- PROMOTING DISEASE MANAGEMENT IN MEDICARE

[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]

PROMOTING DISEASE MANAGEMENT IN MEDICARE
=======================================================================

HEARING

before the

SUBCOMMITTEE ON HEALTH

of the

COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES

ONE HUNDRED SEVENTH CONGRESS

SECOND SESSION

__________

APRIL 16, 2002

__________

Serial No. 107-80

__________

Printed for the use of the Committee on Ways and Means

U. S. GOVERNMENT PRINTING OFFICE
82-324 WASHINGTON : 2002
___________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
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COMMITTEE ON WAYS AND MEANS

BILL THOMAS, California, Chairman

PHILIP M. CRANE, Illinois CHARLES B. RANGEL, New York
E. CLAY SHAW, Jr., Florida FORTNEY PETE STARK, California
NANCY L. JOHNSON, Connecticut ROBERT T. MATSUI, California
AMO HOUGHTON, New York WILLIAM J. COYNE, Pennsylvania
WALLY HERGER, California SANDER M. LEVIN, Michigan
JIM McCRERY, Louisiana BENJAMIN L. CARDIN, Maryland
DAVE CAMP, Michigan JIM McDERMOTT, Washington
JIM RAMSTAD, Minnesota GERALD D. KLECZKA, Wisconsin
JIM NUSSLE, Iowa JOHN LEWIS, Georgia
SAM JOHNSON, Texas RICHARD E. NEAL, Massachusetts
JENNIFER DUNN, Washington MICHAEL R. McNULTY, New York
MAC COLLINS, Georgia WILLIAM J. JEFFERSON, Louisiana
ROB PORTMAN, Ohio JOHN S. TANNER, Tennessee
PHIL ENGLISH, Pennsylvania XAVIER BECERRA, California
WES WATKINS, Oklahoma KAREN L. THURMAN, Florida
J.D. HAYWORTH, Arizona LLOYD DOGGETT, Texas
JERRY WELLER, Illinois EARL POMEROY, North Dakota
KENNY C. HULSHOF, Missouri
SCOTT McINNIS, Colorado
RON LEWIS, Kentucky
MARK FOLEY, Florida
KEVIN BRADY, Texas
PAUL RYAN, Wisconsin

Allison Giles, Chief of Staff

Janice Mays, Minority Chief Counsel

______

Subcommittee on Health

NANCY L. JOHNSON, Connecticut, Chairman

JIM McCRERY, Louisiana FORTNEY PETE STARK, California
PHILIP M. CRANE, Illinois GERALD D. KLECZKA, Wisconsin
SAM JOHNSON, Texas JOHN LEWIS, Georgia
DAVE CAMP, Michigan JIM McDERMOTT, Washington
JIM RAMSTAD, Minnesota KAREN L. THURMAN, Florida
PHIL ENGLISH, Pennsylvania
JENNIFER DUNN, Washington

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public
hearing records of the Committee on Ways and Means are also published
in electronic form. The printed hearing record remains the official
version. Because electronic submissions are used to prepare both
printed and electronic versions of the hearing record, the process of
converting between various electronic formats may introduce
unintentional errors or omissions. Such occurrences are inherent in the
current publication process and should diminish as the process is
further refined.

C O N T E N T S

__________
Page
Advisories announcing the hearing................................ 2, 4

WITNESSES

Centers for Medicare and Medicaid Services, Ruben King-Shaw, Jr.,
Deputy Administrator and Chief Operating Officer............... 8

______

Anderson, Gerard, Johns Hopkins University....................... 48
Henschke, Claudia I., M.D., Weill Medical College of Cornell
University..................................................... 58
Humana Inc., and Disease Management Association of America,
Jonathan T. Lord, M.D.......................................... 33
Marshfield Clinic, Michael Hillman, M.D.......................... 38
Wennberg, John E., M.D., Dartmouth College....................... 28

SUBMISSIONS FOR THE RECORD

3M Health Information Systems, Wallingford, CT, Richard Burford,
statement and attachment....................................... 75
Advanced Medical Technology Association, statement............... 77
American Heart Association, Robert Bonow, M.D., statement........ 80
Burr, Hon. Richard, a Representative in Congress from the State
of North Carolina, statement................................... 82
Disease Management Association of America, Christobel Selecky,
statement...................................................... 84
McKesson Corporation, San Francisco, CA, Sandeep Wadhwa, M.D.,
statement...................................................... 88
RMS Disease Management Inc., McGaw Park, IL, statement........... 91

PROMOTING DISEASE MANAGEMENT IN MEDICARE

----------

TUESDAY, APRIL 16, 2002

House of Representatives,
Committee on Ways and Means,
Subcommittee on Health,
Washington, DC.
The Subcommittee met, pursuant to notice, at 3:16 p.m., in
room 1100 Longworth House Office Building, Hon. Nancy L.
Johnson (Chairman of the Subcommittee) presiding.

[The advisory and revised advisory follows:]

ADVISORY FROM THE COMMITTEE ON WAYS AND MEANS

SUBCOMMITTEE ON HEALTH

CONTACT: (202) 225-3943
FOR IMMEDIATE RELEASE
March 28, 2002
No. HL-15

Johnson Announces Hearing on Promoting Disease Management in Medicare

Congresswoman Nancy L. Johnson (R-CT), Chairman, Subcommittee on
Health of the Committee on Ways and Means, today announced that the
Subcommittee will hold a hearing on promoting disease management in the
Medicare program. The hearing will take place on Tuesday, April 9,
2002, B-318 Rayburn House Office Building, beginning at 3:00 p.m.

In view of the limited time available to hear witnesses, oral
testimony at this hearing will be from invited witnesses only.
Witnesses will include academics, practitioners, and health plans with
expertise in disease management. However, any individual or
organization not scheduled for an oral appearance may submit a written
statement for consideration by the Committee and for inclusion in the
printed record of the hearing.

BACKGROUND:

Approximately 12 percent of all Medicare enrollees accounted for
three-quarters of all Medicare fee-for-service program costs. Many of
these beneficiaries have chronic health conditions, such as diabetes,
hypertension, asthma and congestive heart failure that require repeated
and costly hospitalizations. Medicare's costs could be curtailed if the
program is designed to better manage health care for these
beneficiaries.

Disease management programs assist both the physician and patient
with a plan of care that helps evaluate and prevent complications and
improve outcomes through evidence-based practice guidelines and patient
empowerment strategies. Typically this is used to improve health
outcomes and reduce the costs of chronic diseases.

Some fee-for-service providers have incorporated disease management
programs, but only to a limited extent. But in general, health care for
those in Medicare fee-for-service with chronic illnesses has been
poorly coordinated across sites of care and is often fragmented,
although many providers have expressed greater interest in using
management techniques to improve care.

Conversely, Medicare+Choice plans widely use disease management
programs and have found preventative care and case management may
ultimately save money by avoiding costly hospital stays. According to
the 2000 Survey of Disease Management Practices, ``virtually all''
plans have at least one disease management program. The average plan
has four disease management programs in place, and 95 percent of plans
have a diabetes disease management program. Finally, at least 75
percent of plans have asthma and congestive heart failure disease
management programs and almost 50 percent of plans have a disease
management plan for coronary artery disease.

On February 22, 2002, the Centers for Medicare and Medicaid
Services issued a request for proposals to conduct demonstration
disease management programs in the fee-for-service program as required
by the Benefits Improvement and Protection Act. The demonstration
programs are for congestive heart failure, diabetes, or coronary heart
disease. The proposal recognizes the value of expanding disease
management to additional beneficiaries.

In announcing the hearing, Chairman Johnson stated, ``As Congress
modernizes and strengthens Medicare, we must recognize the significant
role disease management can play in improving seniors' lives.
Unfortunately, this is yet another area in which Medicare significantly
lags behind the private market. By encouraging widespread incorporation
of disease management programs in Medicare, we will help improve
patient outcomes while reducing health costs.''

FOCUS OF THE HEARING:

Tuesday's hearing will focus on promoting disease management
programs in traditional and managed Medicare.

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

Please note: Due to the change in House mail policy, any person or
organization wishing to submit a written statement for the printed
record of the hearing should send it electronically to
[email protected], along with a fax copy to
(202) 225-2610, by the close of business, Tuesday, April 23, 2002.
Those filing written statements who wish to have their statements
distributed to the press and interested public at the hearing should
deliver their 200 copies to the Subcommittee on Health in room 1136
Longworth House Office Building, in an open and searchable package 48
hours before the hearing. The U.S. Capitol Police will refuse sealed-
packaged deliveries to all House Office Buildings. Failure to do so may
result in the witness being denied the opportunity to testify in
person.

FORMATTING REQUIREMENTS:

Each statement presented for printing to the Committee by a
witness, any written statement or exhibit submitted for the printed
record or any written comments in response to a request for written
comments must conform to the guidelines listed below. Any statement or
exhibit not in compliance with these guidelines will not be printed,
but will be maintained in the Committee files for review and use by the
Committee.

1. Due to the change in House mail policy, all statements and any
accompanying exhibits for printing must be submitted electronically to
[email protected], along with a fax copy to
(202) 225-2610, in Word Perfect or MS Word format and MUST NOT exceed a
total of 10 pages including attachments. Witnesses are advised that the
Committee will rely on electronic submissions for printing the official
hearing record.

2. Copies of whole documents submitted as exhibit material will not
be accepted for printing. Instead, exhibit material should be
referenced and quoted or paraphrased. All exhibit material not meeting
these specifications will be maintained in the Committee files for
review and use by the Committee.

3. A witness appearing at a public hearing, or submitting a
statement for the record of a public hearing, or submitting written
comments in response to a published request for comments by the
Committee, must include on his statement or submission a list of all
clients, persons, or organizations on whose behalf the witness appears.

Note: All Committee advisories and news releases are available on
the World Wide Web at http://waysandmeans.house.gov/.

The Committee seeks to make its facilities accessible to persons
with disabilities. If you are in need of special accommodations, please
call (202) 225-1721 or (202) 226-3411 TTD/TTY in advance of the event
(four business days notice is requested). Questions with regard to
special accommodation needs in general (including availability of
Committee materials in alternative formats) may be directed to the
Committee as noted above.

* * * NOTICE--HEARING RESCHEDULED * * *

ADVISORY

FROM THE
COMMITTEE
ON WAYS
AND
MEANS

SUBCOMMITTEE ON HEALTH

CONTACT: (202) 225-3943
FOR IMMEDIATE RELEASE
April 2, 2002
No. HL-15-Revised

Rescheduled Hearing on

Promoting Disease Management in Medicare

Tuesday, April 16, 2002

Congresswoman Nancy L. Johnson, (R-CT), Chairman, Subcommittee on
Health of the Committee on Ways and Means, today announced that the
Subcommittee hearing on Promoting Disease Management in Medicare,
previously scheduled for Tuesday, April 9, 2002, will now be held on
Tuesday, April 16, 2002, at 3:00 p.m., in the main Committee hearing
room, 1100 Longworth House Office Building.

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

Please note: Due to the change in House mail policy, any person or
organization wishing to submit a written statement for the printed
record of the hearing should send it electronically to
[email protected], along with a fax copy to
(202) 225-2610, by the close of business, Tuesday, April 30, 2002.
Those filing written statements who wish to have their statements
distributed to the press and interested public at the hearing should
deliver their 200 copies to the Subcommittee on Health in room 1136
Longworth House Office Building, in an open and searchable package 48
hours before the hearing. The U.S. Capitol Police will refuse sealed-
packaged deliveries to all House Office Buildings.

All other details for the hearing remain the same. (See
Subcommittee Advisory No. HL-15, dated March 28, 2002.)

FORMATTING REQUIREMENTS:

3. Any statements must include a list of all clients, persons, or
organizations on whose behalf the witness appears. A supplemental sheet
must accompany each statement listing the name, company, address,
telephone and fax numbers of each witness.

Note: All Committee advisories and news releases are available on
the World Wide Web at http://waysandmeans.house.gov/.

Chairman JOHNSON. Good afternoon. The hearing will come to
order. Mr. Stark is near at hand, we hope, and so I would like
to start. I consider this one of the most important hearings
the Subcommittee has had.
Seniors in traditional Medicare are literally held hostage
to an outdated benefit package that denies them the state-of-
the-art care that is possible under programs like disease
management (DM). Programs designed to assist both the physician
and patient to develop a plan of care can help defray rising
costs while at the same time improving the quality of health
outcomes and tremendously improving the quality of life of our
seniors. Unless we transform Medicare from a sick and acute
care program, the costs we face as the baby boomers age will be
staggering, but the health needs of the rising number of
seniors suffering from multiple chronic illnesses will not be
met.
So, as we start this hearing, I believe it lies at the
heart of improving both the quality of Medicare and managing
its costs. I would have to say that as I have gone through
doctors' offices where these protocols are being used, medical
organizations, all kinds of providers, honestly, I have never
seen such enthusiasm, such excitement by both patients and
providers for the quality of life disease management is making
possible for seniors with very serious and chronic illnesses,
as well as the respect for the costs that can be avoided and
the long-term cost control that is possible through this
approach that dramatically improves quality.
A small portion of Medicare beneficiaries, 12 percent,
account for 75 percent of all Medicare fee-for-service
payments. Typically, it is these beneficiaries who suffer from
chronic illnesses such as diabetes, asthma, or coronary heart
disease. In many cases these high costs come from repeated
hospitalizations due to poor medication compliance, lack of
adherence to a prescribed treatment plan, and lack of patient
self-management skills.
In addition, there are also provider-related problems that
undermine efforts to coordinate and better manage patient care:
poor communication, and narrowly focused payment systems that
result in inadequate and fragmented monitoring of patients.
Yet, as the baby-boom generation retires, the number of
chronically ill beneficiaries is expected to increase, causing
Medicare costs to escalate.
Disease management programs, designed to assist both
physician and patient to develop a plan of care using evidence-
based practice guidelines, more consistently manage illness,
and will better involve the patient in their own health care.
This will defray some of the costs while improving the health
care of our senior citizens.
While some providers have attempted to implement disease
management programs in Medicare fee-for-service, health care
for beneficiaries with chronic illness remains typically
fragmented and poorly coordinated. Conversely, many managed
care entities have developed a wide array of cost control
programs that combine adherence to evidence-based medical
practices with better coordination of care across providers.
Medicare+Choice (M+C) plans have found preventive care and
case management saves money and avoids costly hospital stays.
According to the 2000 Survey of Disease Management Practices,
the average M+C plan has four disease management programs, with
95 percent of plans having diabetes disease management.
Netcare, a diabetes management program covering 7,000
diabetics in 7 managed care organizations, actually decreased
hospital admissions by 18 percent, resulting in a 12 percent
savings. Think of the impact on people's lives.
There has been some movement toward implementing disease
management programs in fee-for-service. A coordinated care
demonstration authorized by the Balanced Budget Act (BBA)
resulted in approval of 15 programs. In addition, on February
22, Centers for Medicare and Medicaid Services (CMS) issued a
Request for Proposal to conduct demonstration disease
management programs targeted specifically toward congestive
heart failure (CHF), diabetes, and coronary heart disease. The
demonstration projects will operate for up to 3 years, after
which a formal evaluation will be conducted by CMS.
These proposals hold the hope that we can achieve the twin
goals of improving care and saving money, long recognized as
central tenets of managed care. I am pleased to welcome Ruben
King-Shaw from the Centers for Medicare and Medicaid Services,
who will comment on these exciting new opportunities.
I will also welcome other experts: Dr. Wennberg from
Dartmouth University will discuss regional variations in
quality-of-care. Dr. Hillman from the Marshfield Clinic will
explore their exciting work in incorporating disease management
into fee-for-service Medicare. Dr. Henschke from Cornell
University will present her firsthand efforts in managing lung
cancer patients. Dr. Lord from Humana, and the President of the
Disease Management Association of America, will discuss
Humana's work in M+C. Finally, Dr. Anderson of Johns Hopkins
University will discuss his work in this field.
I look forward to your testimony, and I specifically
welcome Ruben King-Shaw for your first appearance before this
Committee, but I hope not your last. As the testimony you will
offer us today is testimony that speaks more to the future
needs of our seniors and to the future evolution of Medicare
than frankly any testimony we have had to date. So welcome to
you, Mr. King-Shaw, and when Mr. Stark joins us, if he would
like to make an opening statement, I will make room for that,
and meanwhile I would like to recognize my colleague from
Florida, Congresswoman Thurman.
[The opening statements of Chairman Johnson and Mr. Foley
follow:]
Opening Statement of the Hon. Nancy L. Johnson, a Representative in
Congress from the State of Connecticut, and Chairman, Subcommittee on
Health
Good morning. Today's hearing will focus on the important subject
of disease management and its application to the Medicare program.
Disease management has significant potential to improve health outcomes
and the quality of patients' lives, and may reduce health costs.
A small number of Medicare beneficiaries--12 percent--accounted for
75 percent of all Medicare fee-for-service payments. Typically, these
beneficiaries suffer from chronic illnesses, such as diabetes, asthma
or coronary heart disease. In many cases, these high costs are from
repeated hospitalizations as a result of poor medication compliance,
lack of adherence to a prescribed treatment plan, and lack of patient
self-management skills.
In addition, there are also provider related problems, such as poor
communication and coordination between providers, and inadequate and
fragmented monitoring of patients that undermines patient care.
As the baby boom generation retires, the number of chronically ill
beneficiaries is expected to increase, causing Medicare costs to
escalate. Disease management programs--programs designed to assist both
the physician and patient to develop a plan of care, using evidence-
based practice guidelines--should help defray some of these costs and
improve health care outcomes.
While there have been some attempts by providers to implement
disease management programs in fee-for-service, health care for
beneficiaries with chronic illness is typically fragmented and poorly
coordinated. These shortcomings are due to multiple health care
providers and multiple sites of care.
Conversely, many managed care entities have developed a wide array
of cost-control programs that combine adherence to evidence-based
medical practices with better coordination of care across providers.
Medicare+Choice plans have found preventative care and case management
saves money and avoids costly hospital stays. According to the 2000
Survey of Disease Management Practices, the average Medicare+Choice
plan has four disease management programs, with 95 percent of plans
having a diabetes disease management program.
Netcare, a diabetes management program comprised of 7,000 diabetics
in 7 managed care organizations actually decreased hospital admissions
by 18 percent--resulting in 12 percent savings.
There has been some movement towards implementing disease
management program in fee-for-service. A Coordinated Care Demonstration
authorized by the Balanced Budget Act resulted in approval of 15
programs. In addition, on February 22, of this year, CMS issued a
request for proposal to conduct demonstration disease management
programs in targeted specifically towards congestive heart failure,
diabetes and coronary heart disease. The demonstration projects will
operate for up to three years, after which a formal evaluation will be
conducted by CMS.
These proposals hold the hope that we can achieve the twin goals of
improving care and saving money--long recognized as a central tenet of
managed care.
We are pleased to welcome Ruben King-Shaw from the Centers for
Medicare and Medicaid Services who will comment on these exciting new
opportunities.
I would like to welcome our other experts. Dr. Wennberg from
Dartmouth College will discuss regional variation in quality of care.
Dr. Hillman from Marshfield Clinic will explore their exciting work in
incorporating disease management in fee-for-service. Dr. Henschke from
Cornell University will present her first hand efforts in managing lung
cancer. Dr. Lord, from Humana and the President of the Disease
Management Association of America will discuss Humana's work in
Medicare+Choice. Finally, Dr. Anderson of Johns Hopkins University will
discuss his work in this field. I look forward to your testimony.

Opening Statement of the Hon. Mark Foley, a Representative in Congress
from the State of Florida
Madam Chairman, I want to thank you for holding this very important
hearing today on disease management programs in Medicare. As you know,
Congress created Medicare in 1965 for the purpose of providing a basic
health insurance package for our elderly--who, in many cases, cannot
make ends meet. In its current form, Medicare is a reactive program
that generally pays only when the beneficiary gets ill.
However, with health care costs rising between eight and ten
percent each year we need to reexamine the entire health system in
order to save it. Medicare must move from a reactive pay-as-you go
system to a pro-active ``wellness care'' model. This shift will save
the American people billions of dollars while increasing the quality of
life of our elderly. The notion is simple--if we can get a patient to
the doctor soon enough, then the overall cost of taking care of that
person dramatically decreases. That is why Congressman Sander Levin and
I introduced H.R. 2058, the Medicare Wellness Act. Our bill would be a
major step in providing necessary preventive care benefits to our
elderly. Specifically, the bill would establish a Healthy Seniors
Promotion Program; expands coverage of preventive services; establishes
a national fall prevention campaign; sets up a clinical depression
screening demonstration project; and, requires a study of elderly
disease prevention.
Again, Madam Chairman, I commend your actions today in bringing
this very important issue to our committee. I hope that as you and your
committee begin work on a larger Medicare bill this year that you will
give strong consideration to incorporating some of the provisions in
our bill.
Thank you.

Mrs. THURMAN. Thank you, Madam Chairman, and I just also
want to thank Mr. Shaw for being here today, and for the
benefit of the Members of this Committee, to let them know that
Mr. Shaw came from Florida, was a very able Administrator, and
was one who strengthened, I think, in many ways the health
programs in the State of Florida through his time, and then
certainly coming into the Federal Government, in which he
helped us attain some very valuable waivers that he had been
pushing before he left Florida. So, we certainly are pleased to
have him before us today and for the work that he has done on
behalf of the United States, but also on behalf of our citizens
in Florida. Welcome.
Chairman JOHNSON. Thank you, Congresswoman Thurman. I was
aware of his service in Florida. I am glad you were here to
make some comment. I would like to recognize now my colleague
and Ranking Member, Congressman Stark, for his comments.
Mr. STARK. Well, thank you. I apologize for being late,
Madam Chair, and I want to thank you for this hearing. We are
going to hear about Medicare beneficiaries, who are more likely
to have chronic illnesses and perhaps even more than one of
them. I hope that we can be careful not to focus on the short-
term costs of covering and caring for these individuals.
Without budget rules and scoring rules, it is tempting to do
that. In the short term, it might be in Medicare's interests to
curtail the costs by curtailing care, and that is not I think
what the Chair has in mind, certainly not what this Ranking
Member has in mind.
There isn't an incentive that I can determine, in the
managed care industry as we know it, for plans to invest in the
long-term health of their enrollees. If they keep getting
adjusted each year, it is hard to see how they will recover
major costs.
So, I think this is a topic that is long past due, and I
think that you are brave to venture into a complex area where I
am sure you are going to get a lot of opinions of what is wrong
with every way that people suggest how to do it. I hope we can
get at it, and maybe in a couple of years we will be able to
see this become a standard part of Medicare, and I thank you
for your interest in it.
Chairman JOHNSON. Thank you, Mr. Stark. Mr. King-Shaw?

STATEMENT OF RUBEN KING-SHAW, JR., DEPUTY ADMINISTRATOR AND
CHIEF OPERATING OFFICER, CENTERS FOR MEDICARE AND MEDICAID
SERVICES

Mr. KING-SHAW. Well, Madam Chairwoman, thank you very much
for the opportunity to talk about something so important and so
meaningful and so much a part of what I have been focused on
for a number of years. To Congressman Stark, again, thank you,
and Congresswoman Thurman, always good to see you again.
It is very, very appropriate that I take time to thank all
the Subcommittee Members for being here and for the great
leadership you have shown in this area. Clearly, disease
management has enormous potential for Medicare, and has proven
its ability to provide great results outside of Medicare for a
number of years. In fact, there are really millions of
individual seniors included who benefit from the power of
disease management programs in the Medicaid and commercial
sectors.
We in Medicare have been demonstrating various
technologies--I will share them with you in a moment--but truly
have some ways to go in harnessing the power of these disease
management methodologies for the benefit of the people we serve
and the mission that we have chosen, which is to care for poor
people and old people and those who need public assistance for
their daily health care needs. I think it is important, though
you have my written statement that goes into great detail of
the specifics of what we are doing at CMS, I think it is
important to take a moment in just this first opening
discussion about what do we mean when we say ``disease
management'' in Medicare.
I think disease management is best described as a
continuum, if you will, that can be both very robust on one end
and particularly light on another. So, as I walk through some
of the common elements of a robust disease management program,
I think we get a sense of what a full, comprehensive disease
management program would look like.
It would have elements of a clinically driven best practice
or evidence-based clinical strategy. That is where it begins,
with strong clinical leadership based on proven, effective
clinical strategies. It would then include the integration of
administrative, particularly data, and financial resources to
support the patient-physician relationship.
This truly is a patient-centered strategy for improving
health care outcome, treatment, and wellness. There is an
important element of patient education in disease management,
and as patients understand the pathology of their condition,
they become full participants in the help and healing process.
As you can see, they actually become a partner and take
ownership of the health care itself.
A significant part of provider education is attributed to
disease management, and there is the important discipline of
risk assessment, truly knowing the population. You will hear a
term, ``population management,'' and an important part of
population management is stratifying the population according
to levels of risk or understanding of disease or degree of
severity in these types of things.
There is an important part of disease management that
focuses on outcomes and outcome measures. All successful
disease management programs truly do have ways of identifying
the objective, the clinical, the social, the cultural even,
outcomes that are the target of performance. So, here are some
quite rigorous, very effective ways of measuring those
outcomes. Then clearly there are cost savings, and then the
provision of comprehensive, integrated, but coordinated care
across the delivery system.
So, these are the elements of what I would describe as a
very robust disease management program, and I will share with
you some examples that we are focusing on at CMS in a moment.
There are elements of disease management, as I have just
outlined, that can appear in isolation. You can have two or
three of these deployed very effectively, and those would end
up on the lighter scale of disease management. It is within
that continuum of sources, of resources, of approaches, that
you will find most disease management programs.
It is also a good question to ask, well, where is disease
management most effective? I think Chairwoman Johnson has
addressed those, and they are in the chronic conditions. They
are most commonly found in asthma, congestive heart failure,
coronary heart disease, Alzheimer's, cardiovascular, and so
forth, diabetes, depression, hypertension, and increasingly
substance abuse and chemical dependency, as well as lung
disease and mental health such as depression conditions.
So, where you have in the Medicare program an increasing
number of beneficiaries who are suffering from chronic
diseases, it would be a natural progression, a natural
advancement of the Medicare program, to begin to harness more
effectively disease management methodologies. Where have these
methodologies been proven to be most successful? It truly has
been in the managed care or coordinated care or integrated care
world.
Whether that has been in Medicaid or the commercial
environment, or managed indemnity before that, it has truly
been in the managed care arena where we have developed the most
promising models for disease management. Why would that be the
case? Why would managed care be the place where the expertise
has grown up in such abundance around disease management?
Well, for one thing, these private plans have the
flexibility to reconfigure resources around the patient-
physician relationship. These private plans also have the
ability to achieve greater returns on the continuity of care.
They are more free to respond to the needs of the population.
They can be more agile in financial models or contracting or
partnerships. They can build coalitions with clinical and
academic and pharmacological and community-based resources
around the needs of a population or a patient, and they have
the ability to maintain a platform that is conducive to further
disease management operations.
So, it is within the context of a delivery system which is
flexible and agile and patient-centered that we have seen the
most effective deployment of disease management programs. So,
if we are looking at one of the ways that Medicare can preserve
the benefits of disease management, it would clearly be to
shore up the M+C program itself, in that the provision of an
actuarially sound methodology of financing M+C programs will
preserve for seniors in those programs the benefits of disease
management that they currently enjoy.
Clearly there is an application of disease management
programs outside of M+C, and so the next few comments that I
will share with you will give you some sense of what we are
doing outside of the M+C environment. In addition to what you
may have already read about is our preferred provider
organization (PPO) demonstration solicitation that we have just
announced.
We are looking at doing some things around congestive heart
failure that will identify clinical outcomes among congestive
heart failure patients, either in M+C organizations or outside
in the fee-for-service world, that would give us the ability to
direct resources, data, information, coordinated care for a
better outcome in revised incentive payments, if you will, as a
result of good clinical outcomes.
Similar efforts are underway with the ESRD, end-stage renal
disease patients, and here is an important part of disease
management which is often missed. These are often extremely
effective methodologies for addressing disparities in health
care, disparities among men and women and among ethnic and
racial groups.
So ESRD, which is disproportionately a condition where
African Americans suffer, effective disease management programs
are among the ways to address that disparity by truly
integrating care and all of the other things that I listed up
front. Similar types of interventions can address disparities
in other ways, between rural and urban areas, between male and
female.
There are a number of things that we are doing in
coordinated care, like demonstrations. You heard Madam
Chairwoman refer to those. There are some very interesting
implications for direct contracting with provider sponsored
organizations.
I mentioned early on that part of disease management is
building teams, communities of care, if you will, and so where
you have community-based organizations, be they medical or
cultural or social or community support, that you can build a
delivery system around, then you can be quite effective with
those. So provider sponsored organizations, case rate
methodologies, where you truly are able to build a financial
model around a continuum of care based on a diagnosis, these
are areas that we are beginning to do some work now.
None of this will substitute for a financially sound
delivery system as whole, be it M+C or the Medicare program
itself, but there are ways that we can begin to do a better
job.
Just a couple of other examples that kind of will lay out
the landscape of some of the power of disease management, and I
will go around the country a little bit. Up in Boston there is
a very effective diabetes program that truly focuses on the
provision of annual retinal eye exams, an important part of
diabetes management, as well as monitoring hemoglobin and
cholesterol levels.
Down in Florida, that great Sunshine State, there is quite
an effective program that is looking at cancer through disease
management, and the measurement there has been acute care
hospital days which have gone down 15 percent over a 2-year
period through effective use of disease management, and also
looking for admissions as a result of complications from
cancers, which is already down 10 percent.
Then I'll stop in New York, because there is an application
of a more interesting, perhaps, disease management program
around the issues of mental health.
I am very pleased to be able to share with you this
opening. I would love to be a part of whatever question and
answer or further discussions you would like to have. I have
had the privilege of being a part of disease management both at
private and State and now Federal level. I am happy to be a
part of this great hearing, and I can spend whatever time you
would like, just respond to your questions, continue the
dialog.
Thank you again, Madam Chairwoman.
[The prepared statement of Mr. King-Shaw follows:]
Statement of Ruben King-Shaw, Jr., Deputy Administrator and Chief
Operating Officer, Centers for Medicare and Medicaid Services
Chairman Johnson, Congressman Stark, distinguished Subcommittee
members--first, thank you for inviting me to discuss the significant
role that disease management can play in improving people's lives.
Also, I want to express my appreciation to you, Chairman Johnson and
other Subcommittee members for your leadership on this issue. Analysis
of disease management is an integral part of the Centers for Medicare &
Medicaid Services' (CMS) efforts to improve and strengthen Medicare and
improve the health care services provided to all Medicare
beneficiaries. As the delivery of health care has matured, we all know
that individual health care providers routinely plan and coordinate
services within the realm of their own specialties or types of
services. However, rarely does one particular provider have the
resources or the ability to meet all of the needs of a chronically ill
patient. Ideally, as part of a disease management program, a provider
or disease management organization is dedicated to coordinating all
health care services to meet a patient's needs fully and in the most
cost-effective manner. I want to discuss with you in greater detail the
challenges and opportunities in integrating disease management into
Medicare. The demonstration projects we are developing can help achieve
the President's principles to improve and strengthen Medicare while
ensuring that America's seniors and disabled beneficiaries receive high
quality care efficiently.
As you may know, last July, the President proposed a framework for
strengthening and improving the Medicare program that builds on many
ideas developed in this Committee and by other Members of Congress.
That framework contains eight principles to guide our efforts:

All seniors should have the option of a subsidized
prescription drug benefit as part of modernized Medicare.

Modernized Medicare should provide better coverage
for preventive care and serious illness.

Today's beneficiaries and those approaching
retirement should have the option of keeping the traditional
plan with no changes.

Medicare should make available better health
insurance options, like those available to all Federal
employees.

Medicare legislation should strengthen the program's
long-term financial security.

The management of the government Medicare plan should
be strengthened to improve care for seniors.

Medicare's regulations and administrative procedures
should be updated and streamlined, while instances of fraud and
abuse should be reduced.

Medicare should encourage high-quality health care
for all seniors.

