Cost Effectiveness of Case Management Programs for the Elderly
by Michael J. Long, M.A., Ph.D.
Geriatric Times May/June 2001 Vol. II Issue 3

Case management has often been adopted as a means to reduce or constrain health care service use and costs for a given enrolled population (Capitman, 1988; Freund et al., 1984; Yordi, 1988). It is important, however, to recognize that there are different models of case management, each with differing dynamics and designed to achieve different goals.

Case Management Models

At the risk of oversimplifying the categorization of the numerous models, the underlying dynamics suggest that they can be generically categorized into one of three types: interrogative, patient advocacy and consolidated. The interrogative model emphasizes intense oversight at the interface of the clinical and fiduciary perspectives. In this model, although the appropriateness of patient care may predominate in determining a treatment regimen, the cost of care is recognized as a legitimate argument in the decision-making process. Hurley and Fennell's (1990) medical case management model, Zawadski and Eng's (1988) prior authorization model and Capitman's (1988) gatekeeper model would all fit under this rubric.

The patient advocacy model emphasizes the coordination of services on the continuum of care from the client perspective. This model suggests that all of the patient's circumstances are recognized as legitimate arguments in the decision-making process. That is to say, the treatment regimen is determined not only by the medical needs of the patient, but also by the financial, psychological and social circumstances of the patient.

It is important to note that the classification of case management models in this manner is not intended as support for the growing tendency in the managed care arena to view cost and quality as philosophically opposed concepts. On the contrary, Donabedian (1980) suggested that costs play a vital role in the quality of care. He defined quality as a measure of the extent to which the care provided maximizes the benefits to health while minimizing the risk, as follows: Quality=Benefits-(Risk+Cost). By this definition, both patient advocacy and interrogative case management models can be further characterized as addressing the quality of care, because if cost and risk remain constant and benefits increase, quality is improved. Similarly, if benefits and risk remain constant and costs decrease, quality is improved. Thus, the interrogative model of case management addresses quality through the cost variable, and the patient advocacy model addresses quality through the benefit variable.

A third model, identified by Zawadski and Eng (1988) and exemplified by the On Lok Senior Health Services in San Francisco, is not seen as a separate and distinct model but rather a combination of both the interrogative and patient advocacy models. In the consolidated model, the decision-making process might be thought of as consensus building among the providers that comprise the team. It is reasonable to suggest that each member of the multidisciplinary team is influenced by their own internal implicit controls and the explicit controls imposed by the managed care organization. The resulting treatment regimen might then be considered the result of the prevailing consensus of the team. That is to say, the group's decision could reflect a position of any point along the continuum of a strong interrogative approach to a strong patient advocacy approach.

Measuring Cost Effectiveness

We conducted a post hoc evaluation of the benefits and costs associated with a case management program for an elderly, functionally impaired population (Long and Marshall, 2000). Clients of a large managed care organization who were 75 years or older and functionally disabled (n=317) were randomly assigned to a regular-care group or a case-managed group.

In this study, the case managers were health care professionals with prior geriatric case management experience. They became integral members of a patient care team, which comprised the client's personal physician and the physician adviser. This team developed the initial care plan for each client, with the case managers responsible for making periodic home visits, reporting back to the care team and participating in the revision of the care plan as necessary. While case managers made at least one home visit every six months, weekly visits to some clients were not uncommon. In addition, case managers scheduled medical appointments; accompanied patients on these appointments; and arranged for non-medical services such as respite care, meals-on-wheels, nursing home placement, Medicaid eligibility, and transport to and from the physician.

The goal of this intervention was to eliminate fragmented care, inappropriate utilization, unnecessary costs and client confusion frequently associated with chronic care. It was also expected that less costly outpatient visits would be substituted for hospital and emergency department (ED) care. These goals would suggest a more interrogative model, but the model adopted was, in fact, heavily biased toward a patient advocacy model. It could be argued that the model of case management adopted was inconsistent with the goals. This could have been due to a lack of specification in the protocols established by the team, a failure to reconcile protocols with goals, or a lack of fit between the prevailing team consensus and the goals of the program. Given this conflict, it was conceivable that the benefits of the program might manifest themselves in financial or quality terms.

In this study, we identified two types of costs: program costs and service costs. Program costs were then identified as the salaries and fringe benefits of the two case managers and the research assistant. Service cost data were taken from the MCO's 1992 Medicare Financial Performance Report. Hospital costs were calculated using diagnosis-related groups for the appropriate fiscal year, and outpatient and ED visit costs were based on an average cost per visit calculated by service, medical specialty and provider type.

