A generic model for evaluating payor net cost savings from a disease management program

Private and public payors increasingly are turning to disease management programs as a means of improving the quality of care provided and controlling expenditures for individuals with specific medical conditions. This article presents a generic model that can be adapted to evaluate payor net cost savings from a variety of types of disease management programs, with net cost savings taking into account both changes in expenditures resulting from the program and the costs of setting up and operating the program. The model specifies the required data, describes the data collection process, and shows how to calculate the net cost savings in a spreadsheet format. An accompanying hypothetical example illustrates how to use the model.