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Disease Management in the Private Sector (2002). Al Lewis Executive Director Disease Management Purchasing Consortium LLC www.DisMgmt.com. Agenda. Background on Disease Management Purchasing Consortium Size and Growth Pricing and Guarantee Trends

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disease management in the private sector 2002

Disease Management in the Private Sector (2002)

Al Lewis

Executive Director

Disease Management Purchasing Consortium LLC

www.DisMgmt.com

agenda
Agenda
  • Background on Disease Management Purchasing Consortium
  • Size and Growth
  • Pricing and Guarantee Trends
  • State of the Industry and Impediments to Future Growth
    • Specifically, employers
hey butch who are these guys and why are they wasting our precious time
Hey, Butch, Who Are These Guys and why are they wasting our precious time?
  • DMPC membership includes 68 health plans, 4 employers, 4 states, 2 gubernatorial campaigns, 2 states retirement systems and CBO
  • Does majority of all private sector and Medicaid RFPs (by dollar volume)
  • As a result, we know most of what goes on in DM
industry trends market sizes and compositions 2001
Industry Trends: Market Sizes and Compositions (2001)

Total Size: $480MM in fees

Asthma

15%

Diabetes

10%

CHF/Cardio

21%

Maternal/Neo

10%

Cancer

12%

Other

23%

ESRD

3%

Rare Diseases

4%

4

agenda1
Agenda
  • Background on Disease Management Purchasing Consortium
  • Size and Growth
  • Pricing and Guarantee Trends
  • State of the Industry and Impediments to Future Growth
    • Specifically, employers
guaranteed savings deals
Guaranteed Savings Deals

Guaranteed with

LOC or Reinsurance

All Consortium Contracts

Not Guaranteed

Guaranteed No

LOC/Reinsurance

1997

1999

2000

1996

2001

To date

1998

agenda2
Agenda
  • Background on Disease Management Purchasing Consortium
  • Size and Growth
  • Pricing and Guarantee Trends
  • State of the Industry and Impediments to Future Growth
    • Specifically, employers
state of the industry
State of the Industry
  • Regulatory Health: Good
    • Workable HIPAA accommodation
    • States moving from blocking to facilitating
  • Economic Health: Good
    • Companies creating value for shareholders (Accordant sale shows intrinsic value)
  • Financial Value-Added: Still a Question (clinical/satisfaction value-added not disputed)
    • Next page
financial value added supporting arguments
Vendor outcomes have been positive

Vendors guarantee savings

Few plans drop programs and many add them

Financial outcomes metrics not valid

They don’t always hit their guaranteed numbers and it’s difficult to reconcile

Pressure from employers accounts for that

Financial Value-Added: Supporting Arguments
financial value added detractor arguments
Vendor outcomes aren’t valid

Vendors miss their numbers sometimes…

…So we can’t be sure of savings

No official standard ROI metrics yet

Only if you don’t know how to contract with vendors

Reinsurance has been purchased 30 times and there have only been 3 claims

Fewer things are more certain than guaranteed savings—you can’t lose

DM Purchasing Consortium metrics the de facto standard, used in most bids and contracts. Anyone can use them

Financial Value-Added: Detractor Arguments
financial value added
Financial Value-Added
  • Strong enough evidence to indicate good financial ROI but not strong enough (for Consortium members at least) to do a fee bid—we still like vendors to take risk (though less risk than before)
    • The tradeoff is higher fees and the strong likelihood of a complex reconciliation (though there are ways to simplify this)
employer impediments
Employer Impediments

Same financial issues, plus:

  • Getting bad advice from consultants
    • Failure to understand DM-specific biostatistics needed for risk deals
    • Admission by one consultant at conference that they don’t know how to contract for DM
  • Using substandard vendors (easy to tell which)
  • Not knowing when to disintermediate and when to use health plan’s program
  • Not looking into option of combining with UM/claims-paying
conclusion
Conclusion
  • Don’t believe the detractors…but don’t disbelieve them either
  • DM SHOULD save money…
  • …but it is not a 100% certain layup so get significant risk in the deal
    • And make sure of your biostatistics and that your advisor is biostatistically savvy (ask them the same question as a test) and don’t pay them to “reinvent the wheel”—this assistance should cost low five figures