[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]



 
               MEDICARE CHRONIC CARE IMPROVEMENT PROGRAM

=======================================================================






                                HEARING

                               before the

                         SUBCOMMITTEE ON HEALTH

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                               __________

                              MAY 11, 2004

                               __________

                           Serial No. 108-51

                               __________

         Printed for the use of the Committee on Ways and Means
















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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               SANDER M. LEVIN, Michigan
WALLY HERGER, California             BENJAMIN L. CARDIN, Maryland
JIM MCCRERY, Louisiana               JIM MCDERMOTT, Washington
DAVE CAMP, Michigan                  GERALD D. KLECZKA, Wisconsin
JIM RAMSTAD, Minnesota               JOHN LEWIS, Georgia
JIM NUSSLE, Iowa                     RICHARD E. NEAL, Massachusetts
SAM JOHNSON, Texas                   MICHAEL R. MCNULTY, New York
JENNIFER DUNN, Washington            WILLIAM J. JEFFERSON, Louisiana
MAC COLLINS, Georgia                 JOHN S. TANNER, Tennessee
ROB PORTMAN, Ohio                    XAVIER BECERRA, California
PHIL ENGLISH, Pennsylvania           LLOYD DOGGETT, Texas
J.D. HAYWORTH, Arizona               EARL POMEROY, North Dakota
JERRY WELLER, Illinois               MAX SANDLIN, Texas
KENNY C. HULSHOF, Missouri           STEPHANIE TUBBS JONES, Ohio
SCOTT MCINNIS, Colorado
RON LEWIS, Kentucky
MARK FOLEY, Florida
KEVIN BRADY, Texas
PAUL RYAN, Wisconsin
ERIC CANTOR, Virginia

                    Allison H. 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               LLOYD DOGGETT, Texas
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 
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                            C O N T E N T S

                               __________

                                                                   Page

Advisory of May 4, 2004, announcing the hearing..................     2

                               WITNESSES

Centers for Medicare and Medicaid Services, Hon. Mark McClellan, 
  Administrator..................................................    10

                                 ______

American College of Cardiologists, Janet S. Wright...............    36
American Heart Association, Vince Bufalino.......................    40
Disease Management Association of America, Christobel Selecky....    29

                       SUBMISSIONS FOR THE RECORD

AdvaMed, statement...............................................    56
Alzheimer's Association, statement and attachment................    57
American Association of Diabetes Educators, Virginia Zamudio, 
  Chicago, IL, statement.........................................    60
American College of Physicians, statement........................    62
American Geriatrics Society, New York, NY, statement.............    65
McKesson Health Solutions, Sandeep Wadhwa, San Francisco, CA, 
  statement......................................................    67
National Kidney Foundation, Brian J.G. Pereira, New York, NY, 
  statement......................................................    70
Urban Institute, Robert A. Berenson, statement...................     5






































               MEDICARE CHRONIC CARE IMPROVEMENT PROGRAM

                              ----------                              


                         TUESDAY, MAY 11, 2004

             U.S. House of Representatives,
                       Committee on Ways and Means,
                                    Subcommittee on Health,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 2:14 p.m., in 
room 1100, Longworth House Office Building, Hon. Nancy L. 
Johnson (Chairman of the Subcommittee) presiding.
    [The advisory announcing the hearing follows:]

ADVISORY

FROM THE 
COMMITTEE
 ON WAYS 
AND 
MEANS

                         SUBCOMMITTEE ON HEALTH

                                                  CONTACT: 202-225-3943
FOR IMMEDIATE RELEASE
May 04, 2004
HL-8

 Johnson Announces Hearing on Medicare Chronic Care Improvement Program

    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 the Chronic Care Improvement 
Program authorized by the Medicare Modernization Act. The hearing will 
take place on Tuesday, May 11, 2004, in the main Committee hearing 
room, 1100 Longworth House Office Building, beginning at 2:00 p.m.
      
    In view of the limited time available to hear witnesses, oral 
testimony at this hearing will be from invited witnesses only. 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:

      
    As part of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (MMA) (P.L. 108-173) that was signed on 
December 8, 2003, Congress provided for a Chronic Care Improvement 
Program (CCIP) within fee-for-service Medicare. On April 20, 2004, the 
Centers for Medicare and Medicaid Services (CMS) released a Request for 
Proposals (RFP) for chronic care improvement programs focused on 
congestive heart failure, diabetes, and chronic obstructive pulmonary 
disease. CMS will select programs to operate in 10 regions of the 
country to evaluate different approaches to the management of chronic 
conditions. The initial phase of the CCIP will be based on improved 
quality in health outcomes, beneficiary satisfaction, and financial 
savings to the Medicare program.
      
    Medicare beneficiaries with five or more chronic conditions 
represent 20 percent of the Medicare population but account for 66 
percent of program spending. The CCIP represents a new way of 
approaching the care of beneficiaries within the fee-for-service 
program by shifting from a focus on acute episodes to the management of 
on-going chronic conditions.
      
    In announcing the hearing, Chairman Johnson stated, ``The chronic 
care improvement program is a major step forward for the Medicare 
program and the quality of health care it provides. It represents a 
fundamental shift in how we think about caring for our seniors and 
people with disabilities. This is a key element of how the Medicare 
Modernization Act truly modernizes the Medicare program by improving 
discussion and coordination between Medicare beneficiaries and their 
physicians.''
      

FOCUS OF THE HEARING:

      
    CMS released the RFP for the CCIP on April 20, 2004. Proposals are 
due back to the agency in early August. Panel members at the hearing 
will include representatives from prospective bidders, physician 
groups, and beneficiary organizations. The hearing continues the series 
of hearings held by the Subcommittee on the implementation of the 
Medicare Modernization Act.
      

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

      
    Please Note: Any person or organization wishing to submit written 
comments for the record must send it electronically to 
hearingclerks.waysandmeans@ mail.house.gov, along with a fax copy to 
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immediate future, the Committee website will allow for electronic 
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to the change in House mail policy, the U.S. Capitol Police will refuse 
sealed-packaged deliveries to all House Office Buildings.
      

FORMATTING REQUIREMENTS:

      
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    Note: All Committee advisories and news releases are available on 
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with disabilities. If you are in need of special accommodations, please 
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noted above.
                                 

