Assessing the Economic Value of Care Management Programs

There are numerous benefits to launching a care management program. These include measurable results for patients, such as improved healthcare access, efficiency, and health outcomes, as well as cost savings for Medicare, Medicare Advantage, and even commercial payors.

But, there is also a substantial economic and value-added benefit to provider organizations, including those in primary and specialty care.

Here, we’ll outline the financial and indirect economic benefits of establishing or scaling one of several care management programs. We’ll also provide a rubric for decision-making when designing a program and how best to quantify revenue potential.

Why should providers offer care management?

Primary and specialty care practices face various shifts in how healthcare is evaluated and reimbursed. The transition from fee-for-service to value-based care is a primary example.

In response, providers can begin to shift some of their practice from episodic and reactive care models to a proactive care management subscription model. Care management programs provide a fundamental transformation to address the increasing needs of an aging population living with more chronic illnesses.

This is particularly relevant for providers who haven’t entered value-based care contracts or have experimented with upside-only risk arrangements.

By integrating care management programs into a practice’s core delivery model, providers can maximize the value of fee-for-service while preparing for what’s next.

How much revenue can a provider expect?

Several variables account for how much revenue an organization can realize and how much it can keep as profit. Those factors include:

• The type of care management program offered
• The number of eligible patients
• The level of patient complexity
• Patient population patterns
• Staffing and technology requirements
• The level of program efficiency and streamlined operations
• The impact care management offerings have on indirect revenue sources

The following provides decision-making guidance so that healthcare leaders can calculate the potential value of a care management program.

Decision #1: What type of care management revenue to pursue

There are two types of care management revenue: 

• Those earned directly from reimbursable services
• Downstream gains from the impact that care management programs can have on  performance metrics

Direct revenue

At ThoroughCare, we recommend our provider clients manage about 250 patients per assigned care team staff member. This means that for every 250 patients enrolled in a program, at least one care manager or medical assistant is required. 

At 250 enrolled patients, an organization could generate between $150,000-$352,500 in direct revenue annually, depending on the program offered.

And, when the CCM program is staffed with non-physician professionals, the average annual revenue can be higher.

A pilot study retrospective review published in Gerontology Geriatric Medicine in 2023 found that, when non-physician staff delivered CCM services, the practice’s net revenue increased despite opportunity and staff costs. Practices could expect about $332 per enrolled patient per year if CCM were delivered by registered nurses and $372 if delivered by medical assistants.

Using non-physician staff could net more than $5,000 in annual revenue for every full-time physician. They estimate that a practice would need to enroll at least 131 Medicare patients to recoup the salary and overhead costs of hiring a full-time nurse to provide CCM services.

Downstream revenue

In addition to net new direct revenue, care management programs can influence other fee-for-service revenue, as well as create positive performance outcomes that affect revenue.

Because these programs provide regular, goal-directed engagement with patients, they offer  opportunities to conduct Annual Wellness Visits or other health screenings, deliver preventive services, and close care gaps. These can improve current and future patient health outcomes and provide enhanced revenue streams.

Additionally, care management programs can influence other metrics that directly impact revenue. These can include  

• Value-based care contract commitments
• Consumer Assessment of Healthcare Providers and Systems (CAHPS) performance
• Partnering with payors to achieve higher Star ratings.

Decision #2: What type of care management programs to offer

At a high level, there are three main categories of care management programs:

Fee-for-service: Those reimbursed by traditional Medicare (or a Medicare Advantage plan).

Value-based care: Those provided as part of a performance-based or contracted through a per-participant, per-month alternative payment model (APM) or VBC arrangement. APM models include a Patient-centered Medical Home, a Merit-based Incentive Payment System, a Medicare Shared Savings program, or the Primary Care First model.

Payor benefit: Those paid for by commercial payors as part of an internal or provider-delivered member programs.

The following programs are currently included in traditional Medicare Part B:

• Principal Care Management for patients with one chronic condition
• Chronic Care Management (CCM) (basic or complex) for patients with two or more chronic conditions
• Remote Patient Monitoring (RPM) for patients using digital tools to monitor and report health data from home
• Transitional Care Management (TCM) for patients diagnosed with certain conditions who were recently discharged from a hospital
• Behavioral Health Integration (BHI) for patients with mental, behavioral health, or psychiatric conditions

These programs can be combined —like Chronic Care Management with Behavioral Health Integration. However, there are rules to consider related to what can be reimbursed in the same month.

