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0606 HR Magazine: Challenging Diabetes

By Susan J. Wells   6/1/2006

HR Magazine, June 2006Vol. 51, No. 6

By partnering with pharmacists and supplementing maintenance costs, employers are reaping big gains.

When the 42 member employers of the Hawaii Business Health Council in Honolulu sought a cure for rising health care costs, they meticulously studied seven different disease management (DM) programs before choosing an uncommon remedy: an employer-based initiative that uses pharmacists to coach diabetic employees on how to better manage their illness.

The Hawaii employers had a special reason for targeting diabetes: Prevalence of the disease in Pacific Islander and Asian populations is considerably higher than in Caucasians, notes Gary Allen, the council’s executive director.

Within weeks of launching the program at three employers this spring, half of eligible employees volunteered for the benefit. That led the council to move up its timeline—planning expansion of the diabetes-coaching program to every employer in the state over the next year, Allen says.

Now being rolled out in 10 U.S. cities, the diabetes-coaching program is winning converts hoping to capitalize on its success. As of late March, 24 employers in seven cities, representing various industries and more than 45,000 covered lives, had signed on to the plan—attracted by proven double-digit health cost reductions in some cases and as much as a 4-to-1 return on investment (ROI).

A New Breed Takes Hold

The “Diabetes Ten City Challenge,” of which the Hawaii employer group is a part, is sponsored by the American Pharmacists Association (APhA) Foundation in Washington, D.C., and is funded by pharmaceutical company GlaxoSmithKline and the employers involved.

The Ten City programs are based on a breed of DM first launched in 1997 by the city of Asheville, N.C., and local pharmacists that has since become a national model for diabetes self-care. Known as the Asheville Project, the program has expanded to include similar approaches for other diseases and conditions, including asthma, hypertension and cholesterol management. Another program targeting depression is soon to come.

Unlike most DM plans, which rely on case management via telephone, the Asheville program is unique in that it relies on personal collaboration between employee-patients and community pharmacists, who are paired up for ongoing counseling, education and follow-up. It also encourages better patient management of the disease by offering free diabetes drugs and supplies to employees who participate; employers foot the bill.

“We went with this model because it has two things that most other disease management programs don’t have,” says Allen. “It pays incentives to employees for participation and puts the counseling site at the local pharmacy.” 

A Great Experiment

The concept got its start after Daniel Garrett—who in the late 1990s headed a professional group of North Carolina pharmacists and was pharmacy director at a local hospital—approached the city of Asheville with an idea: Train local pharmacists to counsel diabetics at the pharmacy when they pick up their medications.

In turn, the pharmacists train patients in how to manage their condition by using their blood-sugar monitors and taking prescribed drugs correctly. Patients agree to meet with the pharmacists monthly to review their blood-glucose readings, discuss any questions and set goals. The pharmacists also check the patients’ eyes, skin and limbs—informing patients’ physicians about any findings and progress.

“Our focus was looking at who really manages diabetes,” says Garrett, now senior director of medication adherence programs for the APhA Foundation. “It’s not the doctor, it’s not the pharmacist—it’s the person with the condition.” The program’s strength, Garrett believes, was setting up a one-on-one, face-to-face relationship between an employee and a trusted community pharmacist.

John Miall, at that time risk manager for the city of Asheville, agreed to try the idea and paid employees for their drugs and supplies in exchange for participation. Four months later, Miall told Garrett he wanted to keep the project going—and he wanted to also pay the pharmacists retroactively for their consulting.

“Waiving the co-pays was really a gimmick to get employees to enroll; then later we realized what a strong incentive it was,” says Miall, who now consults for the APhA Foundation. “From the employee perspective, it did wonders: Employees were coming to me in tears, thanking me for the program and the difference it was making in their lives.”

The free supplies drew employees in, but the program also improved health measures. Of the Asheville employees who participated, 63 percent showed blood-sugar readings in the optimal range after six months—compared with 38 percent before the interventions began.

Miall claimed the city saved $4 for every $1 it spent on employees in the program. The number of sick days also dropped: Patients in the program averaged more than 12 sick days per year prior to the program and fewer than six while enrolled, he says.  

The Payoff

Long-term studies of the Asheville Project—and similar efforts in four other states—show that employers saved $918 per employee in total health care costs for the initial year, with even greater savings in subsequent years. ROI came in at 4-to-1 beginning in the second year, absenteeism dropped by 50 percent, and workers’ compensation claims declined.

The studies also revealed that 95 percent of the 256 participating employees were enthusiastic about their experiences. It’s easy to see why: They saved an average of $400 to $600 a year, thanks to waived co-pays.

While patients said they valued the relationships they established with their pharmacist or diabetes educator, the waived co-pays for diabetes medications and related supplies were the decisive incentive that persuaded many to enroll in the project.

“That incentive gets employees excited,” says Nancy Kennedy, executive director of the Northwest Georgia Healthcare Partnership, a Dalton, Ga.-based group representing 10 employers, and a Ten City Challenge site. “That gets them in; then they stay in the program because they truly start to feel better.”

