Why Managed Care "Gets It" When It Comes To the Value of Nurse-Led Care Management

In yesterday’s post, the Disease Management Care Blog described how risk-bearing health care provider groups will be sorely tempted to under-invest in care management.

Shocking you say? Well, in general, hospitals and physician offices have always undervalued nurse-based services. Just ask any nurse. In addition, look at how many States are considering laws mandating hospital nurse-patient ratios. Think when’s the last time you saw a registered nurse instead of a minimum wage medical assistant in your physician’s office. And we seriously think that all hospitals and physician offices will gladly hire sufficient numbers of nurses to adequately support their Accountable Care Organizations’ and Patient Centered Medical Homes’ risk contracts? Believe that whopper and the DMCB has a handheld MRI scanner it wants to sell you.

In the meantime, walk into any managed care insurer’s building and there's a good chance that at least one of the floors above you will house a cube farm filled with nurses. They're the pleasant-voiced and no-nonsense professionals that are performing utilization, disease, pharmacy and case management, helping with underwriting, determining 1st level medical necessity, precertifying, concurrently reviewing, handling appeals and grievances, coordinating benefits, pursuing fraud and occasionally (and only when they deserve it) haranguing Medical Directors. Yes, that’s a lot of nurses and, by the way, that’s one of the reasons why insurers can have high administrative costs and lower medical loss ratios.

The DMCB isn’t necessarily defending the logic carrying the salary costs of all those nurses and driving up health plans’ administrative costs. However, it is pointing out that managed care organizations have always had a lot of nurses on their payroll. They get it. They understand that that's the price of being in the risk-bearing business.

This has important implications:

1. Health insurers have a long history of believing in nurses and are less likely to skimp on them when it comes to a growing need for chronic illness population-based care management.

2. Insurers have outsourced many of those nurse-based functions when it made economic sense to do so: that’s what helped give rise to the disease management industry.

3. Assuming this is a necessary cost in the fight against chronic illness, it makes little difference if it’s 1) a health plan administrative cost, 2) assumed by disease management companies or 3) transferred/outsourced to the providers (which will increase the medical loss ratio). There are no savings to be had here. It’s all bookkeeping.

4. There is a significant risk that if the portion of the premium (otherwise known as cash) necessary to support nurse-based care management is simply handed over to providers, they will largely, based on their past behaviors, screw it up.

There is a way out of this. That will be tackled in the next post.