease accounts for a disproportionate amount of spending (96% of Medicare and 83% of Medicaid spending goes toward treating patients with one or more chronic diseases). The plan also advanced new proposals that would streamline the costs of administering our health care system, producing savings for business and consumers and simplifying the lives of health care providers. 

I consulted with the group during their deliberations and I think the compromises and concessions they came up with are a strong start. Obviously, this is a starting point as these stakeholder groups work with the Administration, the Congress and others  to achieve a solution that comes closest to working for both sides. However, as I’ve mentioned before, the willingness to come together this early in the process is a major change from the last go-around, and will hopefully signal the passage of a politically viable and implementable health care plan.