The President, the Secretary, the Administrator and I
are determined to work constructively with Congress to achieve
these principles. We believe disease management is a critical
element for meeting these goals. We are currently undertaking a
series of disease management demonstration projects to explore
a variety of ways to improve beneficiary care in the
traditional Medicare plan. These demonstrations provide
beneficiaries with greater choices, enhance the quality of
their care, and offer better value for the dollars spent on
health care. The almost complete absence of disease management
services in the traditional Medicare plan is another striking
indication of how outdated Medicare's benefit package has
become. We appreciate this committee's efforts to improve and
strengthen the traditional Medicare plan, and we are pleased to
be working with you on legislation that will make disease
management services more widely available.

Disease management is also one of the principal reasons why the
President and Secretary Thompson have advocated immediate action to
give seniors reliable private plan options in Medicare, and to prevent
further pullouts of private plans from the Medicare program. Disease
management services have been available to millions of seniors through
private plans, yet inadequate and unfair payments are threatening those
benefits. The most important step that Congress could take right now to
allow seniors who depend on disease management to keep these valuable
services, and to provide rapid access to such services to many more
seniors who need them, is to fix the problems with the payment system
for private plans.
BACKGROUND

A relatively small number of beneficiaries with certain chronic
diseases account for a disproportionate share of Medicare expenditures.
These chronic conditions include but are not limited to: asthma,
diabetes, congestive heart failure and related cardiac conditions,
hypertension, coronary artery disease, cardiovascular and
cerebrovascular conditions, and chronic lung disease. Moreover,
patients with these conditions typically receive fragmented health care
from providers and multiple sites of care. We need to find better ways
to improve and coordinate care for these patients and to do so more
efficiently. Such disjointed care is confusing and can present
difficulties for patients, including an increased risk of medical
errors. Additionally, the repeated hospitalizations that frequently
accompany such care are extremely costly, and are often an inefficient
way to provide quality care. As the nation's population ages, the
number of chronically ill Medicare beneficiaries is expected to grow
dramatically, with serious implications for Medicare program costs. In
the private sector, managed care entities such as health maintenance
organizations, as well as private insurers, commercial firms, and
academic medical centers, have developed a wide array of cost-control
programs that combine adherence to evidence-based medical practices
with better coordination of care across providers.
Several studies have suggested that case management and disease
management programs can improve medical treatment plans, reduce
avoidable hospital admissions, and promote other desirable outcomes.
Coordination of care has the potential to improve the health status and
quality of life for beneficiaries with chronic illnesses. Although
there is a distinction between the two models, the case management
approach is generally used to coordinate care to a patient with
multiple chronic conditions, while the disease management approach
tends to focuses primarily on the patient and one chronic condition,
such as congestive heart failure. In the largest sense, both disease
management and case management organizations provide services aimed at
reaching one or more of the following goals:

Improving access to services, including prevention
services and necessary prescription drugs.

Improving communication and coordination of services
between patient, physician, disease management organization,
and other providers.

Improving physician performance through feedback and/
or reports on the patient's progress in compliance with
protocols.

Improving patient self-care through such means as
patient education, monitoring, and communication.

These goals echo the President's principles of improving the
Medicare program through better care for serious illness, delivering
higher quality health care, and protecting Medicare's financial
security.

PROVIDING RELIABLE COVERAGE OPTIONS THAT INCLUDE DISEASE MANAGEMENT

We are already taking advantage of private sector expertise in
disease management to give Medicare beneficiaries more services for
their premiums, often with lower cost sharing and more benefits than
are available under traditional Medicare. For example, Medicare+Choice
plans provide many benefits that are valuable to seniors with serious
and chronic health conditions, such as:

A Medicare+Choice plan in Boston that has a
comprehensive disease management program for its enrollees with
diabetes. This has resulted in significant increases in the
share of enrollees who received annual retinal eye exams and
are monitored for diabetic nephropathy and substantial
improvements in the management of their Hemoglobin and
cholesterol levels.

A Medicare+Choice plan in Florida that has a
comprehensive disease management program to monitor,
facilitate, and coordinate care for enrollees with cancer. As a
result, the number of acute hospital days per cancer case
dropped by about 15% over two years and the share of inpatient
admissions for complications with cancer has declined by 10
percent.

A Medicare+Choice plan in New York that has a case
management program for those hospitalized for mental health
disorders and nearly doubled the share of its enrollees who
received follow-up care within 7 days of their hospital
discharge. This is consistent with research that has shown that
individuals who receive after-care following hospital stays for
mental illness are more likely to be compliant with their
treatment regimens and less likely to be readmitted to the
hospital.

We are also undertaking several demonstration programs improve the
disease management options available to seniors in private plans. The
projects represent a wide range of programs and approaches, and they
address a number of chronic conditions. First, we just announced
yesterday a demonstration project to expand health plan options in
Medicare+Choice. Preferred Provider Organizations (PPOs) have been
successful in non-Medicare markets in providing disease management
services and other valuable benefits for patients with chronic
illnesses, yet they are almost nonexistent in Medicare. CMS is
conducting the demonstration to test ways to provide more health plan
options to people with Medicare. We hope to award demonstrations later
this year in up to 12 geographic areas that will be available to enroll
beneficiaries during the Fall open enrollment period and begin to serve
enrollees next January. This demonstration program will test changes in
methods of payment for Medicare services that may be more efficient and
cost effective while improving the quality of services available to
beneficiaries. The demonstration plans will be considered
Medicare+Choice plans and must offer all of Medicare's required
benefits, but will also have the flexibility to offer greater access to
drug benefits. Second, we are giving Medicare+Choice organizations that
meet specific quality indicators extra payments recognizing the costs
of successful outpatient management of congestive heart failure (CHF).
DEMONSTRATION PROGRAMS IN FEE-FOR-SERVICE MEDICARE

The outdated benefit package in fee-for-service Medicare does not
include disease management, and so beneficiaries in fee-for-service
have not had access to these valuable services. To identify innovative
ways to include coordinated disease management services in an
inherently uncoordinated fee-for-service system, we have a number of
demonstrations both underway and in development. This includes
demonstrations that are being implemented under legislation developed
with bipartisan support in this committee. In one fee-for-service
project at Lovelace Health Systems in New Mexico, we are testing
whether intensive case management services for CHF and diabetes
mellitus can be a cost-effective means of improving the clinical
outcomes, quality of life, and satisfaction with services for high-risk
patients with these conditions. As part of the evaluation, we will be
looking at mortality, hospitalization rates, emergency room use,
satisfaction with care, and changes in health status and functioning.
We also have implemented an End Stage Renal Disease (ESRD) Managed
Care Demonstration project that began in September 1996. Among other
things, the demonstration was designed to test whether: integrated
acute and chronic care services, and case management for ESRD patients
improve health outcomes; and whether additional benefits are cost-
effective. Services were provided for 3 years at each site--Kaiser
Permanente in Southern California and Advanced Renal Options in
Southern Florida. We measured outcomes such as: survival,
hospitalizations, patient satisfaction, transplantation, vascular
access, hematocrit and adequacy of dialysis. In general, enrollees in
the demonstration exhibited comparable or better outcomes when compared
to those in fee-for-service. This demonstration provided us with
valuable information as we consider new ways to better serve ESRD
beneficiaries, including the possibility of developing a new ESRD
demonstration.
In another demonstration, we have selected 15 sites to provide case
management and disease management services to certain Medicare fee-for-
service beneficiaries with complex chronic conditions. These conditions
include congestive heart failure, heart, liver and lung diseases,
diabetes, psychiatric disorders, major depressive disorders, drug or
alcohol dependence, Alzheimer's disease or other dementia, cancer, and
HIV/AIDS. This demonstration was authorized by the Balanced Budget Act
of 1997 to examine whether private sector case management tools adopted
by health maintenance organizations, insurers, and academic medical
centers to promote the use of evidence-based medical practices could be
applied to fee-for-service beneficiaries. This program was designed to
address important implications for the future of the Medicare program
as the beneficiary population ages, and the number of beneficiaries
with chronic illnesses increases. We are testing whether coordinated
care programs can improve medical treatment plans, reduce avoidable
hospital admissions, and promote other desirable outcomes among
Medicare beneficiaries with chronic diseases. The projects have just
begun enrolling patients. The statute that authorizes these projects
allows for the effective projects to be continued and the number of
projects to be expanded based on positive evaluation results--if the
projects are found to be cost-effective and that quality of care and
satisfaction are improved. In addition, the components of the effective
projects that are beneficial to the Medicare program may be made a
permanent part of the Medicare program. These initial projects are
varied in their scope and include both provider organizations as well
as commercial companies, utilize both case and disease management
approaches, are located in urban and rural areas, and provide a range
of services from conventional case management to high-tech patient
monitoring. For example:

CorSolutions Medical, Inc. of Buffalo Grove, Illinois
will implement an urban disease management program targeting
beneficiaries in Texas and Indiana with high-risk CHF. The
program will offer an extensive array of interventions
including an in-home assessment, patient education, and
physician reports.

Carle Foundation Hospital of Urbana, Illinois will
implement a rural case management program targeting
beneficiaries in eastern Illinois with various chronic
conditions. Interventions include health assessments, patient
and physician education, medication review, and supportive
services.

Health Quality Partners of Allentown, Pennsylvania
will implement an urban and rural disease management program
targeting beneficiaries in eastern Pennsylvania with various
chronic conditions. This integrated delivery system will
provide disease-specific education, and coordination and
arrangement of medical care and social services.

Quality Oncology, Inc. of McLean, Virginia will
implement an urban disease management program targeting
beneficiaries in Broward County, Florida with cancer. This
commercial vendor will match the plan of care written by the
patient's own oncologist with its guidelines based on the type,
location and stage of the patient's cancer. The program's
medical director will contact the patient's oncologist to
discuss any differences between the care plan and the
guidelines. A care manager will provide patient education and
counseling, care coordination, and service arrangement.

Washington University of St. Louis, Missouri and
StatusOne Health of Hopkinton, Massachusetts will implement an
urban case management program targeting beneficiaries in St.
Louis with various chronic conditions. In this joint venture,
patients will receive health and self-care education, personal
goal setting and health and social services.

QMED, Inc. of Laurence Harbor, New Jersey will
implement an urban disease management program targeting
beneficiaries in Northern California with coronary artery
disease. This commercial vendor will combine data from a
cardiac monitoring device with its system knowledge database to
assist physicians in assessing the patient's condition and
formulating treatment recommendations. In addition, cardiac
medications will be provided to participants in financial need.

BUILDING FOR THE FUTURE

We are also developing future demonstration projects that will
expand options for Medicare beneficiaries in the Medicare+Choice
program and the traditional Medicare program. Recently, we announced a
new and innovative demonstration, as required by the Benefits
Improvement and Protection Act of 2000 (BIPA), that will test the
combination of providing disease management services and offering
outpatient prescription drugs to Medicare beneficiaries with advanced-
stage congestive heart failure, diabetes, or coronary heart disease.
The goal is to coordinate care and assist beneficiaries in managing
their doctors' orders and monitoring their medication, which in turn
will lead to better, healthier and fuller lives. Under this
demonstration, disease management organizations may be paid a monthly
premium for coordinating the care of patients in the studies and for
the cost of prescription drugs. We will require each organization
participating in the program to measure improvements in health outcomes
and reduce Medicare program expenditures. In fact, participating
organizations must post a bond guaranteeing savings for the program.
Also, as mandated by BIPA, we are developing a physician group practice
demonstration encouraging coordination of Part A and Part B services,
rewarding physicians for improving beneficiary health outcomes, and
promoting efficiency.
In addition to stabilizing the existing Medicare+Choice program,
and providing more health plan options, like our PPO initiative, we
want to develop specific health plan options for those beneficiaries
with chronic illness. We are investigating disease management projects
that would work with a diverse group of organizations, including
Provider Sponsored Organizations (PSOs), integrated healthcare systems,
disease management organizations, and Medicare+Choice plans. We want to
enhance the clinical management of care to better serve the patients,
provide for more effective coordination of services, and improve
beneficiaries' health clinical outcomes and reduce costs to the
Medicare program.
For example, we are considering demonstrations to test capitated
payment arrangements with qualified organizations that will use the
case management techniques to treat chronic diseases such as congestive
heart failure, diabetes, and chronic obstructive pulmonary disease.
This would allow a plan to specifically target treatment and
coordination for chronic diseases. The payment models are intended to
improve the coordination and quality of care for Medicare beneficiaries
and to reduce costs to the Medicare program. The targeted populations
could include beneficiaries eligible for both Medicare and Medicaid, as
well as the frail elderly.
Similar to the current BIPA demonstration project, we also are
interested in applying the private sector contracting techniques that
health plans use in the Medicare+Choice program with disease management
for fee-for-service populations. In addition, as I mentioned, we are
considering building on the positive aspects of our current ESRD
demonstration to further explore using integrated care management
systems for beneficiaries with ESRD. We want to test the effectiveness
of disease management models in increasing quality of care for ESRD
patients while ensuring that this care is provided both more
effectively and efficiently.
Our evaluations of all of these projects will inform our future
efforts. We are evaluating health outcomes and beneficiary
satisfaction, the cost-effectiveness of the projects for the Medicare
program, provider satisfaction, and other quality and outcomes
measures. We anticipate that better outpatient care and monitoring
through the case management model will reduce avoidable
hospitalizations, avoid unnecessary services, and improve outcomes. The
Agency also is exploring various payment options, including case-rated
methodologies for treating particular conditions, such as stroke, that
may lend themselves to this type of payment system. We recognize,
however, that costs for some individual cases, particularly those in
which appropriate medical services were previously underutilized, could
increase with coordination of services. Nevertheless, we expect that in
the aggregate, the costs to Medicare will be the same or lower through
the efficiencies that will result in providing appropriate care and
this will more than offset the added expenses.
While these new demonstration programs hold promise, they are not
yet fully tested and they are no substitute for the comprehensive
coverage that many beneficiaries prefer through private plans. The most
important step for helping Medicare build for the future, in terms of
providing integrated benefits that keep patients healthy, is to create
a stable and fair payment system for Medicare+Choice plans.
CONCLUSION
Disease management is a critical element for improving the nation's
health care delivery system. Yet seniors are far less likely than other
Americans with reliable access to modern, integrated health care plans
to have access to disease management services. Through changes in
Medicare's unfair payment system for private plans, we are working to
give seniors the same access to modern disease management services that
other Americans enjoy. We also are working to address the difficulties
of providing effective disease management services in the fee-for-
service plan. Our goal is to make disease management services widely
available, enabling beneficiaries to enhance their quality of care and
get better value for the dollars they spend on health care. We look
forward to continuing to work cooperatively with you Chairman Johnson,
this Subcommittee, and the Congress to find innovative and flexible
ways to improve and strengthen the Medicare program while making sure
that beneficiaries, particularly those with chronic conditions, have
access to the care they deserve. I thank you for the opportunity to
discuss this important topic today, and I am happy to answer your
questions.

Chairman JOHNSON. Thank you very much, Mr. King-Shaw, for
your testimony. I did have a chance to read through it, and it
offers us a lot of very good information.
I want to focus for just a minute--and I have several
questions, so I want to just hit on these things lightly--but
you stress in your testimony that the M+C programs and
eventually the PPO programs are the only access Medicare has
right now for patient-centered systems of care, and I think
that is true. You talk about in the fee-for-service area
building teams of care, but that team approach is only sort of
automatically available to us through the more integrated care
plans.
It has struck me, as I have worked in this area, that as
important as any one factor in the ability of those plans to
offer disease management is their information management
technology. They actually can follow their patients more
easily. They can communicate among their providers more easily.
They can track and incentivize their patients to participate in
their own care in a way that fee-for-service Medicare from
Washington can't do.
Do you want to comment a little further on the information
technology aspect of an integrated care system and, how that
means that we really have to look at alternatives to fee-for-
service medicine if we are going to accomplish these goals in
the near term?
Mr. KING-SHAW. Well, that is clearly, clearly a powerful
point, and one of the advantages that private plans and M+C
organizations bring is that they typically have front end
pieces that they can attach to their claims system to integrate
all types of claims, and increasingly the types of interactions
or encounters that happen outside of the regular claims
operation.
So, as we do a better job at collecting lab results and lab
values, not just the financial but the actual values, as these
organizations have access to other types of qualitative data,
they can array it and display that to identify progress, to
measure the effectiveness of the interventions, to actually
look at the risk. I mean, in every disease management program
you have got those that have a condition and know it, those who
have it and don't know it, those who don't have it but are
about to get it or are at risk for getting it.
This kind of data that M+C organizations can integrate
throughout the continuum of care makes them particularly
qualified to maintain that kind of risk and outcome and
performance data. It also enables them to do something with
reimbursement and contracting and pricing of those
relationships.
On the fee-for-service side, we have a long way to go.
There are ways to do it. We have several people who pay claims
in the Medicare program, A and B and DMERC, Durable Medical
Equipment Regional Carrier, and all of that. So, integrating
the data will be a challenge on the fee-for-service side, but
there are organizations, disease management organizations, that
bring that expertise. There are system integrators that would
like to be able to bring that value to us on the fee-for-
service side. There are some contractors that do have large
pieces of the care continuum that can bring us that value, or
team up with other organizations to integrate that data.
So, it does present challenges on the fee-for-service side,
but it is without question where 84 percent of the population
is, where we can do the most work.
Chairman JOHNSON. All right, thank you. In my opening
statement I mentioned that 12 percent of our Medicare
beneficiaries account for 75 percent of the spending, and in
his testimony later on Dr. Wennberg will suggest a disease
management approach to some of the end-of-life use issues. He
notes the enormous variation across the country in the number
of seniors that pass away in intensive care units (ICUs) in
some areas and very uncommonly in ICUs in other areas; the
disparate use in physician visits. You know, is that going to
be a focus of one of your demonstrations, to really look at the
management of end-of-life illness and the efficacy of one
approach versus another?
Mr. KING-SHAW. It certainly could be, and I think it should
be. When we issue solicitations or invitations, either in
writing through the official means or through the conversations
that Tom Scully, the Administrator, the Secretary, and I have
around the country, we are always interested in ideas that
people bring us, initiatives that we can support and work
through.
This is one area that makes a lot of sense. The closest we
have come--I mean, actually it's not commonly thought of as a
disease management program, but in many ways it is--is the
Program of All-Inclusive Care for the Elderly (PACE program)
itself. Our PACE program is, you know, an all-inclusive program
for frail elders, and in there is a great deal of knowledge and
value and opportunity to strengthen disease management
technologies and methodologies around people late in life.
So, the answer would be yes. How we do it, where we do it,
would be a function of someone bringing to us that expertise
that we can connect with and support and develop.
Chairman JOHNSON. We have known for such a long time that
so much of our money is spent in the waning months of one's
life, I do hope that we will think about how much the private
sector does know in this area. I think they know less than they
know in the area of diabetes and some other areas, so I
appreciate that, but I think this does need to be a focus of
our thinking as we develop approaches to managing the costs of
care and improving the quality of life.
Lastly, let me just ask you if you--I noticed with your
comments about the end-stage renal disease management care
demonstration project that began in September 1999, you comment
that it did improve outcomes. You don't comment on whether it
cost money or saved money. You don't comment on why, with this
project completed now and under our belts, we aren't thinking
about rolling this out through Medicare across all of our ESRD
providers, when clearly it did improve at least quality-of-
care. So, if you would, comment on the cost aspect and why we
aren't ready to move that out.
I would ask the same question in terms of diabetes. I have
stood in doctors' offices. I have seen what fantastic, simple
programs we have available that can help physicians monitor
patients much more easily, can get patients involved in their
care ever much more easily. When you look at what it would do
to prevent blindness and all kinds of complications as people
age, it does seem to me that there are areas in here where we
might even use the national coverage process to change the way
we--you know, what care it is we are willing to pay for.
Mr. KING-SHAW. Thank you very much for that, Madam
Chairman. Actually, we are working on at least two different
ESRD disease management initiatives. There is one in the
variety of looking at a true capitated model that would enable,
at a fixed rate per enrollee, ESRD providers to provide the
basket of services that patients need. We are also looking at
some more of the disease management coordinated, noncapitated
models. We are looking at different ways, as I mentioned, you
know, case rate methodology.
So, there are a number of different initiatives that we
have underway, organized toward ESRD, so you will be hearing
about them more. We are engaged with partners and interested
parties to help us do that. So, as they cook a little bit more
and become more structured, there will be ways for us to
present those to you and anybody else who is interested.
There is actually quite a lot of work we are doing in the
area of diabetes, both in the 15 BBA-sponsored diabetes--I am
sorry--disease management programs, there is work being done in
diabetes, and of course the Beneficiary Improvement Protection
Act (BIPA) provided an opportunity for types of disease
management. In that second group, we are actually including the
cost of prescription drug coverage----
Should I wait?
Chairman JOHNSON. Go ahead.
Mr. KING-SHAW. The cost of prescription drug coverage.
As far as the cost goes, in these past examples, they have
proved to be at least cost-neutral. There is some spike in cost
as you bring services to people who have under-utilized the
system, and there is an investment cost, so you will very
commonly see a spike early on in the treatment process. That
levels out and actually reduces over time as you stabilize and
provide all the basket of services, so it is our view that they
actually are quite cost-effective, and over the life of the
program actually at least a break-even, most likely even as a
small benefit to the Medicare program.
Chairman JOHNSON. Thank you very much. Mr. Stark?
Mr. STARK. Thank you, Mr. King-Shaw, for your testimony. Is
there any reason now that providers shouldn't be required to
put in place practice guidelines and patient safety plans as a
condition of participating in Medicare?
Mr. KING-SHAW. Well, we actually have a new policy
forthcoming, a new regulation forthcoming on conditions of
participation. There are several guidelines that are sponsored
by the various medical societies, and those best practices and
guideline are freely available to physicians.
The Medicare program has traditionally not prescribed a way
of practicing, or at least tries not to do that, and so by
identifying any particular protocol or guideline or best
practice, we would be stepping way outside of where the
traditional role of Medicare has been, though we can work in a
consultive way with quality organizations to identify best
practices and be a part of research in evidence-based
methodologies and that kind of thing.
Now, our carriers do have local medical guidelines that are
developed in a very consultive way or consultative way with
physician groups, and there is a Carrier Advisory Committee of
medical professionals who help them do that. So there is
considered effort going on at the carrier level, regional
level, to embrace best practices and good medical decision
making.
Now, the actual issue of proscribing them and mandating
them, that is a different issue than Medicare has dealt with
before from a clinical, physician point of view.
Mr. STARK. It is fair to say that--I believe at this point
you basically completed one ESRD demonstration, and you have 17
other demonstrations currently working. If that is all you have
got, does CMS really have enough information to make a
determination as to whether disease management and case
management has value for Medicare beneficiaries, either in
terms of quality or in cost savings to the taxpayers? Do you
know enough now to make that decision?
Mr. KING-SHAW. Yes, I believe that we have enough
experience to know that there is great value in disease
management methodologies when done well and when done in
partnership with organizations who do it well. I believe like
anything else a poorly designed, poorly supported effort, be it
a study or a protocol or a project, is not going to derive the
kind of results that a well thought out, well financed, well
put together, clinically led program is.
So, I think what we have learned is that there are some
best practices in disease management that we have imported from
other organizations, that we have learned in partnering with
other organizations, and there are some not so best practices.
So, I think that that is sound and that is credible.
As we move forward, I think the objective would be to take
from demonstration to operation, to mainstream, if you will,
those models, those best practices that have worked well, while
not shutting the door to the ever-evolving methodologies that
are being generated in the private sector, that Medicare can be
a part of. So, I think we have enough information to move
forward appropriately, cautiously, with the right kind of
responsible decision making, but we clearly, clearly can see
greater benefit from disease management than what we are seeing
today.
Mr. STARK. Well, we don't have any today. Is that correct?
Mr. KING-SHAW. We have some. What I have described in the
testimony are some disease management initiatives that have
been launched. There are 15 of them that are being launched now
as a result of BBA. There were others that preceded it in ESRD
and a few other areas that have given us meaningful results.
Even if we want to do it differently going forward, the results
were meaningful in helping us guide that decision.
We have a number of others that are under development right
now, and there actually are a number of disease management
organizations that are operating within the M+C world that
continue to bring good value to Medicare beneficiaries in M+C
environments.
Mr. STARK. When you say ``good value,'' do you suggest then
that the M+C plans save money by using disease management?
Mr. KING-SHAW. When effective, yes. I mean, having spent
some time outside of the Federal government, I can tell you
that yes, when effectively done, again with all the elements
that I identified in my oral comments, they clearly produce
cost savings to the program, both the insurer itself and the
program that they operate under, either Medicaid or Medicare or
commercial. They also can do a great deal in terms of reduced
costs on the part of the beneficiary, of the patient, by better
managing their condition or their disease.
Just as an example, to the extent that there is any out-of-
pocket cost sharing on the commercial side--I come from
hospital admissions--effectively reducing hospital admissions
is a cost saver to the patient's out-of-pocket expense. To the
extent that there is not a prescription drug benefit in the
Medicare program outside of M+C, disease management that brings
prescription drug coverage, as this new BIPA package would, or
by helping people manage their diseases and manage their
medications, so that they are not over utilizing or having
contraindications or drug-to-drug interactions that would lead
to other types of complications, there is cost saving on the
part of the patient there, as well as the program overall.
So, I would say yes, most definitely, when effectively
done, disease management is a cost saver to the program, to the
patient, with quite, quite substantial benefits in clinical
outcome, satisfaction, and performance. It has to be done well.
You can't do a bad job with it and expect those kinds of
results.
Mr. STARK. Thank you.
Mr. KING-SHAW. Thank you, sir.
Chairman JOHNSON. Mr. McDermott?
Mr. McDERMOTT. No questions.
Chairman JOHNSON. Mrs. Thurman? I am going to recognize him
after you, but since you are on the Subcommittee.
Mrs. THURMAN. Thank you, Madam Chairman.
Mr. Shaw, I guess the problem--and I don't disagree with
disease management at all. You and I know of a very good health
plan that--AvMed, which is all over the State of Florida, but
even in our Fifth District, we know what they have done with
the congestive heart failure program, and what they have saved
and what they have done.
Quite frankly, we talk about the fact that the M+C programs
have had an excellent way of handling this, but all indications
are, M+C programs are leaving. It would seem to me that it
would be nice to think in a real true world, and everything was
great, that that would happen.
My concern is that we are not seeing that happen, but it
also seems to me that the M+C programs are no different than
Medicare fee-for-service in many ways. They are both with
doctors. They both have an insurer. From what I can gather with
M+C, the insurer is the one somewhat that makes some of these
decisions to and for the patient, and that drives what doctors
might do.
So, why is this so hard, or why do we think this is going
to be so hard to implement under fee-for-service Medicare? What
are the components that we are missing in Medicare that would
make this transition happen?
Mr. KING-SHAW. One of the elements of success in the fee-
for-service world, where it has been successful--I am not going
to represent to you that all M+C programs or all managed care
programs do a great job at disease management and save a lot of
money. There is, as I say, there are robust, there are all
right, there are best practices, and less than best practices,
but where they have been successful, wherever they have been
applied, they have had some common elements.
One is an organized delivery system where you truly have a
community of care, where there are a number of primary care
physicians and specialists who truly have organized their
efforts around the effective treatment of a disease, who know
the population. They know the other Members of the community of
care. There are conversations, there is information sharing,
there are feedback reports that give the providers and the care
givers and the patient and everybody else around that
community, if you will, information about the patient's
progress. The M+C organizations have that platform established,
and many of them actually have networks that are especially
carved out because they are effective at diabetes or
hypertension or congestive heart failure.
So, in the fee-for-service world our delivery system is not
so well organized. It is quite a disparate system, and so you
need to have an organizer, you need to have a partnership with
a disease management entity, which doesn't have to be M+C--it
could be somebody else--and the patient, to assemble that
community of care around the needs of the individual. It is not
a given. Then to integrate data which is actually captured in
many different parts of the system, to bring them together.
That can be identified by diagnosis or by patient or by
substance or by the DM community.
All are doable. I mean, there is technology. There are
people who know how to do it. You know, there are resources to
do those things. It is all doable. It is just not a ready-made
platform, the way it is outside of the fee-for-service sector.
Mrs. THURMAN. In Medicare, it sounds to me like there needs
to be some kind of a benefit payment structure within our
Medicare fee-for-service to provide for that. Is that what we
are kind of saying? I know we talked about primary care, talked
about the gatekeeper. Those were kind of some of the buzz words
at the time.
Is there anything in our Medicare payment services now that
would allow us to do that? For example, we have struggled with
the issue of whether or not we should pay for every year an
exam. Right now I can't remember if Medicare--I don't think we
ever offered that once-a-year exam, so that at the beginning,
the person comes in at the beginning of the year, you have an
opportunity--what are some benefit issues that we could be
doing under Medicare fee-for-service, that would help in fact
organize as you are suggesting?
If we can find out and we can put them in the right
direction, we are in better shape, and then you have somebody
that also can organize this to some--are we doing anything in
the benefit plan to help to do that?
Mr. KING-SHAW. Excellent question. The principal piece on
the benefit side is preventive care services, and that is by no
coincidence a part of the President's principles for reforming
and strengthening and modernizing Medicare. It is with that
preventive piece, the screening piece, that you do a lot of
your risk measurement up front and your monitoring that is such
an important part of disease management.
So, for example, we have very specific screening tests that
are covered under Medicare but they are specific. General
health care screening is not included. That would be one.
Clearly, prescription drugs. When you have many of these
conditions, the prescription drug cost for wellness and
prevention and maintenance is an integral, important part. I
think that the power, the potential power of the new round of
BIPA demonstrations does include prescription drugs in the
community of care, if you will. Without a prescription drug
benefit on the fee-for-service side or any clinical trial as
something to attach to, you have left a huge hole out there.
Then the last piece, again, is you have to have an
integrator, a care manager, somebody who is truly organizing
all of this on behalf of the patient-physician relationship.
There we are testing methodologies that would have physicians
actually empowered through primary care case management type of
things and financial resources brought to bear, to enable him
or her to perform that integrating function.
Mrs. THURMAN. In the M+C programs we actually provide them
those incentives to do that through the payment structure and/
or whatever, so----
Mr. KING-SHAW. Yes, yes.
Mrs. THURMAN. Okay. Thank you very much.
Mr. KING-SHAW. Thank you.
Chairman JOHNSON. Mr. Houghton?
Mr. HOUGHTON. Madam Chairman, first of all, thank you very
much for letting an alumnus come back to this Subcommittee, an
outsider, and I really applaud you for having this hearing. It
is just under so many things that we need to talk about and
discuss.
Mr. King-Shaw, thank you so much. We are honored to have
you here, and you are doing just a wonderful job. I would like
to ask you a question. You mentioned in your testimony the
disease management for lung cancer, and I know Dr. Henschke is
going to be talking about this a little later, but in terms of
just the human part here, cancer, lung cancer kills so many
people and is often so expensive to treat, particularly in the
final stages. How can your agency really take steps to help
those patients get good care, but care that won't break the
bank? That is really the only question I have.
Mr. KING-SHAW. Well, again I would say it begins with the
screening piece. I am familiar with some of the work being done
up at my alma mater, Cornell University, around this area, and
in fact the kind of screening, that computerized tomography
(CT) scanner screening for lung cancer, is a proven, effective
way of risk assessment which is a part of the overall package.
So not having the ability to do that for lung cancer
specifically is an issue, and so we would look to be able to do
a better job at screening as a part of disease management, in
order to be more successful at it. That is one.
I would also say that as we partner with community-based
organizations, again, one of my comments was, partnering with
academic medical institutions, community-based care providers
and those types of things, there are folks out there who know
very well how to manage and treat this condition. It is
expensive, and so when we talk about making things less so or
moving the care earlier in the development of the condition, so
that your interventions can be more effective and the
downstream costs can be minimized, but there is a certain
amount of financial commitment that, you are going to have to
make to effectively manage or treat lung cancer patients.
So, I think the short answer is, we would partner with
those folks who know how to do this, again until we can build
more infrastructure inside. We would have to look at our
ability to provide some of the important screening up front,
the capabilities, and you know there is the case that, as I
said, Medicare law does not specifically allow us to do this.
There is always the opportunity to look at our overall
benefit structure it and modify it, in this case for lung
cancer but I would suggest for many other conditions as well,
through the national coverage decision process. Where we have a
need to look at technology or methodologies and go through
evidence-based review of its potential to contribute to life
and wellness in the Medicare program, we have a mechanism to do
that. We need to have a law that says it is covered, first, but
once we have that, there is a process that we have already
established that can help us bring to the Medicare program
technologies and strategies such as this one, for lung cancer
patients or for anybody else.
Mr. HOUGHTON. Just to follow up on that just a bit, since
it is not quite a third but almost a third of all the cancer
deaths really are from lung cancer, this is such an important
area, break down a little bit what you mean by partnering.
Mr. KING-SHAW. Well, for example, if we were to do a
provider sponsored, in this case demonstration for disease
management around lung cancer, one of the places I would look
to is Cornell, who is doing this. There are other types of
academic or provider organizations that are doing this.
So to partner, it would mean bringing them in as either a
care manager, or we would develop a patient population we would
place under their management. They would develop a proposal
that would look at what resources they would have to bring,
educators, care managers, and so forth; a system for providing
some of the related care needs of lung cancer patients.
We would work out a financial mechanism, whether that would
be a case rate or a capitation, or that would be some type of
bundled rate or fee-for-service or some administrative
reimbursement that covers the cost of integrating these things.
There is no risk involved. There are many different financial
relationships you can build.
Mr. HOUGHTON. These are things that could be done, not are
being done now. Is that right?
Mr. KING-SHAW. Yes, that is correct. These are things that
could be done. We are doing them, applying those technologies,
those methods, to things other than lung cancer. A lot of what
I have talked about in diabetes or hypertension and congestive
heart failure are those very same types of applications. We are
not doing it currently for lung cancer. We could.
Mr. HOUGHTON. Thank you. Thank you, Madam Chairman.
Mr. KING-SHAW. Well, thank you.
Chairman JOHNSON. Thank you, Mr. King-Shaw. I just did want
to ask one final question. I know you have got a proposal out
there for a number of disease management demonstration
projects. I wondered if you could just give us a quick run-down
of how many Medicare beneficiaries you are going to target for
each demonstration, whether they will be distributed across the
regions of the country, across minority populations, urban/
rural, and what incentive will there be for physicians to
participate?
Mr. KING-SHAW. I can maybe give you some sense by picking a
few at a time. The PPO demonstrations, we anticipate there
being 12 geographic markets spread throughout the country,
because every market has a different nuance. Twelve geographic
areas, twelve markets should give us, I think, a well-rounded
comprehensive, and we would look at large and small towns and
big cities. There are some rural methodologies out there that
people would want to bring, so I would hope to have some rural
participation as well in those 12.
A number of the, it is the BBA, what is currently the 15
demonstrations, have been everywhere from--we have some in
Virginia, you have some in the Midwest and in New England, you
have got those down--we understand that there is about, I
think, 6,700 Medicare beneficiaries that we would anticipate
being a part of those.
Under the new BIPA ones, there is a cap of 30,000
beneficiaries. I can get you all of this information in writing
with a much more detailed spreadsheet that would give you the
number of lives and markets and locations once the contracts
are awarded, sometime after July.
In the testimony, if you don't have it, I can provide it,
too, there is a grid that gives you the geographic location and
the disease class of the current 15 BBA demonstrations. I can
also give you some more of the history of the lives that were
involved in some of the past demonstrations.
[The information follows:]

