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Monitoring and Evaluating Medicaid Fee-for-Service Care Management Programs: User's Guide


Across the country, a wide range of care management (CM) initiatives are underway in Medicaid programs. These initiatives seek to reduce costs and improve the quality of care for individuals with chronic conditions. The Centers for Medicare & Medicaid Services (CMS), private vendors, States, and others are undertaking evaluations to determine whether CM programs will lead to cost savings.

With so much activity in this arena and a high degree of variability among care management programs, States and others are interested in understanding how to weigh the evidence presented by vendors and relate it to the array of program designs being offered. In particular, a clearer understanding of methodologies and issues related to evaluating the costs and quality of these programs will help States to assess the impact of their CM initiatives.

This guide walks through the steps necessary for evaluating a Medicaid CM program to assess the economic and quality impact of CM interventions. From how to get started, to thinking about the budget, to executing the evaluation itself, this user's guide is a resource through each stage of the evaluation process. Sections contain background information, State examples, checklists, and charts to help you answer your evaluation questions and make sense of the process.

The guide moves beyond "one size fits all," providing information and perspective on the benefits of specific designs for specific situations. In this way, it can be a resource to States as they create their CM programs or negotiate evaluation methods during CM vendor contracting and reconciliation. In addition, the guide can assist States in critically reviewing other evaluation findings, including published articles and data reported by CM vendors in their proposals and marketing materials.

The guide will be especially useful for decisionmakers and others involved with designing CM programs and overseeing their evaluation. These include directors of Medicaid care management programs, quality improvement directors, contract negotiators, program analysts, Medicaid medical directors, and program evaluators. The guide includes a section that can be used to educate higher level policymakers (e.g., legislators, cabinet secretaries, governors' budget directors) about the importance of evaluating CM programs and how their decisions can impact the viability of these evaluations.

What does the term "care management" mean?

In this guide, we use the term "care management" to refer to disease management programs, case management programs, and care coordination programs.

Carolyn M. Clancy, MD
Agency for Healthcare Research and Quality

David Atkins, MD, MPH
Center for Quality Improvement and Patient Safety
Agency for Healthcare Research and Quality

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Chapter 1. Introduction to Care Management Programs


Patients with chronic illnesses represent the largest consumers of health care dollars, accounting for nearly 75 percent of total health care expenditures in the United States, including 76 percent of all hospital admissions, 88 percent of all drug prescriptions, and 72 percent of all physician visits.1,2 As medical costs continue to rise, care management (CM) programs have been touted by the medical community, Wall Street, and State legislatures as a critical tool for cost containment.

CM programs focus on patient self-care and education to increase overall health and wellness and to avoid more costly medical interventions that result from poor self-care or a lack of adequate information. Emphasizing preventive measures, CM programs aim to reduce health care costs by limiting acute episodes of chronic illnesses. They use a variety of approaches to achieve this goal. Common features of CM programs include patient education, nurse-case manager interventions, 24-hour nurse hotlines, uniform provider guidelines to standardize care, increased attention to high risk populations, integrated health care delivery systems, and evidence based treatment plans-though this by no means represents a comprehensive list.

CM programs evolved in the private sector in an era when providing more efficient care for the chronically ill became a major priority of managed care. As States increasingly implemented Medicaid managed care programs, the perceived success of CM in the commercial market led to the integration of CM within Medicaid managed care. States have realized, however, that their most costly enrollees-those with chronic illness, who make up the majority of adult enrollees (approximately 60 percent)-are often served outside managed care in either Medicaid fee-for-service (FFS) or primary care case management (PCCM) programs.3 States have therefore begun implementing CM within their traditional Medicaid programs, outside their managed care infrastructure, to address the needs of the chronically ill. In February 2004, The Centers for Medicare & Medicaid Services (CMS) sent a letter to State Medicaid directors encouraging States to take advantage of CM opportunities in their fee-for-service (FFS) and primary care case management (PCCM) programs.4 More than 30 States have integrated CM into their Medicaid FFS or PCCM programs.5

Vendor vs. In-House Programs

Throughout this guide there will be different scenarios presented for Medicaid CM programs run "in-house" and those contracted to vendors. Although key elements affecting evaluation design and implementation will, on the whole, be similar for both types of programs, this guide will highlight cases where approaches may differ.

