CLINICAL DIABETES
VOL. 18 NO. 2 Spring 2000


THE BUSINESS OF DIABETES


Economic Considerations in the Application of Clinical Standards and Requirements in Diabetes Care


Steven B. Leichter, MD, FACP, FACE


As we have documented previously in these pages,1 the quality and consistency of diabetes care is erratic when studied in a variety of care settings. These deficits have led to understandable concern about methods to improve diabetes care nationally. Therefore, during the 1990s, we have seen guidelines issued for many clinical situations in diabetes,2 and, more recently, the National Council on Quality Assurance (NCQA) has issued HEDIS 2000, which includes performance standards for providers in diabetes care.3 We have had a comprehensive certifying process for diabetes patient education programs,4 and this process may soon become the basis for Medicare reimbursement of diabetes patient education services.5 Recent discussions about guidelines for hemoglobin A1c (HbA1c) levels in diabetic patients suggest that application of some process regarding HbA1c values looms in the future.

Whereas these activities are clearly positive for patient welfare, one important aspect of their application in practice that has not been assessed is the cost to providers or providing organizations. Yet cost is an important issue: health care is now considered the most regulated industry in the United States,6 and the overall cost of meeting guidelines and regulations for providers is believed to be substantial.7

As we have shown, margins between cost and reimbursement in diabetes are small, especially for follow-up visits.8 When planned well, guidelines for care may facilitate efficiencies in service, thus exerting a positive or neutral effect on cost. When not planned well, guidelines may have an incremental cost.

Economic Costs of Diabetes Care Standards and Guidelines
The primary requirement of standards and guidelines in diabetes care is added documentation. In some instances, these documentation requirements may be substantial. Additional documentation is associated with additional use of manpower. Some documentation requirements of diabetes guidelines or standards may benefit from or even require computer resources.

A second aspect of meeting standards or guidelines is the actual cost of rendering the suggested level of care. However valid the requirements are, more intensive care is, of course, more expensive to provide. Educational services are especially costly, as documented below.

A third cost relates to application costs for certain suggested "recognitions" or certifications. These include recognition for patient education programs and the Provider Recognition Program of the American Diabetes Association (ADA). Each of these programs has an application fee for soliciting recognition from the process.

These costs may be more understandable when analyzed as a cost per patient visit. Assume that a clinical practice sees 30 patients per day for 200 work days per year. The practice then sees 6,000 patients per year. Based on that volume, the average cost per visit for complying on a daily basis with guidelines or standards is shown in Table 1.

Table 1. Estimated Costs for Daily compliance With HEDIS Standards
Item Daily Cost ($)*

Documentation computer (3-year depreciation)

  1.13

Personnel Time (5 min added/patient visit)**

14.58

Supplies

  1.20

Total Cost/Day

16.91

Cost/Visit**

  0.68

* Assumes 200 working days/year.
** Assumes 25 patients/work day and personnel time @ $7/h.

Whereas the daily cost or cost per patient visit, as demonstrated in Table 1, may not seem a concern, the significance of such costs appears more tangible when subtracted from a profit margin as low as $2–4 for certain follow-up office visits by diabetic patients. The significance of these costs should also be judged as the sum of all added costs for meeting relevant guidelines or standards.

Using the same sorts of calculations shown in Table 1, daily costs and costs per visit (assuming 25 office visits per day) for meeting HEDIS guidelines, patient education guidelines, and documentation regarding the ADA's guidelines for care can exceed $8 per patient visit, when all of these services are provided in an efficient fashion (Table 2). More detailed service entails greater overhead costs.

Table 2. Additional Service Costs/Visit for Compliance With Diabetes Care Guidelines
Item Cost/Day(25 patients) Costs/Visit*
Diabetes Education Guidelines
Personnel

$160

$6.40

Supplies

    38

  1.50

Space

      5

  0.20

Total

$203

$8.10

HbA1c Guidelines
Personnel**

  $70

       $14.00
*Assumes 25 patient visits/day.
**Assumes 10 extra minutes of medical personnel with complicated patient.

Additional administrative and service guidelines, such as proposed criteria for HbA1c levels, may be applied in the future. One likely possibility relates to an emphasis on more intensive and aggressive care of patients with persistent and unacceptable elevations of HbA1c levels (Table 2).