    Chairman JOHNSON. Today, I am pleased to chair this hearing 
on the Chronic Care Improvement Program (CCIP) that was passed 
as part of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (MMA) (P.L. 108-173). The program is 
a major step forward for the Medicare Program and the quality 
of health care that it provides. It represents a fundamental 
shift in how we think about caring for our seniors and people 
with disabilities. The CCIP is a key element in how the MMA 
truly modernizes the Medicare Program by improving discussion 
and coordination between Medicare beneficiaries and their 
physicians.
    Medicare beneficiaries with five or more chronic conditions 
represent 20 percent of the Medicare population that account 
for 66 percent of the program spending. The CCIP represents a 
new way of approaching the care for beneficiaries within the 
fee-for-service program by shifting from a focus on acute 
episodes to the management of ongoing chronic conditions.
    This new way of thinking will become even more essential as 
we approach the retirement of the baby boom generation. The 40 
million beneficiaries currently in Medicare will double to more 
than 80 million over the next 30 years. More and more of those 
beneficiaries will be living with chronic conditions. The steps 
we are taking today to rethink how Medicare provides health 
care will be essential as the number of beneficiaries increases 
in future years. The Centers for Medicare and Medicaid Services 
(CMS) currently has several demonstration projects in place to 
test various types of disease management programs, but none 
matches the scale and scope of the CCIP included in last year's 
Medicare law.
    I am extremely happy that this fundamental change in the 
program is rapidly being implemented. To a large degree, that 
is as a result of the firm resolve and strong support for this 
program from Members of Congress, Secretary Thompson, and 
Administrator McClellan as well as his staff.
    The CMS released this Request For Proposal (RFP) on April 
20 and will carry out Phase I of the CCIP in 10 regions of the 
country over the next 3 years. The first phase will focus on 
beneficiaries with congestive heart failure, diabetes, and 
chronic obstructive pulmonary disease. The initial phase of the 
CCIP will be based on improved quality and health outcomes, 
beneficiary satisfaction, and financial savings to the Medicare 
program, and successful programs will be expanded to more 
beneficiaries in the fee-for-service program.
    I might point out that this is the first time we have been 
able to build into Medicare a capacity on the part of the 
Secretary to pilot things that will make a positive health 
improvement in our seniors and then to roll them out 
automatically under his authority. This will accelerate the 
pace at which quality improvements in Medicare actually become 
available by not requiring that Congress have another vote, 
another bill, another go, before positive changes can be 
implemented in Medicare.
    I welcome today Dr. Mark McClellan in his first appearance 
before Congress as CMS Administrator. It is really a pleasure 
to welcome you, Mark. You have broad experience both in 
government and as a physician; and I welcome you before our 
panel to discuss CMS plans for implementing this terribly 
important program that I know you are not only well familiar 
with, but a strong advocate of.
    I also look forward to the testimony of our second panel, 
Christobel Selecky, President-Elect of the Disease Management 
Association of America, who will provide us with some insights 
into the ways in which various organizations are working 
together to respond to the RFPs for this program. Dr. Janet 
Wright, speaking on behalf of the American College of 
Cardiologists, will provide a practicing physician's viewpoint 
on the importance of the CCIP to the Medicare population.
    Dr. Vince Bufalino from the American Heart Association 
(AHA) will discuss the impact that CCIPs can have on the lives 
of beneficiaries; and Dr. Robert Berenson of the Urban 
Institute had planned to provide us with a researcher's 
perspective on the program. Unfortunately, they had an 
evacuation of the airport from which he was to leave, and it is 
extremely unlikely he will be able to join us. His testimony is 
very important both to the consideration of this RFP in the 
long term, to our consideration of how we reform our payment 
system for physicians. So, we will consider his testimony as 
part of the base from which we will question panelists, and we 
will share that testimony with him at a time when he can be 
present.
    [The prepared statement of Dr. Berenson follows:]
            Statement of Robert A. Berenson, Urban Institute
    Madame Chairman, Mr. Stark, and members of the subcommittee: Thank 
you for inviting me to this important session dedicated to reviewing 
the challenge of better serving the growing number of Medicare 
beneficiaries with multiple and complex chronic conditions.
    Americans are living longer than ever, because of new medical 
treatments and technologies, better prevention, and healthier 
lifestyles. At the same time, people are living longer with chronic 
conditions, such as heart disease, diabetes, neuro-degenerative 
diseases, and even cancer. Diseases that used to be fatal early on in 
their course can now be managed effectively for years. And as we live 
longer, more of us are contending with multiple and complex chronic 
conditions that require a high degree of medical management and 
monitoring and a new commitment to encouraging and supporting patient 
self-management.
    Policymakers are just beginning to realize the implications for 
Medicare of beneficiaries living longer with chronic illness, 
particularly multiple chronic diseases.\1\ About 20 percent of 
beneficiaries have five or more chronic conditions, account for over 
two-thirds of Medicare spending, see about 14 different physicians in a 
year, and have almost 40 office visits.\2\ The chances of an otherwise 
unnecessary hospitalization--for conditions that can and should be 
managed effectively on an outpatient basis--increase from about 1 
percent for a beneficiary with just one condition to about 13 percent 
for a beneficiary with five conditions and about 27 percent for a 
person with eight chronic conditions.\3\ It would seem then that 
beneficiaries with multiple chronic conditions have unattended 
complications despite their high health care use. It also would appear 
that the number of chronic conditions has more influence than age on 
health care spending in the Medicare population.\4\
---------------------------------------------------------------------------
    \1\ Among a number of recent policy documents that examine the 
issue of chronic conditions and Medicare is Eichner, June and 
Blumenthal, David, eds. Medicare in the 21st Century: Building a Better 
Chronic Care System. National Academy of Social Insurance. Washington, 
DC. January 2003.
    \2\ Partnership for Solutions, Medicare: Cost and Prevalence of 
Chronic Conditions. Johns Hopkins University, Baltimore, MD. July 2002.
    \3\ Wolff J. et al. Archives of Internal Medicine, November 11, 
2002.
    \4\ Berenson R, Horvath J, Clinical Characteristics of Medicare 
Beneficiaries and Implications for Medicare Reforms. Prepared for the 
Center for Medicare Advocacy, March 2002. Accessed February 2004, 
www.partnershipforsolutions.org/DMS/files/MedBeneficiaries2-03.pdf. It 
is also true that the presence of chronic conditions is associated with 
age; however, costs and use are similar for beneficiaries with multiple 
chronic conditions regardless of age.
---------------------------------------------------------------------------
    Section 721 of the Medicare Modernization Act (MMA) provides for a 
new Chronic Care Improvement (CCI) program within the traditional 
Medicare program; the law also requires a new emphasis on chronic 
illness management within the restructured Medicare Advantage program. 
The CCI program is essentially a vendor-operated disease management 
program targeting beneficiaries with chronic obstructive pulmonary 
disease, congestive heart failure, diabetes mellitus, and other 
diseases that the Secretary may specify. The Centers for Medicare and 
Medicaid Services (CMS) recently published a Request for Proposals that 
makes clear that entities other than a disease management organizations 
are encouraged to apply, although the emphasis will be on organizations 
with large scale and scope, because of the risk requirement, generally 
far beyond that of even large group practices. The CCI will be tested 
for three years after which the Secretary will evaluate the program for 
financial outcomes (program savings), clinical quality (hospital 
readmission rates and adherence to clinical guidelines), and 
beneficiary satisfaction.
    In general, a CCI vendor must guide beneficiaries in managing their 
health. Every enrolled beneficiary will have a care plan that is to 
include disease self-management education and collaboration with 
physicians and other providers to enhance communication of relevant 
clinical information. Care plans can also include use of monitoring 
devices to facilitate transmission of clinical indicators. CCI vendors 
must also have tracking systems to follow beneficiaries across settings 
and record and monitor outcomes in each setting.
    In recent years, there has been growing dissonance between the 
evolving use of disease management by private health plans, convinced 
of its utility in improving patient care, and the continuing dearth of 
peer-reviewed evidence of its cost-effectiveness. One desirable aspect 
of the CCI program is that the technique will be tested in formal 
trials that should help provide data to better assess the cost-
effectiveness of disease management for the Medicare population in the 
context of the traditional Medicare program.
    I would direct the subcommittee's attention to a potential problem 
in the study design mandated in the MMA. The requirement that 
individual patients are to be randomized to intervention and control 
will make it very difficult for practice-based organizations to compete 
for an award because such an organization would normally provide the 
intervention to all of its patients that would benefit from the care 
coordination approach. For these applicants a trial that permits 
matching rather than randomization would be more appropriate. I would 
urge the Congress to give the CMS the flexibility to a study design 
that accommodates the circumstances of different applicants.
    Although the CCI program may be a good start, in my opinion it is 
insufficient for truly addressing chronic care needs in Medicare 
because it lacks a focused physician component. The Administration 
emphasizes that the new program creates a ``business platform'' that 
will permit innovation, but the CCI program ignore the reality that 
beneficiaries look to their personal physicians for responsibility for 
their health care--and not business platforms--whether health plans, 
disease management companies, or other third party-vendors.
    Policymakers need to tackle the difficult challenge of engaging 
those responsible for health care quality and use, namely the doctors 
and other health care professionals. Further, in order to be 
successful, disease management and related case management should work 
better with the active involvement of the patient's physician.\5\ Again 
and again studies have shown that care coordination only works with 
real physician involvement. Unfortunately, the CCI initiative is quite 
removed from the physician, although the legislation correctly calls 
for an individual's care plan to include physician education and 
collaboration.
---------------------------------------------------------------------------
    \5\ Chen, A, Brown, R; et al. Best Practices in Coordinated Care. 
Prepared for the Health Care Financing Administration. Mathematica 
Policy Research, Princeton, NJ. March 2000. Accessed February 2004 at 
www.mathematica-mpr.com/pdfs/bestsum.pdf.
---------------------------------------------------------------------------
    Consistent with the overall philosophy of the MMA, this approach to 
addressing the growing need for improved care for those with chronic 
health conditions is a corporate one, focused on providing contracts to 
third-party vendors, rather than directly enabling professionals to 
better serve their patients. The traditional Medicare program has an 
unrealized opportunity to lead the restructuring of how physicians 
organize and deliver health services, as called for by the Institute of 
Medicine in its seminal ``Crossing the Quality Chasm'' report.\6\ 
Instead, the MMA would have Medicare merely follow private sector 
approaches have been tested in younger and somewhat healthier 
populations and that may not be as well suited to the Medicare 
beneficiaries.
---------------------------------------------------------------------------
    \6\ Institute of Medicine. Crossing the Quality Chasm: A New Health 
System for the 21st Century. National Academy of Sciences. Washington, 
DC. March 2001.
---------------------------------------------------------------------------
    Disease management can likely bring important benefits, such as 
improved functioning and decreased hospitalizations, to relatively 
healthy individuals, with a well-defined chronic condition. It is also 
proper that CCI programs are required to identify and address enrollee 
co-morbidities. However, these programs have not generally been 
designed to address successfully the needs of medically complex 
patients, whose needs go well beyond learning disease self--management 
techniques and who have multiple professionals affecting the care and 
treatments of their different conditions. Nor are they designed to meet 
the needs of individuals with dementia, and, therefore cannot benefit 
form disease management's heavy emphasis on patient self-education.
    It will be challenging for disease management companies and other 
vendors who may be awarded contracts under the initiative to develop 
the necessary links with physicians, especially because the law 
provides no new reason for physicians to engage with them. Creating 
effective relationships with treating physicians is further complicated 
by the probability that these management companies will be operating 
across great distances from a central location with no particular 
connection to the communities in which they will operate.
    Medicare disease management would benefit a certain segment of 
beneficiaries, and this approach could certainly be part of a 
comprehensive strategy to improve the care provided to Medicare 
beneficiaries with multiple chronic conditions. But it is not a 
sufficient response.
    These private-sector approaches have arisen partly because many 
physicians have been impervious to the altered needs of a patient 
population with far more well-established, chronic conditions and far 
fewer acute medical events than their training has prepared them for. 
In addition, the financial underpinnings of a typical medical practice 
do not support physicians who actually do recognize the need to be more 
fully engaged in the components of chronic care coordination. These 
include: teaching patient self-management; communicating more often 
with patients outside of face-to-face office visits; managing 
polypharmacy; coordinating care among many other professionals and 
providers to avoid redundancy and errors; developing and maintaining 
more appropriate medical information summaries, preferably inside an 
electronic health record; and more forthrightly helping prepare 
patients and their families for death and dying. Simply stated, the 
Medicare payment system does not pay for these activities, so 
physicians either do not deliver these services directly or go unpaid 
when trying to do so.
    Bounced around the system, too many Medicare beneficiaries do not 
even recognize a particular physician who is responsible for 
coordinating their care. Where no physician is in charge, disease 
management certainly serves a useful stopgap role. Nevertheless, the 
program goal should be to promote a patient relationship with a primary 
care physician or a specialist willing to take overall responsibility 
for care coordination and the other functions that I identified 
earlier. Although disease management can assist a patient's primary 
physician in caring for patients with multiple chronic conditions, its 
role should be viewed clearly as supplementary to the personal 
physician's responsibility. Disease management currently appears to 
serve a useful purpose because of a quality chasm in how health care is 
delivered. The policy objective should be to address the causes of the 
chasm and not merely provide a partial stopgap.
    As stated earlier, among other areas that need attention is the 
overlooked issue of physician payment policy. Simply put, the 
incentives inherent in most fee-for-service payment systems, including 
Medicare's and those of most private payers, penalize primary care 
physicians who would alter their professional interactions with 
patients to respond to the challenge posed by the reality of patients 
with multiple complex chronic conditions.
    Yet, the MMA mostly ignores alternative payment approaches 
affecting physician behavior. These payment approaches should go hand 
in hand with the new chronic care program to ensure the kind of change 
needed to improve care for Medicare beneficiaries. I would note that 
Sec 646 of the MMA, the Medicare Health Care Quality Demonstration 
Program, provides a possible platform for examining new payment 
approaches. This demonstration should be given high priority and should 
explicitly address chronic care improvement incentives for physicians 
and medical groups.
    Imagine if in the early 1980s, Congress, confronted with soaring 
Medicare Part A hospital costs produced partly as a result of an 
inherently inflationary, cost-plus payment system, had decided not to 
implement the Prospective Payment System. Imagine, instead, that 
Congress had chosen to fund third-party vendor, utilization review 
organizations to try to reduce lengths of stay for Medicare patients. 
That approach might have had some marginal beneficial effects on cost 
reduction--and plenty of unpleasant confrontations with physicians and 
hospital staff. Overall, trying to improve hospital efficiency while 
ignoring the incentives inherent in the basic payment system would have 
been foolhardy. Congress showed good sense by going to the root of the 
problem.
    I would argue that we now face a similar challenge to get the 
physician payment systems right, and to do so would mean entering 
mostly unchartered territory. But is it logical to think you can 
improve the medical care provided to Medicare beneficiaries with 
chronic conditions while ignoring physicians?
    One of the problems, of course, is that the medical profession 
itself has been slow to recognize that the nature of the practice of 
medicine is changing and it has not been very assertive in proposing 
new billing codes and payment approaches that would support altered 
physician activities. Indeed, as I noted above, I am not sure that most 
physicians even recognize the care gaps that result from maintaining a 
traditional orientation to responding expertly to acute medical events, 
while ignoring the less dramatic, but significant, needs of those with 
progressive chronic conditions.
    Recently, the specialty associations representing the primary care 
physicians who serve Medicare beneficiaries, including the American 
Academy of Family Physicians, the American College of Physicians, and 
the American Geriatric Society, have begun to address this particular 
quality gap and have supported specific legislation that I believe goes 
in the right direction. I urge the Committee to work with these and 
other interested parties to explore new payment approaches that should 
be intrinsic to any serious effort to refocus Medicare on the unique 
burden of chronic disease. Physicians should be paid and supported for 
taking responsibility for assertively coordinating care for patients 
with complex chronic conditions. Part of that coordination certainly 
might involve interacting with nurses and others from disease 
management vendors.
    We should be testing various new payment approaches. There are 
already limited precedents in the Medicare physician payment system for 
the kinds of changes that would be needed. In contrast to true 
prospective payment systems used for other provider types, the 
physician payment system suffers for being ``fee for individual items 
of service.'' Yet, renal physicians for many years have received a 
monthly capitation payment for their professional services for end-
stage renal disease. Similarly, Medicare pays for a few ``care plan 
oversight services,'' e.g., for patients under the care of home health 
agencies. These small payment precedents should be examined and built 
on.
    Payment models could distinguish how well a medical practice is 
integrated. For example, solo and other small practices might receive 
relatively small care management fees that essentially would enable 
them to better communicate with disease management vendors. On the 
other hand, larger, more integrated practices would receive larger care 
management fees and possibly Part B or maybe even Part A payments under 
some circumstances. This would that permit them to directly manage 
disease, without the need for a separate third-party organization. The 
additional payments initially might be focused on care coordination for 
those patients with multiple and complex chronic conditions, but over 
time I envision that traditional Medicare might pay some multi-
specialty group practices forms of capitation for a much broader range 
of their patients.
    One new payment model has appeared in slightly different forms in 
Medicare legislation in the past two sessions of Congress, but 
ultimately lost out to the corporate approach.\7\ A token Medicare Care 
Management Demonstration, Section 649, similar to this approach, 
survived in the final MMA. It would place on physicians and their 
staffs responsibility and accountability for clinical care coordination 
of medically complex individuals. Participating physicians would 
coordinate clinical care, consult with other providers as necessary, 
and receive a monthly administrative payment for the extra time and 
attention involved. The model could be expanded in a number of ways. 
For instance, physicians could be required to have on staff or under 
contract a case management function to make referrals to community 
resources that could address the supportive service needs of these 
patients.
---------------------------------------------------------------------------
    \7\ Most recently, the complex clinical care payment concept was 
included as a demonstration in the Senate version of the Medicare 
reform legislation, Section 443 of S. 1, in June 2003. The provision 
set new standards for physicians willing to participate, including 
conducting a range of care coordination activities that linked medical 
and supportive services oriented to the beneficiary and family 
caregivers.
---------------------------------------------------------------------------
    In addition, CMS has proposed another approach to changing the 
nature of physician practice--the physician group practice 
demonstration, which I understand is scheduled to begin next year if 
the Office of Management and Budget signs off. However, the 
demonstration is limited to large-group practices that have at least 
200 full-time physicians. The physician group would receive bonus 
payments to the extent that spending is below established targets. This 
demonstration is on the right track, although it does not target the 
population with multiple chronic conditions. The size of the physician 
group would limit how well the model can be replicated if it proves 
successful. Nevertheless, it is another approach that attempts to 
change physician payment incentives and reward greater integration of 
physician practice and, accordingly, it deserves to be as high a 
priority as the CCI program.
    CMS has numerous other demonstrations to test care management and 
disease management models. However, all of them have design issues that 
will likely limit their success for medically complex individuals. 
Several projects target specific diseases, rather than beneficiaries 
with multiple conditions. And the demonstration models typically ignore 
addressing the crucial role of the treating physician in care 
management.
    In conclusion, I applaud the efforts of Congress in general and 
this subcommittee in particular for recognizing the unique challenge 
posed by the growing number of Medicare beneficiaries living with 
multiple and complex chronic conditions. The disease management 
initiatives are a useful response, but, in my opinion, an insufficient 
one. The traditional Medicare program has the opportunity to pioneer in 
the area of payment policy, as it has successfully done a number of 
times in other areas. Working with the willing in the medical 
community, Medicare can help produce overdue restructuring of the 
practice of medicine and reorient at least some of the delivery system 
to chronic care management.
    While the MMA provisions are a start, I believe they are overly 
focused on a corporate, vendor solution--a business platform--for 
problems in the program that would be served better by involving those 
who actually deliver health care at the front line--physicians and 
other clinical professionals in their own medical practices.
                                 