States craft their programs either "in-house" or through a vendor and use a variety of care models in addition to FFS and PCCM, such as enhanced primary care case management (EPCCM) and Medicaid-Medicare demonstrations (Medi-Medi). While the majority of Medicaid CM programs focus on ameliorating the medical and cost effects of specific conditions, States have recognized the need for their programs to evolve to address the significant comorbidities of many Medicaid consumers.

Similar efforts to reduce health care costs through targeted interventions to increase overall health have emerged alongside CM. For example, employer-sponsored wellness programs aim to decrease the incidence of absenteeism, presenteeism (i.e., on the job but not at full function because of a medical condition), and health care expenditures through a variety of health promotion activities. Wellness programs in the workplace range from modest programs focusing on preventive health to comprehensive behavior modification programs for a variety of conditions, including substance abuse and obesity. Cost-benefit analyses of wellness programs have produced different results, highlighting once again the need for standardized evaluation and further study.6

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Promises of Care Management

Medicaid programs may seek a variety of outcomes when launching CM programs. Some potential goals are:

Goals related to quality:

  • Reduced health complications of chronic diseases.
  • Increased use of evidence-based practice guidelines by providers.
  • Increased adherence to treatment regimens by patients.
  • Increased coordination of services across providers.
  • Increased school or job attendance.
  • Improved indicators of high quality care delivery, e.g., improved Health Plan Employer Data and Information Set (HEDIS) scores.
  • Improved health and functional status of patients.
  • Increased ability to perform Activities of Daily Living (ADL) and improved quality of life.
  • Better management of psychosocial effects of disease.
  • Improved quality of life.

Goals related to cost savings:

  • Reduced medical complications from chronic disease.
  • Reduced lab tests for acute episodes.
  • More cost-effective treatment choices.
  • Fewer unscheduled office visits.
  • Fewer ER visits.
  • Fewer hospitalizations.
  • Shorter hospital stays.
  • Fewer hospital readmissions.

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Importance of Evaluating Care Management

Expenditures for CM programs have exceeded $1 billion. Despite that level of investment, or perhaps because of it, there continues to be debate about whether CM programs actually save money.7-9 Costs for CM programs can include:

  • Staff time (nurses, nurse-case managers, hotlines, administrative staff, contractors, actuaries, etc.).
  • Costs associated with contracts.
  • Data collection, reporting, monitoring, and evaluation.
  • Shifts in utilization (e.g. increased use of office visits).
  • Increased use of prescription drugs.
  • Increased uses of lab tests.
  • General program costs (including administrative costs).

Because there are numerous potential choices for the design and delivery of programs to enhance the health and health care of people with chronic illness, it is imperative that States strive to understand if current models of CM are of greater value than available alternatives. Poorly conducted evaluations provide varying data and ultimately little evidence to assess States' return on investment. Carefully conducted evaluations are critically important to determining the impact of CM on economic and quality outcomes for patients, States, and the health care industry.

Evaluation can achieve three objectives:

  1. Determining if program goals are being met.
  2. Identifying whether performance improvement is possible.
  3. Determining whether similar effects can be achieved more efficiently.

Evaluation provides the information necessary to make the most informed decisions about the program's future. Strong evaluations can provide an answer to the key evaluation question: "What would have happened in the absence of the CM program?"

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Page last reviewed November 2007
Internet Citation: Monitoring and Evaluating Medicaid Fee-for-Service Care Management Programs: User's Guide. November 2007. Agency for Healthcare Research and Quality, Rockville, MD.