The Rising Costs of Chronic Diseases: How Payers Can Respond

The financial impact of chronic disease in the U.S. is sobering.

According to the Centers for Disease Control (CDC), 90% of the $4.1 trillion in U.S. healthcare costs can be attributed to chronic or mental health conditions. Chronic disease accounts for 81% of all hospital admissions, 91% of all prescriptions filled, and 76% of all doctor visits.

Furthermore, it’s estimated that employees with chronic conditions cost employers $153 billion in lost wages each year.

No wonder payers are scrambling to control costs. With Baby Boomers aging and the price of drugs, hospitalizations, and physician visits still rising, it may seem like an endless battle.

But some health plans have successfully implemented strategies to control costs. In this blog post, we’ll explore some of those efforts.

First, an explanation of chronic disease.

Definition of Chronic Disease

Chronic disease is a catch-all term that refers to a number of diseases that are long-lasting conditions persisting for more than three months and are generally progressive in nature. Unlike acute diseases, which are typically resolved with treatment, chronic diseases often require ongoing medical attention and can have lasting impacts on a person’s quality of life.

The types of diseases that fall under the umbrella of chronic conditions are familiar: heart disease and stroke, arthritis, cancer, chronic respiratory diseases, diabetes, Alzheimer’s disease and other dementias, chronic kidney disease, and obesity.

Each of these diseases has significant costs associated with it.

For example, it’s estimated that heart disease and stroke cost our healthcare system $216 billion annually. Meanwhile, cancer care will rise and cost $240 billion by 2030. In 2017, the total estimated cost of diagnosed diabetes was $237 billion in medical costs.

Challenges in Cost Control for Payers

There are several reasons why chronic conditions are such a challenge for payers.

First, the high cost of treatment and management are an ongoing hurdle. Chronic diseases require continuing medical attention, which often leads to hospitalizations.

Second, fragmented care delivery hinders cost control. When patients receive care from multiple providers, it results in duplicative tests and treatments, increasing costs.

Third, medication non-adherence inflates expenses. Patients not taking their medications as prescribed can lead to worsening conditions and additional treatments.

Fourth, the lack of patient engagement can lead to poor outcomes and higher costs. When patients do not take a proactive and preventive role in their health, the odds of adding costs increase significantly.

Finally, rapid advancements in expensive medical technology can also increase costs. While these technologies often improve care, they can also drive up expenses significantly.

Current Approaches for Managing the Costs of Chronic Disease

Some payers have been successful at mitigating the costs associated with chronic conditions. While they haven’t eliminated them, they have implemented strategies and tactics that have helped make those costs more manageable. Here are ten techniques that have proven to be successful for payers.

1. Implementation of Preventive Care Programs: Offering programs that focus on lifestyle changes, screenings, and vaccinations can prevent or delay the onset of chronic diseases, thus reducing long-term costs. One payer utilized predictive analytics to anticipate which patients were at high risk of hospitalization due to chronic conditions. By identifying these individuals, the payer could intervene earlier with preventive care measures, including personalized care plans and regular health check-ins. This approach reduced costly hospital admissions and improved patient health outcomes.
2. Predictive Analytics: Using data analytics to identify at-risk patients or trends in care can allow targeted interventions, improving care efficiency and reducing costs. One payer implemented a predictive model for managing Chronic Obstructive Pulmonary Disease (COPD). The model used clinical and claims data to predict COPD-related hospital admissions. The high-risk patients were then enrolled in a disease management program, significantly reducing hospital readmissions and related costs.
3. Value-Based Contracting with Providers: Shifting from fee-for-service to value-based models incentivizes providers to focus on quality over quantity, potentially reducing unnecessary treatments. One value-based Chronic Care Management Program incentivizes physicians to deliver holistic, patient-centered care to patients with chronic conditions. The program supports coordinated care, preventive services, and improved communication between providers and patients.
4. Chronic Disease Management Programs: Structured programs that provide education and support for patients to manage their conditions can lead to better adherence to treatments and lower complication rates.
5. Encouraging Patient Engagement: Experience shows that the more patients are engaged with their health, the better the outcomes. One payer program assigns health advisors to individuals with chronic conditions, providing personalized, holistic support that extends beyond medical care. The health advisors also encourage healthy lifestyle choices, medication adherence, and preventive screenings. This personalized approach has led to a significant reduction in healthcare costs and improved patient satisfaction.
6. Integration of Care: Coordinating care among providers and specialists ensures a unified approach to managing chronic conditions, reducing duplication, and improving outcomes. In one program, the payer collaborates with doctors to reward them for achieving high-quality, cost-effective outcomes for members with chronic diseases. By aligning financial incentives with health outcomes, the payer has seen lower hospital and emergency room use, translating to lower costs.
7. Remote Patient Monitoring: Wearable devices that monitor vital signs and other health indicators enable early intervention, possibly preventing costly hospitalizations.
8. Investment in Behavioral Health Support: Addressing mental health as part of chronic disease management program can improve overall well-being and reduce costs associated with non-adherence to treatments.
9. Pharmaceutical Cost Management: Negotiating drug prices or encouraging the use of generics when appropriate can significantly reduce the costs of medications for chronic diseases.
10. Implementing Evidence-based Care Technology: Utilizing technology to validate treatment plans with evidence-based medicine best practices and payer policies before treatment begins can control spending while still providing quality care.

Managing chronic disease costs is a multifaceted challenge for health insurance companies. However, it’s possible to control these costs without compromising patient outcomes by harnessing the power of technology, involving patients in their care, and restructuring payment models.