    Chairman JOHNSON. So, I thank you all for appearing before 
us today. I believe that the CCIP is one of the most 
transformational elements of the Medicare modernization bill, 
as it challenges all of us to begin thinking about medicine and 
health care in new ways. I look forward to the testimony of all 
of our witnesses. Now, Mr. Stark, if you would like to make an 
opening statement.
    Mr. STARK. Thank you, Madam Chairman. I am pleased that we 
are here today to discuss the CCIP that was included in the 
bill last year. I must say I am pleased you are having the 
hearing. It is a tribute to your power and party that you could 
close an airport to keep my witness from attending, but I bow 
to political pressures these days all the time. I do know that 
we will have a chance to hear him, Dr. Berenson, at another 
time.
    The disease management approaches, such as the CCIP, I 
guess, that use patient coaches, and they can be helpful tools, 
but I hope we will also get to discuss today the difference 
between young working people with chronic illnesses and those 
of us who are older and often have far more, larger, multiple 
chronic illnesses. I think that it is fair to ask whether our 
money might be better spent on programs that enable chronically 
ill patients greater access to physicians rather than rely on 
corporate vendors that actually kind of remove the patients 
further from their doctors and funnel money to for-profit 
disease management companies.
    I want to encourage the Secretary to look into the 
effectiveness and efficiency of these vendor-based programs and 
to determine their value to Medicare relative to other 
approaches. I understand that they have been having some 
success with managed care plans, but a small percentage of our 
seniors are in those, and I think that we can't overlook the 70 
or 80 percent of beneficiaries who rely on a primary care 
physician. Because of the expense of covering seniors, we 
have--they are sort out of the employment-based insurance 
system, and we have the oldest and sickest people in America in 
our system, the Medicare system. So, approaches that work with 
younger, healthier problem might not apply to the far more 
complex situation that we find in many of our Medicare 
beneficiaries.
    I know you have expressed interest in advancing chronic 
care in Medicare and I think this is an area we could continue 
to work on. I think we should. I have been working for some 
time and currently have a bill to provide a comprehensive 
chronic care benefit in Medicare, and I think that is something 
we are going to have to work on with physicians to find what a 
chronic care protocol should be, and can there be one that we 
can define, as we now do various codes that we use to reimburse 
physicians.
    There are a whole lot of things that I don't think we have 
the expertise in this Committee to define, but I think we have 
to encourage CMS perhaps and the various medical groups to come 
up with their suggestions as to what they think ought to be the 
physicians' role in this, because I think without them, we may 
not get the results that we both want. Thank you very much. I 
look forward to hearing our witnesses.
    Chairman JOHNSON. Dr. McClellan, welcome.

