Diabetes mellitus is a condition first recognized 3500 years ago in ancient Egypt and named 2000 years ago by a Greek, Aretaeus. It is characterized by hyperglycemia resulting from the body’s inability to appropriately metabolize glucose into energy.1 In 2008, the Centers for Disease Control and Prevention estimated that 23.6 million Americans, or 7.8% of the population, had diabetes and another 57 million had prediabetes.2 By 2010, that number had increased to 25.6 million Americans (8.3% of the population) with diabetes.3 Those numbers represent increases of at least 50% in 42 states and 100% in 18 states.4 And, the prevalence of diabetes will continue to get worse. Within the next 25 years, the number of individuals with diabetes is expected to increase to more than 44 million individuals and, as Huang et al5 note, “without significant changes in public or private strategies, this population and cost growth are expected to add a significant strain to an overburdened healthcare system.”
“Private strategies” employed by payers who either assume full risk or manage risk on behalf of government/others certainly have and will continue to play a role in addressing the needs of the diabetic population when it comes to our “overburdened healthcare system.” In fact, with the anticipated millions of newly insured achieving coverage through health insurance exchanges by January 1, 2014, payers will need to develop and promote changes in how they manage the diabetes benefit—the tactics of the past 2 decades will, by necessity and by practicality, yield to newer methods of cost control through promoting member health improvement. As the great Bob Dylan sang long ago, “For the times, they are a-changin’.”
The Evolution of Payer Strategies for Diabetes
When it comes to addressing any benefit, let alone the benefits specific for members with diabetes, payers utilize multiple methods for “management.” Each management method addresses a different stakeholder who is impacted by how the payer manages the diabetes benefit leading to a specific end product of said strategy. These payer strategies used to manage the needs of members with diabetes are not only applicable to other chronic conditions besides diabetes but are also currently in various states of flux as they evolve from where they are to where they need to be. The Table assists in showing the necessary evolution.
Managing the Patient/Member
When it comes to how payers manage the needs of members with diabetes, the current state leaves much to be desired. Typically, most payers, to analogize the Donabedian model of quality assessment, have set into place a structure whereby a simple process exists for the member with diabetes to obtain his or her medication—the physician writes a prescription for the requisite drug and the pharmacy charges that patient a portion of the medication cost as either a copayment or coinsurance. Despite the plethora of studies that have shown that there is benefit to the member’s health when a so-called value-based benefit design (VBBD) is introduced, the great majority of payers have yet to fully embrace such a model in its complete incarnation—a recent survey showed that only 20% to 30% of large employers utilize some form of VBBD.6 However, with payers adopting new philosophies with respect to improving the health of members with diabetes, VBBD may still have not maximized its full potential.
The basic premise for a VBBD program is to reduce member cost sharing for services, such as medications or preventive eye examinations, in which the affected outcome of said services (eg, promoting medication adherence or diagnosing diabetic retinopathy early) provide clinically relevant health benefits. Such benefits have accrued from limiting the costly implications for members seeking this care.7 As payers promote VBBD programs for diabetes (or for other chronic conditions), their management of the condition in question evolves into one where, rather than focusing on mere process, the payers now focus on the outcomes of the process in question. Outcomes of care are where “the rubber meets the road,” as it is this end product that determines member health and, as a consequence of member health, potential payer remuneration in the form of bonuses.8 Given the number of members with diabetes and the dollars involved, it shouldn’t be a big surprise that payer strategies for managing the diabetes benefit should include some form of VBBD.
Managing the Physician
An alternative method of managing a member’s diabetes benefit, while less transparent to the member, is quite efficient. Payers manage the diabetes benefit through the physician caring for that member. Such management falls under the rubric of utilization management. For the physician caring for a patient with diabetes, this means managing of the member’s utilization addresses 2 key factors—first, it ensures that the member receives the appropriate medication or other service needed to address the diabetes and, second, it discourages the wasting of dollars on unnecessary or inefficient care. Physicians are quite aware of this technique of “prior authorization” and, while they may not like it, they work within the prescribed parameters. Typically, a payer’s prior authorization approvals follow and support clinical practice guidelines of key constituencies (eg, the American Diabetes Association or the American Academy of Clinical Endocrinologists). Physicians, even while tending to dislike these practices, still managed to increase their share of, for example, drug formulary use such that their use of specific medications became non-managed.9 Changes to this area require payers to “manage the physician” less than they had been. This shift coincides well with payers’ continuing evolution in diabetes benefit management. This shift also entails a change from a utilization management strategy toward one of quality management. For the purposes of benefit management, payers choose to focus more on improving the quality of care that physicians provide, and are doing so through incentives promoting good care. Examples that specifically address the diabetes realm include the creation of a patient-centered medical home for patients with diabetes as part of a pay for performance program in which objective improvements in a patient correlate with improved health.10,11 Given that early returns from medical home initiatives show promise, this type of diabetes benefit management may be expected to increase or, better yet, to enlarge in scope through aligning a broader network of participants.
Managing an Organization
As payers align diabetes care management strategies for both patients, through VBBD, and physicians, through financial incentives, the next logical step is broadening the impact of diabetes management. Currently, payers manage their diabetic members’ services at hospitals or other large entities contractually. Many payers look merely at the services provided, such as hospitalizations, bundle them together under a contractual diagnosis-related group payment, and adjudicate the claim. Payments of this type led to payer-provider negotiations where victory was “all about cost” and dollars. However, as payers develop newer strategies, as noted above, the next logical step aligns larger entities together. Following the recommendations of Fisher et al,12 payers began to explore and have now contracted with accountable care organizations (ACOs). ACOs are accountable to payers for the overall cost and quality of care provided to, for our purposes, a population of individuals with diabetes. ACOs should not be viewed as a method for payers to manage the diabetes benefit per se, as their specific function involves redesigning healthcare delivery to result in more units of health, defined as total benefit, per unit of cost. In that way, ACOs are “all about value.” For example, as more people with diabetes are better cared for and experience fewer readmissions, then the ACO physician members would share in the savings accrued from this endeavor. ACOs become a natural and logical extension of paying for outcomes on a grand scale.
