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The Centers for Medicare & Medicaid Services today urged states to adopt programs to help those with chronic illnesses better manage their diseases. In a letter to state Medicaid officials, the agency announced it would match state costs of running so-called "disease management" programs aimed at improving health outcomes while lowering the medical costs associated with these diseases.

Studies have shown that persons with chronic illnesses like diabetes, asthma, congestive heart failure, hypertension and other long-term diseases use a disproportionate share of medical services. These beneficiaries frequently are treated by multiple providers whose care is not coordinated, potentially leading to duplicative and unnecessary services and driving up medical expenses. Disease management is a set of interventions designed to improve the health of these individuals by working more directly with them and their physicians on their treatment plans regarding diet, adherence to medicine schedules and other self-management techniques.

"Disease management is an exciting opportunity to significantly improve the care delivered to Medicaid beneficiaries with chronic conditions," said Dennis Smith, acting Administrator of CMS. "It uses the best of managed care techniques of coordinating care that may not have been available in a fee-for-service delivery system."

Today's letter to states comes on the heels of disease management initiatives being launched in the Medicare program. Currently, CMS is undertaking a series of disease management pilot projects in the traditional fee-for-service Medicare program as well as Medicare managed care programs.

The new Medicare Prescription Drug, Improvement and Modernization Act (MMA) establishes two new programs-the Voluntary Chronic Care Improvement Program and the Care Management Performance pilot program to further explore the potential of disease management techniques. The Voluntary Chronic Care Improvement program will provide guidance to beneficiaries with chronic diseases that could be responsive to disease management interventions. The goal will be to improve beneficiary self-care and to provide physicians and other providers with technological support to manage clinical information about the patient.

The Care Management Performance Demonstration will establish a pay-for-performance 3-year pilot with physicians to promote the adoption and use of health information technology to improve quality and reduce avoidable hospitalizations for chronically ill patients. Doctors who meet or exceed performance standards (set by CMS) will receive a bonus payment for managing the care of eligible Medicare beneficiaries. The pilot must show that it does not cost Medicare more than the program would have spent on the beneficiary otherwise.

In its letter to states about the Medicaid program, CMS suggests several models that states can use that would be eligible for federal matching funds. States may contract with a disease management organization (DMO) that would manage the overall care of the beneficiary, but does not restrict access to other Medicaid services. A state may pay the DMO a capped amount per beneficiary with the organization being responsible for any expenses over the set amount.

States may also establish a primary care case management program (PCCM). In these programs, the state works with PCCM providers to enhance the care it delivers to enrollees with chronic conditions. Additional support from the state could be given for especially complex cases.

Individual providers (physicians, pharmacists or dietitians) can also contract with states to provide management services. Providers often undergo specialized training before undertaking this program.

States can develop these programs under either a Medicaid waiver or state plan amendment. CMS will also provide direct technical assistance to states that request it.