Carl Garrett, a balance technician in the machine shop at Blue Ridge Paper Products Inc., a manufacturer in Canton, N.C., calls the company’s Asheville-modeled diabetes program “a godsend.” He tests about three times a day, receives two injections, and gets personal attention for his diabetes management and other health matters from the staff in the company’s on-site medical facility. He appreciates the fact that pharmacists and other medical personnel “know you personally, know your medicines” and can fine-tune his prescriptions when necessary. He receives testing equipment, insulin and diabetes-related drugs at no charge.

Since enrolling at the beginning of the program five years ago, Garrett says, he hasn’t missed a day of work and has felt better than he had for years beforehand. “When you feel better,” he says, “you’re more productive.” (For more details on the Blue Ridge program, see Adapting Asheville.)

Large employers, many of which craft and finance their own employee health plans, know that their allotted reserves are jeopardized if too much of their workforce is seriously ill. But does it make sense to pay more up front by waiving all employee co-pays for diabetes medications and related supplies?

“It can admittedly be a scary proposition to tell your HR and benefits folks to pay 100 percent of drugs and supplies,” admits Miall. “But it’s a strategic move that is based on the fact that it’s cheaper to treat a condition regularly than to have it end up in the hospital or ER.” 

That proved true for Mohawk Industries Inc., a flooring supplier based in Calhoun, Ga., which tested the Asheville concept at its Dublin, Ga., plant from 2002 to 2004. During that time, total average annual medication costs per patient rose from $1,628 to $3,715 because of the waived co-pays and better compliance—patients taking medications and monitoring their condition as they should, says Judy Pair, corporate director of benefits and diversity. ›

At the same time, though, medical claims for the 36 diabetic employees who participated dropped 20 percent, total health care dollars spent per employee were slashed by 56 percent and the number of hospital visits fell by 60 percent, Pair says.

“We knew we were going to incur additional costs by providing medications and supplies for free,” she says. “But if you prevent even one hospitalization, you make up for much more than that.”

The program also made a huge difference in absenteeism. Participating employees collectively missed 14 workdays in 2004, down from 252 days in 2002.

“Better management of the condition absolutely led to these savings,” she says. Mohawk now has 70 employees enrolled in the diabetes management program, and Pair says the company plans to expand the concept to other conditions this year. 

Focusing on the Condition

Experts say employers’ quest to better manage diabetes is fourfold.

First, it’s one of the most prevalent and fastest-growing health risks in the nation. More than 20 million Americans have diabetes, and the number of people diagnosed with the condition has more than doubled in the last 20 years, according to the U.S. Centers for Disease Control and Prevention (CDC). Between 3 percent and 10 percent of a typical health plan’s participants may be diabetics, according to research conducted in 2003 by Harvard Business School professor Nancy Beaulieu.

Second, diabetes is costly: $13,242 is spent annually on each diabetic, compared with $2,560 per person without diabetes, according to data from the American Diabetes Association (ADA) in Alexandria, Va. The organization measures spending on emergency room visits, hospitalizations, disability insurance costs, absenteeism and lost worker productivity.

Third, the disease requires significant self-care by the patient to keep it under control, and the CDC estimates that 63 percent of diabetics currently don’t achieve that goal.

“What distinguishes diabetes from other chronic conditions is that it’s almost entirely self-managed,” says Dr. Nathaniel Clark, national vice president of clinical affairs for the ADA. “The diabetic patient must understand not only what to do but also how to communicate if it’s not working,” he says. “In some ways, it’s conceptually simple to treat, but there is an enormous list of things to keep track of.” For example, patients may have to test their blood glucose as often as eight times a day.

Fourth, some health and benefits experts cite the ability to track and substantiate results as another reason that employers tend to target diabetes first in their wellness-intervention efforts—before they tackle other common conditions, which can be harder to measure. “Diabetes has led the field of disease management because it’s fairly easy to define success,” Clark says.

Specific clinical measures can help patients and their health care providers pinpoint progress—or failure. These measures include the A1C—the standard blood test that measures average blood-sugar control over a two-month period; a low-density cholesterol reading; blood pressure checks; urinalysis; and regular eye and foot exams, Clark says.

Time, Money, Relationships

To replicate the model in the Asheville program and the Ten City Challenge, employers must be self-insured and cover at least 5,000 people, including employees and dependents, the APhA says.

Employers sign a contract with the APhA Foundation and commonly work with their state pharmacist association to set up a network of participating pharmacists. Then employers recruit employees to participate, promise to waive co-pays for diabetes-related drugs and supplies, and pay the pharmacists for their time.

Employers can expect annual per-patient costs to average about $400 for drugs and supplies. Pharmacist counseling costs between $1.50 and $2 a minute, with sessions ranging from 20 minutes to an hour, says the APhA’s Garrett.

Some analysts caution that the Ten City model requires an additional level of interaction with a provider and a shift of responsibility—and money—to a new set of medical providers.

Physicians, for example, may question the role of the pharmacist in helping guide care of a patient. And insurers have so far been slow to reimburse pharmacists and other non-physician providers for the “cognitive services,” or counseling, that they provide.