Medicare Coordinated Care Demonstration
----------------------------------------------------------------------------------------------------------------
Projected
Project Site Rural/Urban Beneficiary Location Beneficiaries To Be Targeted Diseases
Served
----------------------------------------------------------------------------------------------------------------
Avera McKennan Rural SD, IA, MN 634 Congestive heart
Hospital Sioux failure and related
Falls, SD cardiac diseases
----------------------------------------------------------------------------------------------------------------
Carle Foundation Rural Eastern IL 1,518 Various chronic
Hospital Urbana, IL conditions
----------------------------------------------------------------------------------------------------------------
CenVaNet Richmond, VA Urban Richmond 614 Various chronic
conditions
----------------------------------------------------------------------------------------------------------------
CorSolutions, Urban Houston 1,963 High-risk congestive
Medical, Inc. heart failure
Buffalo Grove, IL
----------------------------------------------------------------------------------------------------------------
Erickson Retirement Urban Baltimore 396 Various chronic
Communities County, MD conditions
Baltimore, MD
----------------------------------------------------------------------------------------------------------------
Georgetown U. Medical Urban DC, MD suburbs 1,025 Congestive heart
Center Washington, failure
DC
----------------------------------------------------------------------------------------------------------------
Health Quality Both Eastern PA 1,070 Various chronic
Partners conditions
Plumsteadville, PA
----------------------------------------------------------------------------------------------------------------
Hospice of the Valley Urban Maricopa 1,092 Various chronic
Phoenix, AZ County, AZ conditions [Note: Demo
not limited to end-of-
life care]
----------------------------------------------------------------------------------------------------------------
Jewish Home and Urban New York City 365 Various chronic
Hospital New York, conditions
NY
----------------------------------------------------------------------------------------------------------------
Mercy Medical Center Rural Northern IA 607 Various chronic
Mason City, IA conditions
----------------------------------------------------------------------------------------------------------------
Medical Care Rural ME 1,218 Congestive heart
Developments failure or post-acute
Augusta, ME myocardial infarction
----------------------------------------------------------------------------------------------------------------
Quality Oncology, Urban Broward 1,426 Cancer
Inc. McLean, VA County, FL
----------------------------------------------------------------------------------------------------------------
QMED, Inc. Laurence Urban Northern CA 571 Coronary artery disease
Harbor, NJ
----------------------------------------------------------------------------------------------------------------
University of Urban Baltimore, MD 339 Congestive heart
Maryland Baltimore, failure
MD
----------------------------------------------------------------------------------------------------------------
Washington University Urban St. Louis, MO 5,422 Various chronic
St. Louis, MO/ conditions
StatusOne Health
Hopkinton, MA
----------------------------------------------------------------------------------------------------------------

Chairman JOHNSON. Well, thank you very much. You did
mention in response to my colleague from Florida's comment,
that under the fee-for-service system there would have to be
some compensation for this management capability that the
managed care systems are able to provide. I assume in your
demonstration project, you will get a better handle on what it
will require for physicians to add the extra time it takes to
spend on patient education and to coordinate care, or a non-
physician assistant. So, I think those costs that are currently
being absorbed by the Choice plans will be isolated in these
demos and will get a better handle on that.
Mr. KING-SHAW. Yes. In fact, in some of these demos there
is an administrative fee which is a part of the demonstration
to the best of our understanding right now to cover those
costs. You are absolutely correct, as these demonstrations
unfold, we will get a much better handle of what the financial
resources that are required on the part of physicians and other
clinicians to be effective disease managers. We can then build
a model that would incorporate that.
Mr. McDERMOTT. Madam Chairman, may I ask a question?
Chairman JOHNSON. Yes.
Mr. McDERMOTT. We had sporadic reports recently in Seattle
of patients having difficulty finding physicians who would take
payment for Medicare. What I am interested in understanding is,
do you think that in the face of our attempt to cut
reimbursement in this session of the Congress that we can
expect that there will in fact be more patients who have access
to the kind of health care you are trying to deliver? Do you
think you are going to get more doctors involved in that kind
of chronic management if we cut our rates by 5\1/4\ percent?
Mr. KING-SHAW. Well, I mean, the sustainable growth rate
that Congress gives us to work with resulted in those negative
updates, the physician fee schedule that you are referring to.
Absent a change in that formula or corrective action then
that's what we have to live with. So, I think that we need to
recognize that there is a threat to the integrity of a provider
network in Medicare with the financing and the financial
pressures under--on top of the system right now. So, should we
be concerned about that threat? Yes. One of the things that we
are doing at CMS through our 10 regional offices and out of the
outreach, is we are seeking to obtain very quantifiable
specific data about participation rates in Medicare, either as
a result of the current numbers or as anticipation of more
oblique numbers going forward. As we collect that very specific
about those who are just saying they are going to leave, but
actually leave, actually disenroll, we can provide that
information to leadership for consideration.
Beyond just looking at the number of physicians who leave
Medicare or not is the important question of is there a
restriction of panels? Do you see physicians reserving less and
less time in their weekly schedules for Medicare patients? Are
they closing their practices to any additional Medicare
patients? The conversation seems to have remained at, are we
going to lose doctors through Medicare? Perhaps we may not lose
a doctor through Medicare--from Medicare. We may have that very
same physician restrict the ability of Medicare patients to get
their attention, and that is as much of a concern to us.
Is that a threat? Absolutely. Are we going to try to
articulate that in clearer objective ways? Absolutely.
Mr. McDERMOTT. What is the administration's proposal to
deal with the 5.4-percent reduction?
Mr. KING-SHAW. Work with Congress to figure it out.
Mr. McDERMOTT. Thank you for that clarifying answer.
[Laughter.]
Mr. McDERMOTT. Thank you, Madam Chairman.
Chairman JOHNSON. Thank you very much for your testimony. I
did discuss before the hearing started, the things that the
Virginia hospitals are doing, and I will look forward to
hearing from you as to how that fits in, and the other reports
that are coming out now, the one from Ernst & Young and Cap
Gemini on disease management and fee-for-service beneficiaries.
So, we look forward to working with you on these issues in the
months to come, and hopefully making some significant progress.
Thank you very much for your testimony this morning.
Mr. KING-SHAW. Thank you, Madam Chair.
Chairman JOHNSON. I would invite the final panel up, Dr.
John Wennberg, the Director of the Center for Evaluative
Clinical Sciences, Dartmouth University; Mike Hillman, Dr.
Hillman, the Medical Director of the Business and Community
Health, Marshfield Clinic, Marshfield, Wisconsin; Dr. Claudia
Henschke, Professor of Radiology, Director of the Division of
Chest Imaging, and Director of the Division of Health Policy
and Technology Assessment at Cornell University; Dr. Gerard
Anderson, Professor of Health Policy and Management,
International Health, Johns Hopkins University; and Dr.
Jonathan Lord, Senior Vice President and Chief Clinical
Strategy and Innovation Officer of Humana.
We welcome you all to this important hearing and look
forward to your comments. We will move right through. We have
that roughly 5-minute rule, and then we will follow that by
questions.
Dr. Wennberg, welcome.

STATEMENT OF JOHN E. WENNBERG, M.D., M.P.H., DIRECTOR, CENTER
FOR THE EVALUATIVE CLINICAL SCIENCES, DARTMOUTH COLLEGE,
HANOVER, NEW HAMPSHIRE

Dr. WENNBERG. Thank you, Chairman Johnson, Congressman
Stark. I am glad to be here today. I have been asked to comment
on geographic variations in traditional Medicare and their
implications for the design of chronic disease management
programs.
In my written testimony, I document extensive unwarranted
regional variations in the patterns of practice. The amount of
care patients receive depends as much on where they live as it
does on the disease they have.
First, there is extensive under use of effective care. That
is, care that works and all patients should get. Second, there
is extensive misuse of discretionary care such as elective
surgery, care that should depend on what patients want, but
seems to depend too much on what providers prescribe. Third,
there is extensive over use of physician visits, testing,
imaging, hospitalizations, and stays in intensive care. The
frequency of use in a given region has to basis in medical
science and is determined by the supply of resources rather
than medical need.
Finally, Medicare spending varies extensively. In 1996, per
capita spending in Miami was nearly 2\1/2\ times that of
Minneapolis, but greater spending does not buy higher quality-
of-care. These regions score equally poorly on such measures of
quality as the percent of diabetics who get needed eye exams or
heart patients who get needed drugs. Greater spending is not
associated with greater rates of elective surgery. Rates are
about the same in high-cost regions such as Orange County,
California, as in low-cost regions such as Portland, Oregon.
What then does greater spending buy? It buys more visits,
more tests, more stays in hospitals, and more stays in
intensive care. In some regions Medicare enrollees average more
than 20 visits to medical specialists during the last 6 months
of their lives. In other regions the average is less than
three. In some regions nearly 30 percent of Medicare deaths
occur in ICUs; in others, fewer than 7 percent do. This all
adds up to a lot of money. If the pattern of conservative
practice observed in regions with low spending were the norm
for the Nation, we have estimated a savings of over $40 billion
in 1996. The implications seem quite clear. If disease
management programs in traditional Medicare are to have system-
wide impact on overall qualify and costs, they will need to
provide remedy for each category of unwarranted variation.
The causes and remedies for variation are different
according to the category. Disease management programs
organized by health maintenance organizations (HMOs) have been
quite successful in reducing under service of such things as
diabetic eye exams and beta blockers. They should well work in
traditional Medicare, particularly if the claims data can be
mobilized and patient registries can be mobilized to assist in
that process. Variations in discretionary surgery and other
preference sensitive treatments pose a greater problem. In some
regions virtually no patients with breast cancer receive a
lumpectomy, while another region's almost have to. Such
variation occurs because patients aren't involved in a
meaningful way in the choice of treatment. Patients need to
understand their options.
A basic problem is that Medicare fee structure rewards
procedures, not counseling. Disease management demonstration
projects should be given flexibility to deal with these flaws
that perversely interfere with informed patient choice.
The principal cause of geographic variation in visits,
testing, and hospitalizations of the chronically ill is
variations in the supply of resources relative to the size of
the population saved. More physicians means more frequent
visits. More hospital beds means more hospitalizations. Greater
use of care means more Medicare spending. We interpret these
patterns as evidence for inefficiency in the use of resources,
not health care rationing. Medical science provides no
guidelines regarding appropriate use and studies conducted at
the population level show no gains in life expectancy
associated with a twofold variation in spending across the
United States for Medicare. For these reasons, we believe there
is widespread overuse of such services.
Dealing with the overuse of what we call supply sensitive
services poses a great challenge. The problem is finding the
appropriate level of resources. Only staff model HMOs have
dealt effectively with this problem. Staff model HMOs practice
what Alan Enthoven has called ``private sector health
planning.'' That is, they regulate the capacity of their
organizations. Since their benchmarks for resource inputs are
consistently lower than the prevailing rates in their regions,
the cost of their care has been correspondingly lower than fee-
for-service medicine. For the Nation to achieve such
efficiency, health care organizations serving fee-for-service
populations would need to become accountable for their own
capacity.
While the task of comprehensive reform of the management of
chronic disease is formidable, we need to get on with it. I
applaud the Subcommittee's willingness to address the
complexity of this task. I applaud the efforts by CMS to invite
chronic disease management companies to undertake demonstration
projects in fee-for-service Medicare. We need to learn how well
the network model can improve the quality-of-care in each
category of service, but the complexity of the task warrants
additional demonstration projects carried out by provider
organizations serving traditional Medicare populations. In my
written testimony, my colleagues and I have recommended that
such a demonstration project be undertaken.
I want to thank you for the opportunity to testify, and
also to thank you personally for the kind comment that you made
on our paper in health affairs.
[The prepared statement of Dr. Wennberg follows:]
Statement of John E. Wennberg, M.D., M.P.H., Director, Center for the
Evaluative Clinical Sciences, Dartmouth College, Hanover, New Hampshire
My name is John Wennberg. I am a member of the faculty of Dartmouth
Medical School. I have been asked to comment on variations in Medicare
spending and quality, and on the implications of these variations for
the design of chronic disease management programs. It is now well known
that spending for traditional, fee-for-service, Medicare varies
extensively. For example, in 1996, age, sex and race adjusted spending
for non-HMO Medicare services in the Miami hospital referral region was
nearly two and a half times higher than in the Minneapolis hospital
referral region. In a recent Health Affairs article (attached), my
colleagues and I described some of the variations in quality of care
among hospital referral regions, as well as the association between
quality and spending. We looked at three categories of medical
services: ``effective care,'' ``preference-sensitive care'' and
``supply-sensitive care.''

It is important to make distinctions among effective care,
preference-sensitive care and supply-sensitive care because the
causes of the variation and the remedies are different for each
category. Moreover, variation in per capita Medicare spending
is associated with only one of these categories--supply-
sensitive care. If disease management programs are to have an
important impact on the overall quality and cost of care for
the chronically ill, the programs will have to address
variations in each category.

I will summarize very briefly what we mean by the terms effective,
preference-sensitive, and supply-sensitive care. Each of these
categories of care raises a different challenge to the design and
implementation of disease management programs.
Effective care is evidence-based care--care that we know works and
we know all eligible patients should get. Our studies show extensive
underuse of effective care among fee-for-service Medicare enrollees in
virtually every part of the country. For example, in some regions of
the United States, less than 20% of post-heart attack patients who were
classified as ``ideal'' candidates for a particular medication actually
received the medication. There are similar patterns of underuse of
effective treatments for Medicare enrollees with diabetes, and evidence
that there is poor compliance with guidelines for cancer screening and
immunizations. The principal cause of variation in the delivery of
effective care is a lack of infrastructure--systems that make sure that
appropriate care is provided in a timely way.
Correcting the underuse of effective care will demand improvement
in the infrastructure of the everyday practice of medicine. Staff model
HMOs provide exemplary models of how this can be done and a number of
network HMOs (and their disease management company subcontractors) have
had success in promoting provider compliance. Health insurance claims
provide the information databases that can identify patients who need
services, so that both patients and providers can be reminded to seek
and administer appropriate care in a timely way. The processes of care
can be monitored with these claims databases, at the level of
individual practitioners or physician groups. We have shown that this
monitoring is possible using the Medicare claims data; and many health
systems already have the information available, but have not put it to
use.

Underuse of effective care can be reduced by collecting and
monitoring the processes of care at the hospital and physician
group levels. Medicare claims data can serve as the basis for
establishing disease management registries to identify patients
in need and document health care quality. Medicare claims
should be made available in ``real time'' for use in disease
management demonstration projects in traditional Medicare.

Preference-sensitive care pertains to conditions where at least two
valid treatment strategies are available, each with its own risks and
benefits. Since the choice of treatment involves tradeoffs that ought
to depend on patients' preferences--such as the choice between surgical
or pharmaceutical treatment--the patient's choice of treatment should
determine what is done. There are wide variations in the use of
discretionary surgery and other preference-sensitive treatments. For
example, the rates of lumpectomy for breast cancer and prostatectomy
for prostate cancer vary by a factor of five among hospital referral
regions in the United States. In some cases, the principal cause of
variation is that there is substantial uncertainty about the risks and
benefits of the treatment options because there have been no clinical
trials to determine the facts. The fundamental problem, however, is the
failure to involve the patient in a meaningful way in the choice of
treatment. Decisions should belong to the patient, but provider opinion
tends to dominate. For this reason, we believe there is widespread
misuse of preference_sensitive care.
Dealing with the misuse of preference-sensitive care requires that
patients become actively involved in the choice of treatment in those
clinical situations where options exist. Shared decision making or
``informed patient choice'' is gaining recognition as the remedy for
unwarranted variations in this category, but implementation is just
beginning. Staff model HMOs and a few IPA HMOs provide examples of
implementation, but the results are spotty. A basic problem facing IPA
and traditional Medicare is that the fee structure doesn't reward
providers who implement shared decision making; in other words,
reimbursements reward activity, rather than careful consideration of
all the options. The most important goal of this effort should be to
make sure that people with chronic illnesses know what the options are
(including costs, risks, and benefits). The current system does not
reward or encourage physicians to engage in this effort. It should,
because it is the right thing to do. It could also save money. Several
studies have shown that informed patients tend to want less surgery
than surgeons are inclined to recommend under the current system of
rewarding procedures rather than counseling.

Misuse of discretionary surgery and other forms of preference-
sensitive care can be reduced by actively involving patients in
the choice of care. We must make sure that chronically ill
patients understand their options and are aware of the benefits
and risks of treatment. Disease management demonstration
projects should be given flexibility to deal with the current
flaws in the traditional Medicare fee structure that perversely
interfere with informed patient choice.

Supply-sensitive services are those in which the frequency of use
is not determined by well-articulated medical theory, much less by
scientific evidence. Supply-sensitive services include physician
visits, diagnostic tests, hospitalizations, and admissions to intensive
care among patients with chronic illnesses. The variations are
particularly striking among the most seriously ill Medicare enrollees.
In some regions, Medicare enrollees average more than 20 visits to
medical specialists during the last six months of their lives; in other
regions, the average number of such visits is fewer than three. In some
regions, nearly 30% of Medicare deaths occur in ICUs; in other regions,
fewer than 7% do.
The principal cause of variation in utilization of services is the
regional and local variation in resources. More hospital beds per
capita mean more hospitalizations per capita among those who have
chronic diseases such as congestive heart failure, diabetes and chronic
pulmonary disease. More cardiologists per capita mean more visits with
cardiologists per person with heart disease. Yet there is little
medical theory--and no evidence--about the appropriate frequency of
such services--that is, what rate of physician visits, for example,
results in the best health outcomes. Moreover, studies conducted at the
population level have demonstrated that there are no gains in life
expectancy associated with higher frequency of intervention. For these
reasons, we believe there is widespread overuse of supply-sensitive
services.
Dealing with the overuse of supply-sensitive services poses the
greatest challenge to the implementation of a comprehensive program in
disease management. Most of the care given to patients with chronic
disease belongs in this category. Those who live in areas with more
resources are likely to have more visits with doctors, more tests, and
more admissions to hospitals and to intensive care, particularly at the
end of life. This is the category of care that ``explains'' higher per
capita spending, but it is not associated with better quality of care
or extension of life expectancy. Medicare enrollees living in regions
where per capita spending is higher than average don't receive more
effective care--and the differences in spending are also not explained
by higher rates of major (non-elective) surgery. (See Exhibit 2 in the
attached article.)
The role of supply-sensitive services in both spending and outcomes
has received little attention from academic researchers. The topic
barely makes it onto the research agenda, and there are few studies
that could provide a basis for constructing guidelines that might tell
us how many physicians are actually needed in a given region, what rate
of visits to physicians results in the best outcomes for those with
chronic diseases, or whether the use of expensive diagnostic technology
actually improves accurate diagnosis, health, or survival. Recent
research on the redesign of clinical practice to introduce group visits
and open appointment schedules is encouraging because it breaks the
cycle of supplier-induced demand and could serve as the basis for
redesign of chronic disease management.
Except for staff-model HMOs, insurers and providers have not
responded to the challenge of determining what works and how much is
enough. Much of the intellectual leadership in the research on redesign
of clinical practice comes from these organizations, which are able to
control their own per capita resources (eg. doctors hired, hospital
beds constructed or contracted for, patterns of practice). But the
efficiency of staff-model HMOs in the use of supply-sensitive care is
probably more a byproduct of a corporate strategy of remaining
competitive with fee-for-service medicine than a conscious attempt to
manage chronic disease. As Alain Enthoven has pointed out, such HMOs
practice ``private sector health planning.'' That is, they regulate the
capacity of their organizations. Since the staff-model HMO standards
for resources are consistently lower than the prevailing rates of
resources in the regions where they compete, the cost of HMO care has
been correspondingly lower than the cost of fee-for-service medicine.
For the nation to achieve HMO-like reductions in spending, health care
organizations would need to become accountable for capacity. This is a
formidable task and one that in the absence of reform of payment
systems is probably impossible.
Addressing the overuse of supply-sensitive care is made even more
challenging by the cultural assumption that more health care is better.
There might be hope in the growing public awareness that for many
patients with advanced chronic illness, high-technology interventions
such as admissions to intensive care are both futile and unpleasant,
degrading the quality of life in its closing months and years. The
chronic disease management movement might find natural allies among the
growing numbers of Americans who are trying to reform of end of life
care.

Reducing the overuse of hospitals, intensive care, physician
visits and testing among chronically ill Americans should be a
national priority. This must be done if we want to reduce
unwarranted Medicare spending and improve heath care quality.
Disease management programs must address this priority.
However, the scientific basis for defining optimal care is weak
and, with the exception of staff model HMOs, the tools
available for dealing with the causes of variation are also
weak. Demonstration projects are needed to establish benchmarks
for effective clinical practice for supply-sensitive care and
to identify ``best practice'' models for efficient care.

While the task of comprehensive reform of the management of chronic
disease is a formidable challenge, we have a moral obligation to take
it on. I applaud the committee's willingness to address the complexity
of the task and confront the difficulty of finding workable solutions.
Progress often begins with debate, which I hope these hearings will
spark. I also applaud the efforts by CMS to invite chronic disease
management companies to implement experimental chronic disease
management in fee-for-service Medicare. We need to learn how well the
IPA model can improve the quality of care in each category of service.
The complexity of the task, however, warrants additional demonstration
projects, and some should be carried out by provider organizations
serving traditional Medicare populations. In our Health Affairs
article, my colleagues and I recommend a demonstration project that
could prove that the federal government and responsible health care
organizations can establish a partnership to fruitfully address each
category of unwarranted variation. The results could, I believe,
improve the quality and efficiency of services provided for all fee-
for-service Medicare beneficiaries. And it is only the first step in
improving the quality of care for all chronically ill Americans while
we demonstrate that doing medicine right does not mean doing it the
most expensive way.

Chairman JOHNSON. Thank you. Dr. Lord.

STATEMENT OF JONATHAN T. LORD, M.D., CHIEF CLINICAL STRATEGY
AND INNOVATION OFFICER, HUMANA INC., LOUISVILLE, KENTUCKY, AND
PRESIDENT, DISEASE MANAGEMENT ASSOCIATION OF AMERICA

Dr. LORD. Good afternoon. My name is Jack Lord, and I am
the Chief Innovation Officer for Humana. I am also the
President of Disease Management Association of America.
Health benefits companies like Humana have turned toward
disease management programs to help Members get appropriate and
effective care. Humana, like many other health plans, has
changed its approach to medical management after years of
understanding that the real needs that people have is to have
supported self management. That approach emphasizes Members'
control of their own care and help to make better decisions.
Dr. Wennberg and I have collaborated for the last decade at
the American Hospital Association and an organization called
Health Dialog to produce tools that help people make better
decisions.
Disease management programs also provide for personalized
support for the people who are sick so they can get more
effective care, and certainly self-care opportunities for the
well. The availability of technology, e-health and the Web make
those systems far more effective.
Disease management was evolved to help deal with some of
the symptoms of a systemless world. Fragmentation, variation,
lack of adherence to clinically proven practices, lack of
patient involvement and the absence of predictive tools, where
we had to rely on data from our rear view mirror as opposed to
looking forward, characterized the way health care has been
practiced in this country in many regions.
Disease management does support self management of
individuals, focuses on what Dr. Wennberg calls effective care,
uses evidence-based treatment protocols to provide information
to both patients and practitioners, emphasizes the coordination
of care, and uses advanced sciences to help track patients and
look at outcomes. That science could be used to help predict
future needs of people.
The impacts of disease management programs include better
care planning, both at the individual level as well as at a
population level, healthier behaviors on the parts of
individuals and their families, better clinical outcomes,
physical function and quality of life, better access in care
coordination, and ultimately lower cost, reduced
hospitalizations, surgery and invasive procedures.
Research shows that disease management is effective. Humana
has been an industry leader in this effort, and we have put our
effort and resource behind that. Whether it is in specialized
diabetic care for Hispanics in San Antonio or in the under
served areas of this country in terms of rural health care, we
have seen results. Diabetes programs show that patients who are
managed through disease management programs have increased
frequency of hemoglobin A1c testing, foot exams, eye exams, and
cholesterol exams, and demonstrate reduced hospitalization.
Congestive heart failure programs show significant reductions
in inpatient stays, admissions, emergency room visits, as well
as the reduction of disease-specific claims and co-morbidities.
These are outlined in our written testimony.
Humana's own experience reflects the research. Congestive
heart failure, 90 percent of patients show improvements or
stabilization of their disease, and a 60-percent reduction in
hospitalization. Coronary artery disease patients show
significant reductions in cholesterol levels, and patients who
have chronic renal disease show greater percentages achieving
dialysis targets when people are in disease management programs
than outside of those programs.
The bottom line is, what is right for patients and what is
right for you and me? People are more engaged in their own
care. They get effective care. That is, care that has been
proven to be right. They avoid unnecessary or harmful care, and
they have an opportunity to have improved compliance both in
their drug regimens as well as the medical regimens that are
prescribed by their physicians. The net result is improvement
in self-reported health and real functional status for
individuals.
We have outlined some stories in the written testimony,
stories that reflect our sensitivity around the privacy of our
Members, but also give you a glimpse of the kinds of care and
the kinds of outcomes that are achievable.
One quick example. Mrs. V. We have an example here of a
patient who had successful behavior modification when enrolled
in a disease management program for congestive heart failure.
The key to success is targeting the right patients and
being sure they are connected to the right care. The M+C
programs have had advantages because of the data and the
integration of services. We can use claims to target that
information, and we can use outreach programs like our Personal
Nurse program, where we provide essentially a concierge for
those people who have complex significant chronic disease.
The bottom line to all of this is disease management has
demonstrated advantages for the chronically ill Medicare
beneficiary. Most M+C programs have offered some form of
disease management programs, and those efforts should be
continued. There is a tremendous opportunity to extent disease
management programs beyond the M+C program to a fee-for-service
program, and have an impact on getting the right care to people
and lowering the cost of the care that is provided to Medicare
beneficiaries across the country.
Thank you, Madam Chair.
[The prepared statement of Dr. Lord follows:]
Statement of Jonathan T. Lord, M.D., Chief Clinical Strategy and
Innovation Officer, Humana Inc., Louisville, Kentucky, and President,
Disease Management Association of America
Good Afternoon. My name is Jack Lord, and I am Chief Clinical
Strategy and Innovation Officer for Humana Inc., one of the nation's
largest health benefits companies. Humana provides health benefits to
nearly 6 million commercial, military, and Medicare beneficiaries. I
have also spent time as Director of Quality for the Naval Medical
Command, Executive Vice-President for a large health system in
Maryland, as Chief Operating Officer of the American Hospital
Association, and as President of Health Dialog, a company providing
tools and services to enhance consumer medical decision making.
Additionally, I am president of the Disease Management Association of
America. I am pleased to be here to tell you about how health benefits
companies like Humana have turned to disease management programs to
help our members--especially those members most in need of care--to
obtain appropriate and effective care.
Over the past six or seven years, the offering of health benefits
has significantly changed to address what consumers want. Many of those
changes are already bearing fruit. So not only do we have a great
chance to exceed the expectations of our customers--they couldn't be
lower--but by the time everybody becomes aware of the great changes
that have taken place in our business practices, we will already have
results to prove that the new approaches work--not just for us and for
employers but for patients, too. I'm happy to be here to share some of
these results and, more importantly, some of these success stories,
with you today.
First, I'd like to tell you a little bit about how health plans
have begun to focus on disease management as a core strategy for
addressing medical management. Then, I'll share with you some
information about disease management programs--what they are, how
effective they are, and what we do at Humana, as a health plan, to
better target, recruit, and triage our members, and to provide better
continuity and integration of care. Finally, I'd like to talk a little
bit about how disease management can be extended to all Medicare
beneficiaries, and note some practical obstacles that may stand in the
way.
New Approaches to Medical Management

Consumers in the market place have made health plans to look in the
mirror and rethink how they approach medical management. Humana, like
many other plans, has made extensive changes in its approach. We are
trying to focus our effort on providing personalized support to the
sick so they can get appropriate care and provide opportunity for the
healthy to manage their own health with the help of advanced
information technology. We take seriously our relationship with our
members and our responsibility to help them get more control and make
better decisions about their health and their care.
Our data show that a relatively small percentage of members consume
the health care services that account for 90 percent of health care
costs each year. Medicare knows this phenomenon well. In the Medicare
population these tend to be very sick people with chronic conditions
that require ongoing attention if they are not going to enter a cycle
of costly acute episodes, or beneficiaries at the end of their lives.
Think, for a moment, about the people you know with serious chronic
diseases--people with diabetes, heart disease, or kidney disease. These
people need to receive routine care for their conditions, adhere to
treatment protocols, comply with medication regimens. And if they do,
their conditions can be maintained and their health functioning
significantly improved. For many of the most common and costly
conditions, programs have been developed to operationalize the clinical
knowledge that will keep these chronically ill people feeling
relatively healthy, keep them out of the hospital and reduce their
health care needs and costs.
These sorts of programs are increasingly prevalent in health plans.
A survey last year by the American Association of Health Plans found
that the average plan had at least five disease management programs,
usually focusing on diabetes, coronary artery disease, congestive heart
failure, asthma, high risk pregnancy, and depression.
What is disease management?

