Legislative Watch

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June 2004

By George G. Olsen, JD

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) has been criticized in some quarters for compromising the viability of the fee-for-service Medicare program in favor of private market delivery systems such as Medicare Regional Advantage plans. In truth, the MMA delivers a host of exciting innovations to traditional Medicare. Prominent among them is the Voluntary Chronic Care Improvement Program (CCI). Section 721 of the MMA created CCI to enhance the quality of medical care for persons with multiple chronic illnesses including congestive heart failure, complex diabetes, and chronic obstructive pulmonary disease. This new initiative is designed to encourage better coordination of health care for such individuals. It is the first major chronic care program under fee-for-service Medicare. HHS Secretary Tommy G. Thompson formally announced the initiative on April 20, 2004, and the Centers for Medicare and Medicaid Services (CMS) promulgated regulations governing the first phase of the program on April 23, 2004.

The MMA directs the Secretary of HHS to "provide for the phased-in development, testing, evaluation, and implementation of chronic care improvement programs. Each program shall be designed to improve clinical quality and beneficiary and provider satisfaction and achieve spending targets with respect to expenditures for targeted beneficiaries with one or more threshold conditions." With this program, CMS seeks to identify chronic care strategies that are "scalable, replicable and adaptable nationally." In Phase One, CMS intends to assess programs in approximately 10 geographic areas in which at least an aggregate of 10% of the Medicare fee-for-service population resides. The Secretary will identify at least 30,000 beneficiaries who require care for specific chronic conditions in each area. Participation in CCI will be voluntary and will not change the amount, duration, or scope of the Medicare benefits available to participants. These beneficiaries will be divided into intervention and control groups.

CMS rules specify the types of organizations eligible to apply to implement CCI programs in Phase One, and the Secretary will select one organization for each area to provide services to beneficiaries in the intervention group. Selected organizations will be paid a monthly fee per participant, but payment is contingent on improvements in quality of care, beneficiary and provider satisfaction, and savings to Medicare in the intervention groups of beneficiaries as compared to the control groups. The first phase of CCI is scheduled to run for 3 years.

When Thompson unveiled the CCI, he observed that "chronic conditions are a leading cause of illness, disability, and death among Medicare beneficiaries and account for a disproportionate share of health care expenditures." These conclusions are well founded. According to the regulation, Medicare beneficiaries with five or more chronic conditions constitute 20% of the Medicare population but account for 66% of Medicare spending. More specifically, persons with congestive heart failure represent 14% of noninstitutionalized Medicare fee-for-service beneficiaries but utilize 43% of Medicare expenditures. Individuals who have diabetes comprise 18% of Medicare beneficiaries but account for 32% of Medicare fee-for-service spending.

Unfortunately, patients with multiple chronic conditions must deal with a Medicare program that is ill equipped to meet their needs. The fundamental problem was captured well in the rule-making: "The current health care delivery system is structured and financed to manage acute care episodes, not to manage and support individuals with progressive chronic diseases." Furthermore, "Patient care can be fragmented and poorly coordinated and patient information difficult to integrate among settings as patients move from one care setting to another." This is an especially serious problem for senior citizens because the average Medicare beneficiary sees seven different physicians and fills upward of 20 prescriptions per year.

CCI-I PROGRAM DESIGN
Disease management organizations, health insurers, integrated delivery systems, physician group practices, a consortium of entities, and other qualifying entities are eligible to apply to implement a chronic care improvement program during Phase One. The statute specifies that organizations selected to participate by CMS will be required to assume some financial risk in the event that the organization fails to comply with the agreed-upon performance guarantees.

During CCI-I, CMS will include in intervention groups beneficiaries who have congestive heart failure and/or complex diabetes, or chronic obstructive pulmonary disease, "because they are major population subgroups within Medicare with significant health risks and disproportionately high health care costs that are not being consistently well managed." In addition, an individual must be enrolled in Medicare Parts A and B and Medicare must be the primary payor. Beneficiaries may not be included in Phase One if they are enrolled in the Medicare End-Stage Renal Disease Program (ESRD), a hospice, a Medicare Advantage (Medicare+Choice) plan, or a CMS chronic care demonstration project. CCI-I is required by law to employ randomized controlled trials. Accordingly, beneficiaries will be randomly divided into an intervention group that will participate in the program and a control group that will not.

CMS intends to target geographic areas that have a higher than average prevalence of congestive heart failure, complex diabetes, or chronic obstructive pulmonary disease and have low quality ratings under Medicare. In addition, CMS wants to avoid areas that have an operating demonstration project for chronic diseases. The MMA requires chronic care improvement organizations to have a care management plan for each participant, which: "Guide the participant in managing the participant's health...and in performing activities as specified under the elements of the care management plan of the participant"; utilize "decision support tools" such as evidence-based practice guidelines or other standards approved by the HHS Secretary; and develop a clinical information database to monitor participants as they move from provider to provider and to conduct outcomes assessments.

CMS rules require that participating organizations have a successful track record in engaging physicians and other providers in information sharing and in working with community organizations. It is searching for programs that have created integrative information systems and incorporate expert clinical systems for multiple conditions. CCI-I organizations must comply with the privacy provisions of HIPAA. The MMA provides that each organization participating in CCI will be paid a monthly fee for each participant in its program. The fee will vary based on the program model implemented by the organization and its cost structure. Medicare will not make additional payments to the organization for other costs from establishing the program-all such costs must be factored into the per-participant fee. The monthly payment will represent an administrative fee so that Medicare beneficiaries will have no liability for co-payments or deductibles.

Performance standards for clinical quality, beneficiary and provider satisfaction, and cost savings are mandated by the statute. The standards must be developed by the sponsoring organization and approved by the Secretary. If the organization does not meet the agreed-upon performance goals, the HHS Secretary may make an adjustment in the payment amount to the organization. In addition, the Secretary may terminate a program after 18 months of operation if he determines the program is not demonstrating significant progress. The MMA requires CCI-I to be budget neutral. CMS' regulation construes this to mean that "the total of Medicare claims payments for beneficiaries in the intervention group and chronic care improvement fees under CCI-I paid for participants will be no more than 95% of the amount that total Medicare claims payments would have been absent CCI-I, as measured by claims for the corresponding control group over a 3-year period." In the event that the program does not secure the requisite 5% savings, the organization will be required to refund to the government the excess amounts paid under CCI-I. CMS will also use an independent contractor to audit the organization's compliance with the performance goals and savings requirement.

CONCLUSION
CCI promises to enhance the care of Medicare beneficiaries who have multiple chronic conditions. In a press release, Mark McClellan, MD, PhD, the CMS Administrator, said the program "creates a new business platform that will encourage innovation in addressing deficiencies in chronic care in the fragmented fee-for-service health care delivery system." Rehabilitation professionals who work with Medicare beneficiaries with multiple chronic conditions should become familiar with this program because it is a creative new business model, which, if proven successful, will likely be widely adopted by Medicare. In addition, the programs may afford health care providers more timely and accurate information about chronic care patients, which should serve to improve the overall quality of care.

George G. Olsen, JD, is a partner of the firm Williams & Jensen, PC, Washington, DC. He is also legal counsel for the National Association of Rehabilitation Agencies and Providers.

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June 2004