From a service perspective, the suggestion that patients with elevated HbA1c have more detailed attention would lead to more prolonged and intense office service to the more high-risk individuals. Increasing duration of office visits with the same level of usual service for a follow-up visit would increase costs as shown in Table 2. Generally, patients with persistent elevations in HbA1c will require more personnel time for assessment and treatment.

Positive Applications of Guidelines in the Cost Structure of Diabetes Care
When viewed as an imposed requirement on the care process in the outpatient setting, guidelines would seem to have an incremental cost. However, guidelines also provide information about what the proper goals of care should be, whether procedural or substantive. In that application, guidelines should help determine the proper care process, and, therefore, should be incorporated into existing costs. For example, ADA and NCQA recommend HbA1c determinations in the care of diabetic patients. It is reasonable for physicians to track the course of these determinations as a measure of the success of their care. When seen as an integral part of the care process, the application of this guideline should then be planned as a part of existing costs. The prospective planning of this function into the routine of outpatient service should minimize the cost impact of this guideline on the care setting.

Aspects of Fiscal Responsibility for Diabetes Care Guidelines
In the current environment, fiscal policy toward the implementation of standards and guidelines tends to place the "burden of proof" on the provider. There is a sense that providers failed to follow reasonable guidelines for rendering diabetes care in the past,9 making the design and implementation of formal guidelines and requirements for care necessary. Viewed more positively, there is the sense that the guidelines help providers plan for enhancements of care, as suggested by expert panels.

As suggested in this article, there are two keys to control the costs of these enhancements. One is for national organizations to develop some concept of the cost implications of suggested guidelines on providers. Eventually, the financial burden of such costs will become too cumbersome, and providers and providing organizations will be forced to deal with the expenses. On the other hand, a prospective view of guidelines as roadmaps for good medical practice, in diabetes care for example, may lead to prospective planning for these requirements. Prospective planning will better incorporate services to meet guidelines for the routine care process, which may minimize costs.

Finally, guidelines may lead to the development of better concepts for structuring reimbursement. For example, the application of HbA1c guidelines may segment diabetic populations into those patients who achieve adequate diabetes control and those who do not. Assessment of the two different subpopulations may demonstrate different levels of cost associated with the levels of HbA1c, as providers make efforts to reduce HbA1c in patients with poor glycemic control. The more intense efforts required for the poorly controlled patients may generate the opportunity to work with payors to develop different reimbursement structures for well-controlled versus high-risk patients. A focus on the care requirements of the more high-risk populations, stimulated by ADA guidelines, may yield higher levels of reimbursement.


REFERENCES

1Leichter SB: New pressures in diabetes care delivery. Clinical Diabetes 16:85-87, 1998.

2American Diabetes Association: Clinical Practice Recommendations 2000. Diabetes Care 23 (Suppl 1):S1-116, 2000.

3www.NCQA.org/page/policy/HEDIS/HUG/HUG1.htm

4American Diabetes Association: Patient Education Recognition Update. Http://www.diabetes.org/recognition/education_update.asp. Fall/Winter, 1999.

5American Diabetes Association: Association comments on proposed Medicare education regulations. Http://www.diabetes.org/councils/spring/spring99/clinicalnews.html. 1999.

6Brennan TA, Berwick DN: Regulation, Markets, and the Quality of American Health Care. San Francisco, Josey-Bass, 1996.

7Levitt KR, Lazenby HC, Braden BR, Cowen CA, McDonnell PA, Sivarajan L, Stiller JM, Won DK, Donham CS, Long AM, Long AM, Stewart MW: National health expenditures. Health Care Financing Review 18:175-215, 1996.

8Leichter SB: Cost structure of outpatient diabetes care. Clinical Diabetes 17:94-96, 1999.

9Ratner RE: Long-term health care outcomes in diabetes: economic and political implications. Endocrin Metab Clin N Am 26:487-98, 1997.


Steven B. Leichter, MD, FACP, FACE, is a clinical professor of medicine at Mercer University School of Medicine in Macon, Ga., and managing director of the Columbus Health Education & Research Foundation in Columbus, Ga.


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