Disease management provides disciplined, evidence-based, expert-
approved support for individuals with chronic conditions to help them
become more aware of their condition and of their treatment choices, to
change their behavior to reduce their health risk, and to bridge their
relationships with their physicians. They do this by educating the
patient and encouraging adherence to a personalized treatment plan
based on the body of clinical expertise we call ``evidence-based
medicine.''
Disease management evolved over the last twenty years out of the
recognition that our health care system does not behave like a system
at all. DM is an approach to patient care that is designed to
compensate for the fragmentation in service delivery, the unwanted
variation in care, the lack of adherence to clinically proven
practices, the lack of adequate patient education and decision support,
and the inadequate involvement of patients in making decisions about
their care.
Disease management is a multi-disciplinary set of services that
generally involves identifying the population at risk and eligible for
disease management services, and matching interventions with need;
educating patients for self-management, including primary prevention,
behavior modification, and support for compliance with the treatment
plan; ongoing, structured assessment and the use of evidence-based
practice guidelines to establish personalized treatment goals and to
standardize treatment plans; ongoing communication with the patient and
her family, with routine reporting and feedback to her physicians and
support-service providers; measuring, evaluating, and managing
outcomes; and periodic reassessment and feedback to capture problems as
early as possible and to make adjustments to treatment goals and care
plans before the problems become more severe.
For many patients the need for health care is ongoing and the
required patient effort is significant. Intensifying the support
provided to those patients and their practitioners can improve the
process and outcomes of care. Disease management supports the patient's
self-management and uses evidence-based treatment information as a
basis for coaching the patient and providing timely information to the
practitioner. Since most physicians practice alone or in small, single-
specialty groups without an infrastructure or team to support the
systematic management of patients with chronic disease, DM programs
emphasize the coordination of services between the treating physician
and nurse case managers, educators, pharmacists and other health care
professionals. Because of the need for daily monitoring of measures of
health or adequacy of medication, such as blood sugar in diabetes or
body weight in congestive heart failure, patients with chronic illness
need to take an active role in the management of their disease.
Advanced information technology is frequently used to monitor patients,
such as Interactive Voice Response (IVR) systems that allow patients to
make daily reports of their vital signs and symptoms using a touch-tone
telephone, facilitating regular reporting of process and outcome
indicators.
By maximizing patient adherence to prescribed treatments and to
health-promoting behaviors, patients with chronic diseases should
experience better clinical outcomes, better functional capacity and
quality of life, better access to care, better coordinated care, and
lower health care costs through a reduction in hospitalization, surgery
or other invasive care.
Effectiveness of Disease Management

So what does the research say? How effective are these programs?
A study of a diabetes program implemented in several plans
concluded that the program generated substantial cost savings and
resulted in substantial improvement in all clinical measures. According
to the study, ``members were more likely to receive HbA1c tests, foot
exams, eye exams, and cholesterol screenings while enrolled in the
program . . . [and h]ospital utilization decreased dramatically for
each plan's diabetic population.'' \1\ Another study that followed a
group of patients with congestive heart failure showed significant
improvements a year after enrollment, including a 48 percent reduction
in inpatient (acute) days, a 36 percent reduction in inpatient
admissions, a 31 percent decrease in ER visits, and a 20 percent
decline of average length of stay, yielding an average reduction in
disease-specific claims of 54 percent and total claims of 42
percent.\2\ Health status improved, too--surveys revealed a 16 percent
improvement in functional status and quality of life, as reported by
patients themselves.
---------------------------------------------------------------------------
\1\ Robert J. Rubin et al., Clinical and Economic Impact of
Implementing a Comprehensive Diabetes Management Program in Managed
Care, 83 J. Clin. Endocrinol. and Metab. 2635, 2640 (1998) (Attachment
B).
\2\ Am Heart J 1999;138: 633-40.
---------------------------------------------------------------------------
Our own experience mirrors these results. We have found significant
savings related to the investment in time and support to help the
sickest of our members. But more importantly, we have seen
significantly improved health results for the members. Ninety percent
of participants in our CHF program show stabilized or improved disease
status, with a 60 percent reduction in hospitalization. Participants in
our coronary artery disease program show improved cholesterol control.
And a recently published study of our End Stage Renal Disease program,
comparing its results against the U.S. Renal Data System, a national
registry of 300,000 ESRD patients coordinated by CMS, found
significantly higher percentages of Humana members met their dialysis
adequacy targets than the national average. Hospital bed days were 45
percent lower than the USRDS average and ER visits dropped 75 percent
over the two year study period. Mortality for the Humana population was
80 percent of the expected mortality compared to the USRDS standard.
Of course, financial results tell only a small part of the tale.
The financial results improve because patients become more engaged in
managing their own health care, take better care of themselves, get
care that experts say they should be getting, avoid care that does them
little good, improve their compliance with drug regimens, and generally
experience improved health and functional status. Let me tell you a few
of these stories.
Mrs. V. is an obese diabetic female enrolled in the CHF program. At
the time of admission, she exhibited moderate fatigue and shortness of
breath with exertion. Her treatment plan focused on weight control,
exercise, and maintenance of a low-sodium diet. Mrs. V. eventually came
to exercise four times a day at 45 minutes per day, moderated her salt
intake, and lost 60 lbs. She is very satisfied with the program and
looks forward to the regularly scheduled calls. Mrs. B is a woman with
coronary artery disease enrolled after an angioplasty. She required
consistent reinforcement with routine exercise and stress management.
At enrollment, she couldn't walk a one block without complaining of
fatigue, but after one month she is able to walk a mile without
fatigue, feels less stress and is more motivated to manage her health.
One of the keys to a successful program is targeting the
interventions to the right patients so that services are matched to
needs. At Humana, we use our extensive claims information, including
daily feeds of pharmacy data, to identify and link members with
relevant information and services. To improve enrollment in our DM
programs, we used pharmacy and claims data to identify those members
who were likely to have a diagnosis of a chronic disease for which we
had an established disease management program. We were then able to
compare program enrollment with disease incidence so we could improve
the targeting of our efforts to recruit people into the programs. We
subsequently broadened our eligibility criteria and initiated new
procedures for the identification and recruitment of individuals who
would most benefit from DM services.
In addition, Humana has implemented a ``Personal Nurse'' program
that reaches out to members during acute episodes of illness. The
personal nurse provides pre--and post-hospital care coordination,
coaching and navigational support to help members make their treatment
choices, referral into appropriate disease management programs,
consultations with a pharmacist for drug-related issues, and access to
interactive, on-line personal health tools.
In this regard, the Medicare+Choice plans have capabilities that
Medicare simply does not have. We have procedures that enable us to
identify members as soon as they enter a hospital, which, in Humana's
case, triggers an outbound contact from a Personal Nurse who can assess
the member's suitability for a disease management program and recruit
the member directly into an appropriate program. In addition, the
freshness of our pharmacy reports provide a rich source of information
about the member's condition, compliance, complications, and
comorbidities, which we can use to identify members for intervention,
track guideline compliance, and enable our pharmacy consultants to
evaluate possible drug treatment problems.
Extending Disease Management to the FFS Population

At the moment, these great advantages for the care planning and
support for chronically ill beneficiaries are available only to
Medicare+Choice members. However, these represent a relatively small
percentage of Medicare beneficiaries. Most beneficiaries continue to
receive their care in the fragmented, uncoordinated fee-for service
world. We continue to believe that the ``system-ness'' offered through
Medicare+Choice plans creates distinct advantages for the prompt
identification and recruitment of beneficiaries into appropriate
disease management programs.
However, we commend the efforts of the Medicare program to
experiment with the use of disease management and care management
programs in the FFS environment and encourage further demonstrations of
its effectiveness. With appropriate targeting and recruitment, free-
standing disease management programs can produce savings for the
Medicare program and, through the systematization, care coordination,
and access to best-practice medicine that is at the core of DM
programs, improve the care experience of Medicare beneficiaries. CMS
Administrator Sculley has signaled his intention to conduct more
demonstration projects to use private disease management services to
bring some of the benefits of managed care to the fee-for-service
beneficiaries still struggling to navigate the fragmented,
uncoordinated health care ``system.'' We think these demonstrations are
worth expanding. In the coming years, with the advancing age of the
baby boomers and the increased ability of our health system to keep
them alive with chronic illnesses, the number of Medicare beneficiaries
having to manage chronic health conditions is likely to rise. There are
clearly some obstacles to the implementation of DM in the Medicare FFS
population that will require some creative solutions. The most
important of these is the identification and recruitment of the most
suitable beneficiaries during their moments of acute need--mechanisms
that exist within M+C plans to identify people when they are first
entering an episode of acute illness do not currently exist. In
addition, Medicare cannot rely on claims information for the
identification of eligible beneficiaries unless it is very timely.
These problems are not insurmountable, but they do need to be
addressed.
Conclusion

Disease Management offers significant advantages for the
chronically ill Medicare beneficiary. Most Medicare+Choice plans will
offer DM services and should be supported for doing so. But for the
many beneficiaries who are not able to obtain coverage in a M+C plan,
further extending the demonstrations to make private sector DM services
available would be very desirable.

Chairman JOHNSON. Thank you very much, Dr. Lord. Dr.
Hillman.

STATEMENT OF MICHAEL HILLMAN, M.D., MBA, MEDICAL DIRECTOR,
BUSINESS AND COMMUNITY HEALTH SERVICES, MARSHFIELD CLINIC,
MARSHFIELD, WISCONSIN

Dr. HILLMAN. Representative Johnson, Mr. Stark, on behalf
of Marshfield Clinic, thank you for conducting this hearing. My
name is Mike Hillman. I am the Medical Director for Business
and Community Health Services at Marshfield Clinic.
The hallmark of the Medicare population is age. In our
society, an almost constant companion to age is chronic
disease. Our current health care system, largely shaped by the
health care reimbursement market, is not designed to prevent or
meet the needs of those who are chronically ill. It is a
fundamentally reactive system. It emphasizes response to acute
problems instead of prevention, diagnosis of disease instead of
early screening, symptom relief instead of health behavior
change.
The behavior of our health care system as a whole is
exactly the behavior that the CMS reimbursement system rewards,
and not just for the Medicare population. Make no mistake about
it, CMS reimbursement policy is mirrored by most commercial
insurance carriers.
In addition, leveraging Medicare resources by selectively
denying medical services or reducing reimbursement along faulty
geographical assumptions is unfair and does not work. Dr.
Wennberg has elegantly debunked the faulty logic behind these
assumptions.
However, an even greater problem is the Resource Based
Relative Value Scale, RBRVS fee schedule, which is based on a
model of medical practice centered on traditional patient/
physician encounters, instead of the value of care that is
actually provided. This model is terribly outdated.
When you think about it, physicians are the second most
expensive resource in a patient's health care team. The patient
is the most expensive. Therefore, the use of patient/physician
encounters as the primary vehicle for delivering health care is
shamefully wasteful.
The Anticoagulation Service described in my testimony,
illustrates a population health intervention that is 100-
percent telephonic, yet delivers superior quality with dramatic
savings to CMS. Patients with chronic conditions are best
served by a systematic multi-disciplinary approach in which the
patient plays an active role. This approach requires a large
front-end investment in information systems and process change:
process change that defines roles and expectations of patients,
physicians, nurses, and others in accordance with what each is
most qualified to do in the most value-added way.
I have submitted testimony to you that describes some of
the information and population health tools and strategies used
at Marshfield Clinic, including a detailed account of our
Anticoagulation Program, a program that has dramatic and
positive effects on both health care quality and cost. I
detailed this program for three reasons.
First, if we look at disease management separate from
population health management, we would never have chosen to
engage in this effort. Anticoagulation is not a disease. The
process of managing anticoagulation has a profound quality-of-
care and cost-benefit effect that extends across the boundaries
of many diseases. Isolated disease management interventions are
not optimal. However, disease- or condition-specific population
health interventions, when provided in a coordinated manner,
make a lot of sense.
Second, the effectiveness of any population health
intervention is synergistically enhanced if it is part of an
integrated and coordinated system of care, the record of which
should be immediately available electronically and can be
accessed 24-7-365 by an ``actionably'' qualified health care
provider; that is, someone who can understand the information
and act on it, such as a registered nurse.
Third, it is essential to measure the value, the quality,
and quantity per unit cost of a population health intervention.
Cost should be a part of any quality or process improvement
platform. It certainly is in other industries, but in other
industries there is a market that rewards companies for
providing services or products of superior value. That is not
the case with the current CMS reimbursement policies.
One final thought. I believe that a reimbursement system
that stakes its financial solvency on the currency of patient
provider encounters is at risk. At the same time, a care system
that devalues the currency of patient provider relationships is
at perilous risk.
Thank you. It is truly an honor and privilege to be here.
[The prepared statement of Dr. Hillman follows:]
Statement of Michael Hillman, M.D., MBA, Medical Director, Business and
Community Health Services, Marshfield Clinic, Marshfield, Wisconsin
On behalf of the physicians and staff of Marshfield Clinic, I want
to thank you for conducting this hearing and for the opportunity to
comment on Disease State Management in the Medicare program.
This document will summarize the following: (1) why it is important
to view `disease management' as a carve-out of `population health
management'; (2) Marshfield Clinic's approach to disease management,
particularly as it relates to the Medicare population; (3) how the
current reimbursement system influences (or may influence) population
health strategies to reduce the cost of health care, while improving
the health, of the Medicare population.
Marshfield Clinic is the largest private group medical practice in
Wisconsin and one of the largest in the United States, with 678
physicians, 5158 additional staff, and 1.6 million annual patient
encounters. The Marshfield Clinic system includes a major diagnostic
treatment center, a research facility, a reference laboratory and 39
regional centers located in northern, central and western Wisconsin.
The largest concentration of physicians is in the city of Marshfield
(population 19,000). The facility houses almost half of the
physicians at the Clinic. The facility is attached to a 534-bed
hospital, St. Josephs, which is owned by a separate company, Ministry
Health Care. Marshfield Clinic serves a disproportionately large socio-
economically challenged population. As a 501(c)(3) non-profit
organization, Marshfield Clinic is a public trust, and thus obligated
to serve all who seek care, regardless of their ability to pay. The
Clinic serves several federally designated Health Provider Shortage
Areas (HPSAs). These communities are typically geographically remote,
older, and educationally-challenged. Logging, mining, and agriculture
are the economic mainstays. The Clinic also provides services in
partnership with a federally funded Community Health Center at 13
locations in Wisconsin providing comprehensive integrated care to un-
and under-insured residents of the community with incomes at or below
200% of the federal poverty level. Security Health Plan of Wisconsin, a
tax-exempt health maintenance organization, is a wholly owned
subsidiary of Marshfield Clinic and provides financing for health care
services for almost 120,000 members throughout northern, central and
western Wisconsin.
Marshfield Clinic has developed and acquired sophisticated tools,
technology, and other resources that complement and support the
population health management strategy of the Clinic. These include an
electronic medical record, a data warehouse, an immunization registry,
and an epidemiological database that enable enhanced definitions of
disease states, diagnoses or conditions, and activity-based cost
analysis of CPT level interventions. These tools have enormous
scientific, clinical and social policy potential that has only been
partially tapped.
During the last three decades, Marshfield Clinic funded and
installed, and fully implemented a sophisticated electronic medical
record (EMR) which now contains years of historical data, including
diagnoses, procedures, test results, medications, immunizations, alert
events, outcome measurements, and demographics. Marshfield Clinic's 39
regional centers are linked by common information systems. The EMR
provides instant portability across our system facilitating
communication between providers in different departments and at
different centers. For instance, easy access to previous diagnostic
test results avoids duplicate ordering of lab and radiology tests. We
presently put 2.5% of revenue into the operation and maintenance of the
Clinic's information system, a cost for FY 2001 that amounted to
$22,073 per physician.
Marshfield Enhanced Charting & Code Acquisition (MECCA) is an
integral part of the EMR. It allows us to collect high quality data for
health care, research and education. It is a point-of-care application,
acting as an electronic medical assistant that requires providers to
document and/or review data from lists of items, such as visit types,
providers, vital signs, diagnoses, procedures, medications, and alerts.
MECCA plays an important role in patient safety because it tracks drug
allergies and other diagnoses including past medical history, family
history, food alerts, latex allergies, and allergic reactions. Because
MECCA is required for all scheduled patient encounters in Marshfield
Clinic (including ambulatory surgery, unscheduled encounters, and
hospital procedures), it helps us track the resources needed for
medical care and is the foundation of an order-entry system for
providers. MECCA will also be used to capture data from Hospital
Discharge Summaries. Patient identifying information is only available
to providers who have previously taken care of the patient.
Marshfield Clinic has developed innovative preventative health care
measures such as an immunization registry (Regional Early Childhood
Immunization Network or ``RECIN''). RECIN is a computer program that
allows the sharing of immunization information between and among
providers and public health departments. RECIN allows providers to have
electronic access to a child's immunization history, including any
alerts or reactions to immunizations. Such access minimizes the
possibility of over-immunization and potentially severe allergic
reactions. Equally important, access to this information allows public
health personnel to target children who have not been immunized. As a
consequence of this program, Marshfield Clinic and concerned public
agencies have been able to increase childhood immunization rates from
67% to 92% in Wood County alone. The RECIN platform can be applied to
many other population health care problems affecting Medicare. Examples
include anticoagulation, lipid, and diabetes management, as well as
preventive services including flu and pneumovax vaccinations for
vulnerable populations.
Marshfield Clinic has also developed a very unique resource known
as MESA (Marshfield Epidemiologic Study Area) for clinical research in
population health management.

[GRAPHIC] [TIFF OMITTED] 82324A.001

MESA.--In the 24 zip code areas shown in map of Wisconsin,
virtually all of the 88,000 residents get almost all of their medical
care from a Marshfield Clinic facility.This population is very stable.
The Clinic has medical records of this population dating back to the
early 1900s.

MESA captures nearly all the health care information of those
residing in the 24 zip codes above. Consequently, population-based
health research can be done that includes all of the populations that
comprise these geographic communities. Unlike most other research
facilities, MESA researchers can monitor the residency of individuals
on a daily basis by using updates of births, deaths, new patients, and
name and address changes to Clinic databases. This allows researchers
to monitor the health of a community over time by linking this
residency information with the extensive health care information
available in Clinic databases and medical records.\i\
---------------------------------------------------------------------------
\i\ DeStefano F, Eaker ED, Broste SK, Nordstrom DL, Peissig PL,
Vierkant RA, Konitzer KA, Gruber RL, Layde PM. (1996). Epidemiologic
Research in an Integrated Regional Medical Care System: The Marshfield
Epidemiologic Study Area. J Clin Epidemiol; 49: 643-652.
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The research opportunities afforded by MESA contrast starkly to the
studies performed by payers (HMOs and other insurers). Payer research
is largely based on claims data and is restricted to narrow populations
circumscribed by a common disease from multiple communities, receiving
their healthcare from multiple provider organizations. Likewise, MESA
affords a very important perspective not provided by the research of
traditional academic medical centers. Typical academic medical research
is accomplished through randomized clinical trials. In these studies
populations are studied across multiple sites in very disparate
geographic communities. Typically, the populations are medically
homogenous except for the single hypothetical factor that is being
tested. This type of research has limited value because it is so
severely restricted. It is widely accepted that multiple, often un-
anticipated variables, are important determinants to individual's and
populations' health. Yet, there are very few tools to study multiple
variables simultaneously. MESA is a platform that enables analysis of
multiple variables simultaneously.
L`DISEASE MANAGEMENT' AS A PART OF `POPULATION HEALTH
MANAGEMENT'
Medicare is defined by a predominantly aged population, many
members of which have chronic diseases or conditions. Hence, the need
for `disease management'. Patients with chronic conditions typically
enter a health care delivery system seeking acute care services
traditionally covered under insurance, but they also may need services
related to counseling and behavior change, support groups,
communication between visits, continuous coordination with other health
professionals, and medical supplies. Unfortunately, traditional fee-
for-service payment approaches offer a chronically ill patient face-to-
face office visits as the primary mechanism for receiving care and
rarely encompass the range of services needed across the continuum of
care. There is a misalignment among what the patient needs, how the
services are provided, and how needed services are reimbursed.
The explosive growth in the size of the Medicare population is one
of three drivers that will completely transform health care in the next
10-15 years. The other two drivers are human genomics and a revolution
in healthcare consumerism. It is essential to consider these drivers,
as well as the health factors that drive chronic disease, so that we
minimize the possibility that changes in the Medicare health system
cause unintended, more expensive, consequences.
People use physicians primarily when they are, or perceive they
are, ill. Their use of physicians is defined primarily by encounters.
Most traditional fee-for-service reimbursement occurs on a `per
encounter' basis. Therefore, physicians compete with each other for
per-encounter business. They compete more vigorously for those
encounters that reimburse at higher rates. The corollary is also true.
It is not in the best business interest of physicians to compete for
those patient encounters that are reimbursed at lower rates (i.e.
Medicare). This situation poses a significant access problem for the
Medicare population. Especially, when because of their age and chronic
diseases, they require so much non-reimbursed care (care that does not
have to be physician-encounter-driven). Therefore, it becomes in our
enlightened self-interest to manage patients in the most cost-effective
manner possible. Hence, our strategy to use population health
management principles.
Population health management. The sine qua non of population
healthcare management is the improvement of the health status of a
selected population by focusing on the needs of that population. There
are multiple determinants of the healthcare needs of any population.
Multiple determinants of health model.\ii\
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\ii\ Evans, R., M. Barer, and T. Marmor. (1994) Why are Some People
Healthy and Others Not? The Determinants of Health of Populations.
Aldine de Gruyter. New York.
[GRAPHIC] [TIFF OMITTED] 82324B.002

In the context of the multiple determinants of health model,
population health management can be defined as ``the technical field of
endeavor which utilizes a variety of individual, organizational and
cultural interventions to help improve the morbidity patterns (i.e.,
the illness and injury burden) and the health care use behavior of
defined populations.'' \iii\
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\iii\ Chapman, LS. (1997). HEALTH MANAGEMENT: Optimal Approaches
for Managing the Health of Defined Populations. Summex Corporation.
Seattle, WA.
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The generally accepted objectives for population health management
include: (1) reduction in volume of services utilized, (2) shift of
utilization to lower cost settings, (3) achievement of clinical
improvement by focusing on the health status of the population, (4)
integration of health care services, (5) organization of providers into
networks, and (6) evaluation and documentation of quality.\iv\ Within
each of these objectives, there is great number of considerations from
both philosophical and operational perspectives, especially as they
relate to the performance of the access system for a horizontally
integrated health system like Marshfield Clinic.
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\iv\ Fos, PJ, DJ Fine, and PJ Foss. (2000). Designing Health Care
for Population: Applied Epidemiology in Health Care Administration.
Jossey-Bass. San Francisco
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To simultaneously accomplish the first 3 goals of population
health, mechanisms must be in place to assist patients in becoming
active, empowered participants in their own health care decisions,
while reducing the need and use of unnecessary or ineffective medical
services--enhancing the overall health status of a defined
population.\v\
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\v\ Montrose, G. (1995). The Art & Science of Demand Management.
Group Health Association of America
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The increase in patient responsibility inevitably results in a
fundamental change in the patient-physician relationship. Patients, and
the information with which they make decisions, are no longer solely
dependent on their physicians. Patients, in the above model, are
partners. They are customers. They are consumers. The consumerism that
has already reshaped other large parts of the American economy (retail,
information, automotive, and manufacturing) is carrying over to
healthcare.\vi\ Much of this consumerism is driven by the increased
information available on the Internet.
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\vi\ Herzlinger, R. (1997). Market-Driven Health Care. Perseus
Books, New York.
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Physicians at Marshfield Clinic are not unique in their resistance
to the demands of a changing healthcare delivery system. The value of
specialty practice culturally persists at the Clinic today. The desire
to develop this core competency of specialty care drove the formation
of the Clinic. Implicit in subspecialty training is the emphasis on
``sickness-care''. Specialists are not needed to prevent illness. They
are needed to perform extraordinarily technical deeds to stave off
mortality and reduce morbidity. However, even the most ardent advocates
of specialty practice will now admit that it is not efficient use, for
example, of a heart surgeon's time to manage a post-operative valve
replacement patient's anticoagulation medicine. It is also not good
patient care, because it not something that heart surgeons are expert
at doing.
Likewise, it is not the best use of a cardiologist's time to manage
Type II diabetes in patients that have a stable myocardial status.
Again, it is also not good patient care. It is not something that
cardiologists are expert at doing. Then, whose job is it to manage
these patients with these problems? At Marshfield Clinic, like many
physician-oriented multi-specialty clinics, it falls to the primary
care physicians--internists and family practitioners, and their
physician extenders (Nurse Practitioners and Physician Assistants). For
the last 6 years, the Marshfield Clinic has purposefully re-directed
patients under the care of procedural specialists to the primary care
departments.
We believe that the business case to be made for this approach is
sound, even considering the internal conflict attendant Medicare fee-
for-service reimbursement. Primary care is the entry point from which
subspecialty care demand is generated. Dysfunctional access to primary
care limits the growth of subspecialty care. Dysfunctional access to
primary care makes it virtually impossible to develop a consistent,
system-wide collaborative effort to maximize customer satisfaction and
consumer health outcomes at the lowest cost per life.
To further improve access to primary care, we are redefining the
scope of practice for the different members of the health care team.
For example: primary care physicians see new patients, provide hospital
care, do complex follow-up exams, and perform procedures. Nurse
Practitioners and Physician Assistants do most follow-up care and
screening (as opposed to diagnostic) exams. Registered Nurses triage
acute patient symptoms, provide case management, educate, and coach
behavioral change--all integral elements of disease management.
Disease Management. Disease Management is a further refinement and
application of population health principles that we now utilize in the
Marshfield Clinic. There are four basic steps.\vii\ One, define the
population. Two, determine what care processes will most effectively
and efficiently meet the needs of that population. Three, measure the
effectiveness of those care processes. Four, improve the care processes
further. The vision for Marshfield Clinic using population health as a
core strategy is to develop consistent, continually improving, system-
wide collaboration to maximize customer satisfaction and consumer
health outcomes at the lowest cost per life, and as a result, deliver
care that is of superior value and liking to the members of its
communities.
---------------------------------------------------------------------------
\vii\ Runde, D. (1999). Weaving Disease Management Into the Fabric
of Patient Care. Health Care Horizons Institute for the Future. Menlo
Park, CA
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LDISEASE/POPULATION HEALTH MANAGEMENT AT MARSHFIELD CLINIC
In 1995, Marshfield Clinic performed an ``outside-in'' assessment
of its primary care system. From the patient-as-a-customer perspective,
we found that our system could improve greatly by addressing the
following needs: providing symptom-based advice with respect to whether
patients needed to see a provider; if they don't, how they can self-
manage their symptoms; if they do, when do they need to be seen, and
with what type of provider.
The needs of the providers-as-a-customer were different. Our
providers wanted to provide continuity of care 24-7-365 (although they
were not willing/able to work 24-7-365) and increase their access (by
reducing unnecessary patient encounters).
Marshfield Clinic found that the respective needs of the patients
and the providers could be met, and exceeded, by a 24-7-365 Registered
Nurse (RN) call center that systematically answered patients symptom-
based concerns, and, using Marshfield Clinic's electronic medical
record in combination with the physicians on-call, provide true
continuity of care. Strictly speaking, we developed a population health
management/disease management intervention on healthcare resource
utilization.
This RN call center department was named ProActive Health. This
department provided these interventions on behalf of both Marshfield
Clinic and Security Health Plan (the Clinic's wholly owned insurance
product). The interventions that this department developed in
collaboration with its customers include the following: symptom-based
triage, prenatal health, asthma, secondary cardiac prevention,
diabetes, and anticoagulation management. The basic principles
underlying all of these interventions are as follows:

Patients are selected. In the case of RN ``triage''
and pregnancy, they are self-selected. In other cases they are
identified through the use of Health Risk Appraisals or
utilization data.

A condition/symptom-specific assessment is performed
telephonically. This assessment includes reviewing the
patient's electronic medical record. And for those patients
with a chronic condition, particular attention is paid to the
providers' care plan.

Marshfield Clinic has developed an extensive intranet
repository of clinical practice guidelines that were/are
modified from national guidelines. Provider care plans are
checked against those guidelines (particularly for asthma,
diabetes, and secondary heart prevention). Our QI department,
which organizes the development of these guidelines, is now
examining interventions directed towards compliance with these
guidelines.

For acute symptom-based advice, the RNs consult more
than 500 guidelines, many of which were specifically modified
by Marshfield Clinic physicians to enhance their effectiveness.
These guidelines help the RN advise the patient if they need to
be seen, in what time frame, and by what type of provider. In
addition, the RN helps the patients to develop a self-care
plan. For the condition-specific (i.e. ``Disease Management'')
interventions, the patients and RNs customize a curriculum of
educational messages and behavioral coaching based on the
patients' current knowledge base, and the degree to which that
individual is at risk for acute decompensation.

For several of these programs, active RN case
management is integrated with the education and behavior
coaching. Case management is the heart of population health
management. Simply stated, it is a collaborative multi-
disciplinary process to assess, monitor, and intervene.
Physicians are part of the team, but the actual case managers
are non-physicians, often nurses. The overall mission is to
provide care efficiently, minimizing unneeded office visits,
maximizing usefulness. Most of the services can be provided by
telephone. In these programs, the RN assumes responsibility for
a group of patients. These patients require particularly close
monitoring and medication management towards a specific
clinical or laboratory indicator. After specialized training,
using protocols developed by our physicians, in compliance with
the legislatively defined scope of an RN's practice, our
Disease Management Nurses help patients adjust their
medications (without having to see their physician).

