Care management for Medicare beneficiaries at high risk of hospitalization can significantly reduce hospital admissions without increasing costs, according to two studies in Health Affairs and sponsored by the Robert Wood Johnson Foundation. The studies found decreases in Medicare inpatient admissions of 17 percent and 8 to 33 percent, respectively. Care management was not shown to save money for Medicare, but the studies did find it reduced spending enough to offset the additional costs of the program, so long as program costs stayed within $125 to $150 per member per month. In other words, care management paid for itself.

The first report drew its findings from the Washington University School of Medicine in St. Louis – one of 15 participants in the Centers for Medicare and Medicaid Services’ (CMS) Medicare Coordinated Care Demonstration project. Initially, the Washington University’s care management was unsuccessful at reducing hospitalizations or Medicare spending. However, the university redesigned its program to emphasize new methods, including:

  • More in-person contact – instead of phone conversations – between the program’s care managers, patients, care givers, and providers
  • Stronger transitional care after a patient leaves the hospital, which some studies have shown can reduce hospital readmissions
  • Comprehensive medication management, to help patients take appropriate medication and to reduce conflicting or duplicative medications
  • More staff to serve as care managers and assistants, most of them nurses and one a social worker
  • Thorough and systematic assessments of patient risks and unmet needs

Reduced Admissions, Cost-Neutral

High-risk patients were the only ones to experience a decrease in hospital admissions and Medicare spending: Hospitalizations fell 17 percent and Medicare Part A and Part B spending dropped 14.8 percent, or $435 per enrollee per month. The program lasted two and a half years, and CMS paid Washington University $151 per enrollee per month. The study reported overall decreases of 11.7 percent and 9.6 percent in admissions and spending, but the authors said the program had no effect for patients who were not in the high-risk category. High-risk patients were defined as those who had two or more hospitalizations per year in the two years before enrolling in the care management program.

The program essentially pays for itself, the authors concluded. Though decreases in Medicare spending surpassed what CMS paid for the care management program, the confidence interval for Medicare spending decreases of high-risk patients was so large – $4 to $567 – that the authors determined the program did not create net savings for Medicare.

Of course, by reducing hospital admissions by high-risk Medicare beneficiaries, care management efforts provided substantial benefits to patients themselves.  Also, the lessons learned can be applied to make future care management more cost effective.

Six Effective Approaches to Care Management

Similar results were reported in the foundation’s second study: Medicare care management programs reduced hospitalizations by 8 percent to 33 percent for high-risk patients and were cost-neutral. The authors evaluated data from four programs over a six-year period in CMS’s Medicare Coordinated Care Demonstration, including the one at Washington University. Three of the four programs six particular approaches to care management, as written in the study:

  1. Supplementing telephone calls to patients with frequent in-person meetings
  2. Occasionally meeting in person with health care providers
  3. Acting as a communications hub for providers
  4. Delivering evidence-based education to patients
  5. Providing strong medication management
  6. Providing timely and comprehensive transitional care after hospitalizations


Kip Piper is a Medicare, Medicaid, and health reform consultant, speaker, and author.  He advises health plans, health systems, states, drug and device manufacturers, and investment firms throughout the U.S.  For more, visit  Follow on Twitter at @KipPiper and connect with Kip on LinkedIn.