In addition, not all pharmacists may buy into the program. And employees may question privacy statements that allow the pharmacists to transfer information about them to physicians—although the Health Insurance Portability and Accountability Act does not prevent that type of communication among health care providers.

To address these concerns, the APhA advises HR and benefits managers to make sure materials clearly describe the benefits of the program to all parties involved. It also advises employers to consider sending letters to area physicians inviting them to support the program—and explaining that the program is designed to complement their patient care, not compete with it. Establishing an open channel of communication among all providers is a key element in the patient’s success.

Despite the implementation challenges, proponents are quick to tout the concept’s adaptability. Garrett believes that the program he helped get off the ground can work anywhere—evidenced by its growing national reach through the Ten City Challenge—and invites HR and benefits professionals to stay tuned to monitor the Ten City experience.

“The beauty of the program is that it can be adapted to local needs and delivered person-to-person in all settings,” Garrett says. “We think the old saying fits: If it plays in Peoria, it can play anywhere.” 

Susan J. Wells, a business journalist in the Washington, D.C., area and a contributing editor of HR Magazine , has more than 20 years of experience covering business news and workforce issues.

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 Adapting Asheville  

Blue Ridge Paper Products Inc., a paper-goods manufacturer in Canton, N.C., researched and adapted the Asheville model as part of an overall wellness initiative in 2001. Estimates revealed that about 10 percent to 15 percent of its workforce was either diabetic or at risk.

“As I traveled around to our locations, I heard story after story of how employees did not know what to eat or how to manage the highs and lows of their disease,” says Bonnie Blackley, corporate benefits director. “One woman also told me she was having to charge her insulin on a credit card with 20 percent interest—and to please rush the new program.”

To help its diabetic employees, the company introduced an on-site program that provides free monthly monitoring by paramedics trained in diabetes management. A pharmacist comes on-site every month to consult with patients and check blood-glucose readings.

No-cost diabetic drugs and supplies and cash incentives for achieving health-management goals for related behaviors, such as weight loss and nutrition, encourage employees to follow the plan, says Blackley. And, she notes, the company required employees to fulfill their end of the bargain. “If they’re not in compliance with requirements of the program,” she says, “we let them know that they will be dropped and will no longer have the waived co-pays.”

Blackley says success was fueled by the program being simple, understandable, and easy for both the employee and the company to follow and administer. The program—as part of a large-scale health-management initiative—helped contribute to a total turnaround in annual health care cost increases, she says. While the company’s health care costs rose 23.3 percent in 2002, in 2005 the company enjoyed a 3.8 percent decrease.

Measuring ROI: Not an Exact Science  

Many employers are investing heavily in disease management programs, but they’re also finding it tricky to quantify the returns they expect. In fact, for some employers, a deterrent to adding or maintaining such programs has been the difficulty of proving their effect on lowering health-benefit costs.

“In truth, it’s hard to measure the impact of true intervention” for certain conditions in terms of the all-important, actual health-status improvement, says Sue Willette, principal and leader of the national health and productivity management practice in the Minneapolis office of Mercer Human Resource Consulting LLC.

A 2005 Mercer survey of 3,000 employers shows that only one-fifth of large organizations that offer care management programs say they’ve “attempted” to measure ROI.

Many things—such as ever-changing employee participation rates or a high-turnover workforce, among others—can affect even the most specific measures.

Then there’s another fundamental problem—a problem of accuracy—says Al Lewis, who heads the Disease Management Purchasing Consortium International Inc. in Wellesley, Mass., a consultant and broker with 100 members that include health plans and private and public employers covering 80 million lives.

Lewis, who founded the Disease Management Association of America (DMAA) and is a past president, contends that a lot of currently accepted measurements are actually inaccurate and misleading because of what he calls a “fatal flaw” in how some disease management companies and benefits vendors typically have calculated ROI.

Because “not all patients with a disease will file a claim during the initial measurement period,” he says, not all are counted in the baseline measurement, so the savings for some chronic diseases will always be overstated. “The key to the measurement is that anybody that you find with a disease in any period has to be considered to have the disease in all periods,” he says.

To explain, he offers this example: You have two employees with asthma. One had a $1,000 claim in 2004 and nothing in 2005. The other one had no claim in 2004 and a $1,000 claim in 2005.

“Using the industry standard methodology, if you look at claims for 2004, you conclude that your average asthmatic cost $1,000 in that year. You had a prevalence of one, and it cost $1,000. In 2005, the vendor finds that prevalence went from one to two, and would claim that the cost-per-asthmatic fell to $500, even after spending $1,000 on one patient in 2005,” he explains.

These types of challenges led the DMAA in Washington, D.C., earlier this year to vow it would develop by year’s end a uniform method for measuring and evaluating outcomes in disease and care management programs. The association is surveying the industry to collect data on how disease management organizations and others now measure outcomes.

“The DMAA recognized that a gap exists in our understanding of best practices for evaluating disease and care management programs,” says Tracey Moorhead, DMAA executive director. “Our experience shows disease management works, but lack of agreement on how to measure that success has hampered our ability to convince skeptics.”

—Susan J. Wells