Marshfield Clinic has a number of disease management programs in
various states of maturity. These programs include: Diabetes, Prenatal
Health, Congestive Heart Failure, Asthma, Lifestyle Management,
Secondary Cardiac Prevention, and Anticoagulation Management. In
addition, a number of programs are on the ``drawing board''. Those
programs include Hypertension, Hyperlipidemia, Obesity, Post-natal
care, and Low Back Pain. Many members of the Medicare population suffer
from several of these conditions concurrently. To give you a more
complete picture of how a mature disease management program should
work, we will describe our Anticoagulation Service Disease Management
program in more depth.
The Anticoagulation Service is particularly germane for the
following reasons. One, it demonstrates how all the essential
components of a disease management program work together. Two, it is
the program of ours that is most fully developed with respect to
clinical and economic outcomes measurement. Three, it demonstrates the
power of connecting a disease management program directly to physician
practices.
Anticoagulation is the process of making the blood less likely to
clot (form a scab) inside the body. When a clot forms inside the body
(within the blood vessels), it causes either a stroke or heart attack.
There are a number of very common conditions in the Medicare problem
that predispose the formation of these internal clots. These conditions
include atrial fibrillation (2-3% of the population over 65 years of
age), congestive heart failure, deep vein thrombosis (especially after
orthopedic procedures and during cancer chemotherapy), and mechanical
heart valve replacement. Almost all of these conditions are caused by
age and chronic disease.
The most common outpatient drug used for anticoagulation is
warfarin. While the risk/benefit ratio of using warfarin in this
patient population is indisputable, the window of therapeutic benefit
is narrow. That is, under-anticoagulation with this drug doesn't
prevent stroke and heart attack. Over-anticoagulation can cause
dangerous internal bleeding. Furthermore, the metabolism of this drug
(the way that it is broken down by the body) is very sensitive to
changes in diet, exercise, and many other common medications taken by
this population (e.g. antibiotics). Therefore, the administration of
this drug has to be done very carefully. A monthly blood test is
required to adequately monitor the effects of this medication.
When this drug is administered in the standard way, the incidence
of hospitalizations or death is 7-10% per year (the risk of stroke or
heart attack without this drug is substantially higher). However, with
our disease management approach to patients taking this medication,
that risk is reduced to less than 2% per year.
All five of the `ProActive Health' dot points described above were
used in this program. The patients are introduced to the program by
their physicians (to reassure the patient that it is an extension of
their physician's practice) or are referred immediately upon discharge
from the hospital. The patients are entered into a special tracking
database that prevents them from falling through the `cracks' due to
the complicated monitoring schedule and telephonic follow-up routine.
Our nurses case manage the patients through guidelines developed by
Marshfield Clinic. They adjust the patients' warfarin doses according
to protocol. They educate and coach the patients about recognizing on
their own the many pitfalls that influence anticoagulation (diet,
activity, other medications, other illness). The RN case managers have
access to the Medical Director of the program and the patient's
personal physician for the 5-10% of time when the protocols don't cover
a patient's situation. All of the interactions are documented in both
database and the Clinic's electronic medical record. The RN's EMR note
is signed by the patient's personal physician (so they always know what
is going on with their patient). In addition to the RN case manager,
the patients have access to the 24-7-365 RN ProActive Health Nurseline
for acute symptom-based advice. This entire program is done
telephonically without any reimbursement from CMS.
We recently conducted a study that was funded by the Agency for
Healthcare Research and Quality under its new Integrated Delivery
System Research Network initiative. It assessed the impact of
Marshfield Clinic's Anticoagulation Service on health care utilization
measures, including urgent care, emergency department and inpatient
events. In the study, we compared these measures in two study groups of
individuals receiving warfarin therapy. One group consisted of
individuals that were enrolled and managed in the Anticoagulation
Service; the other group consisted of individuals who received standard
care for their warfarin management needs. All study subjects were under
the care of Marshfield Clinic cardiologists for at least some of their
health conditions. The study included a total of 408 study subjects and
359 years of study observation time.
In the course of providing this intervention, we noted that two-
thirds of the phone calls were not directly related to warfarin dosing.
Rather, they resulted from the patients calling in about other health
concerns that they correctly thought would influence their state of
anticoagulation. Therefore, in the study funded by AHRQ, we looked at
all hospital events, not just the events directly related to warfarin.
Hospital events occurred at a much lower rate in the Anticoagulation
Service group compared to the standard care group. Based on our
analyses, the expected difference in hospitalizations per 100 person
years was approximately 28.7 hospitalizations. This difference was not
only large but also statistically significant (P<.014).
For the 86% of the study population that are Medicare
beneficiaries, total Medicare costs avoided per hospital event were
estimated at $9,443 in constant year (2000) dollars. Hospital facility
costs represented about 76% of these costs. Non-hospital costs,
primarily physician and laboratory costs for both inpatient and
outpatient care, represented the remaining 24% of costs. Estimated
avoided CMS costs were $8,221 per hospitalization. The difference
between total Medicare costs per hospitalization and CMS avoided costs,
which was $1,222 per hospitalization, is represented by expected
Medicare beneficiary co-payments and deductible: $446 per
hospitalization and annual Part B deductible of $776.
Total avoided Medicare hospitalization-related costs per 100 person
years of Anticoagulation Service enrollment compared to standard care
was estimated at approximately $271,014 based on a differential
hospitalization rate of 28.7 events and an average total Medicare-
related cost of $9,443 per hospitalization. CMS total avoided costs per
100 person years were estimated at $235,943. Reduced Medicare
beneficiary co-payments and deductibles were estimated at $35,071. In
developing estimates of avoided costs, a conservative approach was
utilized; it is believed a greater savings are likely available than
those estimated.
Using the Marshfield Enhanced Charting & Code Acquisition (MECCA),
we know that our system has 12,477 unique patients on warfarin
anticoagulation. 95% of those patients are Medicare-eligible. If we
generalized the Anticoagulation Service to the entire population
receiving warfarin under the care of Marshfield Clinic, CMS would avoid
over $28,000,000. It will cost Marshfield Clinic about $3,000,000 to do
so, none of which is currently reimbursed.
We are certain that near-equally compelling savings can be achieved
with our congestive heart failure, diabetes, and other population
health initiatives. The anti-coagulation example provides clear
evidence that better health can be achieved at significantly less cost.
These results can be greatly expedited if Medicare reimbursement policy
influences the healthcare market to rely less on patient-physician
encounters, and more on integrated systems of care that extend the
benefits of patient-physician relationships.
LTHE RELATIONSHIP OF MEDICARE REIMBURSEMENT TO THE HEALTHCARE
MARKETPLACE AND POPULATION HEALTH MANAGEMENT
The health care system that we presently live with is not well
designed to meet the needs of the chronically ill. The current delivery
system responds primarily to acute and urgent health problems
emphasizing diagnosis, ruling out serious conditions, and relieving
symptoms. Patients with chronic conditions are better served by a
systematic approach that emphasizes self-management, care planning with
a multidisciplinary team, and ongoing assessment and follow-up. This
systematic approach requires a large front-end investment in
information systems and process change. Marshfield Clinic is making
that investment. Yet the health care marketplace, largely shaped by CMS
reimbursement policy, works against developing this type of approach.
Even without any financial incentive or reimbursement for this
front-end investment required for population health, clinics like
Marshfield in the Wisconsin Medicare payment locality, are already
under-reimbursed by CMS. Marshfield Clinic recently conducted an
internal analysis to determine to what extent the Medicare program
covers the cost of providing services to Medicare beneficiaries. Our
analysis demonstrates that the Clinic presently recovers only about 70%
of its costs in providing Medicare Part B services. We do not believe
that we are unique, but suspect that the shortfalls in Medicare revenue
are common for physicians providing Medicare Part B services. We urge
you to take steps to remedy this inequity as soon as possible.
To calculate the percent of its Medicare allowed costs for which
Medicare reimbursement is received, Marshfield accountants eliminated
all expenses and revenues received that might potentially be questioned
by the Medicare program. Our methodology for FY 2000 follows principles
applied in our annual FQHC cost report that was audited by external
auditors and submitted to the state. (Marshfield Clinic in conjunction
with Family Health Center Inc. functions as a federally qualified
health center (FQHC) under the Medicaid Program.) For the purposes of
this analysis, all expenses and revenues from activities such as the
outreach lab, veterinary lab, research and education, rental property
and optical and cosmetic surgery departments were removed. Our
accountants also removed all non-Medicare ``Allowed'' costs related to
our bad debt, interest expenses, marketing programs, government affairs
activities, National Advisory Council, goodwill amortization and other
miscellaneous costs.
For FY 2000, Marshfield Clinic's Medicare revenue was 71.52% of
costs for fee-for-service Medicare. For FY 2001 Medicare revenue (un-
audited) as a percent of costs goes down to 70.59%. For FY 2002 we
project that Medicare revenue will decrease as a percent of costs to
approximately 68.5%.
Reimbursement shortfalls of this magnitude interfere with the
Clinic's capacity to further implement disease management programs in
the many departments where we believe efficiencies can be captured. The
declines in Medicare reimbursement that Marshfield Clinic experienced
in FY 2000 and 2001, and has projected for FY 2002 are due in part due
to payment updates lowered by CMS in anticipation of volume offsets.
CMS has assumed that increasing volume in response to tightening
reimbursement takes place uniformly across the country. We believe that
this simplistic point of view and the pursuant regulatory response by
CMS are a constant source of frustration and a major obstacle to the
coordination of care for beneficiaries by organizations whose mission
is to provide better patient care.
Marshfield Clinic has demonstrated that by reducing both the volume
and intensity of services provided to Medicare beneficiaries, savings
are accruing to Medicare Part A, Medicare Part B, and the beneficiaries
we serve. Unfortunately, from the point of view of promoting the
financial viability, disease management activities that serve the
welfare of beneficiaries and the interest of the Medicare program can
be potentially self-defeating if not reimbursed. It will be difficult
to promote the long-term view that disease management strategies are a
rational response to the current economic incentives of the Medicare
fee-for-service program.
Organizations that stake their future to the currency of patient-
physician encounters as the basic unit of medical care value are at
risk in the present fee-for-service reimbursement environment. At the
same time, we believe that patients who stake their future to the
healthcare system that devalues the benefit of patient-physician
relationships are equally at risk.
CONCLUSIONS

In summary, we believe that there are significant quality-of-care
concerns as well as the business case to be made that population/
disease management holds significant promise for the Medicare program.
However, Congress must take several steps to address the misalignment
of incentives in the Medicare reimbursement market.
The Institute of Medicine suggests that fee-for-service payment can
be adapted to provide incentives for quality improvement by encouraging
cooperation and providing reimbursement for care outside of the
traditional office visit, which is not always optimal for meeting
patients' needs. This approach involves developing relative values for
the elements of work performed over time by physicians and other health
professionals.\viii\
---------------------------------------------------------------------------
\viii\ Institute of Medicine (U.S.). Committee on Quality of Health
Care in America. (2001). Crossing the Quality Chasm: A new Health
System for the 21st Century. Washington, D.C. National Academy Press.
---------------------------------------------------------------------------
That may be a reasonable suggestion, but probably not realistic. It
still relies on encounters (although not face-to-face), rather than
care as the unit of value from which reimbursement occurs. And that is
the reason that capitation, as it has been thus far administered, also
doesn't work. It also relies on encounters. Although in a capitated
system, encounters have negative value instead of a positive value.
We need to develop a reimbursement system that is somewhere in
between: a system that reimburses for continually improving value
(quality +quantity , unit cost) in care. Marshfield Clinic looks
forward to the opportunity to work with you on this.
Thank you for considering our views.

Chairman JOHNSON. Dr. Anderson?

STATEMENT OF GERARD ANDERSON, PH.D., PROFESSOR, PUBLIC HEALTH
AND MEDICINE, JOHNS HOPKINS UNIVERSITY, BALTIMORE, MARYLAND,
AND DIRECTOR, PARTNERSHIP FOR SOLUTIONS, JOHNS HOPKINS
UNIVERSITY, BALTIMORE, MARYLAND

Dr. ANDERSON. Chairwoman Johnson, Ranking Member Stark,
Members of the Subcommittee, thank you for inviting me to
testify this afternoon.
I am Gerard Anderson, a Professor at Johns Hopkins
University and Director of the Robert Wood Johnson National
Program Partnership for Solutions: Better Lives for People with
Chronic Conditions.
In my testimony this afternoon, I want to focus your
attention on the large number of Medicare beneficiaries with
multiple chronic conditions and how this creates challenges and
opportunities for disease management. Our analysis suggests
that 63 percent of Medicare beneficiaries have two or more
chronic conditions, and this is in contrast to only 5 percent
of children and 20 percent of adults with multiple chronic
conditions.
So, when we think of disease management in the Medicare
program, we need to be considering the complex, multiple
conditions of a disabled and aged population. This is probably
the most critical differences between disease management
programs in the private sector and in the Medicare program. It
is much easier to design a disease management program for a
patient with a single chronic disease, such as diabetes,
arthritis, or congestive heart failure than it is to design a
disease management program for a patient with diabetes,
arthritis, and congestive heart failure.
If Medicare is going to pursue a disease management program
strategy, then these programs must be able to demonstrate they
are equipped to handle Medicare beneficiaries with multiple
chronic conditions. In the working age population, multiple
chronic conditions are the exception. In the Medicare
population, they are the norm.
Caring for Medicare beneficiaries requires that disease
management programs make certain modifications. For example,
and as we have heard today, many disease management programs
rely on self-management as a backbone to their success.
However, many Medicare beneficiaries are unable to self-manage
because of their dementia or their problems with multiple
chronic conditions.
Medicare beneficiaries are very likely to see many
physicians. For example, 1 in 5 Medicare beneficiaries sees 14
or more doctors during the year. Therefore, all disease
management programs should have the information capability to
allow physicians to know what other physicians are doing when
they treat a patient in common.
Now we know that doctors recognize the need for better care
coordination. We, ourselves, conducted a national Survey of
Physicians, surveying physicians who provide more than 20 hours
of patient care per week. These physicians told us they were
having difficulty coordinating care with other doctors and
other health professionals. Two-thirds of them told us they
were not well-trained in care coordination. The payoff to the
Medicare program of better coordination is fewer unnecessary
hospitalizations, fewer nursing home placements, and fewer
drug-drug interactions.
In our survey of physicians, 44 percent of them told us
that poor care coordination results in adverse drug reactions;
36 percent said that it resulted in unnecessary
hospitalizations; and 24 percent of them said it leads to
unnecessary nursing home placements.
Lack of care coordination is also a problem expressed by
people with chronic conditions. We did a survey of Americans,
and we found that about 16 million Americans go to the
pharmacist every year only to be told of a drug-drug
interaction.
Now, think of the Medicare beneficiary going to the
pharmacist, those fortunate enough to have drug coverage, they
go to the drug store only to be told that their drug can't be
filled because another medication, probably ordered by a
different doctor, is going to give them a potential problem. So
what do they do? Do they fill it anyway? Do they ask the
pharmacist? Do they call the doctor who ordered the
prescription? Do they call their primary care physician? Do
they phone a friend? What do they do? Disease management
programs must be able to help this Medicare beneficiary
standing at the pharmacy counter.
An alternative to disease management programs for fee-for-
service Medicare is to pay explicitly for care coordination.
For example, our data suggests that cost utilization and poor
outcomes really started about four or more different chronic
conditions. So perhaps an enhanced payment, a monthly
management fee, for example, would be appropriate for
physicians who are willing to take on the clinical and possibly
other service coordination activities for this group of complex
patients. These physicians would have to meet certain criteria
in order to be able to be eligible for payment; for example,
having appropriate office staffing, information and
communication systems.
I would like to leave you with a fact and a concept. The
fact is that two-thirds of Medicare spending is for Medicare
beneficiaries with five or more chronic conditions, two-thirds
of Medicare spending. The concept is that Medicare is a program
for people with chronic conditions. It just doesn't know it.
[The prepared statement of Dr. Anderson follows:]
Statement of Gerard Anderson, Ph.D., Professor, Public Health and
Medicine, Johns Hopkins University, Baltimore, Maryland, and Director,
Partnership for Solutions, Johns Hopkins University, Baltimore,
Maryland
Good morning and thank you for inviting me to testify on the
important topic of disease management in Medicare. I am Dr. Gerard
Anderson, Professor of Public Health and Medicine at Johns Hopkins
University, and Director of a Robert Wood Johnson Foundation project,
Partnership for Solutions: Better Lives for People with Chronic
Conditions.
My role today is to provide this Committee with information about
chronic conditions in the Medicare population and talk about some
aspects of disease management that are particularly important to
consider for Medicare.
Chronic Conditions in Medicare

The top five chronic conditions in the Medicare population overall
are: hypertension, diseases of the heart, diseases of the lipid
metabolism, eye disorders, and diabetes.\1\ There is not a great deal
of variability by age or eligibility status in the top disease rankings
although there is some variation by age and eligibility status.
---------------------------------------------------------------------------
\1\ The top 15 most common chronic conditions in Medicare are:
hypertension; diseases of the heart (including coronary
arteriosclerosis and congestive heart failure, cardiac disrhythmia,
among others); disorders of the lipid metabolism (including
hyperlipidemia and pure hypercholesterolemia among others); eye
disorders (including senile nuclear sclerosis, senile cataract,
glaucoma among others); diabetes mellitus; non-traumatic joint
disorders (including osteoarthritis and rheumatoid arthritis among
others); thyroid disorders (including hypothyroidism and thyrotoxicosis
among others); COPD and bronchiectasis (including chronic airway
obstruction and chronic bronchitis among others); diseases of the male
genital organs; diseases of arteries, arterioles, and capillaries
(including peripheral vascular disease, arteriosclerosis of extremities
or aorta, among others); senility and organic mental disorders
(including Alzheimer's and senile dementia among others); spondylosis,
intervertebral disc disorders, and other back problems; affective
disorders (including neurotic depression, major depressive disorder
among others); osteoporosis; diseases of the urinary system; viral
infection (chronic); chronic ulcer of the skin; other connective tissue
disease; other nutritional, endocrine, and metabolic disorders; other
endocrine disorders; nutritional deficiencies; anemia, schizophrenia
and related disorders; anxiety, somatoform, dissociative, and
personality disorders; other nervous system disorders; cerebrovascular
disease (including cerebral arteriosclerosis among others); asthma.

Senility and organic mental disorders are most
prevalent in the 85 years and older population. They begin
appearing among the top 15 conditions in the 75-79 year old
group.
Affective disorders are the fifth most prevalent
group of conditions for the disabled population but rank 13th
for the general Medicare population. Other conditions related
to mental health appear more prevalent in the disabled
population than in the aged Medicare population.
Asthma is one of the top 15 most common conditions
among disabled Medicare beneficiaries but asthma is not
otherwise very prevalent in the Medicare population.
General Prevalence and Cost

About 78% of the Medicare population has at least one chronic
condition while almost 63% have two or more. Of this group with two or
more conditions, almost one-third (20% of the total Medicare
population) has five or more chronic conditions, or co-morbidities.
[GRAPHIC] [TIFF OMITTED] 82324C.003

In general, the prevalence of chronic conditions increases with
age--74% of the 65 to 69 year old group have a least one chronic
condition, while 86% of the 85 years and older group have at least one
chronic condition. Similarly, just 14% of the 65-69 year olds have five
or more chronic conditions, but 28% of the 85 years and older group
have five or more. Fourteen percent of the people with disability-
related eligibility have five or more chronic conditions but 46% of the
ESRD patients have five or more.
Average per beneficiary spending increases gradually with age but
the variation in average costs related to number of chronic conditions
is more significant. In 1999, the average per person costs for people
with no chronic conditions was $160 (including the under 65 entitled),
while the average per person cost jumps to $13,700 for people with five
or more chronic conditions. The average per beneficiary spending across
all ages and eligibility groups is $4,200. Per beneficiary spending
increases more than 2\1/2\ times between two and four chronic
conditions, and nearly triples again from four to five chronic
conditions.
[GRAPHIC] [TIFF OMITTED] 82324D.004

People with one chronic condition are 15% of the Medicare
population but only 3.5% of the spending. People with 3 chronic
conditions are also 15% of the population but 10% of the spending.
People with 5 chronic conditions are 20% of the population but 66% of
program spending.
[GRAPHIC] [TIFF OMITTED] 82324F.006

Key Utilization

There is strong pattern of increasing utilization as the number of
conditions increase. Fifty-five percent of beneficiaries with five or
more conditions experienced an inpatient hospital stay compared to 5%
for those with one condition or 9% for those with two conditions. 19%
of Medicare beneficiaries have an inpatient stay. Inpatient days per
thousand beneficiaries jumps from 335 days for those with one condition
to over 7000 days per thousand among those with 5 or more conditions.
The average days per thousand across all beneficiaries was 1944.
In terms of physician visits, the average beneficiary has just over
15 physician visits annually and sees 6.4 unique physicians in a
year.\2\ There is almost a four-fold increase in visits by people with
five chronic conditions compared to visits by people with one chronic
condition. The number of unique physicians seen increases almost two
and half times for people with five or more chronic conditions relative
to those with just one chronic condition.
---------------------------------------------------------------------------
\2\ This number of unique physician visits is 6.7 when people who
died are included and is 4.6 when only outpatient settings among the
age-entitled are included in the analysis.
[GRAPHIC] [TIFF OMITTED] 82324G.007

The average Medicare beneficiary fills almost 20 prescriptions.
Within this average, the under 65 year old population fills on average
26.3 prescriptions and those 65 years and older fill 19.1 on average.
We found that beneficiaries with no chronic conditions fill an average
of 3.7 prescriptions per year while those with any chronic conditions
fill an average of 22.7.
There is a strong trend in utilization of prescriptions when
examined by number of chronic conditions.

Average annual prescriptions filled jumps from 3.7
for all people studied with no chronic condition to 49.2 for
people with five or more chronic conditions.

Growth in usage between those with no chronic
conditions and those with one chronic condition is over 180
percent--from 3.7 to 10.4 prescriptions filled.

Usage grows 72% between one and two chronic
conditions, from 10.4 to 17.9 prescriptions filled.

There is a 48% growth in average annual usage between
four and five chronic conditions (33.3 to 49.2).
[GRAPHIC] [TIFF OMITTED] 82324H.008

Implications

So what does all this information mean for beneficiaries, the
providers that serve them and the program overall. There are
indications in the data that there is a lot of care provided to
beneficiaries with chronic conditions--particularly those with multiple
chronic conditions. There are also indications that the care may not be
well-coordinated and that for beneficiaries with multiple chronic
conditions there are adverse outcomes.
For instance, we have found that as the number of chronic
conditions increase, so too do the number of inappropriate
hospitalizations for illnesses that could have received effective
outpatient treatment (Ambulatory Care Sensitive Conditions). Per 1,000
beneficiaries, these hospitalizations increase from seven for people
with one chronic condition to 95 for beneficiaries with five chronic
conditions, and jumps again to 261 for people with 10 or more chronic
conditions.\3\
---------------------------------------------------------------------------
\3\ This analysis includes only age-eligible beneficiaries.
[GRAPHIC] [TIFF OMITTED] 82324I.009

These poor outcomes are likely a result of poor care coordination
among the many services used and providers seen. It may be that
different providers are recommending conflicting treatments that result
in poor outcomes including adverse drug events. It could be that one
condition is receiving treatment, while other chronic conditions go
unattended and then become acute episodes.
There is other information to support this theory. In our surveys
of people with chronic conditions and people with serious chronic
conditions, we know that care coordination is a problem.
We hired Gallup to conduct a national survey people with serious
chronic conditions:

26 percent report receiving contradictory advice from
different doctors in the past year

20 percent report they were often or sometimes sent
for unnecessary or duplicate tests or procedures

23 percent report that they often or sometimes
received conflicting information from different health care
providers

25 percent report that they were often or sometimes
diagnosed with different medical problems for the same set of
symptoms from different providers

Our work at Partnership for Solutions shows that physician think
that care coordination is both important and difficult to do. We
conducted a national survey of physicians who provide more than 20
hours of direct patient care during the week. Almost two-thirds of
these physicians reported that their medical education training was not
adequate to the task of caring for people with chronic conditions and
17 percent reported that they had problems coordinating care with other
physicians. Most importantly, physicians in our survey think that poor
care coordination leads to poor outcomes.
[GRAPHIC] [TIFF OMITTED] 82324J.010

What Can Be Done to Change the Situation?

I believe policymakers, payors, and providers are increasingly
attentive to the issue of chronic conditions. The Centers for Medicare
and Medicaid Services (CMS), for example, is becoming more actively
engaged in the issues of chronic care in Medicare, in part thanks to
the efforts of Congress in the Balanced Budget Act of 1997 and more
recent legislation.
As you know, CMS is implementing a 15-site Medicare Coordinated
Care Demonstration that will provide case management and disease
management services to different Medicare populations. An important
aspect of these demonstrations is coordination with community-based
services. There is also a more recent CMS call for proposals for a
demonstration testing disease management strategies and the benefit of
prescription drugs for beneficiaries with specific diseases (congestive
heart failure, diabetes, and coronary heart disease).
These demonstrations are important and will test the idea of
integration and coordination in larger health care settings. I think
there are issues in traditional disease management that need to be
explored and addressed in order for them to be successful in the
Medicare population whether these programs are applied only in
demonstration or directly into the larger program.
Disease management programs in Medicare must be able to demonstrate
that they are equipped to handle Medicare beneficiaries with multiple
chronic conditions. In the working age population, multiple chronic
conditions are the exception, in the Medicare population they are the
norm. Unlike the working age population, it is more common in Medicare
to have patients who cannot adequately self-manage their care because
of dementia or other problems. Many disease management programs rely on
improving self-management. Any disease management program should have
the information capacity to allow physicians to know what other
physicians are doing to treat a shared patient, which can be
particularly challenging in a program where the average beneficiary
sees slightly more that six unique doctors in a year. Finally, disease
management programs need to have protocols for handling people with
multiple, complex chronic conditions.
Beyond disease management, there are other options worth exploring
that will improve care for Medicare beneficiaries with multiple chronic
conditions. These options would be interim, modest steps in for
Medicare program. We know a great deal about Medicare beneficiaries and
their conditions, as well as the lack of coordination within the system
that affects them.
Unlike the traditional method of disease management, which targets
enrollees with particularly high cost conditions, it may be useful to
look at some of the people who are having the most difficult time with
multiple medical conditions (whatever those conditions may be). We
should focus on people with four or five chronic conditions who, for
whatever reason, have difficulty self-managing one or more of their
conditions. These are people who typically see many physicians, who
fill a large number of prescriptions, who need an array of health care
services, and who are at risk of poor outcomes if the clinical care and
other care is not well-coordinated.
For this group of target beneficiaries, there could conceivably be
a physician payment adjustment that compensates physicians for the
additional visit and other office time necessary to work with these
patients. This type of adjustment could be available to all physicians
treating any Medicare patient who meets the criteria.
Unlike a broad-based payment available to all physicians, a more
targeted approach could also be considered. Again, the target
beneficiary population would be those with four or five conditions who
have difficulty self-managing one of their conditions. This approach is
modeled roughly on Medicaid Primary Care Case Management programs and
would reimburse certain providers for complex clinical care management
and coordination. In this model, a treating physician accepts added
responsibility to coordinate the clinical care provided by all treating
physicians. Beneficiary enrollment would be voluntary.
Physicians could participate to the extent that they agreed to
follow certain administrative procedures to track and monitor all
aspects of a beneficiary's care, act as a referral, receive and
coordinate clinical reports from others involved in the patient's care,
maintain a comprehensive medical record and be available to provide
greater consultation time surrounding a qualified beneficiary's care.
There are a number of payment options that could apply to this
clinical care management model, two of which are used in Medicaid. One
would be a monthly per patient management fee which is separate and
apart from billing for specific services rendered. Another option is a
monthly capitation to the physician for a range of primary care
services and the care coordination activities.
There are a number of design issues that would have to be
considered in applying a PCCM-type approach to Medicare. Under either
payment structure, the model would require some sort of provider
designation such that participants would have to meet certain standards
for care, quality, and administrative capabilities. Because only one
provider can be paid for the clinical care management of a particular
patient, more administrative capabilities may be required of the
carriers.
Another possible modest step for Medicare would be to develop a
modified home visit benefit. The current home health benefit is for
people in need of extended home nursing and personal care services and
who meet a technical definition of ``homebound.'' The current 60-day
episode of care payment reflects the extended nature of the benefit.
There seems to be need, however, for another type of benefit that is
not as extensive or intensive as the current home health benefit.
Although current rules require direct physician supervision of
staff seeing Medicare patients, direct supervision is not always
practical. Physicians have said it would be helpful to clinical care if
they could authorize their office nurses or physician assistants to
periodically conduct home visits to check on patients. This benefit
would be limited in scope to infrequent medical monitoring when a
patient is not able to come to the office due to temporary or otherwise
acute health conditions but allows the physician more direct knowledge
of health status and functioning than a service delivered through a
separate agency.
There could be limits built into the design of any new benefit such
as limiting the number of visits per beneficiary per year, defining the
qualifications of practitioners who might make such home visits,
restricting services within the benefit, and having the visits related
to patient-specific events such as acute exacerbations of chronic
conditions, or times when a patient's treatments have been altered due
to a change in health status.
One other option, that is not mutually exclusive with anything else
discussed here has to do with physician training and physician ability
to care appropriately for people with chronic conditions. I note that
the Medicare program is providing almost $8 billion in direct and
indirect medical education support in 2002. For this money Medicare
could ask the training programs to emphasize care coordination as part
of their curriculum. The Medicare program could encourage analysis of
the appropriate treatments for people with multiple chronic conditions,
given that most Medicare beneficiaries have multiple chronic problems,
this should be a priority.
Summary

Chronic care in Medicare is an important issue although a difficult
one. Chronic conditions affect both program beneficiaries and program
financing in significant and growing ways.
It is important for the program to begin to take steps to address
the growing disparity between what the program is currently designed to
do and the changing needs of its beneficiaries.
I have proposed some ideas today that we are working on at
Partnership for Solutions. Indeed, there are many other ideas as well
that need to be debated and refined. In general, I would ask Members to
think about solutions to the current problems keeping in mind a few key
principles or goals.

Care coordination for people with multiple chronic
conditions should be a top priority.

Any new benefit or service should address the common
problems of beneficiaries with multiple chronic conditions
rather than address similar needs disease by disease.

Any new benefit or service should be accessible to
all beneficiaries and not be designed such that it only can be
provided in special settings or by providers who are not widely
available to beneficiaries.

I thank you for this opportunity and will be happy to answer any of
your questions.

Chairman JOHNSON. Dr. Henschke?

