September 2006 | Profile


Johns Hopkins HealthCare, a Maryland-based health plan, is participating in a CHCS initiative to determine whether the integration of substance abuse outreach and medical care management for Medicaid recipients with a substance abuse diagnosis and chronic conditions yields a positive return on investment (ROI).

“We wanted to bring together, in uniform format, disease care management and behavioral care management, targeting a very ill and substance abusing population,” said Peter J. Fagan, PhD, director of research and clinical outcomes at Johns Hopkins HealthCare and associate professor of medical psychology at Johns Hopkins University School of Medicine. “Our goal was to change how our internal system addresses these problems.”

Johns Hopkins HealthCare’s project is one of 10 initiatives in the Business Case for Quality in Medicaid Managed Care, a demonstration and evaluation program launched in June 2004 by CHCS and the University of North Carolina School of Public Health with support from the Robert Wood Johnson Foundation and The Commonwealth Fund.

Johns Hopkins HealthCare examined the first 12 months of claims histories of 603 adult Medicaid enrollees who frequently used medical services and had a recent history of substance abuse. An intervention group of 400 of these members was targeted for management by substance abuse coordinators and nurse care managers who received training in the integration of medical case management and substance abuse services. The training included mock interviews, lectures, and case conferences on substance abuse topics. A comparison group of 203 members received routine care in the form of separate outreach from substance abuse coordinators and care managers.

“We tracked the start-up costs and operational expenses of the interventions, and compared the utilization and total medical costs for the first 12 months of the 18-month intervention for the two groups,” said Dr. Fagan.  Early results indicate that the intervention group reduced medical costs by $122 per member per month (PMPM) compared to the 12 months prior to the intervention. The comparison group saw an increase in medical expenses of $165 PMPM during the first 12 months of the quality initiative compared to the 12 months prior to the intervention.

The intervention group’s cost reductions were realized through a decrease of 288 admissions per 1,000 members as well as a decrease in 92 days admitted per 1,000 members. Meanwhile, for the comparison group, hospitalizations decreased by only 150 admissions per 1,000 members and days admitted decreased by only 45 days per 1,000 members.

Moreover, the intervention group experienced increased enrollment in substance abuse treatment and case management, which appropriately offset some of the savings from hospital utilization. “There was a six-fold increase in the number of members enrolled in disease case management, and a 14 percent increase in the number of members who had received substance abuse treatment,” said Dr. Fagan. “Twenty-two percent of the group received both case management and substance abuse treatment.”

In all, the PMPM cost reductions among intervention group members totaled $503,616 through the first year of the program, relative to baseline.  When compared with the intervention’s start-up and operational costs of $137,557, these savings represent a return on investment of $3.65 for every $1 spent on the intervention.  Adjusting for observed differences between treatment and comparison group PMPM costs further increases this return on investment.

Although statistical analyses suggest that firm conclusions cannot yet be drawn, the initial results appear to be both clinically and financially significant to Johns Hopkins, as well as to other organizations considering similar initiatives.

“With sustained effort, integrated care management of medical and substance abuse services can result in a positive return on investment and reduce hospital stays, while maintaining a high level of quality care,” said Dr. Fagan. “Traditional care management is ‘siloed.’ By coordinating substance abuse treatment and disease management, we can integrate these services within our care management program and offer a model that others will be encouraged to adopt.”