    STATEMENT OF THE HONORABLE MARK MCCLELLAN, M.D., PH.D., 
   ADMINISTRATOR, CENTERS FOR MEDICARE AND MEDICAID SERVICES

    Dr. MCCLELLAN. Thank you, Chairman Johnson, Representative 
Stark, and Representative Crane. It is a real privilege to be 
here with you today at this critical time for the Medicare 
program to discuss the new CCIP. This is a major step for us, a 
new step for us, to improve the care of chronically ill 
beneficiaries in Medicare fee-for-service; and it is a real 
privilege to be involved at this time when we are taking so 
many new steps in Medicare. I want to thank you for your 
leadership in making this possible.
    Medicare beneficiaries living with chronic conditions in 
the traditional fee-for-service program face a particularly 
challenging task in managing their conditions. The goal of the 
CCIP, this program, is to work closely with health care 
professionals to assist those beneficiaries in using the latest 
evidence-based management techniques and information technology 
to get better outcomes.
    The widespread failings in chronic care management are a 
major public health concern today. In my own experience in 
medical practice, I have often seen doctors and nurses and 
other health professionals provide high-quality care for people 
with chronic illnesses in spite of, rather than because of, the 
systems in which they practice. Yet too often, Medicare 
beneficiaries do get less than optimal care for their chronic 
conditions because they have a lot of problems and can suffer 
if the care is fragmented and if they aren't well informed 
about how to follow their doctor's treatment plan. 
Fragmentation leads to poor health outcomes.
    Since chronic illnesses account for most of the deaths 
among Medicare beneficiaries today, this is a big deal for our 
Medicare beneficiary population. It can also lead to high 
medical costs. Beneficiaries with five or more chronic 
conditions represent 20 percent of our population; that is 66 
percent of our program spending, and most Medicare expenditures 
for the care of these beneficiaries are for multiple and often 
preventable hospitalizations. Currently, our payments are not 
designed to promote disease prevention and avoid poor outcomes. 
Instead, as Representative Stark noted, we pay for services 
that are primarily related to dealing with disease 
complications themselves, missing opportunities to prevent the 
complications in the first place.
    The new MMA is our best opportunity ever to change the 
focus to prevention, and the CCIP is an important part of that 
effort. As my written testimony describes in more detail, 
chronic care management programs have repeatedly demonstrated 
an ability to reduce costs while improving health and the 
satisfaction of beneficiaries.
    Many Medicare Advantage health plans have engaged in 
disease management activities for our beneficiaries in the past 
2 years. In one such program, hospital admissions for 
congestive heart failure were reduced by 70 percent. By 
preventing these acute complications, the plan saved $3 for 
every $1 it invested. Lower complications is one reason that 
Medicare Advantage plans save so much money for beneficiaries 
of chronic illnesses compared to fee-for-service Medicare, and 
that is why it is important for us to make sure that these 
kinds of plans are available to beneficiaries who prefer them, 
especially beneficiaries with limited means.
    Despite the proven advantages of chronic care improvement 
programs, however, millions of beneficiaries who are most 
likely to benefit from them have the least access because they 
aren't part of fee-for-service Medicare. That is going to 
change now. As called for under the MMA, the Secretary will 
enter into agreements with qualified organizations, 
collaborative groups, including physician organizations and 
others, to run large-scale regional CCIPs for 3 years using 
prospectively identified beneficiaries with congestive heart 
failure, complex diabetes, and chronic obstructive pulmonary 
disease. We expect that the CCIPs will collectively serve 
between 150,000 and 300,000 fee-for-service Medicare 
beneficiaries during this first phase pilot program.
    These programs will be evaluated through randomized, 
controlled independent trials using the best scientific 
techniques available. We published the notice in the Federal 
Register announcing this program last month. Completed 
proposals from potential awardees are due by August 6 of this 
year, and we expect to implement the first service agreements 
on schedule by December 8, 2004. We expect the program 
operations will begin and services will be provided in full by 
early 2005.
    It is important to note in this program that beneficiary 
participation is completely voluntary and that beneficiaries 
can get access to the full set of fee-for-service benefits 
throughout this program. In fact, the point of the program is 
to help them get the most out of their fee-for-service 
benefits.
    The payment to program awardees will be performance-based. 
They don't get paid unless they improve performance: 
performance in quality, performance in saving money for the 
Medicare Program at the same time. Fees paid to awardees will 
be at risk for performance improvements in clinical quality, in 
beneficiary and provider satisfaction, and for reduced costs 
across their assigned target populations compared to regional 
control groups.
    I want to emphasize again, we fully expect this program to 
improve beneficiary health outcomes, to increase their 
satisfaction with the services they receive, to improve the 
partnership between care givers, health professionals, and 
patients, and to save the Medicare Program money. It is an 
innovative model for care delivery, and it is a real pleasure 
to have the opportunity to be here working with you to 
implement it. Thank you for your time. I have more detailed 
written testimony that I would ask be read into the record, and 
I would be happy to answer any questions you may have.
    [The prepared statement of Dr. McClellan follows:]
Statement of The Honorable Mark McClellan, M.D., Ph.D., Administrator, 
               Centers for Medicare and Medicaid Services
    Chairwoman Johnson, Representative Stark, distinguished members of 
the Committee: I thank you for inviting me here today to discuss the 
new Chronic Care Improvement Program, (CCIP) about which we at CMS are 
very excited. As you know, this voluntary program was created by 
Section 721 of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (MMA). The CCIP could be a major new step in 
improving the quality of care for chronically ill beneficiaries under 
Medicare fee-for-service. I would like to make particular note of the 
work that Chairwoman Johnson did to champion this new program and let 
her know that we believe that her work will make a real difference in 
the lives of hundreds of thousands of Medicare beneficiaries across the 
country who suffer from chronic ailments. Today, I would like to 
address the questions of how the CCIP may help Medicare beneficiaries, 
and how Phase I will work, including beneficiary selection, payment, 
and criteria for expanding the program nationwide under Phase II.
HOW CAN THIS PROGRAM BE HELPFUL?
    Medicare beneficiaries living with chronic conditions in the 
traditional fee-for-service Medicare program face a particularly 
challenging task in effectively managing their conditions. The goals of 
the CCIP are to assist these individuals utilizing the latest in 
evidence-based care management and information technology, as well as 
personal interactions with caregivers to ensure better outcomes. We 
believe that Medicare may be able to utilize these proven measures not 
only to improve the fiscal outlook of the program, but also to more 
adequately assist our beneficiaries in living healthier lives.
    Widespread failings in chronic care management are a major national 
concern. Many of these failings stem from systemic problems rather than 
lack of effort or intent by providers to deliver high quality care. 
Medicare beneficiaries are disproportionately affected because they 
typically have multiple chronic health problems. Fragmentation of care 
can lead to poor health outcomes. In addition, Medicare beneficiaries 
with five or more chronic conditions represent 20 percent of the 
Medicare population but 66 percent of program spending. Most of 
Medicare expenditures for care of these beneficiaries are for multiple 
and often preventable hospitalizations.
    Congestive Heart Failure (CHF) and diabetes are among the five most 
common chronic diseases in the Medicare population. According to 
findings from the 2002 Medicare Current Beneficiary Survey, individuals 
with CHF, and coronary artery disease represent 21.3 percent of non-
institutionalized fee-for-service Medicare beneficiaries and account 
for 36.8 percent of Medicare expenditures, including treatment for all 
their health problems. Individuals with diabetes represent 19.4 percent 
of beneficiaries and 30.4 percent of fee-for-service Medicare 
expenditures. Beneficiaries with these diseases tend to have complex 
self-care regimens and medical care needs, that when neglected, or 
uncoordinated, can lead to complications and acute care crises. The 
health risks of these beneficiaries depend heavily on how effectively 
they are able to control their conditions in their daily lives and 
whether or not they receive appropriate medical care and effective 
coordination of their care. Efforts to control their conditions 
successfully may benefit from ongoing guidance and support beyond 
individual provider settings.
    Prevalence rates of diabetes and CHF are even higher among 
minorities than among all Medicare beneficiaries. For example, as shown 
in Figure 1, the Centers for Disease Control and Prevention reports 
that 23.0 percent of black males and 23.5 percent of Hispanic males 
ages 65-74 have diabetes compared to 16.4 percent of white males and 
15.4 percent of all individuals in that age group. Black and Hispanic 
females in that age group have diabetes prevalence rates of 25.4 
percent and 23.8 percent, respectively, compared to 12.8 percent for 
white females and 15.4 percent for all individuals in that age group. 
Given these prevalence figures, improving quality and adherence to 
evidence-based care has the potential to improve outcomes and reduce 
racial and ethnic health disparities, consistent with HHS' Healthy 
People 2010 goals.