STATEMENT OF CLAUDIA I. HENSCHKE, M.D., PH.D., PROFESSOR OF
RADIOLOGY, WEILL MEDICAL COLLEGE, CORNELL UNIVERSITY, NEW YORK,
NEW YORK

Dr. HENSCHKE. Madam Chairman, thank you very much for
having this important hearing and for including me. For the
record, I am Claudia Henschke, Professor of Radiology of Weill
Medical College of Cornell University.
Each year, approximately 160,000 Americans die of lung
cancer. That is more than 50 times the number of people who
died in the attack on New York City in Washington on September
11. The overall cure rate of lung cancer is dismal, somewhere
around 10 percent.
About 85 percent of the lung cancers found in our usual
care today are of late stage, and their cure rate is
essentially zero. None of the other major cancers--that is
colon, breast, prostate--for which screening is provided has
such a poor outcome.
The prognosis of patients found with early stage lung
cancer is much brighter. It is well accepted that early stage,
Stage I, non small-cell lung cancer has a 5-year survival rate
of over 70 percent. Thus, early detection is compelling as the
probability of cure is significantly increased.
However, today's usual care results in less than 15 percent
of the non small-cell lung cancer being found in early stage.
Low-dose CT screening, on the other hand, finds about 80
percent of cancers in this early stage, and this high
percentage has been well documented in studies in the United
States, Japan, and Europe. This improvement is due to the many
more detailed images obtained by the CT Scan, currently about
300 images per person and, thus, lung cancers can be found as
small as a grain of rice, as compared to being recognized when
they are the size of a grapefruit. This resulting dramatic
shift from finding 15 percent of cancers in the early stage to
over 80 percent, suggests a concomitant improvement in the cure
rate. However, further follow up is still needed of the
currently ongoing studies to confirm the exact amount of this
improvement.
Analysis of Medicare cost data has shown that the cost
associated with treatment of late-stage lung cancer is at least
twice the cost of treatment of early stage lung cancer. Thus,
there is considerable financial incentive for early detection
as well. The charge of a low-dose screening CT is currently set
at $300 at our institution, although in some places it is lower
and in other places higher. This test is painless, the images
are acquired in a single breath hold in less than 20 seconds,
and this equipment is already available in private practice
offices, community hospitals, as well as major medical centers
throughout the country.
In my opinion, the most realistic scenario suggests that
the cost is less than $3,000 per life year saved, much less
than the benchmark value of $50,000 for renal dialysis, and the
worst-case scenario is still less than that benchmark amount.
Today, under usual care, thoracic surgery is performed on
many individuals with no cancer at all. By following the
recommended management plan of nodules, either incidentally
detected by chest X-ray or CT, many unnecessary biopsies and
surgeries may be avoided by assessment of nodule growth on
subsequent CT scan one or several months later. A rational lung
cancer management plan of screening and standardized workup, in
terms of actual nodule growth, provides the benefit of early
diagnosis and early treatment and thus could save many lives.
Current cost of care of the 170,000 annually diagnosed
patients with lung cancer averages at least $50,000 per case,
totaling more than $8.5 billion a year. The majority of these
dollars are spent on late-stage treatment, with a very poor
outcome. This does not include the work of many benign nodules,
which often undergo surgery as well.
We are most concerned about the currently planned National
Cancer Institute (NCI) randomized trial for assessment of CT
screening for lung cancer. It will be the most expensive
screening trial ever planned, well over $200 million, and it
will take at least 10 years to complete. It is, however,
unlikely to provide an answer, as it has the same design flaws
that recently caused the firestorm about mammography screening.
Our published article points out these fundamental flaws, and
this article was widely endorsed.
Even the front page article in the New York Times noted
that our article caused the NCI to continue to endorse
mammography. It is simply not rational for the NCI to embrace
the design considerations when it comes to mammography and yet
ignore these same considerations when it comes to lung cancer.
Now is an opportune time to intervene before the planned trial
starts, so as to avoid the misleading results and resulting
confusion seen in mammography screening.
However, despite numerous attempts for open discussion of
the currently planned trial or design alternatives that are
less costly and more efficient, we have been ignored. Such
alternative designs allow for assessment of the effectiveness
of CT screening as a part of a practice management plan. These
designs provide the benefit of CT screening to all participants
and allow for careful assessment of the improvement in the lung
cancer cure rate and the associated costs.
These alternative studies will lead to more definitive
answers in much less time than the contemplated NCI trial. It
is important to recognize that our group in New York has been
doing lung cancer screening over 10 years. We have found that
the costs to perform the trial being contemplated by the NCI to
be at least six times the cost per patient as other
alternatives.
We think this is a very important topic for the
Subcommittee to address and appreciate the opportunity to
present our views. A thoughtful approach to the careful
evaluation of the benefit and cost of CT screening now has the
potential to save more lives than all of the other treatments
developed for cancer to date. Such a benefit should not be
delayed for years by a very expensive and probably inclusive
trial.
I suggest to the Subcommittee that the issue of cancer
screening and how such screening is evaluated is the most
important health care issue of our time. With our rapidly
changing technology, we need to make rapid and accurate
decisions regarding the scientific application of these
potential screening tests.
The prevailing methodology has overwhelming design flaws
and an open scientific debate is essential. The confusion about
mammography screening for breast cancer, despite seven large
trials involving more than $500,000 women over 30 years make
this point abundantly clear.
Thank you.
[The prepared statement of Dr. Henschke follows:]
Statement of Claudia I. Henschke, M.D., Ph.D., Professor of Radiology,
Weill Medical College, Cornell University, New York, New York
Each year, approximately 160,000 Americans die of lung cancer, that
is more than 50 times the number of people who died in the attack of
September 11, 2001. The overall cure rate of lung cancer is dismal,
somewhere around 10%.
About 85% of the lung cancers found by our `usual' care are late-
stage, and their cure is essentially zero. None of the other major
cancers (e.g., colon, breast and prostate) has such a poor outcome.
The prognosis of patients found with early stage lung cancer is
much brighter. It is well accepted that early stage (Stage I) non-
small-cell lung cancer has a 5-year survival rate exceeding 70%. Thus,
the emphasis on early detection is compelling, with the probability of
cure significantly increased.
Today's `usual' care results in less than 15% of non-small-cell
lung cancer being found in Stage I. Chest x-ray screening alone
resulted in less than 30% of cancers being found in this early stage.
Low-dose CT screening, on the other hand, finds about 80% in this early
stage and this high percentage has been well documented by studies in
the United States, Japan, and Europe (1-6). This diagnostic improvement
of the CT is due to the many more detailed images it produces of the
lungs (currently over 300/person) as compared to the single chest x-ray
image. The resulting dramatic shift in early stage cancers from 15% to
over 80% suggests a concomitant improvement in the cure rate. However,
further follow-up is still needed of the currently on-going studies to
confirm the exact amount of this improvement.
Analysis of Medicare cost data has shown that the cost associated
with treatment of late stage lung cancer is at least twice the cost of
treatment of early stage lung cancer. Thus, there is also considerable
financial incentive for early detection. The charge of a low-dose
screening CT scan currently set at $300 at our institution, although it
may be as low as $200, although considerably more is charged in some
settings. The test is painless, the images are acquired in less than a
single breath-hold, that is in less than 20 seconds and this equipment
is already available in private practice offices, community hospitals
as well as major medical centers throughout the country (7-9). In my
opinion, the most realistic scenario suggest that the cost is less than
$3,000 per life-year saved, the worst-case is less than $40,000 per
life-year saved.
Today, under `usual' care, thoracic surgery is performed on many
individuals with no cancer at all. By following the recommended
management plan for nodules either incidentally detected on chest x-ray
or CT, many unnecessary biopsies and surgeries may be avoided by
assessment of nodule growth on a subsequent CT scan one or several
months later. A rational lung cancer management plan of screening and
standardized work-up in terms of actual nodule growth provides the
benefit of early diagnosis and early treatment to over 80% of the
individuals diagnosed with lung cancer as compared to that less than
15% as currently found and thus save lives now.
Current cost of care of the 170,000 annually diagnosed with lung
cancer averages at least $50,000/case, totally more than $8.5 billion.
This does not include the work-up of many benign nodules, which often
undergo surgery as well. The majority of these dollars are spent on
late-stage treatment, with a very poor outcome.
We are most concerned about the currently planned National Cancer
Institute randomized trial (RCT) for assessment of CT screening for
lung cancer. It will be the most expensive screening trial ever planned
(well over $300 million currently estimated) and it will take at least
10 years to complete. It is, however, unlikely to provide an answer as
it has the same design flaws that recently caused the firestorm about
mammography screening (10). Our published article pointed out
fundamental flaws of the design and this article was widely endorsed
(11-13). Even the front-page article in the Los Angeles Times noted
that our article in part caused the NCI to continue to endorse
mammography. It is simply not rational for NCI to embrace the design
considerations when it comes to mammography yet ignore these same
considerations when it comes to lung cancer. It is an opportune time to
intervene before the planned trial starts so as to avoid the misleading
results that occurred with mammography.
However, despite numerous attempts for open discussion of the
currently planned trial, or design alternatives that are less costly
and more efficient, we have been ignored. Such alternative designs
allow for the assessment of the effectiveness of CT screening as part
of the practice management plan; these designs provide the benefit of
CT screening to all participants and allow for careful assessment of
the improvement in the cure rate and associated costs. These
alternative studies will yield more definitive answers in much less
time than the traditional trial being contemplated. It is also
important to recognize that our group in New York has been doing lung
cancer screening for over 10 years and we have found that the cost to
perform the trial being contemplated by the NCI is at least 6 times the
cost per patient as other alternatives. In addition, it will take more
than 10 years to have an answer, which will most likely be misleading.
We think this is a very important topic for the Committee and
appreciate the opportunity to present. A thoughtful approach to careful
evaluation of the benefit and cost of CT screening now has the
potential to save more lives than all of the treatments developed for
cancer to date. Such a benefit should not be delayed for years by a
very expensive but probably inconclusive trial. I suggest to this
committee that the issue of cancer screening and how such screening is
evaluated is the most important healthcare issue of our time. With our
rapidly changing technology, we need to make rapid and accurate
decisions regarding the scientific application of these potential
screening tests. The prevailing methodology has overwhelming design
flaws and an open scientific debate is essential. Just looking at the
confusion we have in regards to mammography where there have been no
fewer than 7 large trials involving more than 500,000 women over 30
years makes this point abundantly clear.

References

1. LHenschke CI, McCauley DI, Yankelevitz DF, Naidich DP, McGuinness
G, Miettinen OS, Libby D, Pasmantier M, Koizumi J, Altorki N, Smith JP.
Early Lung Cancer Action Project: Overall Design and Findings From
Baseline Screening. The Lancet 1999; 354:99-105

2. LHenschke CI, Naidich DP, Yankelevitz DF, McGuinness G, McCauley
DI, Smith JP, Libby D, Pasmantier M, Koizumi J, Flieder D, Vazquez M,
Altorki N, Miettinen OS. Early Lung Cancer Action Project: Initial
results of annual repeat screening. Cancer 2001;92:153-159

3. LKaneko M, Eguchi K, Ohmatsu H, Kakinuma R, Naruke T, Suemasu K,
Moriyama N. Peripheral Lung Cancer: Screening and detection with low-
dose spiral CT versus radiography. Radiology 1996;201:798-802

4. LSone S, Takahima S, Li F, Yang Z, et al. Mass screening for lung
cancer with mobile spiral computed tomography scanner. Lancet
1998;351:1242-5

5. LSone S, Li F, Yang Z-G et al. Results of three-year mass screening
programme for lung cancer using mobile low-dose spiral computed
tomography scanner. British Journal of Cancer 2001;84:25-32

6. LInternational Collaboration to Screen for Lung Cancer. Proceedings
of the First, Second, Third, Fourth and Fifth International Conference
on Screening for Lung Cancer. New York, NY (Website: http://
ICScreen.med.cornell.edu.)

7. LMiettinen OS. Screening for lung cancer: Can it be cost-effective?
Canadian Medical Association Journal. 2000;162:1431-6

8. LMarshall D, Simpson KN, Earle CC, Chu CW. Economic decision
analysis model of screening for lung cancer. European Journal of Cancer
2001;37:1759-67

9. LWisnivesky JP, Mushlin A, Kimmel M, Sicherman N, Henschke CI.
Cost-effectiveness of baseline low-dose CT screening for lung cancer.
Chest 2002. Accepted

10. LKimmel M, Gorlova OY, Henschke C. Randomized controlled trials for
CT screening for lung cancer: The impact of protocol nonadherence.
Submitted

11. LMiettinen OS, Henschke CI, Pasmantier MW, Smith JP, Libby DM,
Yankelevitz DF. Mammographic screening: No reliable supporting
evidence? Lancet 2002;359:404-5

12. LMiettinen OS, Henschke CI, Pasmantier MW, Smith JP, Libby DM,
Yankelevitz DF. Mammographic screening: No reliable supporting
evidence? www.Lancet.com Feb 2, 2002

13. LMiettinen OS, Henschke CI. ``Method appears appealing'' but
``analysis is flawed''! Lancet 2002;309:70613.ab

Chairman JOHNSON. Thank you very much, Dr. Henschke, and
thank you all for your testimony.
Dr. Wennberg, I have been interested in your work
documenting the really tremendous variations across the Nation
in patterns of practice and the lack of any evidence of
parallel variations in quality. Yet, solutions to this
irrational and costly variations have been difficult to
develop.
Do you think that disease management, because the protocols
are developed through professional experience based on outcomes
research and best practices, could help us not only establish a
more uniform approach to core illnesses nationwide, but reduce
the costs in some regions without compromising quality?
Dr. WENNBERG. That is quite a question. I believe that the
evidence seems to be pretty clear that when we have scientific
consensus that something should be done based on clinical trial
evidence, as the best quality of evidence, and that particular
intervention does not involve tradeoffs that imply preferences,
that disease management programs have definitely shown
themselves capable of getting the beta blockers out, getting
the A1C hemoglobin done, and so I think that we can count on a
quality improvement along those dimensions.
The cost issues are more complicated. First of all, the
costs that we see that are associated with the variations in
regional costs have nothing to do with beta blockers, failures
to do them, and so forth. It has to do with the intensity with
which chronically ill people are treated across the board. I
have always been aware that there is a balloon effect in health
care, namely, if you improve the way that a certain subgroup of
the population is treated, the rest of the population is likely
to get the spillover effects of the supply side problem.
For example, we have observed in some of our studies that
patients have engaged in decision support systems for shared
decision making will become more conservative in their
treatment choices, but the overall workload of surgery in the
region continues at the same level. In other words, other
patients that aren't involved in the study are getting it. So,
I am concerned that, for example, a successful disease
management program may be apparently working, in terms of
reducing overall cost, but unless the control group is
carefully defined, namely, as those others at risk of receiving
the care that is in that region that isn't being used by that
population, you can get a very different opinion on that.
I think that, and I said in my testimony, that I think
ultimately the cost issues are going to have to come back to an
open debate about what is an efficient capacity of the system,
and some of our systems have just twice as many resources in
them as others do. Until we come to terms with that, we will
continue to see regional variations.
As we continue to increase the capacity of the system by
training more physicians and building more technologies, we can
count on the costs going up, and the reason is because this
kind of care is not driven by science. It is not driven by
well-articulated medical theories about intervention. It is
done basically by the simple hypothesis or the simple fact that
if you have twice as many physicians in a region, you have
twice as many office hours to offer, and you therefore have
twice as many visits, and visits associated with all sorts of
other kinds of activities.
Chairman JOHNSON. I appreciate what you are saying, and the
significance of your response. On the other hand, as Dr.
Anderson says, Medicare is increasingly going to be about
managing chronic illness and is----
Dr. WENNBERG. Right.
Chairman JOHNSON. A chronic disease management program,
though we don't have chronic disease management capability. As
we get that capability in place, and we begin to manage those
chronic illnesses, and then if we do, as you suggest in your
article, which is a little different than any disease
management demonstration I am aware of, look at end-of-life
illness management from the same point of view, then I think we
are going to, at a very profound level, change the way we
practice.
Now that brings me to my second question. Disease
management does depend on patient participation. A number of
you had really marvelous, pithy ways of describing this. Dr.
Lord, you said supported self-management in a systemless world
and the supported self-management, and then you did point out
that somebody with Alzheimer's can't self-manage. This issue of
self-management, outside of Medicare you can create systems in
which the right of physician to educate a patient about self-
management can be absolute, and it is no surprise that it is
outside of the fee-for-service reimbursement system of Medicare
that this capability for physicians to act differently in order
to get patients to act differently has developed.
All of you know perfectly well our coding process, all of
the experts we have involved in coding, all of the complexities
of coding, we can't even--and I see my colleague, Mr. McDermott
isn't here, but we were on the phone when we asked experts who
have been in the Medicare program for 10 years what the
difference between a comprehensive physical is and a detailed
physical, and they can't tell you till this moment.
I spent a year and a half trying to get my intermediary to
figure out what partial hospitalization is versus outpatient
mental health for seniors, and we can hardly do that.
Now, the idea that Medicare could define, and one of you
mentioned a management fee, could define a management fee or
could define a physician visit education component in a fee-
for-service system that whether it is in government or in the
private sector focuses on encounters is, in my mind, simply not
possible or else we cannot wait for it. If we did, it would be
so complicated that there would be mostly war over whether this
was or was not eligible for a management reimbursement.
That is one of the reasons why I am so focused on systems.
I brought systems out in terms of technology, and some of you
talked about the need for that, but this issue of patient
involvement goes very directly to physician activity. If
reimbursements don't encompass that activity, you will never
get management education. In the disease protocols that I am
familiar with, that management education function moves from
the physician to the disease management company, who then
educates the patient in the guidelines of the doctor.
So, I don't know that you can do this through fee-for-
service. I don't really see any opportunity to do that because
while you can, a system can contract management or can develop
management within its capability, I don't see how Washington
can develop the definition of management, and how the
complexity of our coding system for a moment will enable us to
reimburse for this in a way that the Inspector General won't
destroy in the course of events.
So, I would like for you to comment on that issue of
physician involvement and the degree to which disease
management does require a different attitude toward physician
education of the patient.
Dr. WENNBERG. Me?
Chairman JOHNSON. Yes, and anyone else who wants to comment
as well.
Dr. WENNBERG. Well, let me say that I am not here defending
the current fee-for-service system. The questions about how
that payment system is organized is really what a lot of this
debate is all about, and I would think some way of paying for
the management of chronically ill people, where we have
organizations that are responsible for that, can work in many
ways. For example, at least several of the organizations that
are represented around this table have fully salaried
physicians and have health care organizations that are already
serving defined populations. The question is how do we modify
the current payment systems to make it work.
Capitation is one strategy, but capitation has always been
presented as a competitive model, and many parts of the country
there simply is only one system, and we have got to figure out
somehow how to make that system work. Clearly, the kind of
models we are talking about, patient education, group visits,
is a wonderful idea, and it works, but you can't bill for it.
In fact, it is very efficient, and it breaks this kind of
supplier-induced demand problem between the doctor supply and
that because they are suddenly no longer being paid just for
doing piecework. That is where we need to get to.
So, the question is how can we get there? In our proposal
that we put in the Health Affairs article, we basically wanted
to allow certain health care organizations that are intimately
involved now in chronic disease management, in fee-for-service
environments, to see if they could not come up with some
suggestions for modifications in the fee structure that would
support the fundamental reforms which, Madam Chairman, I hear
you asking for.
Chairman JOHNSON. Thank you. Dr. Lord?
Dr. LORD. Several comments. First, with respect to self-
management, I think one of the things that we have been focused
on, in terms of program design, and an area that Jack and I
have collaborated on for the last several years, is trying to
level the ball field so that people have a fair shake in the
health care system, understanding their disease and
understanding their choices.
I think if anybody on the panel holds up a hand-mirror
about their experiences in the system or their family's
experience, it is confusing. It is very confusing when you are
sick. It is even more confusing and scary when you are facing a
fateful decision. How can we help people at that time of
absolute need just deal with the confusion and the lack of
``systemless,'' the combination of fragmentation of care,
coupled with what was described by Dr. Anderson as multiple co-
morbidities? It creates real problems and challenges for folks.
Now the world has changed. The world has changed from a
technology perspective, the world has changed from access-to-
information perspectives, the world has changed in a number of
ways that we can work with, collectively and individually, with
people who are facing significant illness. I think there are
opportunities within the Medicare structure to create a fee-
for-service model that would pay for someone to serve as a
concierge or coordinator or adviser to people who have chronic
illness. It may be another function that hasn't been defined
yet in the health care system, but it is something that if you
think about people's experience, they really need. It may be
unreasonable to expect that is only a physician's role out into
the future, and I believe, through some of the demonstration
projects that CMS is presenting, we have an opportunity to try
some different approaches that really help deal with a very
common and a very human issue that all of us have touched or
faced somewhere in our family's lives.
Chairman JOHNSON. Dr. Anderson?
Dr. ANDERSON. In the long run, I agree with you that we
have got to change the payment system, but in the short run, we
have to deal with the existing fee-for-service system. So, what
I would take a look at is the Medicaid program, which has been
running primary care case management programs quite
successfully for a number of years, and has dealt with the
payment issues with this, has dealt with the coding issues in
the primary care case management program. So there is a model
for Medicare to take a look at to do many of these functions.
The way I would set it up in the Medicare program is to
take a look at people that had four or five different chronic
conditions, different chronic conditions. These people see an
average of 10 to 12 doctors in the course of the year. They
need their care coordinated desperately.
The care that is actually being provided to them is not
very good, as my example about the prescription drugs
illustrated, but I could also give you examples about
unnecessary hospitalizations or unnecessary nursing home
patients. There would be savings from care coordination if we
could figure out a way to get these 10 doctors to talk to each
other. Part of it is information system, but we need a primary
care physician to be responsible for saying, ``What is the
endocrinologist doing, what is the cardiologist doing for my
patient?'' To get that to happen, I think you need to pay them.
Chairman JOHNSON. Those are very interesting comments. I
think they underestimate the problem of getting the information
from all of the people involved when you have got a lot of
chronic illnesses, and I think they completely ignore the
liability concerns. If you have Medicaid, you are sheltered
from liability. I don't know who would want to take the
liability on their shoulders of coordinating the care, when you
have multiple chronic illnesses, and possibly disagreeing with
one of the doctors so that you can better integrate the care.
So, I think this is a pretty big and difficult issue. It is
one that systems are solving themselves. So, right now we can
reimburse the system, and the system can do it. In the long
run, of course, we have to have a way for the whole system to
do it, but I feel real urgency about pressing ahead and
encouraging systems that can take on this responsibility to
move rapidly because this is--I agree with you--this is already
a chronic care program.
Dr. Hillman?
Dr. HILLMAN. Yes, I agree completely with you. I think to
rely on physicians, first of all, to educate patients is a
misuse of health care resources. Physicians have no training in
patient education, patient behavior paradigms, that type of
thing. It is just not part of physician training.
Likewise, to ask physicians to be coordinators of care is
also probably a misuse of their capabilities. I think that
there are other types of health care providers that can provide
these functions as long as they have coordination in terms of
having an electronic medical record. For example, that is
portable from site-to-site or physician to physician. Those
information systems allow a case manager, such as a registered
nurse, well within their scope of practice, to perform these
functions.
I don't think that it is going to be beneficial to put an
individual in a role where they are going to be adversarily
questioning other people's judgments. If the system keeps the
care in mind itself, as opposed to the encounters in mind, is
what our current reimbursement system does, I think we will do
a lot better.
Chairman JOHNSON. Mr. Stark?
Mr. STARK. Well, I thank you all for taking the time.
One of the things that troubles me--the Chair asked if I
would yield to----
Chairman JOHNSON. Let me recognize Mr. Houghton, since he
has to leave and has taken a very, very great interest in the
issue of lung cancer detection. Congressman Houghton.
Mr. HOUGHTON. Thank you very much.
Listen, I am sorry to do this, Pete. Thank you very much
for your letting me--I have just got to get out of here----
[Laughter.]
Mr. HOUGHTON. It is not because I want to, but because of
something else.
Dr. Henschke, if I understand it, you have got two points;
one, get it early, and then don't go into these expensive
trials which are going to push off the inevitable. I would like
to ask you really two questions. The first is this.
We talk about lung cancer, and then obviously you get into
the idea of smoking. Smoking inevitably enters the discussion,
and don't smoke, and you won't get cancer. Do you agree with
this? Also, why should we put money into research on early
screening detection, when perhaps it would be better spent on
prevention, and cessation programs and things like that?
Dr. HENSCHKE. Well, I certainly agree that we should put a
lot of effort in smoking cessation programs particularly in
those of younger individuals. However, there are 50 million
currently smoking individuals in this country and some 50
million former smokers. Even if we stop smoking today, if no
one smoked, we would have lung cancer deaths for a considerable
time, 20 or 30 years in the future, and we should do something
for these individuals, and we can save many of those lives.
So, we think that screening should go hand-in-hand with
smoking cessation, that actually you can give them a lot of
information, and people who come to screening programs also are
interested in stopping. So, these two should go hand-in-hand.
Mr. HOUGHTON. The second question, and I will be brief,
there was a report presented to the National Cancer Institute
in August last year that presents really a very pessimistic
picture. It talks about lack of progress in research, and high-
death rate, and unenthusiastic attitude of doctors, and
researchers, and other health care providers, and also total
lack of communication and cooperation among those involved in
treating and managing the disease that you might want to
comment on that.
Dr. HENSCHKE. Well, I was a participant of that program
project review for lung cancer, and, yes, lung cancer has,
there has been a pessimistic attitude in these past years, but
now with screening really making its changed the attitudes. At
that meeting, there was emphasis on collaborative efforts,
there were a whole set of priorities that were detailed that
are very good priorities. The problem is that funding for lung
cancer has been much less than funding for the other cancers,
even though, for example, it kills more than seven times as
many cancers--it causes seven times as many deaths as breast
cancer, it gets about a tenth of the funding or so.
So, the pessimism is more due to the lack of funding, and
we do have now a lot of information that we could obtain about
the biology and the innovative treatments that could be used in
view of these new techniques. So, there is a lot of excitement,
there has to be funding, and there has to be implementation of
those priorities that were set by that report.
Mr. HOUGHTON. Thank you very much. Thank you, Madam
Chairman.
Chairman JOHNSON. Thank you for being with us today,
Congressman Houghton. Congressman Stark?
Mr. STARK. Well, thank you again, as I said. I am glad to
see that the Marshfield Clinic, it used to be the Doege Clinic?
Dr. HILLMAN. It used to be the Dayton Clinic?
Mr. STARK. Dr. Doege?
Dr. HILLMAN. Doege, yes.
Mr. STARK. I grew up next door to him in the summers, a
long time ago. He is no longer--Marshfield is easier to spell.
I am troubled, and I want to say at the outset that Dr.
Lord had nothing to do with this, but what was absent in his
testimony and what can happen in case management as a result, I
suppose, of clinical strategy and innovation, was the Chipps
case that Humana was involved with, where they terminated 100
critically ill children to save $78.5 million for the Humana
program. Fortunately, the court decided to whack them with
punitive damages for $78.5 million, but that was overturned. My
question is of concern of might this be used, and I would be
more concerned in the for-profit part of medical delivery than
I would in the not-for-profit because the incentives would not
be so high there is how do we prevent mischief?
If you begin to identify people with chronic diseases, as I
presume you would in the workplace before they mature into
Medicare, do we run the risk of tremendous selectivity,
companies like Humana or Aetna, Marshfield Clinic, Johns
Hopkins saying we don't want you or finding whatever ways they
can to discourage these people? Are we all going to have the
red mark of ``C'' on our foreheads saying we are chronic and
therefore become the great unwashed of the people running
around hat in hand looking for health care.
Now, this is a panel of physicians, and I am far more
comfortable with your training and approach to taking care of
me than I am your company treasurer or whomever may make these
decisions at some point to, say, terminate or design recruiting
or advertising programs to subtly select. There is a new health
care gang out, Sterling, I guess it is, who does a fee-for-
service Managed Care Plus Choice. They have got some cute
tricks--50-percent co-pay for durable medical equipment. What
does that tell you? Nobody in a wheelchair or walker should
apply or 50-percent deductible, as many have for mental illness
procedures.
I guess I am worried that this could turn on us if we are
not careful, and that is my question, how do we prevent and,
Dr. Lord, I impugned your company here by sort of indirection,
and I will let you respond, but I am concerned that we not
begin, and the privacy issues come up this morning. I don't
think that is as bad for a Democrat that is probably blasphemy,
but I really think that we have got to sacrifice some privacy
to get the kind of research that I would like to see in
outcomes research done.
How can we assure that this won't just kind of categorize
the people we end up getting back to the Hansen's disease farms
and sort of putting all of these Medicare critical people off
in one corner, and then we will have trouble getting them into
the best of the plans?
I am sorry, Dr. Lord, go ahead. You were not there. I want
to stipulate, you did not come aboard until this case was
behind you.
Dr. LORD. First of all, the Chipps case really has nothing
to do with today's testimony, but beyond that, I think in terms
of the disease management programs that we provide, we provide
to all beneficiaries, regardless of plan design and regardless
of program--government, commercial, TriCare, programs that are
provided, as my 20-year-old daughter would say
``disregardless'' of how people have shown up at our doorstep
and provide a set of services that really are intended to try
to get rid of waste that exist in the system.
I think the theme-line, from Jack through all of the
panelists here, is that there is waste and inefficiency in the
system because it does not act like a system. The more that we
can do a few things, one, help provide information, coordinate
services, allow people to be sovereign in terms of making some
choices that are right for them, which in many cases people
have been disenfranchised of choice, how can we do that and how
can we make that work on a systematic base?
I believe that it is the incentives that exist for, for-
profit enterprises, nonprofit enterprises, but most importantly
people, that we somehow rationalize the kinds of care that we
provide and allow the fact that we live in a world with a lot
of abundance and don't live in the paradox of abundance that
creates waste and get rid of the waste that exists in the
system today.
Dr. ANDERSON. I think it is not that most Medicare
beneficiaries have one ``C'' on their forehead, Mr. Stark, but
it is probably two or three or four ``C's.'' We have
essentially got to deal with the issue of multiple chronic
conditions, not just the single ``C,'' and we have got to deal
with it in two different ways. In fee-for-service Medicare, I
think we do have to pay for coordination of care. If we don't
pay for it, we make the person or their care giver the de facto
care coordinator. I think in many cases self-care coordination
is fine, but I would like to have the advice and really the
guidance of a physician in many cases, and I think I,
unfortunately, need to pay for those types of activities.
Mr. STARK. I would like that. I mean, as a patient, I would
rather talk to one of you guys than I would some kind of social
worker who has been trained to tell me the kind of stuff I can
find on the Internet. I am not very comfortable or I wasn't
before I went to see Dr. Walsh reading about it on the
Internet, and he is not the most charming, bedside manner guy
in your institution, I might add, but, nonetheless----
Dr. ANDERSON. Technically, very good.
Mr. STARK. Yes, thank God, but nonetheless, what I am
suggesting is that we patients would just as soon talk with the
guy that has got the knife, what is going to happen, Doc? Don't
send me over there to somebody who is going to just give me the
stuff I can read. I want to know what are you going to do
relative to me.
Dr. ANDERSON. I am taking into account your specific
circumstances, because your collection of chronic conditions
that you have, which is different from the next person, and you
have got----
Mr. STARK. Does Marshfield still--Dr. Hillman wants to say
something--does Marshfield deal with fee-for-service? Do you
take fee-for-service patients?
Dr. HILLMAN. Yes.
Mr. STARK. I guess what I want to ask, and then you can say
whatever you want, is would Dr. Anderson's idea of having a
fee, a physician whose job it would be to be a coordinator work
in your system, for example?
Dr. HILLMAN. Most definitely. Just to reinforce that, I
forgot which management guru said that you can't manage what
you don't measure. I can tell you 100 percent that what you
don't reimburse, you certainly aren't going to measure, and you
are certainly not going to manage, and we have to do that.
Marshfield Clinic is a 501(c)(3) clinic, and as a public
trust, we see everybody. One of the things that you had asked a
question before of Mr. King-Shaw was why couldn't physicians be
required, for example, to follow clinical practice guidelines
and provide care plans in order to participate in Medicare? I
can tell you that, for example, in our area, which is one of
the under reimbursed areas in the country, that our competitors
would welcome that because they would say, ``Hey, look. We are
no longer qualified to take care of Medicare patients. Ship
them to Marshfield,'' which is what they do right now anyway.
That is why we have had to develop the systems that we
have, and that is why we have made the investment to develop an
electronic medical record, to develop the epidemiological
database that we have, basically, so that we can take care of
people in a more effective manner.
I would also point out one other thing. You may feel better
right now, and I agree that if you were going to have a surgery
or a specific care intervention that is dangerous to you, you
would feel more comfortable talking to a physician, but the
majority situations that arise in chronic care aren't related
to that. They are related to behavioral changes, to monitoring
the effectiveness of dosage changes in the medications, and
those things don't need to be done by a physician. We are
wasting a huge amount of health care resource by not employing
the right type of provider to provide those services. As the
Anticoagulation program that I detailed in my testimony showed,
those things can be done by nurse case managers, and the
patients like it a lot better. It is done on a 24-hour basis,
it is done when it is convenient for the patient. It is backed
up by another nurse call center that has access to the
patient's medical records so that people know what is going on,
not just from their physician at Marshfield, but among any of
the other 38 regional centers that Marshfield Clinic provides
care at, many of which are in disproportionately socioeconomic-
challenged populations.
Mr. STARK. I grew up there.
[Laughter.]
Dr. HILLMAN. Well, you made it out.
[Laughter.]
Mr. STARK. I miss it. I am sorry. Thank you, Madam Chair.
Chairman JOHNSON. Thank you. That was very interesting.
Congresswoman Thurman?
Mrs. THURMAN. Thank you.
Dr. Anderson, in reviewing and looking over the testimony
by Ruben King-Shaw, it struck me that many of the demonstration
programs that they are embarking on in fee-for-service seemed
to concentrate on maybe one specific illness, as versus what
you are suggesting is I think, which I actually think is a very
good idea, it seemed to me that where you would want to start
is where those are four or five so that you could have a real
idea of how you were managing.
I think, for the most part, a doctor that deals with
somebody with CHF for whatever, I mean, pretty much manages
that patient. So, the real management of disease is when you
are talking about many kinds of disease that would be a
problem. So, I would hope that maybe one of the messages this
Subcommittee could carry back in a demonstration issue is to
maybe look at a demonstration where you are looking at a
patient with several chronic conditions, as versus one. That
does concern me a little bit. I think that is a very good idea.
The liability issue, and, of course, we have all been
through this Patient's Bill of Rights, and this issue and that
issue, but, Dr. Lord, because you do this now, that is what
your company does is supposedly manages for managed care, and
how do you work through this? I mean, doctors, maybe you as an
individual or as Humana can't be held liable, but the fact of
the matter is your doctors and others could. So, I am not sure
that I understand this liability issue when it comes to a
managed or when you are trying to manage different disease
management. I kind of got lost in that argument there. Can you
help me a little bit here?
Dr. LORD. Sure. The disease management function is to
support the care between practitioner and patient, and it is to
provide access to resource, in terms of information for both
groups as they enter what Dr. Anderson described as a very
complex world. Very few people have just a single disease to
contend with. They have multiple pieces of challenges going on
clinically, as well as in their family life, as well as
economically, that all make a full picture. The only person who
could be making the kinds of decisions that are right for that
individual are, first, the individual and, second, with the
advice of their practitioner, whether that is a physician or
another type of practitioner.
What we have tried to do is get out of the management
business and be in a position to provide best-in-class
information to both the patient, as well as to the
practitioner, to provide information that helps reinforce
things that the patient should be doing.
For instance, if a patient is receiving a drug after a
heart attack, they need to take that drug on a regular basis.
We can send out an automated reminder that lets them know they
haven't gotten the refill. Why can we do that? In our
commercial programs, our pharmacy benefits manager lets us know
within about 24 hours every time we fill the position. We can
go ahead and use automated systems and use some logic around
our electronic data warehouses to provide that information to
people.
Now, we are not prescribing the drug, we are reminding the
individual about their care. Health plans are not care
providers. They are not hospitals, they are not doctors, but
what we can do is a much better job, and what we are trying to
do is a much better job of getting information back to people.
We are the hub and spoke of a lot of the transactions that take
place in the health care system. We know and we have insights
about what works for people and what are best practices, and we
can serve that up in ways that both practitioners can take
advantage of, as well as patients. I think that really is the
focal point for our business as we go forward, and clearly it
is the insight that we want to try to give to people who face
the complex problems that Dr. Anderson described.
Mrs. THURMAN. It is not insurmountable to believe that
Medicare fee-for-service could do very similar. I think that
Dr. Anderson mentioned that. Dr. Hillman, you seem like you
want to just jump right in here. Did you have something you
wanted to add to this?
Dr. HILLMAN. Yes, and I will be a little bit careful
because I am going to be a little bit provocative.
Mrs. THURMAN. We love it.
Dr. HILLMAN. I think that information is very helpful, but,
quite frankly, information is of limited use. For example, I
don't know how many people know how many teeth they have in
their mouth. You don't need that information to know that you
have to brush them twice a day.
When you have multiple chronic diseases, and you have
multiple facets of information about complex systems and drugs,
and a lot of these people that are seeing 5 and 10 physicians
are taking 15 and 20 medications and that type of thing. There
is only so much information that you are going to be able to
pass on to something that they are going to be able to act
responsibly with before they become overwhelmed, dejected, and
decide to forget the whole thing. That is why I think that case
management is a very critical part of this.
The other thing that I think has been ignored by it----
Mrs. THURMAN. Earlier you thought this couldn't be done in
one of your responses. So, I am curious to what you think case
management is. I got the indication that you thought only a
doctor could do it or----
Dr. HILLMAN. No, quite the opposite.
Mrs. THURMAN. Okay.
Dr. HILLMAN. I think a physician doing case management is
not an appropriate use of health care resources. That is why I
detailed the Anticoagulation program, because it is basically a
nursing program that has medical direction, has prescribed
protocols. All of the interactions that the nurses have with
patients are documented in the electronic record, which is
confirmed and electronically signed off with the providers, but
they all work on very specific guidelines.
The point about that program that I think I failed to make
in my written testimony is that that case manager for
anticoagulation basically is acting as a chronic disease
manager, because when we looked at hospitalization rates
between the control group, the usual care group, versus the
group that was in the Anticoagulation Service, we looked at
global hospitalizations. The difference there was huge, and I
have the numbers in the written testimony. The reason we looked
at global hospitalizations is because we found that in the
education process or the behavioral training or development
process of patients, that we were able to get them to call the
nurses the minute something else changed in their health care.
By getting that information sooner, the nurse was able to
advise them on what to do either about their medication or
about seeing a provider on an outpatient basis or adjusting
some other aspect of their regimen that allowed them to avoid
those hospitalizations.
I agree with basically everything that Dr. Anderson said,
but we actually have a program that basically, with a little
bit of expansion, accomplishes what he said. Unfortunately, we
get no reimbursement for this whatsoever. While we have 1,000
patients enrolled in this program right now, and many of those
patients incidentally have a trial fibrillation and heart valve
replacements that have been caused by chronic diseases related
to sachemic or coronary artery disease, diabetes, and
hypertension. That is the value of the case manager.
Mrs. THURMAN. I would just say, based on the testimony on
page 5, it says they are talking about giving M+C organizations
that meet specific quality indicators extra payments,
recognizing the cost of successful outpatient management. In
this case, it was just the CHF. So, it sounds to me like they
are noticing it in one area, but it should be recognized, I
guess, in the fee-for-service for any kind of demonstration
program we would do there as well.
Dr. HILLMAN. I agree with you 100 percent.
Mrs. THURMAN. Thank you.
Dr. HILLMAN. That is why we didn't participate in that
disease management demonstration. It was too narrowly focused.
There was a huge risk associated with it, in terms of its
budget neutrality, and you were required to provide
medications, and I think that is a fair criticism of that
demonstration project. I don't really see that we are going to
get much out of it, quite frankly.
Mrs. THURMAN. Thank you.
Chairman JOHNSON. Thank you, Karen.
There have been some questions raised. To just pursue
Karen's questions in two aspects. First of all, I want the
record to reflect very clearly that all of you at the table who
are involved in disease management programs are providing
disease management services, whether they are sort of narrow
and computer-driven or whether they are more interactive and
have a human being there actually doing a lot of following, and
advising and communicating, and that Medicare does not
reimburse you for them, for that aspect of your service.
I thought it was very interesting that you pointed out in
Mr. King-Shaw's testimony, and I noticed it, too, that in the
demonstrations, they are going to pay for this function, but in
the Choice plans. It is one of the ways in which the Choice
plans bear costs that Medicare doesn't bear, and it is one of
the reasons I am so intent on at least reimbursing them at 100-
percent fee-for-service because if they are going to perform,
they have additional costs they have to bear.
I was very interested, Dr. Hillman, with your description
of the amount of technology you have put in place just to have
electronic records available throughout the very large serving
area of your system, which I believe is multi-county, is it
not, in Wisconsin?
Dr. HILLMAN. Yes, it is.
Chairman JOHNSON. It is a big system over rural and urban
areas, but without that technology, you could not possibly
implement disease management protocols, correct?
Dr. HILLMAN. That is correct. Here is the perverse
incentive of the whole thing. Our reimbursement for Medicare
fee-for-service is so low, about 70 percent of our costs, done
by the CMS methodology. We have to raise our commercial fee-
for-service rates, which increases, indirectly, the number of
uninsured, which indirectly increases the number of people that
are on Medicaid, which indirectly causes even lower fee-for-
service payments on the services that we started providing to
begin with. This is an untenable situation, and the only reason
that you have it at Marshfield Clinic is because we are so
mission-driven and passionate about delivering the quality-of-
care that we do, that we have to believe, at some point in
time, what goes around comes around.
Chairman JOHNSON. You are the only system I know of
nationwide, and that doesn't mean there aren't any, it just
happens to be that the others haven't come to my attention,
that is systemically involved in disease management with no
reimbursement and serving a very low-paying, but also a needy
population.
Mr. Stark?
Mr. STARK. Are your Medicare fee-for-service rates lower
than Wisconsin's Medicaid? I am curious. I don't----
Dr. HILLMAN. No. Despite the fact that we get probably I
think it is 50 cents on the dollar for our Medicare
reimbursement, Medicaid is actually a little bit less,
although----
Mr. STARK. Does anybody pay a dollar?
Dr. HILLMAN. No, but they pay a whole lot more than 50
cents on the dollar.
Mr. STARK. Do you own your own hospitals or do you contract
with----
Dr. HILLMAN. We do not. We are completely outpatient. I
will tell you we do have a capitation contract with the State
for medication, at least Security Health Plan, our subsidiary
does, and that plan actually does retain some net earnings
above what they pay us. So, we are able to sustain it on a
capitated basis, but we do not have a gatekeeper system with
that. We use the system that I described with the
anticoagulation management in order to make that margin.
Chairman JOHNSON. In other words, a management system.
Dr. HILLMAN. That is correct.
Mr. STARK. If Medicare pays you 50 cents on the dollar,
what is the next lowest commercial contract on fee-for-service;
does it pay you 60 cents? You don't have to tell me the name of
it, but the private insurer that then pays you the next lowest.
Dr. HILLMAN. Seventy cents.
Mr. STARK. Seventy cents, it is that big a gap.
Dr. HILLMAN. That is our own health plan.
Chairman JOHNSON. That is 70 cents versus 50 cents for
Medicare and less than that for Medicaid?
Dr. HILLMAN. Yes.
Chairman JOHNSON. So, we are not so great.
Mr. STARK. Thank you.
Chairman JOHNSON. Let me go back to the malpractice issue
that I had raised because I didn't actually raise it in the
context that Karen heard it. Within a plan, I understand that
there would be whatever the plan's liability is under that
State law or whatever we do in Patient's Bill of Rights. If you
are trying to coordinate care across individual physicians
reimbursed under Medicare, now I think you do have a problem.
If they are not part of the same group practice, if they are
not part of the same system, I do not know how you identify
that responsibility, and how you reimburse it. I think in
identifying it, you would not be able to provide the nurse
practitioners and stuff because the liability is--I mean, to
me, that is a real can of worms.
Dr. Hillman?
Dr. HILLMAN. The only way we can do it so to be self-
insured, and that is what we do. That is why we have such a
high interest in maintaining quality-of-care.
Chairman JOHNSON. That is interesting. You are self-insured
for malpractice as well.
Dr. HILLMAN. That is correct.
Chairman JOHNSON. That is outstanding.
Before I conclude, I just want to say that I really
appreciate Dr. Henschke's comments. We will work with you on
your thoughts and opinions on the clinical trials program that
is being proposed, if only because 10 years, give me a break.
With the pace of medical change, at the end of 10 years we will
know about a procedure that is no longer the state-of-the-art,
so truly a ludicrous proposal on their part.
If you were to advise us as to how we could do a better job
in terms of Medicare being a force for early diagnosis of lung
cancer, what would you suggest we do?
Dr. HENSCHKE. Well, I don't know all of the complications
of Medicare, but I----
Chairman JOHNSON. Well, the big complication, of course, is
money, but, nonetheless, what would you suggest that we do in
order to have a program that did do for lung cancer, basically,
what we have done for breast cancer and colon cancer.
Dr. HENSCHKE. I think one could develop demonstration
projects. Medicare, I have talked to Medicare. They were very
interested in the results, but they said it is Congress who has
to mandate any screening policy. So----
Chairman JOHNSON. That is true. For instance, sometimes we
are able to mandate screening policies when there are a
combination of factors that will identify those who are prone.
So, sometimes we have done that. We do that in colonoscopies.
Certain procedures are available--am I correct, staff? Yes,
certain procedures are available if you meet certain criterion,
and other lower cost procedures are available if you don't meet
those criteria.
So, if you will give that some thought and get back to us,
we will be very grateful.
Dr. HENSCHKE. Thank you very much.
Chairman JOHNSON. Thank you very much.
I thank the panel for their thoughtful comments today, and
I thank the Members for their participation on a Tuesday. I
notice the Democrats are in town, and the Republicans aren't. I
thank you for that and commend you.
[Whereupon, at 5:29 p.m., the hearing was adjourned.]
[Submissions for the record follow:]
Statement of Richard Burford, Product Marketing Manager, 3M Health
Information Systems, Wallingford, Connecticut

