Statement of Sandeep Wadhwa, M.D., MBA, Vice President, Disease Management Services,
McKesson Health Solutions, McKesson Corporation, San Francisco, California

I am pleased to submit this statement on behalf of McKesson Corporation to the Subcommittee on Health of the House Committee on Ways and Means, subsequent to the April 16 hearing on Promoting Disease Management in Medicare.   McKesson Corporation strongly supports the creation of a disease management benefit for Medicare and Medicaid recipients.  Furthermore, McKesson recommends the expansion of disease management services to recipients of Federal government sponsored health care benefits (Veterans Health Administration beneficiaries, military personnel and dependents and Federal employees) and to rural underserved populations. 

As the world’s largest healthcare services company, McKesson is an industry leader in the provision of disease management services for commercial, Medicaid and Medicare populations.  The Disease Management Purchasing Consortium and the Health Industry Research Company have both recognized McKesson as a Top Ten disease management firm from more than 160 companies.  Our disease management clients cover a broad host of purchasers of health care, including commercial health plans such as Blue Cross Blue Shield of Texas, Anthem Midwest, and Blue Cross Blue Shield Federal Employees Plan; state Medicaid programs and managed care plans such as the State of Washington and Columbia United Providers; and high risk insurance pools like CoverColorado.  As such, we are uniquely positioned to provide Congress with information on currently available solutions, as well as ideas for improving the health status of populations while decreasing health care costs through the use of disease management programs.

McKesson is the industry leader in care management services and software and has market leadership positions in demand management and utilization criteria.  Furthermore, we are leading providers of physician and quality profiling software and case management workflow software.  As an early provider of these programs, we have been delivering disease management services since 1996.  McKesson’s disease management programs leverage our experience with patient services, pharmacy management, and health care quality improvement activities.  Many of these programs and services reflect the capabilities and expertise of our 165 year old company, one of the largest nationwide distributors of pharmaceuticals and health care products and the largest health information technology company in the world.

The disease management industry arose from the recognition that the nation’s health care system is largely geared towards meeting the acute and symptomatic needs of patients, rather than the long-term needs of those with chronic diseases.  However, by providing proactive rather than reactive care, disease management services can help retard the progression of disease by encouraging a more rapid adoption of evidence-based standards of care which reduces the likelihood of acute care intervention.  

Disease management is one of the few health care innovations that can improve health status and access to care while reducing net expenditures.  In developing this program for Medicare beneficiaries, McKesson recommends that Congress initially focus on those conditions for which there are national, evidence-based guidelines of care and that lend themselves to a net savings.  In addition, it is important to focus on conditions where the gap between the standards of care and actual practice leads to hospitalizations and emergency room visits, both of which might otherwise be avoided through adherence to the guidelines.  Conditions that meet these criteria include congestive heart failure, diabetes, asthma, and chronic obstructive pulmonary disease (COPD).

Demonstrated Results

McKesson’s success with disease management is a function of leveraging information technology through the creation of clinical decision support software, utilization of advanced relational database management systems, and application of state-of-the-art call center technology.  Our system relies on both “high tech” information technology and “high touch” nursing to achieve its impact.  We position our services to complement and extend, and not threaten or disrupt, the patient-physician relationship.  Our aim is to reinforce physician treatment plans that are often misunderstood or incompletely understood as well as to promote awareness and adherence to evidence-based guidelines.

McKesson’s disease management services are delivered by health care professionals.  We rely primarily on nurses to provide patient counseling and education through telephonic nursing, also known as telenursing.  These health care professionals are able to impart evidence-based education and assess patients’ understanding of their condition and barriers to compliance.  In addition to proactive monitoring and counseling, our disease management programs offer patients around the clock access to nurses who are able to answer patients’ symptom-related concerns and safely direct patients to the appropriate level of care.  Telephone access to nurses for health care advice and support also benefits the Medicare patient or those living in rural, underserved areas without ready access to a physician’s office or to emergency room facilities.  Our nurse triage function complements the proactive components to reduce inappropriate utilization of services.

McKesson programs have demonstrated dramatic improvements in the health status of patients, with marked reductions in hospitalization and emergency room visits that have resulted in net reductions in health care costs.  In order to achieve improved outcomes, our programs focus on teaching patients self-management principles, symptom control strategies, and optimal medical management practices.  In patients with congestive heart failure, which is the leading cause of admissions in Medicare, we demonstrated for one disease management client an 89% increase in the usage of ACE-inhibitors, heart failure drugs which lower mortality and morbidity rates.  With the same client, we also documented a 24% increase in influenza vaccination and a 44% increase in patients’ adherence to a low salt diet.  These changes in care management and patient behavior led, over the course of one year, to a 51% reduction in inpatient costs, 36% reduction in emergency room visits and an overall reduction in claims costs of 24%.  Furthermore, patients in this program reported very high satisfaction with the service and noted improvements in their overall quality of life.

Our diabetes program not only helps patients improve their blood sugar values, but also focuses on reducing risk of strokes and heart attacks, which account for the overwhelming morbidity and mortality in diabetics.  For one client, we have demonstrated a 33% increase in patients’ use of glucose meters and a 70% increase in the use of aspirin, which contributed to a documented 35% reduction in hospitalization and 28% reduction in diabetes-related missed work days.