[GRAPHIC] [TIFF OMITTED] T9671A.001

                                Figure 1

    The Medicare fee-for-service system is structured and financed to 
manage acute care episodes, not to manage and support individuals with 
progressive chronic diseases. Providers of care are organized and paid 
for services provided in discrete settings (for example, hospitals, 
physician offices, home health care, long-term care, or preventive 
services). Patient care can be fragmented and poorly coordinated and 
patient information difficult to integrate among settings. Providers 
may lack timely and complete patient clinical information to fully 
assess their patients' needs and to help prevent complications. Ongoing 
support to beneficiaries for managing their conditions outside their 
physicians' offices is rare.
    Fragmentation of care can be a serious problem for Medicare 
beneficiaries. The average Medicare beneficiary sees seven different 
physicians and fills upwards of 20 prescriptions per year. In a recent 
survey, 18 percent of people with chronic conditions reported having 
duplicate tests or procedures and 17 percent received conflicting 
information from providers.\1\ Providers reported feeling ill-prepared 
to manage chronically ill patients and reported that poor coordination 
of care led to poor outcomes. Physicians and other practitioners desire 
to, and often do, provide very high levels of care in this country, but 
the challenges they face in integrating all of their efforts often 
frustrate their excellent intentions. As a practicing internal medicine 
physician I encountered these same challenges. I believe that the CCIP 
will assist currently practicing physicians and health care providers 
to avoid some of the challenges that I was faced with while actively 
treating patients.
---------------------------------------------------------------------------
    \1\ Anderson, G. Chronic Conditions: Making the Case for Ongoing 
Care. Partnership for Solutions and the Robert Wood Johnson Foundation, 
p. 32.
---------------------------------------------------------------------------
    The gap between accepted standards of appropriate care for patients 
with chronic diseases and the care they actually receive is 
significant. According to findings of a recent national study published 
in the New England Journal of Medicine, only 56 percent of patients 
with chronic diseases received recommended care based on well-
established guidelines referenced by the researchers. Among patients in 
the study sample who had CHF, only 64 percent received recommended 
care, and among those with diabetes, only 45 percent received 
recommended care. Specifically, only 24 percent of diabetes patients in 
the study received three or more glycosylated hemoglobin tests over a 
two-year period. Similarly, in a recent study of practice patterns 
under Medicare, researchers found that, across all States, an average 
of 66 percent of Medicare beneficiaries with heart failure received ACE 
inhibitors and 16 percent with diabetes received a lipid test.
    A concerted effort to coordinate care and enhance patient 
compliance will result in fewer acute episodes of care, fewer disease 
complications and will help eliminate redundant services as physicians 
and other providers repeat tests and evaluations previously performed 
because they lack the ability to access results of those services. 
These changes alone have the potential to generate substantial savings.
    Currently, Medicare fee-for-service payments do not encourage 
prevention of diseases, good outcomes and performance. Instead, the 
payment system provides money for acute events, missing a potential 
opportunity to prevent these situations which could be beneficial from 
a cost standpoint, but, more importantly, from a health perspective. In 
a sense, payment incentives are the opposite of the way they should be. 
The CCIP seeks to address this problem, as well as others described 
above, by rewarding efforts to prevent acute episodes and improve 
health. Under CCIP, awardees will work to increase patient compliance, 
facilitate communication between patients and providers, and better 
coordinate care among providers caring for the same individual. In a 
much more direct way than ever before under fee-for-service Medicare, 
economic incentives will be directly lined up with prevention and 
performance. We hope to reward high quality care, rather than high 
volume and high intensity care.
    Our work with CCIP will nicely complement previous efforts to 
provide consumers with information on quality outcomes in nursing 
homes, home health agencies, and hospitals, and to line up economic 
incentives with quality standards. This shift in payment and emphasis 
is a demonstration of the Administration's commitment to a coordinated, 
patient-centered approach to healthcare.
    CMS is also working to line up physicians' economic incentives with 
quality care through such programs as the physician group practice 
demonstration project that will provide bonus payments for improvements 
in quality. We also will be conducting a demonstration under Section 
649 of the MMA to encourage physicians to promote continuity of care, 
use established clinical guidelines and prevent or minimize 
exacerbations of chronic conditions. Additionally, beginning in 2006, 
all Medicare Advantage plans will be required to operate chronic care 
improvement programs of their own. These plans will be able to use 
varying payment methodologies to line up economic incentives with 
quality care from providers. The CCIP under Section 721, although 
important in its own right, is not the only tool CMS will be using to 
assist Medicare beneficiaries with chronic conditions to effectively 
manage their care.
CHRONIC CARE IMPROVEMENT POTENTIAL
    To date, there has not been a sufficient number of thorough tests 
of whether chronic care improvement will improve health care quality 
and reduce costs in Medicare. However, private companies have been 
utilizing the techniques called for under CCIP for some time, and have 
demonstrated some success in improving health outcomes.
    Michael Rich and colleagues found that a nurse-directed 
multidisciplinary intervention program reduced net cost of care an 
average of $153 per patient, per month, for the treatment group versus 
the control group. Readmissions in the control group were nearly double 
that of the treatment group.\2\
---------------------------------------------------------------------------
    \2\ Michael W. Rich, Valerie Beckham, Carol Wittenberg, Charles L. 
Leven, Kenneth E. Freedland, and Robert M. Carney, ``A 
Multidisciplinary Intervention to Prevent the Readmission of Elderly 
Patients with Congestive Heart Failure,'' New England Journal of 
Medicine, 333, no. 18, November 2, 1995: 1190-1195.
---------------------------------------------------------------------------
    A major U.S. company reported that a disease management program for 
diabetic patients run out of an on-site clinic realized savings of more 
than $600,000 in reduced sick time usage in its first year of 
operation.\3\
---------------------------------------------------------------------------
    \3\ Annemarie Geddes Lipold, ``Disease Management Comes of Age, Not 
a Moment Too Soon,'' Business and Health, June 19, 2002.
---------------------------------------------------------------------------
    Ronald Aubert and colleagues found significant decreases in fasting 
glucose levels among patients who were provided with the services of a 
nurse case manager who was also a certified diabetes educator. These 
patients reported perceived improvement in their health status more 
than twice as often as their control group counterparts.\4\
---------------------------------------------------------------------------
    \4\ Ronald E. Aubert, William H. Herman, Janice Waters, William 
Moore, David Sutton, Bercedis L. Peterson, Cathy M. Bailey, and Jeffrey 
P. Koplan, ``Nurse Case Management to Improve Glycemic Control in 
Diabetic Patients in a Health Maintenance Organization,'' Annals of 
Internal Medicine, 129, no. 8, October 15, 1998: 605-612.
---------------------------------------------------------------------------
    Researchers at Geisinger Health Plan found that patients who chose 
to enroll in its diabetes management program had higher scores on 
diabetes-related HEDIS (Health Plan Employer Data and Information Set) 
performance measures and lower average monthly claims. Inpatient days 
per patient, per year, were lower, though there were more primary care 
visits.\5\
---------------------------------------------------------------------------
    \5\ Jaan Sidorov, Robert Shull, Janet Tomcavage, Sabrina Girolami, 
Nadine Lawton, and Ronald Harris, ``Does Diabetes Disease Management 
Save Money and Improve Outcomes?'' Diabetes Care, 25, no. 4, April 
2002: 684-689.
---------------------------------------------------------------------------
    Another study found that telephonic nurse guidance for CHF patients 
following initial hospital admission resulted in a 47.8 percent 
decrease in heart failure readmissions at six months. The authors 
reported medical care cost savings net of intervention costs.\6\
---------------------------------------------------------------------------
    \6\ B. Riegel et al., ``Effect of a Standardized Nurse Case-
Management Telephone Intervention on Resource Use in Patients with 
Chronic Heart Failure,'' Archives of InternalMedicine, 25 March 2002: 
705-712. Reported in Health Affairs, Sandy Foote, July 30, 2002.
---------------------------------------------------------------------------
    In another study, readmissions for heart failure were reduced 56 
percent in the first ninety days after discharge for high-risk CHF 
patients age seventy or older.\7\
---------------------------------------------------------------------------
    \7\ M.W. Rich et al., ``A Multidisciplinary Intervention to Prevent 
the Readmission of Elderly Patients with Congestive Heart Failure,'' 
New England Journal of Medicine, 2 November 1995: 1190-1195. Reported 
in Health Affairs, Sandy Foote, July 30, 2002.
---------------------------------------------------------------------------
    The Diabetes Care Connection program, implemented in 2000 by the 
Hawaii Medical Service Association (HMSA), targeted all of its 40,000 
beneficiaries with diabetes, including more than 6,000 Medicare 
beneficiaries. Cap Gemini Ernst and Young found that a much higher 
percentage of beneficiaries had their blood glucose levels tested 
during the first year of the program than in the baseline year. Also, 
total per capita claims costs were lower for HMSA Medicare 
beneficiaries with diabetes in 2000 than in 1999, mainly because of 
reduced hospital costs.\8\
---------------------------------------------------------------------------
    \8\ Hawaii Medical Service Association, a licensee of Blue Cross 
Blue Shield Association in Hawaii, has a cost-based contract to operate 
a fee-for-service Medicare plan. Myra Williams, HMSA vice-president, 
care management, confirmed study findings, also discussed with David 
Plocher, Cap Gemini Ernst and Young; and with Robert Stone, American 
Healthways. Reported in Health Affairs, Sandy Foote, July 30, 2002.
---------------------------------------------------------------------------
    Despite these proven successes, Medicare beneficiaries who are most 
likely to benefit from chronic care management services are unlikely to 
participate in them because they have been unavailable under the fee-
for-service program. Many of the Medicare Advantage health plans have 
engaged in one form or another of disease management in the past few 
years. These programs have assisted beneficiaries enrolled in those 
plans to reap the benefits of more coordinated and effective care 
management. In one such Medicare Advantage disease management program, 
their CHF program has produced a 70 percent decrease in hospital 
admissions. They calculate that for every dollar they invest in their 
disease management program, they realize a savings of three dollars. In 
their diabetes management program, this health plan has seen a 45 
percent decrease in amputations made necessary by advanced conditions 
of the disease. New cases of retinopathy have declined by 20 percent 
among participants in the disease management program. The plan 
estimates that the 10 year benefit will save $1,500 per patient, or $30 
million over that time frame. Unfortunately, the benefits of a disease 
management program have been unavailable to beneficiaries in the fee-
for-service program until now. The CCIP will move toward changing this 
situation.
    The programs cited above resulted in patients who were healthier, 
who spent fewer days in the hospital and who were happier with the care 
they received. So what kinds of things do chronic care improvement 
organizations do to make such a positive impact in people's lives?
    Mrs. Jones, a beneficiary with heart failure, was given the option 
of using a 1-800 number to call and report her weight on a daily basis, 
or the equipment that would report automatically. If her weight 
increases by more than a certain amount over a week, her physician 
would be notified immediately. The weight gain could be an indication 
that Mrs. Jones is retaining fluid, which could be a reflection of her 
heart failure flare-up. With such a timely notification, the physician 
could adjust Mrs. Jones' medication over the phone, or do a simple, 
quick checkup in the office before a serious complication occurs, 
saving Mrs. Jones an unpleasant trip to an emergency room or worse.
    Another example might be Mr. Smith, a beneficiary with COPD. He 
could receive home health care on a regular basis to help ensure that 
his home environment does not exacerbate his condition. Since 
beneficiaries with COPD often have limited oxygen intake, his home 
health aid could help ensure that activities such as reaching for a jar 
from a kitchen cabinet are made easier, that he has air filters in his 
home, or that he has hypo-allergenic bed sheets, for example. These are 
all simple activities that could send Mr. Smith to the emergency room.
    Another example might be Mr. Rodriguez, a beneficiary with 
diabetes. He could be in need of transportation services to get to the 
physician. He could have a history of failing to seek diabetic wellness 
visits due to transportation issues. These could have led to acute 
exacerbations of his diabetes, where he had to spend time in the 
hospital. His nurse case manager could help him obtain transportation 
so he does not miss critical preventive check-ups. These preventive 
check-ups, such as retinal exams, glycosolated hemoglobin tests, blood 
pressure tests, foot exams, etc. have documented benefits in preventing 
acute diabetic crises.
    Another example might be Mrs. Johnson, a beneficiary with CHF and 
depression. She could have had severe problems with medication 
compliance and general wellness stemming from her depression. A nurse 
in an IPA could reach out to her on a regular basis, provide self-care 
support for diet and exercise, and ensure medication compliance. The 
physician's office could also bring her in for group therapy and 
schedule preventive check-ups with the physician. The IPA could use an 
electronic health record to track Mrs. Johnson's progress and 
communicate with her other physicians.
    We expect many CCIPs to rely on innovative uses of IT equipment, 
including electronic monitoring, records, prescribing and alerts, to 
help them carry out their programs. These tools, when properly 
utilized, are tremendously powerful in aiding physicians, pharmacists 
and other caregivers to provide the best possible care. Individual 
physicians, nurses, home health agencies and other health providers may 
utilize electronic records or prescribing systems within their own 
practices, but it is often a challenge to integrate these systems so 
that information gleaned by one provider can be available to others who 
serve the same beneficiary. Part of the CCIP concept is that awardee 
organizations will work with the beneficiary and through their own 
innovative IT systems to ensure effective communication between the 
beneficiary's providers. That sort of overarching view of things is 
expected to greatly assist these providers in their effort to overcome 
the fragmented state of care often encountered today. Additionally, we 
expect that when these individuals see the benefits of this technology 
they may be more apt to integrate it more fully into their broader 
practice.
    To put it in human terms, patients served by one of these 
organizations have said the following:

      ``[The program] is the best thing that ever happened to 
me. Thank God for you. Keep up the good work.'' E.A. 60 yrs. Lake City
      ``Please keep this program. It helps in many ways. Keeps 
you on top of your health, and helps you understand what's happening 
when things do go wrong. Good Program.'' P.D. 51 yrs. Titusville
      ``I am very pleased to have someone help me to take 
better care of myself and my self esteem is stronger knowing others 
care about me. This program should extend to everyone.'' M.M. 58 yrs 
Palm Coast
      ``The help I have received through your staff and 
educational material has helped keep me out of the hospital. Thanks a 
million. I also appreciate your personal phone calls. They are a great 
help.'' D.B. 57 yrs. Pounce de Leon
      ``[The program] nurses have been a great help to me. I 
feel that with their help I have been able to control my CHF and the 
notes to the doctor have really helped getting the doctor to pay more 
attention to my problems and get to me faster when needed.'' C.W. 51 
yrs. Ocala
      ``My nurse is fantastic. She is very informative and 
cares about your condition and helps you to get better or take care of 
yourself as best that you can. She is the best. Thank you for assigning 
her to me. I feel blessed to know her.'' L.G. 35 yrs. Jacksonville

    These outcomes represent the kinds of results we hope to accomplish 
through the CCIP.
HOW THE PROGRAM WILL WORK
    On April 23, 2004, CMS published in the Federal Register a notice 
informing chronic care improvement organizations of the possibility of 
working with CMS in providing services to Medicare beneficiaries under 
the new program established by Section 721 of the MMA.
    In Phase I, the Secretary will enter into agreements with qualified 
organizations to run large-scale regional CCIPs for 3 years, for 
prospectively identified beneficiaries with CHF, complex diabetes, and 
chronic obstructive pulmonary disease (COPD). There is some evidence 
that self-care support, education, and other tools targeted at 
beneficiaries with these conditions are particularly effective at 
improving clinical outcomes, reducing overall cost, and improving 
beneficiary and provider satisfaction. The CCIPs are to be implemented 
in approximately ten regions where at least 10 percent of the Medicare 
population resides. We expect the CCIPs will collectively serve between 
150,000 and 300,000 chronically ill fee-for-service Medicare 
beneficiaries. These programs will be evaluated through randomized, 
controlled trials, with at least 10,000 beneficiaries in the control 
group for each program. The evaluations will be conducted by an 
independent entity.
    Each program will offer self-care guidance and support to 
chronically ill beneficiaries to help them manage their health, adhere 
to their physicians' plans of care, and ensure that they seek (or 
obtain) medical care that they need to reduce their health risks. The 
programs will include collaboration with participants' providers to 
enhance communication of relevant clinical information. The programs 
are intended to help increase adherence to evidence-based care, reduce 
unnecessary hospital stays and emergency room visits, and help 
participants avoid costly and debilitating complications. CCIPs will be 
required to assist participants in managing their health holistically, 
including all co-morbidities, relevant health care services, and 
pharmaceutical needs. CMS will test models that use a wide variety of 
interventions to bring about improvements in clinical quality, 
satisfaction and reduced costs.
    As intended by Congress, CMS will seek to partner with awardees 
whose CCIPs are designed to support and improve the patient-physician 
relationship, not interfere with it. CMS is particularly interested in 
programs that have a track record of success in, or a comprehensive 
plan for, engaging beneficiaries' physicians and other providers. Given 
the considerable time constraints that today's physicians face, we 
anticipate that physicians will appreciate the timely, actionable 
information that these services could provide. We also anticipate that 
physicians will appreciate better-educated patients and better 
information about what is happening with patients outside their 
offices. There is nothing about these programs that will supplant a 
physician's autonomy.
    Completed proposals from potential awardees are due by August 6, 
2004 and we expect to sign the first service agreements by December 8, 
2004. We anticipate that program operations will begin and services 
will be provided by early 2005.
ELIGIBLE ORGANIZATIONS AND BIDDING
    Organizations eligible to apply to implement and operate programs 
under CCIP include: (1) disease management organizations; (2) health 
insurers; (3) integrated delivery systems; (4) physician group 
practices; (5) a consortium of such entities; or (6) any other legal 
entity that meets the requirements of the solicitation in the Federal 
Register, published April 23, 2004.
    The bidding process is designed to allow different approaches to be 
reviewed in a comparable manner. Applicant organizations will propose 
the geographic region(s) they wish to serve. CMS will provide 
applicants with a de-identified nationally representative sample 
dataset of the type of beneficiaries who would be included in this 
pilot, on which applicants will base their bids. Finalists will be 
provided with geographic specific data to enable bids to be adjusted, 
if necessary, for regional variations.
    The beneficiary participation process will be conducted in a way 
that balances giving beneficiaries the greatest opportunity to 
participate if they want to, while protecting them if they do not. It 
is important to note that participation is completely voluntary. 
Beneficiaries who participate may terminate participation at any time. 
This program is not a form of managed care, in the sense that it has no 
gate-keeping function, operating to limit services, or do a pre-service 
review of appropriateness of care. Beneficiaries will remain enrolled 
in the traditional fee-for-service program and have access to the full 
range of Medicare benefits as they currently stand. Additionally, 
beneficiaries who participate in the program will have access to any 
participating Medicare provider. The beneficiary participation 
verification process works as follows:

    1.  CMS identifies eligible beneficiaries. All beneficiaries in a 
chosen geographic area will be screened for eligibility based on 
historical claims data. Those beneficiaries who are deemed eligible 
will be randomly assigned to one of two groups--the intervention group 
or the control group.
    2.  CMS contacts enrollees by letter. All beneficiaries in the 
intervention group will be notified of the opportunity to participate 
through a letter from the Medicare program including the information 
specified in the legislation. The letter will provide a description of 
the program and give the beneficiary an opportunity to decline to be 
contacted by the CCIP organization. The letter will detail how the 
beneficiary can obtain further information about the program.
    3.  If the beneficiary says `No,' awardee would not contact 
beneficiaries who opt not to be contacted regarding the opportunity.
    4.  If the beneficiary is silent--awardee attempts to contact 
beneficiaries to confirm participation. CMS will then expect each 
awardee to contact all intervention group beneficiaries in its area who 
were silent to describe the program and ask if the beneficiary would 
like to participate. CMS will provide a specific protocol that each 
awardee must use during the initial contact. With regard to non-
responders, we will expect applicants' proposals to specify detailed 
descriptions about their outreach protocols, including, for example, 
frequency and number of outreach attempts, and how the applicant will 
ensure that outreach efforts are respectful of beneficiaries. CMS may 
negotiate limits on the number and/or frequency of outreach attempts 
during the outreach period, and may specify that awardees will be 
required to cease further outreach efforts after the outreach period.
    5.  If the beneficiary is contacted and says `Yes' or `No,' the 
awardee will record the beneficiaries' responses. Beneficiaries who 
agree to participate will be considered participants until they either 
become ineligible (for example, joining a Medicare Advantage plan) or 
notify the awardee or CMS that they no longer want to be contacted by 
the awardee.

