Inventor of Disease Management Calls Current Texas Medicaid Disease Management Procurement "Taxpayer-Financed Bureaucrat Job Security"

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Texas DHHS has opted to remove all specific metrics from their current disease management procurement, to allow the vendors to propose measuring themselves in this multi-year, possible $100-million contract. This self-serviing strategy ensures that DHHS can show the legislature apparent savings of 5%, as is required in the disease management enabling legislation, without actually saving taxpayers anything.

either shockingly naïve or purposefully deceptive

The leading authority in disease management, who also drafted the initial enabling legislation for Texas Medicaid's disease management program, today called the Texas Health and Human Services Commission (HHSC) "either shockingly naïve or purposefully deceptive" in its current procurement efforts for a new disease management program for the Medicaid population. This Agency failure threatens to cost Texas taxpayers an estimated $100 Million over several years and calls into question whether DHHS should be responsible for setting the metrics against which its performance should be judged.

Al Lewis, who is credited with having "invented disease management" by Google and who is ranked #1 in all Managed Healthcare Executive Special Reports on disease management industry executive influence, is the president of the Disease Management Purchasing Consortium (DMPC). In addition to procurement of disease management programs, DMPC has also certified several hundred people and organizations in measurement of savings, contracting for programs, and analyzing outcomes.

"In 2003, I was asked to assist in writing legislation requiring a 5% savings to taxpayers in disease management for Texas, and to draft a Request for Proposal (RFP) for HHSC to realize that promise, with a financial guarantee from the vendors that this savings would be realized. HHSC did an excellent job drafting the RFP, and taxpayers were protected when the selected vendor was not able to realize those savings. HHSC insisted on valid measurement," Lewis explains.

"However, their current RFP drops all pretense of valid measurement, and also of comparable measurement across vendors.    For instance, the 2004 RFP had two full exhibits dictating valid metrics and showing examples of savings calculation using those metrics. The 2004 RFP also had an exhibit dictating how members would be selected for the program, in order to prevent vendors from gaming the system. In 2009, the RFP has one sentence saying that measurement metrics will be negotiated later, with no requirement of any specific algorithm for member selection.

"The vendors, who have all taken my classes in distinguishing valid from invalid measurement, know how to propose methodologies to show apparent savings without actually realizing any true savings for taxpayers. But, in order to have the Texas legislature believe that 5% is being saved, DHHS appears willing to abandon efforts to measure the true impact of these programs, preferring to waste almost $100-million in tax dollars to ensure their own job security. The appearance of savings is what they are ensuring in this RFP, at the expense of actual savings."

"Another thing that has been learned in the last five years is that it is impossible to save 5% in disease management. The original legislation I drafted turns out to have been too optimistic. For instance, at the federal level, Medicare tried very hard to save 5% when they piloted disease management, but ended up not quite breaking even.    Further, every biostatistician who has written about this field agrees that it is impossible to save 5%, and the Congressional Budget Office also agrees. Finally, no state that has had its outcomes independently reviewed (meaning, reviewed by an entity not also reporting to or consulting to the Medicaid program director) has ever found 5% savings, and no state that has used industry-standard plausibility checks has saved 5%. "

Lewis also notes that there is no "plausibility check" in the RFP.    Almost every private-sector RFP these days (and several state RFPs) contain metrics to check the plausibility of claimed outcomes. For instance, if the program is claiming savings in heart disease management, a "plausibility check" is used to determine if heart attacks and angina attacks actually declined. Because it is impossible to save money in heart disease without a decline in heart events, most others insist on this logical and intuitive measurement.

"We are urging that some oversight or accountability of this process be put in place, or that the 2004 standards for measurement be restored, or at least that DHHS should explain why they are abandoning measurement integrity in this RFP."

The Disease Management Purchasing Consortium website can be accessed at


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