Published March 20, 2018

Proving the Financial Impact of Chronic Care Management Services

Over the last four years, the Centers for Medicare & Medicaid Services (CMS) has expanded Medicare reimbursement for chronic care management (CCM) services based on the agency’s belief these services can lower the total cost of care.  While the clinical case for care management is compelling, the evidence supporting CMS’ conclusion has been limited to the results of a handful of pilot projects – until now.

An analysis of the impact of Medicare CCM services recently completed by Mathematica’s Policy Research Group provides compelling evidence of the financial value of care management.  In the study, the firm analyzed complete 2014 to 2016 Medicare enrollment and claims data, as opposed to a representative sample.

Mathematica’s analysis showed that per-beneficiary-per-month (PBPM) cost for patients who received CCM services was less than the costs for comparable non-CCM beneficiaries after just 12 months.  PBPM expenditures for CCM beneficiaries decreased by $74 in the 18-month follow- up period.

Source: Medicare 2014-2016 enrollment and FFS claims data as analyzed by Mathematica Policy Research.

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Other Key Findings

As one might expect, these lower expenditures were primarily driven by a reduction of PBPM inpatient hospital expenditures.  Specifically, the study showed that receiving CCM services is associated with a reduction in hospital readmissions for certain ambulatory care-sensitive conditions (ACSCs).  The results were promising for patients with certain ACSCs, including diabetes, chronic obstructive pulmonary disease (COPD), urinary tract infections (UTIs), and pneumonia, with statistically significant reductions in hospital admissions compared to patients with the same conditions who did not receive CCM services.

What Does This Mean?

Many clinically integrated networks invest time and energy to get organized, but after formation, are frequently left with the question of “now what?”  The same often applies to physician groups and other provider organizations that are developing networks and exploring risk-based contracting.

For these organizations, we believe the best answer is to develop a robust care management program.  Implementing a program that focuses on patients with chronic conditions and those transitioning from a hospital admission will drive quality and efficiency, which are the keys to success under alternative payment models.

Shared savings arrangements.  Participation in the Medicare Shared Savings Program is at an all-time high.  Commercial payers are also offering providers shared savings arrangements.  Implementing a care management program is a no-brainer for those developing accountable care organizations (ACOs), as financial success under this type of model requires lowering the total cost of care.

Bundled payments.  The Center for Medicare & Medicaid Innovation (CMMI) recently announced the new Bundled Payments for Care Improvement Advanced program and received overwhelming interest from providers.  Similarly, commercial payers and state Medicaid programs are implementing episodic payment models for certain procedures.  Care management and care coordination services can lower total episodic costs and improve performance in these programs.

Other risk- or value-based payment arrangements.     U.S. Health & Human Services Secretary Alex Azar recently stated that CMS will aggressively pursue new models that reward providers for high-value and patient-centered care.  Based on Mathematica’s new study, care management services are an essential component of any provider-payer arrangement aimed at delivering high-quality, highly efficient care.

More research on CCM would be helpful to demonstrate its value.  For example, CCM significantly reduced the regulatory burdens for providers to bill for this service beginning in 2017, which has likely encouraged more providers to implement the service.  Thus, an updated study with newer data may demonstrate even more powerful results.

Regardless, Mathematica’s research stands as solid evidence for providers to begin adopting and implementing a CCM program for their patients.  Since 2015, PYA has annually updated a CCM white paper that simplifies Medicare’s billing requirements and addresses frequent questions about developing a care management program.  Our team of experts has also developed a robust CCM Clinical Services Manual, which outlines certain requirements and best practices.  The CCM manual serves as an excellent tool for those new to offering CCM services.

PYA can assist with the program development and management necessary for your organization to implement CCM and other care management services.

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