Overall, annual net savings in health care costs inclusive of program fees for disease management for our congestive heart failure program range from $610 to $4,872 per patient.  For diabetes, annual net savings range from $755 to $2,138 per patient, and for asthma, we have net savings ranging from $223 to $899 per patient.  We have demonstrated these results in commercial, Medicare and Medicaid settings, and with government employees.  McKesson has conducted evaluations using different study designs, including pre/post evaluations, prospective cohort evaluations, and randomized controlled trials.  We believe that the benefits of disease management programs can be evaluated using the most rigorous study designs

Market Segments

Medicare

To date, disease management programs have largely been an innovation in the commercial insurance market and serve the families of adult workers.  However, the burden of chronic disease is disproportionately higher in the elderly, and concomitantly leads to increased costs of care and utilization of services in that population segment.   McKesson believes that Medicare rates of hospitalization and emergency room use can be reduced, sometimes dramatically, in patients with chronic diseases, particularly those with congestive heart failure, asthma, diabetes, and COPD.  These conditions are highly prevalent in the Medicare population, and the avoidance of unnecessary hospitalizations and emergency room visits can result in sizable savings while improving the quality of lives of Medicare beneficiaries.  For example, for one Medicare+Choice client, we demonstrated a 48% reduction over six months in bed days in a program designed to treat congestive heart failure.

The Medicare population is expected to double over the next 30 years.[1] Disease management programs can serve as a fiscally prudent measure to temper the rate of growth in the costs of Medicare services.  In addition, when a prescription drug benefit is created for Medicare recipients, disease management programs can help rationalize the appropriate use of medications and greatly improve healthcare outcomes.

Medicaid

As states continue to grapple with rising Medicaid expenditures, disease management can serve as an important service to control health care costs.  McKesson believes that the greatest opportunity is in the Medicaid elderly and disabled categories.  Eleven million of the 40 million Medicaid recipients qualify for Medicaid on the basis of disability or age.[2]   Despite being roughly 25% of the population, this group accounts for nearly 66% of the Medicaid costs.[3]  Furthermore, very few disabled and elderly Medicaid recipients are covered by managed care organizations due to their very high costs and pre-existing conditions.  Therefore, these vulnerable patients lack many of the care coordination services common to managed care organizations.  Disease management programs provide patient counseling, care coordination, and a patient advocate who is able to counsel patients and help them navigate through a complex health care system.

McKesson has several Medicaid clients.  We have contracted directly with the state in some cases and with Medicaid managed care plans in other cases.  Although Medicaid reimbursements are lower than reimbursements from commercial payers, there is usually higher utilization of services in Medicaid programs.  In an asthma disease management program conducted for Medicaid recipients in a Mid-Atlantic state, we have demonstrated a 37% reduction in hospitalizations and a 22% reduction in emergency room visits, which resulted in a 19% return on investment for the health plan.

Government Employees

McKesson also recommends that the benefit design for Federal Government employees be expanded to include disease management services.  Focusing on conditions such as asthma, diabetes, congestive heart failure, and COPD can result in net reductions in health care costs and an improvement in the health status of employees or dependents with these conditions.

We believe that current and former military personnel also should be included in this initiative.  The Veterans Health Administration (VHA) system is rapidly expanding and faces increased costs associated with providing care for veterans, particularly those who served in World War II and Korea.  Tricare and the VHA are beginning to conduct pilot trials of disease management services and have solicited bids from companies including McKesson.  We strongly support expansion of these trials with a focus on solutions that are scalable across wide geographic settings. 

Rural, underserved populations

Disease management services are particularly relevant in underserved areas.  For the 61 million Americans who live in rural settings, access to health care is an issue of major concern.[4]  In these settings, investments to promote patient self-management and education are particularly fruitful.  By increasing compliance and self-reliance, disease management can help lessen the demand and, therefore, the need, for scarce health care resources. Telenursing services in disease management programs are able to efficiently and economically overcome geographic barriers for care provision.  Disease management services can act as a physician extender in these underserved areas.  McKesson strongly recommends the implementation of disease management programs in rural, underserved areas and suggests pilot projects to demonstrate the effectiveness of disease management services in these settings.

Conclusion

Disease management has emerged as a private sector solution that provides incremental technology and professional resources to improve care for those with chronic conditions.  These services improve the health of patients by decreasing symptoms and improving their quality of life.  Disease management also reduces the frequency of emergency room visits and hospitalizations as patients learn to effectively manage their diseases.  Overall, we believe that the savings from reductions in hospitalizations and emergency room visits outweighs the costs of delivering these programs.

McKesson urges the creation of a disease management benefit for Medicare recipients.  The impact of these programs is greater for vulnerable populations such as the poor, elderly, and disabled, where the frequency and costs of chronic conditions are higher and health care delivery is generally highly fragmented.  The outcomes-focused, evidence-based interventions provided in disease management programs improve patients’ ability to participate in their care and help physicians by reinforcing medical recommendations.  As Congress grapples with improving the quality and delivery of health care, we support the greater utilization of disease management programs as a vital way to enhance care outcomes for the elderly while concurrently reducing the cost of delivering better care.

We look forward to working with members of this subcommittee as you address these important concerns. 

[1] Board of Trustees of the Federal Hospital Insurance Trust Fund. Annual report of the Federal Hospital Insurance Trust Fund. Washington, D.C.: USGPO, 2000.

[2] Hoffman C, Schlobohm A. Uninsured in America: a chart book. 2nd ed. Washington, D.C.: Kaiser Commission on Medicaid and the Uninsured, March 2000.

[3] Medicaid: a primer. Washington, D.C.: Kaiser Commission on Medicaid and the Uninsured, 2001.

[4] National Rural Health Association.  Annual Report 2000.