Lastly, when selecting a care management program, consider the length of time that a patient can be enrolled. A CCM cycle could last for 12 months or more, while TCM is limited to the first 30 days following a hospital discharge.

Decision #3: Determine the number of patients who should be enrolled

Provider organizations should assess their current patient population to determine: 

1. The total potential cohort that could be eligible to participate in one or more care management programs 
2. Which of those eligible patients should be part of an initial cohort or pilot group

This step could be started as part of the second decision around which care management programs are best for the practice.

Looking at patterns in your patient population provides insight into which conditions are more prevalent, including the four most often addressed through care management: 

• Congestive Heart Failure (CHF)
• Chronic Obstructive Pulmonary Disease (COPD)
• Diabetes
• Hypertension (High Blood Pressure)

The three most common patient cohorts  include Chronic Care Management patients with and without remote monitoring devices and patients with one chronic condition enrolled in both Principle Care Management and remote monitoring.

Decision #4: Estimate indirect financial benefits of care management 

Other financial benefits beyond direct revenue should be assessed and quantified. 

Referred to as indirect or downstream revenue, these sources of additional fee-for-service revenue include those gained from conducting Annual Wellness Visits, providing preventive health screenings and services, as well as closing care gaps.

Provider organizations should decide if their core programs will focus on preventing medical events, admission/readmission, and exacerbation of existing conditions or if programs can increase adherence to care standards.

If a certain percentage of participants received an Annual Wellness Visit and all preventive screenings, vaccines, and testing, what would be the total potential revenue?

Beyond these FFS opportunities, healthcare leaders should estimate the value of care management for performance-based revenue, if appropriate. Patients can realize improved outcomes that directly impact a physician’s ability to meet contracted quality and savings objectives.

McKinsey also points to other benefits that can impact revenue to payors and providers, including:

• Care Management can improve clinically appropriate and accurate coding. This could be achieved, for instance, when a care manager uncovers that a patient has moved into the next stage of chronic kidney disease. More regular patient contact can avoid exacerbations and determine if a patient’s condition has progressed to a higher risk level.
• Care management can help close care gaps and improve Consumer Assessment of Healthcare Providers and Systems (CAHPS) performance. Providers who benefit from partnering with health plans through Stars quality bonus payments could see increases in contracting opportunities or shared savings.

Finally, care management programs have demonstrated a measurable impact on patient engagement and satisfaction that can influence metrics tied to revenue. 

Quest Diagnostics surveyed more than 80 primary care physicians and patients over 65 and discovered that the overall value of Chronic Care Management outweighed the challenges of implementing it. 

In fact, 92% of patients reported they received the required attention and were largely satisfied.

Estimating potential care management revenue

Equipped with information from the first four decision steps, provider leaders can conduct an economic analysis to estimate revenue targets as part of an initial pilot, a second cohort, or when scaling an existing care management program.

Depending on your patient population analysis, a pilot could start with 25 patients, a second cohort could ramp up to 75-100 patients, and, ultimately, scale to 250 patients per care manager. 

If an organization has the capacity, multiple care managers could be employed, which could increase the number of patients enrolled by two- or three-fold.

Here’s a formula for estimating the total potential revenue of an example program:

Successful care management programs could also see additional downstream revenue. 

Other services or assessments could factor into care management activities and have claim to added reimbursement. For instance, enrolled patients may also pursue an Annual Wellness Visit.

Maximize the value of care management

Building or scaling one or more care management programs within a provider organization can create an ongoing and diversified revenue stream. 

Additionally, it can improve patient care and outcomes that directly influence other revenue sources, even preparing a provider for more sophisticated value-based care contracts.

How ThoroughCare can help

Healthcare organizations use ThoroughCare to deliver integrated care management services to foster patient engagement and enhance revenue. Our platform provides the digital infrastructure to leverage fee-for-service programs for value-based success. 

With seamless EHR integration and data interoperability across health information exchanges and remote devices, our platform supports solutions for:

• Chronic disease management
• Remote patient monitoring
• Behavioral health services
• Wellness assessments
• Transitional care

Providers use ThoroughCare to seamlessly manage populations, capture and act on patient data with interactive care planning and assessments, and visualize business performance to inform decision-makers.

*Reimbursement rates are based on a national average and may vary depending on your location.

Check the Physician Fee Schedule for the latest information.