How effective is disease management for chronically ill Medicaid beneficiaries: Results from California's 1115 Waiver demonstration pilot program on expenditures and utilization

This study assesses whether disease management (DM) for chronically ill fee-for-service Medicaid beneficiaries produces significant reductions in expenditures through reduced utilization of high-cost services. A vendor-provided, telephonic disease management (DM) program designed to improve self-management of five chronic illnesses was conducted as part of California's 1115 waiver from September 2007 to August 2010. The eligible population included California Medicaid beneficiaries ages 22 and older enrolled in fee-for-service care with one or more of five chronic illnesses: asthma, atherosclerotic disease syndrome/coronary artery disease (ADS/CAD), congestive heart failure (CHF), diabetes, and chronic obstructive pulmonary disease (COPD). We employed a pre/post, intervention vs. control group evaluation design and conducted difference-in-difference analyses of acute care Medicaid expenditures and utilization rates (inpatient admissions and days, emergency room (ER) visits and outpatient visits), controlling for presence of comorbid conditions, disease severity, and demographic covariates. Because of the impact of hospital episodes on total expenditures, we employed a four-part model: 1) a logistic regression predicting if monthly expenditures >$0; 2) a logistic regression, conditional on having expenditures >$0, predicting whether an individual had a hospital admission; 3) a GLM model with a log link and normal distribution that predicts total expenditures for those with a hospital admission; and, 4) a GLM model with a log link and normal distribution that predicts total expenditures for those without a hospital admission. The utilization models followed a similar structure, but employed zero-inflated Poisson or negative binomial regression methods, as appropriate. We determined that the data could not be pooled across disease conditions, so we stratified the analyses. Individual claims data for beneficiaries in the 2 intervention counties and in 8 counties serving as a matched comparison group (N=~25,000) were analyzed. We analyzed three years of data during the pre period, and two years of data during the post period. Monthly expenditures ranged from 3.5% lower to 8.6% higher in the five chronic illnesses among beneficiaries in the intervention counties, but only one of these differences was significant at the p<0.05 level. We did not find evidence of significant reductions in inpatient admissions or days in any of the chronic illnesses, although there were significant reductions in ER visits among those with diabetes and with ADS/CAD. The lack of statistically significant reductions in expenditures or high-cost services within two years is consistent with findings from previous evaluations of DM programs. Our results do not include year three of the program.