``On behalf of 3M Health Information Systems (3M HIS), I am pleased
to submit written comments to the House Ways and Means Subcommittee on
Health hearing to be held on disease management on April 16th, 2002.
Our comments make the case for the importance of coordinated of care
and the need for greater coordination of care in federally funded
health care programs. For the sake of simplicity, our comments are
submitted in the attachment in a question and answer format.
3M HIS is a market leader in the healthcare information technology
business. 3M HIS specializes in coding and classification tools in
acute care and the payer market. The views advanced in our written
comments result from our experience in working in the managed care
arena and, particularly, with companies in the business of delivering
care management and case management services.''
______

A Case for Better Coordination of Care

What is coordinated care and care management? Why is it important?

``Coordinated care'' is getting the right health care
services to the right patients at the right time and in the
right setting. Delivering well-coordinated care is important
for maintaining and improving the health status of
beneficiaries.

Effective care management is also important for
successfully managing the financial risk of an enrolled
population.
What are the basic steps in the care management and care coordination
process?
The first step to delivering high quality care
management services is understanding the disease burden of the
enrollees. Enrolled members with chronic health conditions must
be identified, classified into clinically meaningful groups and
stratified according to severity. Disease progression and
anticipated costs must be projected.

Next, specific beneficiaries are then targeted for
case management intervention. Case management interventions
(care plans) are devised and implemented to promote effective,
high quality care. The result is effective case management
programs that meet the needs of enrollees by improving their
health status while reducing health plan financial risk.
How did the original intent of managed care related to better
coordination of care?

In managed care, payment methods were originally
designed to foster and promote the provision of coordinated
care. However, capitation, which is the predominant method of
payment under managed care, does not provide adequate
incentives to foster well coordinated care.

Under capitation, health plans accept an annual fixed
fee to deliver a defined set of health care services to an
enrolled population and, thereby, assume financial risk.

If the capitated revenues health plans receive do not
cover the costs of administering and delivering covered health
care services, health plans lose money. This creates an
incentive for health plans to enroll healthy beneficiaries that
are expected to have low costs and to avoid beneficiaries with
chronic illnesses that are expected to have high costs.

The beneficiaries with chronic illnesses are the very
ones that would benefit most from care coordination and case
management services.

To introduce positive incentives for the delivery of
well coordinated care, payments to health plans must be
adjusted to compensate for differences in the health status or
disease burden of beneficiaries enrolled in the plan (risk
adjustment) Also, direct payments for case management services
can be made, specifically, for those beneficiaries that would
benefit most from care coordination.
Why is effective case management and care coordination important to
the future success of the Medicare+Choice program?

Just 15.7 percent of Medicare beneficiaries account
for 76.6 percent of all Medicare program payments. (1997
Medicare data)

76.2 percent of Medicare beneficiaries are relatively
healthy and account for only 7.1 percent of Medicare program
payments. (1997 Medicare data)

Because of this high concentration of expenditures in
a small number of Medicare beneficiaries, targeting enrollees
for case management services and implementing effective
programs of care coordination is vital to the future success of
the program.

Coordinated care is especially important for the high
cost, chronically ill beneficiaries. These are the patients
that, frequently, are at highest risk for deteriorating health
status and the related ``exponentially'' increasing costs for
health care services.
What are some key characteristics of a properly designed system of
coordinated care?

An effective system of coordinated care should accomplish the
following:

- Predict future health care resource use of beneficiaries
(costs), especially for the frail elderly and individuals with
special health care needs.

- Provide for effective systems of targeting cases for case
management intervention and tracking the cases over time.

- Pay health plans fairly for the delivery of case management
services, taking into account differences in the health status
of the populations they serve.

- Be based on a clinical model that is easy to understand and
verify.

- Provide clinically meaningful information to health plans in
order to promote care coordination, quality improvement,
disease management and provider profiling.

- Demonstrate value, i.e., the efficacy of the care management
processes.

- Provide Medicare with accurate data on the competitive
performance of health plans in delivering coordinated care.
What are the benefits of an effectively designed system of coordinated
care?

Health plans are paid fair and equitable capitation
rates that give them incentive to serve all beneficiaries,
regardless of their health status. Thus, negative program
incentives that promote selective enrollment of healthy
beneficiaries and the ``de-selection'' of sick beneficiaries
are eliminated.

Health plans are able to shift their operating
emphasis from managing risk to delivering coordinated care that
was the original vision of managed care.

Statement of the Advanced Medical Technology Association (AdvaMed)
AdvaMed, the Advanced Medical Technology Association, is pleased to
submit this comment for the record on the important role that disease
management can play in the delivery of high quality, cost effective
medical care to the growing number of seniors and people with
disabilities under Medicare.
AdvaMed is the world's largest association of medical technology
manufacturers, with over 1,100 members worldwide. Our members develop
and produce the advanced medical technologies that are integral to
disease management and other innovation forms of high quality health
care delivery.
Disease management technologies have a key role to play in Medicare
in the 21st century: improving patient care, improving health system
efficiency, and reducing overall costs. Realizing these benefits will
be critical in the coming years as Medicare faces a rapid increase in
the number of beneficiaries it serves. AdvaMed supports efforts by
Congress and the Centers for Medicare and Medicaid Services (CMS) to
expand access to technologies that facilitate the management of
disease--by ensuring adequate reimbursement and coverage.

AdvaMed believes the following three key points are important to
keep in mind when considering the increasingly important role of
disease management technologies:

L(1) The aging population of the U.S. demands technology
solutions to manage chronic disease and reduce disability.

L(2) Technologies will likely bring the greatest strides in the
future towards improving the management of chronic and short-
term diseases.

L(3) Medicare should take steps to encourage more timely
adoption of medical technologies that facilitate disease
management.
The aging population of the U.S. demands technology solutions to
manage chronic disease and reduce disability.

The United States faces unprecedented challenges in the number of
elderly patients who will rely on Medicare to ensure their health and
well-being. Based on historic trends, the most expensive patients are
those that need ongoing institutional care--and the costs of caring for
patients in nursing homes accounts for a growing share of our health
care budgets. Other expensive critical care services also are expected
to become more numerous as the elderly population grows.
Fortunately, technologies offer the potential for many to change
the paradigm of care and reduce hospitalizations and allow patients
with serious chronic conditions to lead active, productive, independent
lives. Recent advances offer cost-effective solutions to some of the
conditions that are the costliest to Medicare, such as congestive heart
failure, diabetes, and coronary artery disease.
Study results announced in March at the 2002 American College of
Cardiology Annual Scientific Session show one way that advanced medical
technology can improve health care quality and efficiency. The study
found that a breakthrough technology called cardiac re synchronization
therapy can reduce by 50% the number of hospitalizations for congestive
heart failure. Heart rhythm disorders currently account for more than
761,000 hospital visits annually at a cost of more than $6,000 apiece.
Drug-eluting stents (stents that slowly release medication after
being implanted to keep the coronary artery open) show promise in
eliminating the problem of arteries renarrowing, or restenosis--which
is a major cause of repeat medical procedures in patients with coronary
artery disease. In recent clinical trials, drug-eluting stents
completed eliminated restenosis. This ``could become one of the biggest
breakthroughs in treating cardiovascular disease,'' according to the
American Heart Association.
A landmark study published last year by Duke University researcher
Kenneth Manton, PhD illustrates one way that innovative tests and
treatments are reducing the number of people who need disease
management and yielding long-term savings. Manton's research finds
that, due in part to advances in medical technology, the rate of
chronic disability among Medicare-age patients has fallen significantly
over the last two decades. In fact, today there are 1.4 million fewer
Medicare beneficiaries with chronic disability than would have been the
case without these gains. This reduction saved Medicare an estimated
$19 billion in 1999.

Technologies will enable the greatest strides in the future towards
improving the management of chronic and short term diseases.

Medical technology innovations are helping make effective disease
and case management a reality. Many emerging breakthroughs are
empowering patients to take a more active role in the effective
management of their disease or condition.
Recently FDA approved the first-ever cardiac pacemakers with remote
monitoring capability. This technology enables patients to transmit
information about their heart condition and pacemaker performance from
home directly to their caregiver. These ``virtual office visits''
promise to improve patient care and increase efficiency in treating
patients with chronic heart conditions through more timely follow-up
and better overall patient management.
Advances in diabetes detection and monitoring are playing key roles
in the management of the disease. Diabetes and its related
complications consume one of every four Medicare dollars. The Centers
for Disease Control and Prevention (CDC) warns it is ``a major public
health threat of epidemic proportions.''
Recently, the first-ever non-invasive blood glucose monitor became
available in the U.S. HHS Secretary Tommy Thompson remarked that
introduction of the device ``heralds the advent of new technologies
that promise dramatic improvements in the quality of life for the
millions of Americans who have diabetes.''
In 2001, new technologies also were introduced to make blood
glucose monitoring simpler and less painful. One product made available
last year was the world's first combined blood glucose monitoring and
insulin dosing system. In addition, a growing number of monitors were
introduced that allow patients to draw blood samples from sites other
than the fingertip, such as the arm. HHS Secretary Thompson also
recently called on doctors to test many people for ``pre-diabetes,'' a
condition of elevated blood glucose levels that often leads to
diabetes.
Advanced diagnostic technology called prothrombin self-testing
allows patients on blood-thinning drugs like Coumadin to closely
monitor their clotting time (prothrombin time) at home. Information
from the test enables the physician to adjust the blood-thinning
medication to avoid serious complications like bleeding and stroke.
The genomics revolution also is yielding gains in disease
management. New genomic disease management tests, by providing new
information not currently available through existing methods, enable
physicians to diagnose disease more quickly and accurately, to
determine the most appropriate treatment and to monitor disease
progression and reoccurrence during therapy. These tests also enable
the detection of disease at the very early or developing stages when
treatment is likely to be most effective.
In addition, many new information management technologies are
emerging to help providers successfully monitor and care for patients
across the spectrum of the health care delivery system.
LMedicare should take steps to encourage more timely adoption of
medical technologies that facilitate disease management.

Unfortunately, Medicare procedures and policies often discourage
the adoption of new medical technologies that can facilitate disease
management--or reduce the need for it altogether.
Diabetes testing policy:

CMS has issued several policies to reduce reimbursement and
restrict access to the glucose monitoring technologies patients
need to achieve tight glucose control. Congress and CMS must
work to remove these restrictive policies and ensure that
Medicare patients have access to advanced monitoring
technology.

Recently CMS finalized a policy to cut reimbursement for blood
glucose testing by 26%. The Congressional Diabetes Caucus had
expressed concern to CMS that it was employing a flawed process
to make this cut.

In early 2000, CMS issued an extremely burdensome policy that
is discouraging close monitoring of glucose levels for patients
in nursing homes. Despite the fact that glucose monitoring is
designed to show a trend in glucose levels over time, CMS has
said that nursing home caregivers must obtain a physician's
order for each individual measurement that is taken. Because it
is impractical and time consuming to obtain a physician's order
for each measurement, this requirement has meant that nursing
homes must either perform fewer glucose tests or absorb the
cost of perform needed tests.

CMS further restricted Medicare patients' access to glucose
testing in a recent policy that allows them to purchase glucose
monitors and test strips only from retailers that are Medicare
suppliers. However, because of Medicare's burdensome and
complex requirements for gaining recognition as a Medicare
supplier, many small retailers choose not to apply for this
status. This policy, which has never been applied to any other
product or service under Medicare, could make it difficult for
many patients to purchase the glucose monitors and supplies
they need, especially in rural areas that lack a Medicare
supplier.
Innovative diagnostic tests:

In addition to problems specific to diabetes tests, other
diagnostic tests integral to successful disease management face
significant barriers at Medicare.

A report issued by the Institute of Medicine (IoM) on Medicare
policy and procedures for diagnostic tests states that
``current Medicare payment policy for outpatient clinical
laboratory services seems not only outdated, but also
irrational.'' The report concluded that ``Medicare needs a more
timely and appropriate method for integrating the proliferation
of new technologies anticipated in the near future.''

Legislation pending in the Senate and passed by the House as
part of the Medicare Regulatory Relief bill (H.R. 3391) would
help address the serious problems in Medicare's procedures for
new diagnostic tests. It would establish an open public process
for gathering input on reimbursement decisions for new tests
and require Medicare to establish objective criteria for
setting payment rates.
Hospital inpatient coding and payment:

CMS typically takes two years or more to fully integrate new
medical technologies like coronary stents into the hospital
inpatient payment program. A regulation published by the agency
last year on adoption of new medical technologies into the
inpatient setting leaves in place current delays in Medicare
coding and payment decisions that create barriers to patient
access to medical technologies.

Congress and CMS must take steps to support patient access by
eliminating delays in assignment of new codes and adequate
payment rates for new inpatient technologies. H.R. 2973,
bipartisan legislation introduced in the House by Reps. Jim
Ramstad (R-MN) and Karen Thurman (D-FL), would take steps to
improve patient access to innovative technologies in the
inpatient hospital setting.
Medicare technology adoption delays:

According to a report by the Lewin Group, Medicare can take 15
months to five years or more to integrate new medical
technologies into the program. This has a significant impact on
patient and provider access to innovative disease management
technologies like remote monitoring devices, gene-based testing
and diabetes monitoring.

H.R. 3391 contains provisions from H.R. 2973 to improve
accountability and coordination between offices in CMS that
make coverage, coding and payment decisions on new
technologies.
Healthcare information technology:

In its report Crossing the Quality Chasm, the IoM said
``health care delivery has been relatively untouched by the
revolution in information technology that has been transforming
nearly every other aspect of society.'' Many of these
information technologies play a key role is successful disease
management. Medicare must ensure that health care providers
have the resources they need to adopt effective new information
technologies.

AdvaMed appreciates the Subcommittee's interest in technologies
that facilitate disease management and other innovative forms of high
quality health care delivery. Given the vital role disease management
technologies play in improving patient care, spurring health system
efficiency, and reducing overall costs, AdvaMed and its member
companies look forward to the opportunity to work with the Subcommittee
on these issues in the future.

Statement of Robert Bonow, M.D., President-Elect, American Heart
Association
My name is Robert Bonow, MD, and I am the president-elect of the
American Heart Association. On behalf of the American Heart Association
and its over 22.5 million volunteers and supporters, I am pleased to
submit this statement for the hearing record.
Since 1924, the American Heart Association has dedicated itself to
reducing disability and death from cardiovascular disease and stroke
through research, education, community-based programs and advocacy.
Providing effective, credible scientific information is vital to our
mission. The American Heart Association and the American Stroke
Association, a division of the American Heart Association, actively
participate in efforts to improve the delivery of disease-specific
health care through the widespread adoption and implementation of
scientifically based standards and guidelines.
LCardiovascular Disease and Stroke Contribute Significantly to Chronic
Illness in the United States

More than 125 million Americans have at least one chronic illness.
This number is approximately 40% of the total U.S. population, and
approximately 40% of those patients have at least two chronic
conditions. The direct medical costs of chronic conditions in the U.S.
will total $600 billion per year, and the care and management of
patients with chronic disease represents the single largest cost to our
health care system.\1\ Significantly, the cost of cardiovascular
disease and stroke in the United States in 2002 is estimated at $329.2
billion.
---------------------------------------------------------------------------
\1\ Lawrence Fisher & Karen L. Weihs, Can Addressing Family
Relationships Improve Outcomes in Chronic Disease? 561 Journal of
Family Practice 561 (June 2000).
---------------------------------------------------------------------------
Of these chronic illnesses, cardiovascular disease accounts for
almost as many deaths as the next seven leading causes of death
combined, costing this country almost $300 billion a year in healthcare
expenditures and lost productivity--more than any other single disease.
Some 60 million Americans--about 1 in 5--suffer from some form of
cardiovascular disease, ranging from high blood pressure to myocardial
infarction, angina pectoris, stroke, congenital vascular defects and
congestive heart failure. One form of cardiovascular disease alone,
heart disease, is the number one killer in the U.S., and another form
of cardiovascular disease, stroke, is the third leading killer.
Disease Management as an Approach to Confronting Chronic Illness

Disease management is one strategy used to confront the challenges
presented by chronic illness. It is a term widely and inconsistently
used. Hundreds of ``disease management programs'' exist for a wide
array of chronic illnesses, including congestive heart failure,
diabetes, asthma and depression. Increasingly, disease management is
being offered as an approach to health care management in the public
and private sectors. For example, Federal agencies are currently
evaluating the cost effectiveness and patient outcomes of programs that
rely on disease management techniques to deliver patient care; a number
of states are offering disease management services through their
Medicaid programs; key members of Congress are introducing legislation
to fund new disease management initiatives; and pharmaceutical benefit
managers (PBMs) are contracting with states to provide disease
management services through pharmaceutical assistance programs for
seniors. There are as many definitions of ``disease management'' as
there are programs that claim to provide disease management services.
Although advocates for the approach argue that it lowers costs,
improves patient care, and allows for effective evaluation of services,
some policy experts suggest that disease management programs may
actually lower costs at the expense of patients' healthcare needs, or
alternatively, that it may actually increase health care costs through
added services (which may include administrative costs and other
indirect costs). In addition, the effectiveness of disease management
in improving clinical outcomes is currently being evaluated.\2\
---------------------------------------------------------------------------
\2\ Finley A. McAlister et al., A Systematic Review of Randomized
Trials of Disease Management Programs in Heart Failure, 110 American
Journal of Medicine 378, 381 (April 1, 2001).
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The American Heart Association Urges Policymakers to Focus on Quality
as the Guiding Principle

Disease management is an evolving concept. As government, health
plans and clinicians have adopted disease management models to fit
their own needs and goals, the various meanings of disease management
have diversified. In practice, disease management can cover a range of
potential activities, from distributing pamphlets to patients that
instruct them on self-management techniques related to their particular
condition to relying on a case manager to develop patient-specific care
plans.\3\
---------------------------------------------------------------------------
\3\ Jeff Tieman, Disease Management Making a Case for Itself
Clinically and Financially, Modern Healthcare, July 9, 2001.
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The American Heart Association finds the concept of disease
management promising, but also urges the Subcommittee to consider two
issues----

(1) any quality standards or performance measures for
cardiovascular disease and stroke must be based appropriate,
objective and scientifically-derived, evidence-based
guidelines; and

(2) quality of care must be prioritized over cost-containment
or other financial incentives in all disease management
initiatives. Disease management should be primarily about
improving patient outcomes and only secondarily about cost
containment.

For disease management to truly put patients first, clinical
guidelines must rely on a template that emerges from medical community
consensus. Additionally, appropriate disease-specific programs should
reach low-risk patients as well as high-risk patients to best serve
long-term health needs. In short, to focus on appropriate patient-
centered clinical guidelines, medical community standards must serve as
the fundamental framework for any disease management program that hopes
to draw widespread approval and acceptance.
How Congress chooses to confront this issue for Medicare
beneficiaries will likely impact the entire U.S. healthcare system. As
noted in a recent MedPAC report to Congress, ``. . . because Medicare
is the single largest purchaser of health care in the country, its
actions influence the care that all patients receive nationwide.'' \4\
---------------------------------------------------------------------------
\4\ Medicare Payment Advisory Commission (MedPAC), Report to the
Congress: Applying Quality Improvement Standards in Medicare (January
2002).
---------------------------------------------------------------------------
The American Heart Association Provides Leadership and Consensus

It is fitting that the American Heart Association adds its voice to
the many that are currently speaking to the issue of disease
management. Although within most clinical areas there are many
organizations, health plans and manufacturers that promote clinical
guidelines based in part on the clinical literature, few organizations
have the expertise or resources to establish and continually update
consensus based standards that represent a holistic view of
cardiovascular and stroke care. Importantly, the American Heart
Association represents not just providers but all stakeholders in
cardiovascular and stroke care--physicians, nurses, emergency medical
support personnel and others. Most significantly, the American Heart
Association represents the patient.
The American Heart Association is at the forefront of investigating
ways to improve the quality of care for patients with cardiovascular
disease and stroke. We have developed and are currently operating a
number of patient-centered programs. Our programmatic efforts have
increased and evolved with the dynamic advances made in cardiovascular
and stroke care.
In essence, the American Heart Association's existing programs and
guidelines provide a foundation for managing disease. We are extremely
proud of the process through which our guidelines are developed and
place great emphasis on ensuring objectivity and sound science. The
American Heart Association and the American College of Cardiology have
developed joint guidelines on the treatment and management of heart
disease, including guidelines for acute myocardial infarction, unstable
angina, congestive heart failure, chronic coronary disease and
secondary prevention.
The American Heart Association and the American College of
Cardiology also work in partnership in the development of performance
measures, including developing measures for acute myocardial infarction
and chronic heart failure. The American Stroke Association, a division
of the American Heart Association, develops scientific guidelines for
managing and treating stroke and is currently developing performance
measures for stroke.
Our programs are developed based on our scientific guidelines. The
following is a brief description of two of our programs designed to
improve the quality of care for cardiovascular and stroke patients.

Get With the Guidelines--This program is an acute
care hospital-based program that helps manage risk factors in
coronary artery disease and stroke patients. Get With the
Guidelines strives for long-term behavioral change by focusing
on workable patient management strategies in the hospital
setting. Get With the Guidelines incorporates a multi-
disciplinary approach to risk factor management. The program
encourages links between cardiologists, neurologists, primary
care physicians, nurses and pharmacists. It also provides
resources to build consensus and optimize discharge protocols.

Acute Stroke Treatment Program--This multimedia
toolkit includes guidelines and criteria for hospitals to use
in meeting the standards of a primary stroke center. The
criteria follow the consensus of the Brain Attack Coalition
guidelines and helps hospitals evaluate their capacity to
threat stroke patients.

The American Heart Association's work on disease management is
ongoing. We are currently reviewing various models of disease
management, particularly in the area of cardiovascular disease and
stroke. We are analyzing the effectiveness of these models and hope to
use this information to refine our current policies, programs and other
efforts, if needed.
Conclusion

In addition to the use of appropriate clinical guidelines, it is
critical to ensure that disease management programs are driven by the
clinical needs of patients rather than cost containment or financial
profit. While we recognize the need for cost containment and careful
allocation of health care resources, improving the quality of care must
be the primary goal of any disease management program. The American
Heart Association appreciates the opportunity to provide these comments
to the Ways & Means Health Subcommittee on this timely and important
issue, and we look forward to working with the Subcommittee as it
continues to consider the appropriate integration of disease management
into the Medicare program.

Statement of the Hon. Richard Burr, a Representative in Congress from
the State of North Carolina
I would like to offer my thanks and praise to the Chairman for
calling this hearing on disease management in Medicare. I have long
been committed to providing the best possible services to Medicare
beneficiaries and to creating incentives for the development of
innovative new medical technologies that will improve care. Disease
management offers the opportunity to do both.
I have introduced a bill that takes a simple but important first
step toward Medicare coverage of emerging remote technologies that play
an increasing role in disease management. The bill would improve
patient care while moving forward the modernization of Medicare's
benefit package. I look forward to working with you on disease
management, and enlisting your support for H.R. 3572, the Medicare
Remote Monitoring Services Coverage Act.
Emerging Disease Management Approaches Emphasize Technology

Several broad market trends are placing new focus on disease
management today.