Benefits were calculated in two ways. We first considered the service use and related costs with the understanding that, all things being equal, reduced service use and cost represented a benefit. We also examined the number of days of coverage (exposure) with the understanding that a greater number of days of exposure represented a greater benefit. The potential number of days of exposure during the two-year study for each group was 730 days. In the event of death during the study, the number of days of exposure was reduced by the number of days from the date of death to the end of the study.

The actual cost of services used by the two groups during the study period was remarkably similar ($2,414,043 for the case-managed group and $2,473,221 for the regular-care group). However, when the program costs were allocated to the case-managed group, the average cost per person totalled $18,210 for the case-managed group and $13,973 for the regular-care group. This difference was statistically significant (p=0.05).

The average number of days of exposure was 656 days for the case-managed group and 550 for the regular-care group. This difference was statistically significant (p=0.01).

The cost per additional day of life was calculated by dividing the difference in average cost per person ($18,210-$13,973=$4,237) by the difference in the average number of days of exposure (656-550=106). This resulted in a cost of $39.97, which can be interpreted as the cost of each additional day of life.

Discussion

Several caveats are in order. This study examined one particular case management intervention, in one particular setting with a unique population and, as such, the results cannot be generalized to any other population. It is also important to note that, in this study, an additional day of life is considered to be positive and, therefore, a positive outcome. It is entirely possible, particularly with this population, that an additional day of life may not be perceived by the individuals involved as positive. Since death can only be determined retrospectively, any attempt to measure the quality of an additional day of life using any of the available validated instruments when death is eminent would not only require an unacceptable intrusion, it would probably be impossible. Given the data available and the methodology adopted for this study, an independent measure of the quality of life inherent in additional days of life (on average) in this study cannot be determined. Under the circumstance, it seems reasonable to accept the unobtrusive measure of an additional day of life as a positive outcome of a case management intervention.

The case management model adopted in this program was clearly a patient advocacy model. The case managers, acting in what they perceived to be the best interest of the clients, encouraged and facilitated the use of the system, so it is not surprising that the average cost per person was greater for the case-managed group. A simple evaluation of the difference in the cost per person would suggest, erroneously, that the program was a failure, but when costs are considered relative to the benefits received, a very different picture emerges. The actual death rate in both groups was very small and very similar. On the other hand, the cost for an additional day of life was only approximately $40, which, it could be argued, is a small price to pay. Consistent with the dynamic inherent in the Donabedian (1980) definition of quality, although costs were increased, quality was improved. From this perspective, the program might very well be considered a success.

Implications

From a management practitioner perspective, these results point to the need to carefully evaluate the various models of case management relative to the outcome desired. In other words, the underlying dynamic of the case management model adopted must be consistent with the reasons for implementing it. They also point to the need for management practitioners to evaluate both the benefits and the costs of a program, regardless of the impetus behind its implementation, before condemning it as a failure or praising it as a success.

Regardless of the rationale for implementing a case management program, it is the dynamic inherent in the model adopted that will dictate whether the ultimate effect manifests itself in costs savings, benefit improvement, neither or both. Unfortunately, organizations very often engage in the case management process assuming a priori that cost savings will be realized by simply imposing any model. This is obviously not the case. It is critical, therefore, that before embarking on a case management endeavor, the individual or team responsible for determining the treatment regimen fully understands the goal. Guidelines, protocol or treatment parameters that reflect this goal must be established and agreed upon by all concerned.

Dr. Long is professor in the department of public health sciences at Wichita State University. He has been published widely in national and international journals as a health economist and has written two textbooks.

References

Capitman JA (1988), Case management for long-term and acute medical care. Health Care Financ Rev Dec(Spec No):53-55.

Donabedian A (1980), The definition of quality and approaches to its assessment. Ann Arbor, Mich.: Health Administration Press.

Freund DA, Ehrenhaft PM, Hackbarth M (1984), Medicaid Reform: Four Studies of Case Management. Washington, D.C.: American Enterprise Institute for Public Policy Research.

Hurley RE, Fennell ML (1990), Managed-care systems as governance structures: a transaction-cost interpretation. In: Innovations in Health Care Delivery: Insights for Organization Theory, Mick SS and associates, eds. San Francisco: Jossey-Bass Publishers, pp241-268.

Long MJ, Marshall BS (2000), What price an additional day of life? A cost-effectiveness study of case management. Am J Manag Care 6(8):881-886.

Yordi CL (1988), Case management in the social health maintenance organization demonstrations. Health Care Financ Rev Dec(Spec No):83-88.

Zawadski RT, Eng C (1988), Case management in capitated long-term care. Health Care Financ Rev Dec(Spec No):75-81

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