    Again, participation is always voluntary. Participants can notify 
the awardee or CMS at any time that they no longer want to be contacted 
by the awardee.
    Awardee organizations will be responsible for serving an entire 
population assigned to them by CMS. They will be held accountable for 
improving clinical, satisfaction, and financial outcomes over the 
entire assigned population. Because of this fact, the program is 
considered to be ``population based.'' Awardees are held responsible 
for beneficiaries who choose to participate in the program, as well as 
those who choose to not participate. A valid comparison between 
beneficiaries offered the opportunity to participate in the 
intervention group and beneficiaries in the control group requires that 
awardees performance measures include data from intervention group 
beneficiaries who choose not to participate, since we would have no way 
of knowing the rate at which beneficiaries in the control group might 
similarly participate or not.
    The CCIP will be set up so that its activities, including 
contacting physicians with beneficiary health information, are health 
care operations of Medicare fee-for-service, and therefore, entail 
permissible disclosures under the Health Insurance Portability and 
Accountability Act (HIPAA). Health care operations, allowed under the 
HIPAA privacy rule, include population-based activities relating to 
improving health or reducing health care costs, case management and 
care coordination, contacting of health care providers and patients 
with information about treatment alternatives, and other related 
functions. Furthermore, CCIP organizations would be considered business 
associates of CMS, and therefore it would be permissible to transmit 
health information to them.
PAYMENT
    The CCIP contracting model is flexible enough to accommodate a wide 
range of program models, but payment methods in all instances will be 
performance-based. Fees paid to awardees will be at risk for 
performance improvements in clinical quality, beneficiary and provider 
satisfaction, and reduced costs across their assigned target 
populations compared to their regional control groups. The statute 
purposely links payment and quality. The underlying premise of the CCIP 
initiative is that through performance-based contracting, improvements 
in quality will lead to better financial, health, and satisfaction 
outcomes
    As a condition of continued participation in the CCIP, 
organizations will be required to demonstrate improvements in quality 
of care for beneficiaries in the intervention group. Prior to award, 
the specific measures for improved quality and satisfaction will be 
negotiated with the organizations based upon the quality parameters 
listed in the solicitation as a minimum. CMS reserves the right to 
reduce or withhold payments should the mutually agreed upon quality 
targets not be achieved. The specific guidelines for such action will 
be negotiated with each organization prior to award.
    The goal of the CCIP is to reduce Medicare costs in traditional 
fee-for-service, while simultaneously improving beneficiary outcomes. 
CMS is requiring a guaranteed minimum of 5 percent savings to the 
Medicare program, including all CCIP fees for the assigned population 
compared to the control group's experience. The exact amount of savings 
is contingent upon a number of unknown variables such as the total 
number of sites and beneficiaries who will be served across the program 
and whether CMS will receive and accept proposals with more aggressive 
savings guarantees.
    As part of the application process, all organizations will be 
required to show proof of their financial solvency and ability to 
assume financial risk up to 100 percent of their monthly fees, up to 
the 5 percent net savings guarantee. The agreements between CMS and the 
awardees will specify the exact mechanism for guaranteeing performance 
and security. Their ability to achieve proposed Medicare savings 
targets will be evaluated on an individual basis based upon their 
proposed program designs, the results of site visits, and evidence of 
prior achievements. CMS plans to hold a bidders conference on May 13 
for organizations interested in providing CCIP services under this new 
program. The conference will provide participants an opportunity to 
gain knowledge of issues associated with applying to implement and 
operate a chronic care improvement program as part of Phase I of CCIP. 
CMS has already enrolled as many potential bidders as it can to attend 
the conference.
EXPANSION OF THE PROGRAM
    Phase II, the potential expansion phase of CCIP, depends on the 
success of Phase I. The statute provides for the Secretary to expand 
successful CCIPs or program components, possibly nationally. The 
Secretary may begin Phase II expansion not earlier than 2 years, and no 
later than 3= years, after implementing Phase I. Quality and 
satisfaction measures will continue to be a key part of contracts with 
CCIP awardees through Phase II.
CONCLUSION
    We at CMS fully expect this program to improve beneficiary health 
outcomes, increase their satisfaction with the services they receive 
through Medicare, better the partnership between caregivers and 
patients, and save the Medicare program money. It is an innovative 
model for care delivery, focusing on preventing problems, rather than 
allowing them to develop in the first place. We appreciate the 
Congress' support in providing the means for this program to take place 
and look forward to sharing the results with you as it progresses. 
Thank you for your time and I would be glad to answer any questions.

                                 