Managed care plans are shifting their focus from
tightly controlled access to services to more loosely
structured preferred provider organizations, resulting in
increased outsourcing of disease management services.

A growing sense of self-empowerment among patients
with chronic conditions is leading to the development of
patient-focused solutions.

Finally, advances in telecommunications are
facilitating improved interactions between patients and health
care professionals. Data advances that automate information
collection and patient tracking are making it easier to
identify and treat patients with chronic conditions.

Emerging disease management vendors are employing technology to
enhance their product offerings. Patient-focused services feature
disease assessment surveys, personal action plans, and on-line
information and support, while services tailored to clinicians include
tools to track patients, frequently asked practice questions, and
online clinical care guidelines.
Among the most significant technology-focused services are those
that strengthen the link between patients and physicians. These
services provide for interactive case management and support, ``push''
surveys that solicit patient information and feedback, live chats with
nurses or other health experts, and home monitoring with automatic or
manual data transmission.
While traditional disease management approaches have emphasized
case management by nurses as a key interaction between patients and
clinicians, emerging disease management techniques feature home data
monitoring and interactive case management and support, along with
nurse case management, to create greater linkages between patients and
clinicians.
Analyses by firms that specialize in disease management show that
technology-centered approaches reduce hospitalizations and medical
costs and lead to greater physical health and patient satisfaction. The
development of new technologies expands the promise of emerging disease
management approaches.
LLack of Medicare Coverage Hinders Broader Adoption of Remote
Monitoring

Despite the innovations emerging in disease management, many new
clinical information and remote management technologies have failed to
diffuse rapidly. A significant barrier to wider adoption of disease
management approaches that utilize remote monitoring services is the
lack of payment mechanisms in fee-for-service Medicare to reimburse for
remote, non-face-to-face management services provided by a physician.
Consider the implications for an elderly Medicare beneficiary with
a heart condition similar to the Vice President's. If, for example, the
beneficiary receives a shock from her implantable cardioverter
defibrillator (ICD) over the weekend when her heart specialist is not
in the office, the patient would likely go to the emergency room where
there may not be a heart specialist on staff familiar with her
condition.
Yet if the beneficiary had remote monitoring technologies in her
home, she could immediately forward information concerning her heart
and the ICD securely through the Internet to her physician. The heart
specialist could then decide if the patient should come into the clinic
on the next business day or to proceed immediately to an emergency
room. More likely, the patient would be reassured that everything is
appropriate, thus saving an often stressful and expensive trip to a
hospital emergency room.
Under existing Medicare payment rules, many physician billing codes
are primarily for face-to-face interactions between the physician and
patient. The payments often do not account for the clinician time
involved in non-face-to-face interactions that are necessary for
interpretation and response to data from remote management
technologies. As a result, the payment systems do not adequately
reflect the value of physician services involving remote monitoring
services, and serve as an impediment to disease management approaches
that involve remote monitoring services.
The Medicare Remote Monitoring Services Coverage Act

To provide greater incentives for the adoption of remote patient
management services, changes in Medicare reimbursements are necessary.
My bill--H.R. 3572, the Medicare Remote Monitoring Services Coverage
Act--takes an initial step toward covering remote monitoring services.
It would create parity between certain face-to-face and remote
services. Under the bill:

Remote monitoring services that are found to be
comparable to face-to-face, encounter-based, monitoring
services will be given the same coverage and level of Medicare
payment as the comparable encounter-based physician service.

Remote monitoring services are defined to be services
provided through a system of technology that allows a remote
interface to collect and transmit clinical quantitative data
between a patient and a provider, for the purposes of clinical
review or response by the provider.

The Secretary of Health and Human Services would have
the discretion to determine comparability between face-to-face
and remote monitoring services. The remote monitoring services
would be subject to the same frequency guidelines developed now
or in the future for the comparable in-office services.

LThe provision is designed to be budget-neutral. We
anticipate that remote monitoring services will substitute for
the existing in-office services only when appropriate. In the
event utilization increases, the bill includes a mechanism to
ensure budget neutrality.

There are several benefits of the legislation.

It will improve patient access, care, and management,
as well as spur the development of new technologies and disease
management approaches that will improve services further. For
patients in more rural settings, it may be the most practical
means for patient management in order to make timely
adjustments in the program of care before a more serious health
event occurs.

The proposal attaches value to physician time
dedicated to remote management technology and will encourage
physician use of tools that improve services to patients. It
will also enable enhanced care and real-time feedback that will
avoid unnecessary hospitalizations and patient anxiety.

It ensures that payment will only be provided for
services that are comparable to those provided in face-to-face
interactions. The Centers for Medicare and Medicaid Services
would retain authority through existing initiatives to monitor
the quality of such services.
Conclusion

Madam Chairman, let me once again commend you for your leadership
in calling this hearing today. Advances in technology are expanding the
promise of disease management, and Medicare must take advantage of the
opportunity to improve care for those with chronic conditions. My bill
provides a simple but important first step toward the coverage of new
remote technologies featured in emerging disease management approaches
today. I urge you to join me as a cosponsor of the bill, and I look
forward to working with the members of this Committee, as well as with
my fellow colleagues on the Energy and Commerce Committee, to passing
the bill this year. Thank you very much for the opportunity to present
my views.

Statement of Christobel Selecky, Chair, Government Affairs and Health
Policy Committee, Disease Management Association of America
Chairwoman Johnson and distinguished members of the Subcommittee,
it is a pleasure to have the opportunity to provide testimony to the
Subcommittee on the strong value of disease management programs to
improve quality and control costs under the Medicare program. My name
is Christobel Selecky and I am a member of the Board of Directors of
the Disease Management Association of America (DMAA) and also the Chair
of their Government Affairs and Health Policy Committee. I am also the
Chief Executive Officer of LifeMasters Supported SelfCare, a privately
held Disease Management Organization (DMO).
Overview.

Comprehensive Disease Management (``DM'') programs have
demonstrated their effectiveness in improving health status, health
care quality, patient and provider satisfaction, and financial outcomes
for populations with congestive heart failure (CHF), diabetes, coronary
artery disease (CAD), chronic obstructive pulmonary disease (COPD),
end-stage renal disease (ESRD), asthma, obesity, and several other
chronic illnesses. Commercial, Medicare FFS, Medicare+Choice, and some
state Medicaid plans have already implemented DM programs and benefited
from these clinical and financial outcomes. A majority of large private
payors have already launched major disease management programs and have
signaled their commitment to DM as the core element of their new
medical management strategy.
The Disease Management Association of America fully supports and
commends the Congress and the Centers for Medicare and Medicaid
Services (``CMS'') for promoting the expansion of DM programs in its
efforts to modernize and revitalize Medicare+Choice, and through the
coordinated care, Benefits Improvement and Protection Act (BIPA), and
other demonstration projects.
In order to build on the incremental progress made to date, DMAA
strongly urges federal policymakers to offer the benefits of full-
service DM programs to all enrollees in:

The traditional Medicare fee-for-service (``FFS'')
program;

Any new Medicare+Choice programs, such as point of
service, PPO, or MSA products; and

All State Medicaid programs, including FFS and
managed care alternatives.
Disease Management and the DMAA.

Disease Management is an approach to patient care that seeks to
limit ``preventable'' events by maximizing patient adherence to
prescribed treatments and to health-promoting behaviors. For patients
with chronic diseases, the anticipated benefits of disease management
include superior clinical outcomes; improved functional capacity and
quality of life; lower health care costs; reduced need for
hospitalization, surgery or other invasive care; and greater access to
care support service.
The Disease Management Association of America (DMAA) is the only
association in America dedicated exclusively to the DM industry. The
DMAA draws members from throughout the United States and has
representatives from all segments of the DM industry, including health
plans, hospitals, employers, pharmaceutical companies, physicians, and
stand-alone DM organizations. The DMAA seeks to advance the use of DM
programs as a means to build a better system of care that will
predictably improve quality and reduce costs in private and public
sector health care programs. DMAA also works to promote research,
accreditation, education, and the science of DM, and to increase the
effectiveness of DM programs.
The DMAA has established an industry-standard definition \1\ of
qualified disease management programs and entities. The DMAA
definition--established in consultation with primary care and specialty
physicians, and incorporating private practice, health plan and
institutional perspectives--has been relied upon widely by CMS (the
definition is cited by CMS in its February 22, 2002 solicitation for
proposals to conduct the DM demonstration projects authorized in the
BIPA, by DM accreditors (NCQA, URAC and potentially JCAHO) and by
payors and providers.
---------------------------------------------------------------------------
\1\ Disease management is a multidisciplinary, systematic approach
to health care delivery that: (1) includes all members of a chronic
disease population; (2) supports the physician-patient relationship and
plan of care; (3) optimizes patient care through prevention, proactive,
protocols/ interventions based on professional consensus, demonstrated
clinical best practices, or evidence-based interventions; and patient
self-management; and (4) continuously evaluates health status and
measures outcomes with the goal of improving overall health, thereby
enhancing quality of life and lowering the cost of care. Qualified
Disease Management programs should contain the following components:

Population Identification processes;
Evidence-based practice guidelines;
Collaborative practice models that include physician
and supp ort-service providers;
Risk identification and matching of interventions with
need;
Patient self-management education (which may include
primary prevention, behavior modification programs, support groups, and
compliance/surveillance);
Process and outcomes measurement, evaluation, and
management;
Routine reporting/feedback loops (which may include
communication with patient, physician, health plan and ancillary
providers, in addition to practice profiling); and
Appropriate use of information technology (which may
include specialized software, data registries, automated decision
support tools, and call-back systems).
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Disease Management Improves Health Status & Quality and Helps Control
Costs.

Disease management programs produce significant clinical
improvements at the same time that they achieve financial savings. For
example, one study published in a peer-reviewed cardiology journal (Am
Heart J 1999; 138: 633-640) followed the progress of a population of
CHF patients enrolled in a multidisciplinary DM program including
patient education, interactive vital sign and symptom monitoring, nurse
support and physician intervention. Clinical impacts measured twelve
months after enrollment included an 18 percent reduction in inpatient
days, a 36 percent reduction in inpatient admissions, a 31 percent
decrease in emergency department visits, and a 20 percent decline in
average length of stay. Patient satisfaction surveys showed a 16
percent improvement. Financial savings for the group were reflected in
a 54% drop in disease specific claims and a 42% average reduction in
all claims. Numerous similar examples of such impressive outcomes are
fully described in DMAA's Medicare and Medicaid ``White Paper''
(available at www.dmaa.org).
DM has already been proven to be successful in Medicare and
Medicaid populations. In Hawaii, American Healthways, a DMAA member DM
company, provided diabetes disease management services to 6,000
Medicare FFS cost contract beneficiaries enrolled in HMSA. In the first
year, the program yielded a 17.2% reduction in total claims savings
over the population resulting in a $5 million net savings to CMS. In
Florida, LifeMasters has been providing CHF disease management services
to approximately 3,000 FFS Medicaid recipients in the northern half of
the state for almost two years. After just one year, total claims costs
for this population were reduced by 21% resulting in a $3 million net
savings to the state. In addition to cost savings, quality of care and
satisfaction for these populations was significantly improved.
One DMAA member company's calculations indicate that the difference
between annual baseline costs for CHF in the Medicare FFS program and
the company's claims-reconciled costs for patients in a disease
management intervention for one year is over $14,000. Extrapolating
savings across the Medicare program using a conservative figure of
$11,000 for both the Medicare+Choice and FFS programs, CHF disease
management alone could produce total Medicare savings of over $8.3
billion annually. The FFS program would account for $7 billion, or
nearly 85 percent of the total savings opportunity, suggesting the
critical need for testing the expansion of disease management to this
segment of Medicare.
DM programs also improve access to care. Sophisticated information
technology is used to both identify and enroll all persons with a given
health condition. This proactive outreach process helps to include
individuals who are otherwise isolated from the health care system. And
many programs run by DMAA members are administered on a multi-lingual
basis in languages such as Spanish, Cantonese and Mandarin.
DM programs can also play a crucial role in reducing medical errors
and improving quality. The recent Institute of Medicine (IOM) reports
on medical errors \2\ and the deteriorating quality of healthcare in
America \3\ argue that DM is not only integral to preventing medical
errors, but also to protecting and improving overall health care
quality, especially for the chronically ill. As the IOM studies
emphasized:
---------------------------------------------------------------------------
\2\ To Err is Human: Building a Safer Health System, Linda T. Kohn,
Janet M. Corrigan, and Molla S. Donaldson, Eds., Committee on Quality
of Health Care in America, Institute of Medicine, National Academy
Press, Washington, D.C. (1999).
\3\ Crossing the Quality Chasm: A New Health System for the 21st
Century, Committee on Quality of Health Care in America, Institute of
Medicine, National Academy Press, Washington, D.C. (2001).

One of the chief culprits in medical errors is the
lack of care management and coordination, resulting from the
decentralized and fragmented nature of the health care delivery
system, and the multitude of unaffiliated providers practicing
in different settings without access to complete medical record
information or coordination (such as can be provided by DM
---------------------------------------------------------------------------
organizations).

More than 100 million Americans have at least one
chronic illness. ``Clinicians, health care organizations, and
purchasers . . . should focus on improving care for common,
chronic conditions such as heart disease, diabetes, and asthma
that are now the leading causes of illness in the United States
and consume a substantial portion of health care resources.
These ailments typically require care involving a variety of
clinicians and health care settings, over extended periods of
time . . . who work so independently from one another that they
frequently provide care without the benefit of complete
information about patients' conditions, medical histories, or
treatment received in other settings.''
Disease Management is Needed ``Inside'' Medicare and Medicaid.

Diseases such as arthritis, asthma, cancer, chronic obstructive
pulmonary disease, CHF, depression, and diabetes account for 60 percent
of medical costs in the United States. Cardiovascular disease is the
leading cause of death among both men and women and across all racial
and ethnic groups. About 58 million Americans live with some form of
the disease. In 1999 alone, cardiovascular disease cost the nation an
estimated $287 billion in health care expenditures and lost
productivity, and this burden is growing as the population ages. In the
Medicare population, a 1993 chronic care demonstration proposal
indicated that roughly 10 percent of the Medicare beneficiaries
accounted for 70 percent of the $129.4 billion in total Medicare
expenditures. The majority of these 10 percent suffered from chronic
illnesses. Medicare has recognized that an acute care system is no
longer appropriate where the major morbidity, mortality and cost
drivers of our era are chronic conditions. However, Medicare and
Medicaid have thus far lacked the legislative and regulatory authority
to implement demonstrations on a wide scale to provide fair access to
all beneficiaries.
DMAA believes that comprehensive DM, if fully employed in Medicare
and Medicaid, can:

Improve the safety and quality of care by adhering to
evidence-based treatment guidelines and outcomes data, and by
providing patients with a safety net between physician and
hospital visits, thereby reducing drug and treatment errors and
improving care coordination (identified by the Institutes of
Medicine as the two principal problems with the America health
care system)

Improve access to care by around the clock nursing
and high-tech contacts, and by assisting rural caregivers and
their patients who do not have the benefit of easy entre to in-
person care

Improve patient self-management of, and
responsibility for, preventing and treating their conditions by
its innovations in patient-centered and collaborative education

Improve financial cost containment without
sacrificing quality or patient satisfaction by serving as an
alternative to the increasingly unacceptable cost-containment
techniques of managed care, such as utilization review,
gatekeeper restrictions, referral limitations, and drug
restrictions

Enhance efforts in the Public Health arena by
providing health improvement programs on a population basis;
creating financial incentives to promote and deliver preventive
interventions on a large scale using advanced outreach
technologies, especially secondary preventive measures; and
encouraging those segments of the private sector that have not
yet embraced DM to do so.

DM should be implemented in Medicare FFS, Medicare+Choice, and
Medicaid according to the following principles endorsed by the DMAA:

There should be no discrimination against FFS
enrollees, who currently lack any access to the benefits of DM
programs available to Medicare+Choice and certain Medicaid
enrollees (or have lost access to these programs as a result of
the loss of their Medicare+Choice coverage).

Medicare and Medicaid FFS programs should directly
contract with DM organizations to offer such benefits on a
population basis. Further, DM programs and demonstration
projects sponsored by CMS should reflect models of DM which
have been successfully utilized in the commercial sector.
Specifically, these programs should not require that DM be
linked with the provision of a drug benefit which is not a
standard offering of DM providers.

Medicare and Medicaid managed care programs should
provide financial and other incentives to private health plans
and public managed care programs and their enrollees to join
HMOs, PPOs, MSAs, point of service plans, and other
alternatives to traditional FFS.

DM programs should be compensated for their services
on an equitable and competitive basis that compensates them for
their investments, provides them with incentives to maximize
both clinical and financial outcomes. Historically fees paid to
DM organizations are a fraction of the savings generated for
their payor customers.

As the only association in America dedicated exclusively to the DM
industry, we would like to offer the services and expertise of DMAA's
staff and member organizations to serve as a resource to the
Subcommittee as you explore the various ways in which Disease
Management can improve the delivery of healthcare in the United States.
Thank you for the opportunity to provide these views to the
Subcommittee.

I63The Disease Management Association of America, a non-profit,
voluntary membership organization, founded in March of 1999, is the
only industry organization dedicated to advancing disease management.
DMAA's members represent disease management organizations, health
plans, employers, pharmaceutical companies and benefits managers,
hospitals, physicians, and other stakeholders in the disease management
community.

Statement of Sandeep Wadhwa, M.D., MBA, Vice President, Disease
Management Services, McKesson Health Solutions, McKesson Corporation,
San Francisco, California
I am pleased to submit this statement on behalf of McKesson
Corporation to the Subcommittee on Health of the House Committee on
Ways and Means, subsequent to the April 16 hearing on Promoting Disease
Management in Medicare. McKesson Corporation strongly supports the
creation of a disease management benefit for Medicare and Medicaid
recipients. Furthermore, McKesson recommends the expansion of disease
management services to recipients of Federal government sponsored
health care benefits (Veterans Health Administration beneficiaries,
military personnel and dependents and Federal employees) and to rural
underserved populations.
As the world's largest healthcare services company, McKesson is an
industry leader in the provision of disease management services for
commercial, Medicaid and Medicare populations. The Disease Management
Purchasing Consortium and the Health Industry Research Company have
both recognized McKesson as a Top Ten disease management firm from more
than 160 companies. Our disease management clients cover a broad host
of purchasers of health care, including commercial health plans such as
Blue Cross Blue Shield of Texas, Anthem Midwest, and Blue Cross Blue
Shield Federal Employees Plan; state Medicaid programs and managed care
plans such as the State of Washington and Columbia United Providers;
and high risk insurance pools like CoverColorado. As such, we are
uniquely positioned to provide Congress with information on currently
available solutions, as well as ideas for improving the health status
of populations while decreasing health care costs through the use of
disease management programs.
McKesson is the industry leader in care management services and
software and has market leadership positions in demand management and
utilization criteria. Furthermore, we are leading providers of
physician and quality profiling software and case management workflow
software. As an early provider of these programs, we have been
delivering disease management services since 1996. McKesson's disease
management programs leverage our experience with patient services,
pharmacy management, and health care quality improvement activities.
Many of these programs and services reflect the capabilities and
expertise of our 165 year old company, one of the largest nationwide
distributors of pharmaceuticals and health care products and the
largest health information technology company in the world.
The disease management industry arose from the recognition that the
nation's health care system is largely geared towards meeting the acute
and symptomatic needs of patients, rather than the long-term needs of
those with chronic diseases. However, by providing proactive rather
than reactive care, disease management services can help retard the
progression of disease by encouraging a more rapid adoption of
evidence-based standards of care which reduces the likelihood of acute
care intervention.
Disease management is one of the few health care innovations that
can improve health status and access to care while reducing net
expenditures. In developing this program for Medicare beneficiaries,
McKesson recommends that Congress initially focus on those conditions
for which there are national, evidence-based guidelines of care and
that lend themselves to a net savings. In addition, it is important to
focus on conditions where the gap between the standards of care and
actual practice leads to hospitalizations and emergency room visits,
both of which might otherwise be avoided through adherence to the
guidelines. Conditions that meet these criteria include congestive
heart failure, diabetes, asthma, and chronic obstructive pulmonary
disease (COPD).
Demonstrated Results

McKesson's success with disease management is a function of
leveraging information technology through the creation of clinical
decision support software, utilization of advanced relational database
management systems, and application of state-of-the-art call center
technology. Our system relies on both ``high tech'' information
technology and ``high touch'' nursing to achieve its impact. We
position our services to complement and extend, and not threaten or
disrupt, the patient-physician relationship. Our aim is to reinforce
physician treatment plans that are often misunderstood or incompletely
understood as well as to promote awareness and adherence to evidence-
based guidelines.
McKesson's disease management services are delivered by health care
professionals. We rely primarily on nurses to provide patient
counseling and education through telephonic nursing, also known as
telenursing. These health care professionals are able to impart
evidence-based education and assess patients' understanding of their
condition and barriers to compliance. In addition to proactive
monitoring and counseling, our disease management programs offer
patients around the clock access to nurses who are able to answer
patients' symptom-related concerns and safely direct patients to the
appropriate level of care. Telephone access to nurses for health care
advice and support also benefits the Medicare patient or those living
in rural, underserved areas without ready access to a physician's
office or to emergency room facilities. Our nurse triage function
complements the proactive components to reduce inappropriate
utilization of services.
McKesson programs have demonstrated dramatic improvements in the
health status of patients, with marked reductions in hospitalization
and emergency room visits that have resulted in net reductions in
health care costs. In order to achieve improved outcomes, our programs
focus on teaching patients self-management principles, symptom control
strategies, and optimal medical management practices. In patients with
congestive heart failure, which is the leading cause of admissions in
Medicare, we demonstrated for one disease management client an 89%
increase in the usage of ACE-inhibitors, heart failure drugs which
lower mortality and morbidity rates. With the same client, we also
documented a 24% increase in influenza vaccination and a 44% increase
in patients' adherence to a low salt diet. These changes in care
management and patient behavior led, over the course of one year, to a
51% reduction in inpatient costs, 36% reduction in emergency room
visits and an overall reduction in claims costs of 24%. Furthermore,
patients in this program reported very high satisfaction with the
service and noted improvements in their overall quality of life.
Our diabetes program not only helps patients improve their blood
sugar values, but also focuses on reducing risk of strokes and heart
attacks, which account for the overwhelming morbidity and mortality in
diabetics. For one client, we have demonstrated a 33% increase in
patients' use of glucose meters and a 70% increase in the use of
aspirin, which contributed to a documented 35% reduction in
hospitalization and 28% reduction in diabetes-related missed work days.
Overall, annual net savings in health care costs inclusive of
program fees for disease management for our congestive heart failure
program range from $610 to $4,872 per patient. For diabetes, annual net
savings range from $755 to $2,138 per patient, and for asthma, we have
net savings ranging from $223 to $899 per patient. We have demonstrated
these results in commercial, Medicare and Medicaid settings, and with
government employees. McKesson has conducted evaluations using
different study designs, including pre/post evaluations, prospective
cohort evaluations, and randomized controlled trials. We believe that
the benefits of disease management programs can be evaluated using the
most rigorous study designs
Market Segments
Medicare

To date, disease management programs have largely been an
innovation in the commercial insurance market and serve the families of
adult workers. However, the burden of chronic disease is
disproportionately higher in the elderly, and concomitantly leads to
increased costs of care and utilization of services in that population
segment. McKesson believes that Medicare rates of hospitalization and
emergency room use can be reduced, sometimes dramatically, in patients
with chronic diseases, particularly those with congestive heart
failure, asthma, diabetes, and COPD. These conditions are highly
prevalent in the Medicare population, and the avoidance of unnecessary
hospitalizations and emergency room visits can result in sizable
savings while improving the quality of lives of Medicare beneficiaries.
For example, for one Medicare+Choice client, we demonstrated a 48%
reduction over six months in bed days in a program designed to treat
congestive heart failure.
The Medicare population is expected to double over the next 30
years.\1\ Disease management programs can serve as a fiscally prudent
measure to temper the rate of growth in the costs of Medicare services.
In addition, when a prescription drug benefit is created for Medicare
recipients, disease management programs can help rationalize the
appropriate use of medications and greatly improve healthcare outcomes.
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\1\ Board of Trustees of the Federal Hospital Insturance Trust
Fund. Annual report of the Federal Hospital Insurance Trust Fund.
Washington, D.C.: USGPO, 2000.
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Medicaid

As states continue to grapple with rising Medicaid expenditures,
disease management can serve as an important service to control health
care costs. McKesson believes that the greatest opportunity is in the
Medicaid elderly and disabled categories. Eleven million of the 40
million Medicaid recipients qualify for Medicaid on the basis of
disability or age.\2\ Despite being roughly 25% of the population, this
group accounts for nearly 66% of the Medicaid costs.\3\ Furthermore,
very few disabled and elderly Medicaid recipients are covered by
managed care organizations due to their very high costs and pre-
existing conditions. Therefore, these vulnerable patients lack many of
the care coordination services common to managed care organizations.
Disease management programs provide patient counseling, care
coordination, and a patient advocate who is able to counsel patients
and help them navigate through a complex health care system.
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\2\ Hoffman C, Schlobohm A. Uninsured in America: a Chart book. 2nd
ed. Washington, D.C.: Kaiser Commission on Medicaid and the Uninsured,
March 2000.
\3\ Medicaid: a primer. Washington, D.C.: Kaiser Commission on
Medicaid and the Uninsured, 2001.
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McKesson has several Medicaid clients. We have contracted directly
with the state in some cases and with Medicaid managed care plans in
other cases. Although Medicaid reimbursements are lower than
reimbursements from commercial payers, there is usually higher
utilization of services in Medicaid programs. In an asthma disease
management program conducted for Medicaid recipients in a Mid-Atlantic
state, we have demonstrated a 37% reduction in hospitalizations and a
22% reduction in emergency room visits, which resulted in a 19% return
on investment for the health plan.
Government Employees

McKesson also recommends that the benefit design for Federal
Government employees be expanded to include disease management
services. Focusing on conditions such as asthma, diabetes, congestive
heart failure, and COPD can result in net reductions in health care
costs and an improvement in the health status of employees or
dependents with these conditions.
We believe that current and former military personnel also should
be included in this initiative. The Veterans Health Administration
(VHA) system is rapidly expanding and faces increased costs associated
with providing care for veterans, particularly those who served in
World War II and Korea. Tricare and the VHA are beginning to conduct
pilot trials of disease management services and have solicited bids
from companies including McKesson. We strongly support expansion of
these trials with a focus on solutions that are scalable across wide
geographic settings.
Rural, underserved populations

Disease management services are particularly relevant in
underserved areas. For the 61 million Americans who live in rural
settings, access to health care is an issue of major concern.\4\ In
these settings, investments to promote patient self-management and
education are particularly fruitful. By increasing compliance and self-
reliance, disease management can help lessen the demand and, therefore,
the need, for scarce health care resources. Telenursing services in
disease management programs are able to efficiently and economically
overcome geographic barriers for care provision. Disease management
services can act as a physician extender in these underserved areas.
McKesson strongly recommends the implementation of disease management
programs in rural, underserved areas and suggests pilot projects to
demonstrate the effectiveness of disease management services in these
settings.
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\4\ National Rural Health Association. Annual Report 2000.
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Conclusion

Disease management has emerged as a private sector solution that
provides incremental technology and professional resources to improve
care for those with chronic conditions. These services improve the
health of patients by decreasing symptoms and improving their quality
of life. Disease management also reduces the frequency of emergency
room visits and hospitalizations as patients learn to effectively
manage their diseases. Overall, we believe that the savings from
reductions in hospitalizations and emergency room visits outweighs the
costs of delivering these programs.
McKesson urges the creation of a disease management benefit for
Medicare recipients. The impact of these programs is greater for
vulnerable populations such as the poor, elderly, and disabled, where
the frequency and costs of chronic conditions are higher and health
care delivery is generally highly fragmented. The outcomes-focused,
evidence-based interventions provided in disease management programs
improve patients' ability to participate in their care and help
physicians by reinforcing medical recommendations. As Congress grapples
with improving the quality and delivery of health care, we support the
greater utilization of disease management programs as a vital way to
enhance care outcomes for the elderly while concurrently reducing the
cost of delivering better care.
We look forward to working with members of this subcommittee as you
address these important concerns.

Statement of RMS Disease Management Inc., McGaw Park, Illinois
RMS Disease Management Inc., an affiliate of Baxter Healthcare
Corporation, provides disease management (DM) services for patients
with chronic kidney disease. Founded in 1996, RMS coordinates care for
approximately 5,000 patients across the United States. Clients include
regional and national health plans as well as the State of Florida's
Medicaid program.
We strongly support the Subcommittee's efforts to expand disease
management programs in the Medicare fee-for-service (FFS) population.
Disease management has been proven to improve both clinical and
economic outcomes while concurrently increasing patient and provider
satisfaction. Applying DM to the FFS population offers the government a
singular opportunity to improve the quality of care for Medicare
beneficiaries, while also addressing increasingly critical funding
issues.
Comprehensive disease management programs directly address the
issues raised in the March 2001, Institute of Medicine 2 Report
``Crossing the Quality Chasm: A New Health System for the 21st
Century''. Specifically, DM programs supply the patient centered data,
necessary information systems, aligned incentives, and integrated care
coordination that the report authors believe are required to close the
chasm.
End-stage renal disease provides an ideal opportunity for applying
disease management principles due to the characteristics of this
population and its care. These characteristics include:

- A clearly defined population using the HCFA 2728 form

- Patients typically have multiple co-morbidities in addition
to their renal disease which requires complex care that takes
place in a variety of care settings

- Care delivered is fragmented as a result of multiple
physician specialists and allied care professionals working in
an uncoordinated manner

- High annual costs

- Incomplete capture of patient care data in one medical
record file

- Important need for ongoing patient counseling and education

The RMS program has been designed and implemented to address all of
these issues and needs. RMS uses evidence-based medicine, state-of-the-
art information technology, and highly experienced nurses to provide
care support for renal patients and their attending physicians 24 hours
per day, 7 days a week. Patients receive education, counseling, and
care coordination based on individual care plans created by their
physicians. Physicians receive incremental nursing support and
comprehensive patient data that otherwise would not be available to
them. Activities in the field are overseen by board certified
nephrologists and a nationally recognized Medical Advisory Board.
Program results published in the peer-reviewed American Journal of
Kidney Diseases, May 2001, showed a 35 percent reduction in
hospitalization and 20 percent reduction in mortality for patients
whose care was coordinated by RMS. Emergency room visits have dropped
by over 75 percent compared to the pre-program baseline. Further, self-
reported patient and provider satisfaction is also consistently very
high.
We believe expanding the availability of disease management to the
fee-for-service ESRD population will achieve similar benefits to those
that have been obtained in managed care populations. In its
deliberations, we would suggest the Subcommittee consider the
following:

(1) Establish high standards for defining disease management
programs. There is widespread variability as to what
constitutes ``true'' disease management. As a starting point,
we propose that the accreditation guidelines established by
NCQA be used as a baseline.

(2) Ensure that payment mechanisms for patient categories are
properly risk adjusted and funded. For example, current ESRD
AAPCC rates do not fully account for the impact of diabetic
status, MSP, and transplant. This results in wide disparities
between the actual cost of care and the AAPCC payments for ESRD
patients.

(3) Create payment methodologies that reflect how most disease
management organizations are structured. Unlike managed care
organizations, most disease management organizations are not
set up to contract with providers or pay claims.

(4) View disease states in their totality. In the case of
chronic kidney disease, costs can be reduced significantly if
disease management intervention begins before onset of ESRD and
dialysis. Currently, the care and payment systems are not
constructed in a way that captures patients before the emergent
need for dialysis. Therefore, the appropriate patient care and
education does not take place, which results in unnecessarily
high costs and sub-optimal clinical outcomes.

Again, RMS is strongly supportive of the Subcommittee's initiative
to capture the benefits of disease management for the fee-for-service
population and appreciates the opportunity to comment.