Managing the Community
As discussed earlier in this article, diabetes is and will continue to be a national problem. However, this national problem trickles down to a community level. In that respect, as they address the full ramifications of diabetes with their individual members, their contracted physicians, and with ACOs, payers are also changing how they are working with the communities in which they operate. More recently, payers defined their community contributions through their public relations departments—a payer’s effectiveness resulted from their CAHPS (Consumer Assessment of Healthcare Providers and Systems) results or if they had fewer complaints filed against them with the Department of Insurance. Payers looked at their claims data historically and descriptively. But this, too, is changing. Following the proposals of Sinek,13 payers are also moving away from explaining what they do to promoting why they do it. Payers know that addressing the diabetes epidemic requires engaging more than their individual members and the physicians or organizations providing care for them— making a difference in diabetes requires community engagement and community engagement requires data mining and predictive analytics. Payers already know who their members with diabetes are; now they need to identify which of these members will experience a myocardial infarction or a stroke or who is less likely to comply with a given medication regimen. The ability to leverage “big data” from the claims they have allows payers to promote healthier communities in concert with how they are managing the diabetes benefit in other ways. These changes are already evident, with one national payer defining itself through its “expertise in health benefits solutions and health information technology,”14 whereas another one defines itself as committed to “improving the health and well-being of our members, our associates, the communities we serve, and our planet.”15
Just as there are many ways to treat a condition such as diabetes, there are also many ways for payers to manage the diabetes benefit. Although none of these methods is specifically right or wrong, they are grounded in a payer’s philosophy and created in response to the needs of the time. Yet, just as in any other business, new ideas and, for diabetes, new scientific discoveries will surely mandate new strategies to achieve goals. As payers find themselves adapting to new political realities and new partnerships, one cannot be sure if their new strategies will succeed or not. But, in actuality, this becomes moot as the 1 point we can be sure of is that benefit management will continue to evolve.
Author Affiliation: From HumanaOne & KMG, Waukesha, WI.
Funding Source: None.
Author Disclosure: Dr Tzeel reports employment with Humana Inc, as well as stock ownership. He also reports receiving consulting fees from Amylin Pharmaceuticals.
Authorship Information: Concept and design; drafting of the manuscript; critical revision of the manuscript for important intellectual content; and administrative, technical, or logistic support.
Author correspondence: Albert Tzeel, MD, MHSA, FACPE, National Medical Director, HumanaOne & KMG, Clinical Leadership & Policy Development, Humana, N19 W24133 Riverwood Dr, Ste 300, Waukesha, WI 53188. E-mail: email@example.com. Sattley M. The History of Diabetes. www. diabeteshealth.com/read/2008/12/17/715/the-historyof-diabetes/. Published December 17, 2008. Accessed November 24, 2012.
2. US Centers for Disease Control and Prevention. 2011 National Diabetes Fact Sheet Press Release. www.cdc.gov/media/releases/2011/ p0126_diabetes.html. Accessed November 24, 2012.
3. US Centers for Disease Control and Prevention. 2011 National Diabetes Fact Sheet. www.cdc.gov/diabetes/pubs/pdf/ndfs_2011.pdf. Accessed November 24, 2012.
4. Steenhuysen J. Big rise in Americans with suppl):S277-S283.
5. Huang ES, Basu A, O’grady M, Capretta JC. Projecting the future diabetes population size and related costs for the U.S. Diabetes Care. 2009;32(12): 2225-2229.
6. Fendrick AM, Chernew ME, Levi GW. Valuebased insurance design: embracing value over cost alone. Am J Manag Care. 2009;15(10 2011;34(4):1047-1053.
7. Chernew ME, Juster IA, Shah M, et al. Evidence that value-based insurance can be effective. Health Aff (Millwood). 2010;29(3):530-536.
8. Jacobson G, Neuman T, Damico A, Huang J. Medicare Advantage Plan star ratings and bonus payments in 2012. www.kff.org/medicare/upload/ 8257.pdf. Accessed November 25, 2012.
9. Fang H, Rizzo JA. Managed care and physicians’ perceptions of drug formulary use. Am J Manag Care. 2009;15(6):395-400.
10. Curtin K, Beckman H, Pankow G, et al. Return on investment in pay for performance: a diabetes case study. J Healthc Manag. 2006;51(6):365- 374.
11. Bojadzievski T, Gabbay RA. Patient-centered medical home and diabetes. Diabetes Care. diabetes, especially in South. www.reuters.com/ article/ 2012/11/15/us-usa-diabetes-idUSBRE8AE 1HF20121115?feedType=RSS&feedName=healthNews&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+reuters%2FhealthNews+%28Reuters+Health+News%29. Published November 15, 2012. Accessed November 24, 2012.
12. Fisher ES, Staiger DO, Bynum JPW, Gottlieg DJ. Creating accountable care organizations: the extended hospital medical staff. Health Affairs. 2007;26(1):w44-w57.
13. Sinek S. The Golden Circle. www.startwithwhy.com/About.aspx. Accessed November 28, 2012.
14. Aetna 2011 Annual Report. Uncommon Connections to Good Health. www.aetna.com/2011annual report/uncommon-connections.html. Accessed November 25, 2012.
15. Humana 2010-2011 Corporate Social Responsibility Report: Well-Being Starts With Us. http:// apps.humana.com/marketing/documents.asp? file=1853046. Accessed November 25, 2012.