Looking to manage care more closely - new techniques in case management to manage chronic illness and high-risk pregnancies - Cover Story

Business & Health, Sept, 1993 by Rita Shoor

Employers are going beyond traditional case management to manage chronic illness and high-risk pregnancies.

For years, insurers and third-party administrators (TPAs) have closely managed treatment plans for catastrophic injuries and illnesses. Spinal cord and head injuries, AIDS, and motor vehicle accident victims typically have received close scrutiny. Such cases lend themselves to catastrophic categorization, and all insurers use these diagnoses as criteria for applying case management techniques, says Kathleen Douglas, director of the medical management unit for Massachusetts Mutual Life Insurance Co. in Springfield, Mass.

Insurers and employers, however, are beginning to apply case management in situations that don't fit the traditional definition. Chronic diseases, such as diabetes and asthma, and cases not necessarily described as catastrophic--high-risk pregnancies, for example--are now frequently targeted for case management.

Employers, case managers, and insurers agree that more aggressive case management may be warranted in smaller cases. "You need to go beyond the strict decision tree related to catastrophic cases and look at high-dollar cases that might not have a diagnosis that would strictly fit into case management," advises Mindy Owen, past president of the Case Management Society of America (CMSA), in Washington, a national professional association of case managers.

Gary Wolfe, CMSA president-elect and director of case management for Pacific Review Services (PRS), a health care cost management firm in Cypress, Calif., concurs. "You still have to worry about those $100,000 and $250,000 cases," he says. "But you also have to look at managing some of the other events that, over time, contribute to high costs, as well as the inherent employee problems of lost time and lost productivity."

A broader focus

Typical of how employers are expanding utilization of case management services is the case management program at Santa Barbara Cottage Hospital and Cottage Care Center in Santa Barbara, Calif. Case management for the 465-bed hospital's more than 1,800 employees was initially handled in-house. But, says John Crozier, manager, compensation and benefits, "It was difficult for our staff to work with physicians whom they dealt with all the time and really be objective about case manegment." In October 1990, case management was assigned to PRS.

At first, PRS's case management services were invoked based solely on inpatient hospitalization. However, after 15 months' experience, the process was expanded considerably. "We realized we weren't catching certain diseases, such as AIDS, for example," Crozier explains. "You don't necessarily have a hospitalization right away, or you may have a very short hospitalization that, by itself, wouldn't necessarily cause a case management program to kick in. Also, you might look at someone who keeps returning to the hospital, even though they're short stays. The fact that this keeps occurring might make it appropriate for case management."

It was just such a pattern that served as a red flag to activate case management in a situation that involved a diabetic patient who was terminally ill, notes Crozier.

An employee's spouse was coming in for hospital stays of one or two days over about six months. Noting the frequency of the admissions, a case manager investigated and found that the inpatient stays were being used as a means of avoiding home visits by a nurse. "The couple tried to save their home visits because the hospital's benefits plan had a limit on the number of at-home visits from a nurse," Crozier explains. Once the full scenario became clear, the employer opted to remove the home visit limit for the patient.

Since the care could be easily performed at home by a nurse, the result was more convenient, quality care for the patient and savings for the employer. Even with the charges incurred for the nurse, Crozier estimates savings of at least $10,000 over the last eight months of the patient's life. As a matter of course, Santa Barbara Cottage Hospital now considers chronic cases as case management candidates on an individual basis, explains Crozier.

Recognizing the evident cost containment benefits of case management, employers are increasingly utilizing this approach. Five years ago, 50% of employers responding to the annual health care benefits survey conducted by A. Foster Higgins & Co. Inc., benefits consultants in New York, were using case management. By 1992, that number had climbed to 69% of surveyed employers.

Managing prenatal costs

Case management is also routinely applied in all maternity cases. "Maternity management is an area where there's usually no problem, but you manage the case in preparation for that expensive claim," says Crozier. "The employee makes initial contact with PRS, gives the vendor the physician's name, and answers some questions. Based on that first phone interview, PRS determines whether the pregnancy is low, medium, or high risk. Each one is handled differently," he continues. No high-risk pregnancies have occurred since Santa Barbara Cottage Hospital flagged maternity claims for case management. However, Crozier is well aware of what just one such case can cost. The highest medical claim in the hospital's history was a neonatal case that cost $550,000. Most of the charges were for intensive neonatal care during 1990--just before the hospital contracted for outside case management.