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Stretching State Health Care Dollars: Targeted Care Management to Enhance Cost-Effectiveness

Executive Summary

With more than three-quarters of current Medicaid spending devoted to people with chronic conditions, and the number of Americans with at least one chronic condition expected to rise at least 25 percent by 2020, states are pursuing efficiencies through various types of "care management" strategies for high-cost individuals. These services can be provided directly or contracted out to specialized vendors.

Care management is the coordination of care in order to reduce fragmentation and unnecessary use of services, prevent avoidable conditions, and promote independence and self-care. Alternatively called advanced care management (ACM), targeted case management (TCM), high-cost or high-risk case management, care coordination, disease management, and other terms, care management programs manifest themselves in a wide variety of ways. While they vary in goals, strategies, target populations, specific services provided or emphasized, administrative practices, and assessment capabilities, all states but one make optional care management services available to at least one Medicaid population.

Care management programs may be categorized as follows:

  • Medical- vs. long-term-care-oriented. Some programs target people with complex medical conditions, while others focus on those with multiple needs or disabilities who are eligible for nursing-home care but who—with proper support and coordinated social and long-term care services—could be maintained within the community.
  • Targeted diagnosis. Some programs target individuals with specific diseases. For example, 14 states provide care management for Medicaid beneficiaries with asthma, 14 states focus on those with diabetes, and 6 target patients with congestive heart failure.
  • High service use or cost. Some programs target people with high risk of hospitalization and adverse outcomes. These individuals may, for example, have more than a certain number of chronic conditions, take more than a specified number of prescription medications, be considered high-cost users (e.g., claims reach a designated amount or are within the top 10 percent of Medicaid cost per enrollee), or make a higher-than-average number of trips to the hospital emergency department (a.k.a. "frequent fliers").
  • Key intervention. Some programs (generally disease-based) provide educational materials on proper care that reflect evidence-based management guidelines; others focus on pharmaceutical management; and others use intensive one-on-one "advanced care" interventions by nurses or other health professionals.

Since results from past care management evaluations have been mixed, it is especially important to develop a national database that allows state high-risk pools and Medicaid programs to compare best practices for treating specific health conditions and better managing costs. Along with providing evaluations of emerging care management models, the information gained can potentially help states, the federal government, and private insurance and health delivery systems manage care—in a way that is both efficient and effective—for a U.S. population increasingly burdened by chronic conditions.

Publication Details



Stretching State Health Care Dollars: Targeted Care Management to Enhance Cost-Effectiveness, Sharon Silow-Carroll, M.B.A., M.S.W., and Tanya Alteras, M.P.P., The Commonwealth Fund, October 2004