    Chairman JOHNSON. Thank you, Dr. McClellan, for your 
testimony and your written testimony, which was very useful. 
Could you enlarge somewhat on the demonstration under section 
649 where you have the chance to encourage physicians to 
promote continuity of care?
    Dr. MCCLELLAN. That is another program that we are 
undertaking to achieve the same goals, improving quality at a 
lower cost. That is a demonstration program, because some of 
the techniques that we are going to implement there, such as 
more direct payments for performance to physicians and the 
like, have not been as well evaluated yet as some of the 
disease management and care management that will be part of the 
CCIP.
    So, that is a demo program that can help us with 
complementary approaches to get at the same goal, getting 
better outcomes to beneficiaries at a lower cost by supporting 
and encouraging providers to prevent complications in the first 
place. I think it can complement here what we are doing here 
well. That demonstration is still under development internally, 
and we will have more to say about that in the coming months.
    Chairman JOHNSON. Thank you. I hope it will allow smaller 
physician practices to participate, because I do think the 
issue, at least in developing this part of the law, was very 
unclear to us. I think it is still unclear how much of this 
function of management can be integrated into standards of 
practice for individual specialties, and we need a better 
handle on that as we move forward so that we only employ a 
coordinator where a coordinator is necessary, perhaps across 
specialties or whatever.
    A lot of what we are talking about should be part of the 
next round of physicians' standards of practice. Therefore, 
this whole issue of chronic disease management is going to be 
present as we deal with one of our other responsibilities that 
we have from the passage of the MMA, which is to rethink of how 
we pay physicians or we will be able to pass real reform under 
the physician payment section of the Medicare law.
    So, as we think about how we are going to change how we pay 
physicians, we need to think about the fundamental flaw in the 
Medicare Program, which is that it is acute episode focused and 
not focused on what really has become the challenge in 
medicine, which is to prevent the development of acute 
episodes.
    So, in that framework, there were a number of interesting 
comments by Dr. Berenson in his testimony. One of the briefer 
ones that he mentioned was they need to look at not just 
randomized controls, but matching, to allow smaller entities to 
compete in the trials. Do you have a comment on that?
    Dr. MCCLELLAN. We are using randomized approaches in this 
pilot program that was actually mandated by Congress, as you 
know, in the MMA. In many of our demonstration programs, 
however, we rely on other techniques to identify what the 
effects of a particular program might be. In some settings 
where it is not feasible to do randomizations, which might be 
the case involving small physician groups, matching may be a 
good alternative. I do want to try to take further steps to be 
able to implement steps, implement methodological approaches 
even in smaller settings. I would emphasize these CCIP programs 
are not going to succeed if they don't work well with physician 
offices.
    Most Medicare beneficiaries get their care primarily 
through small physician groups; and because you have to improve 
the outcomes for a population in order to get the performance 
reward in the CCIP program, therefore, the groups are going to 
have to work well with these small physician offices, even in 
the CCIP. I think we can learn something from this effort and 
from the randomization techniques used here, about what works 
well in small physician groups, that can carryover to the 
broader goals you mentioned about improving our payment systems 
to physicians.
    Chairman JOHNSON. In your RFP, are you very specific about 
how that project should relate to physicians?
    Dr. MCCLELLAN. We are very specific in emphasizing that we 
expect these programs to work well with physicians and other 
health professionals. In my own experience in dealing with a 
variety of disease management programs, the ones that I found 
to be most helpful were the ones that supported my work, the 
ones that reminded my patients that they needed to come in for 
a follow-up exam or to get another laboratory test done, or the 
ones that helped my patients identify when they were having 
complications early before they got to a very serious stage, 
such as a little bit of weight gain in patients with heart 
failure, so they could come into the office if necessary and 
get that complication headed off. Those kinds of steps are 
built into this program, and we are backing it up by including 
provider satisfaction measures as part of the formal 
evaluation. The payments to these organizations that 
participate in CCIP will depend on how well they do with 
doctors and other health professionals.
    Chairman JOHNSON. Thank you. So, you will be evaluating 
that particular piece of the connection and the motivation for 
physician involvement as you determine which of all the really 
many proposals you will select. I am pleased, what a tremendous 
response you are having for the informational seminar that is 
coming up this week.
    Dr. MCCLELLAN. It is tomorrow. We are oversubscribed. The 
auditorium at our headquarters in Baltimore is going to be 
full. We have more than 550 participants, and they span the 
spectrum. It not only includes disease management business, but 
also includes a number of physician group organizations, a 
number of academic medical center organizations.
    We have a very broad range of participants, and in many 
cases, I expect these different groups will be working together 
in order to serve the whole beneficiary population, which 
includes a lot of patients that are treated by small physician 
groups, includes a lot of patients with disabilities, cognitive 
impairments and the like. Again, you can't do well on the 
performance measures unless you do well for all of these 
groups.
    Chairman JOHNSON. Are you having sufficient interest from 
those States that have geriatric centers to participate in that 
demo, where we want to look at how a geriatric center would 
pair with physicians, for example, in rural areas so we can 
look at physician performance, small office performance in this 
context?
    Dr. MCCLELLAN. We are going to include rural areas and 
geriatric programs that work with our rural providers and rural 
beneficiaries in this effort. As you know, there are other 
demonstrations and other initiatives in the MMA that are also 
targeted at geriatric research programs and geriatric programs 
in rural areas as well, so that will be part of this overall 
effort to learn more about how we can help doctors and other 
health professionals improve the quality of care for their 
patients.
    Chairman JOHNSON. Thank you, Dr. McClellan. I reserve the 
rest of my questions. Mr. Stark.
    Mr. STARK. Dr. McClellan, first of all, welcome to the 
Committee. I am puzzled just by a couple of things; and as a 
physician, you can help me here. I don't--and this is how a 
patient might react and a physician might react, but it seems 
to me, as I have read through this, that there is nothing--if I 
am under care or going to an internist and I think of the 
internist as my doctor, okay, and I develop diabetes or high 
blood pressure and a bunch of different things, I will be 
contacted in one way or another by CMS. Will I get a letter or 
phone call?
    Dr. MCCLELLAN. You would initially get a letter from CMS 
that will inform you that you have the option to participate in 
this program.
    Mr. STARK. Will it reference my doctor at all?
    Dr. MCCLELLAN. The initial contact won't. It will be based 
on beneficiaries.
    Mr. STARK. I would probably run to my doctor, right? I 
might say, what is this? First of all, I would be a little 
curious as to how you knew I had all of these problems, but--
and that is a question of privacy that I want to get to in a 
minute. It is my understanding that this--the provider, the 
company or the corporation that is going to do this management, 
is going to try and entice my physician into cooperating, but 
not necessarily pay him or her anything for doing anything; is 
that right?
    Dr. MCCLELLAN. The plans or the organizations that support 
these programs are going to have a hard time succeeding if they 
don't have buy-in from that internist that you mentioned.
    Mr. STARK. How are they going to buy in? Are they going to 
pay the doctor something?
    Dr. MCCLELLAN. They don't necessarily have to pay directly, 
but they do need to make clear to the physician why this is in 
their best interest to participate, and it is to make sure----
    Mr. STARK. As a practicing physician, would it be a fair 
statement to say that physicians as a general rule--I won't put 
this in order--but somewhere between ``resent'' and ``rail 
against Congress'' for interfering with their practice, CMS 
interfering with their practice, Blue Cross interfering with 
their practice, nurse practitioners telling them how to 
practice, or pharmacy detail people telling them how to do 
their practice. They tend to be relatively independent folk. 
How is my doctor going to react when some corporate guy calls 
them up and says, why don't you check up on Stark and make sure 
he is losing weight and not smoking and doing all those things? 
I have a disconnect there that I think could be problematical 
from the physician standpoint.
    Dr. MCCLELLAN. Speaking as one of them, what I found most 
frustrating is when I was contacted by many of the types of 
individuals you described who were telling me to do something 
that I thought was not in the best interest of my patient. At 
other times, I have been contacted by disease management 
organizations, patient advocates and others who had some very 
helpful things to say, some things that I found useful in 
improving the care that my patients got and doing it in a way 
that helped me.
    Mr. STARK. I would understand how this would work if Kaiser 
decides to do it, and Kaiser Permanente tells all the doctors 
in their group, we are going to do this and we are going to 
cooperate, because they are all on salary. I have one other 
question, and that is a little bit off the topic, but we had 
some problems last year on estimates from the actuaries. Both 
you and Secretary Thompson have promised us publicly and in 
private to reinstate our access to the Office of the Actuary. 
Does that still stand?
    Dr. MCCLELLAN. We have both promised transparency in 
working with the actuary and access to estimates that you need.
    Mr. STARK. We have a couple of analyses at this point that 
we understand are completed. These are previous requests, not 
new work for them, that we understand are complete and are not 
being released. Would you get them to release those studies?
    Dr. MCCLELLAN. If you will send me the details, we 
definitely want to pass along final results.
    Mr. STARK. I hate to beat a dead horse. I didn't mean 
Secretary Scully as a dead horse. Thank you, Madam Chairman.
    Chairman JOHNSON. I would like to recognize Mr. Crane, a 
diligent Member of our Subcommittee, always present at our 
hearings. Thank you very much.
    Mr. CRANE. Thank you, Madam Chairman. Dr. McClellan, the 
goal of this new program is to reduce Medicare costs while also 
improving beneficiary outcomes. Do you believe that Phase I of 
the new CCIP, will meet both of these goals? If so, how much do 
you estimate Phase I will provide in savings to the Medicare 
Program?
    Dr. MCCLELLAN. I do think it will meet both of the goals, 
that performance contracts that we are setting up envision a 5-
percent reduction in costs. Some of these programs that I 
mentioned in my oral testimony have achieved far larger savings 
than that.
    To stay on the conservative side, our actuaries have 
estimated a 1-percent cost savings for all of the beneficiaries 
that will be involved in this program, but that is an important 
savings if we are achieving better health results at the same 
time. So, we are going to wait and see. The reason we are doing 
this as a pilot is to see which methods work best, and we can 
get the maximum savings and the maximum improvements in 
outcomes.
    Mr. CRANE. We all know that preventive health care services 
save the Medicare Program money, but it is often hard to track 
the savings of providing these services. I imagine it will be 
difficult to quantify the savings from the new disease 
management initiative. How will the CCIPs be evaluated and 
measured to ensure that they are improving clinical outcomes 
and actually reducing costs?
    Dr. MCCLELLAN. It is hard to get a handle on the actual 
impact of things that we do on outcomes, but that is why I 
appreciate the foresight of Congress in this case, asking us to 
do a randomized, careful study where we have two populations of 
patients, one population that gets access to this new pilot 
program and the other population which is from the same area 
and has exactly the same kind of characteristics.
    We are going to compare the outcomes for those populations, 
not just look at the people that a disease management program 
manages to sign up, a chronic care improvement program manages 
to sign up, but the whole population. We will compare those 
outcomes with the control group, and based on what I have seen 
of successful chronic care improvement programs, we should be 
able to see some improvements in outcomes in a pretty short 
timeframe.
    Some of the programs that have been implemented already to 
reduce complications from diabetes or heart failure pay for 
themselves more than one time over within a matter of months in 
terms of avoided hospitalizations with complications of the 
disease. So, we will be watching that very carefully and will 
be reporting to you along the way about how the programs are 
doing.
    Mr. CRANE. Critics have asserted that the CCIP initiative 
is removed from the physician and that the program does not 
promote a relationship between the patient and his or her 
doctor. Can you respond?
    Dr. MCCLELLAN. I think we are going to make sure that these 
programs do have elements that encourage an effective 
relationship between patients and providers. Those 
relationships are strained today as many Medicare beneficiaries 
are seeing more doctors than ever before. A Medicare 
beneficiary, on average, sees seven physicians in a year, and 
there is a lot of evidence out there that Medicare 
beneficiaries are not getting the best possible evidence-based 
care for their chronic illnesses.
    So, there is a lot of room for improvement, and I think 
some of the main ways that improvements can occur are ways that 
physicians may well appreciate, like having services that 
remind patients when they need to follow up with their 
physicians and helping patients understand their disease so 
they will understand why it is so important to comply with the 
treatment plan that their physician has provided for them, as 
well as taking steps to help beneficiaries spot complications 
from their diseases early, as I mentioned before, when their 
weight is up a little bit, when their blood sugar levels are 
off a little bit, rather than down the road when they get into 
costly complications requiring hospitalizations.
    All of these steps may actually increase the amount of 
contact through appropriate office visits with physicians. The 
difference is, the physicians will be seeing the patients to 
prevent the complications rather than seeing the patients after 
the complications have occurred. So, in short, we will be 
getting much more for our money, and physicians will be able to 
get much more out of the time that they spend with patients. 
This is going to be a challenge, and we will be watching 
closely how well we do and why we will be evaluating these 
programs in part based on the satisfaction that providers have 
with the services being provided.
    Mr. CRANE. Thank you, Dr. McClellan. We look forward to 
working with you.
    Chairman JOHNSON. Dr. McClellan, to follow up on that 
point, since it has been so frequently raised, why not just 
develop a code that shows what you need to coordinate and just 
change Medicare to pay doctors?
    Dr. MCCLELLAN. Well, first, we are paying doctors more. 
That was another set of provisions in the MMA; it is very 
important for access to high-quality physician care in this 
country. I think there are some further steps we can take to 
figure out whether there are better ways to pay doctors.
    As you mentioned in your earlier questions, we have other 
demonstrations going on and a lot of interest in CMS right now 
in developing appropriate pay for performance methods where you 
do get paid more for delivering higher-quality results, for 
providing better care and not just for having more visits and, 
in effect, more complications leading to higher payments. So, 
we will keep looking at the best ways to do this.
    The advantage of these CCIPs is that, I think, they are 
appropriately at a stage where they can be piloted on a large 
scale and then used on a large scale. There are proven 
approaches in these chronic care improvement ideas that can 
potentially have a large-scale, positive impact for 
beneficiaries.
    I think we will learn more along the way in this program 
and in other demonstration programs about other ways which we 
might want to improve the payment system, but I don't think it 
is a question of paying more under the current system. I think 
it is a question of how we can develop the best evidence to 
guide modifications through our payment system to get better 
outcomes at a lower cost. Chronic care improvement is one 
valuable way to do that; and I think there are probably others, 
and we will keep pursuing them.
    Chairman JOHNSON. It is my hope that out of the combination 
of pilots and demos that are in process, and others that you 
have the authority to develop, that we will be able over time 
to sort out this issue of how much can be integrated into 
individual physician practice standards and payments, and at 
what point there is a benefit and a real value added to having 
a coordinator across specialties or across community-based 
support programs versus traditional medical support programs. 
So, I think we need to keep our eye on that ball, how much this 
can be ultimately implemented through physician payment 
structures involving coordination of care and how much needs to 
go beyond that, what kinds of patients need more assistance in 
that. That leads me to my last question.
    Almost all of the chronic programs involve a greater level 
of patient involvement, patient knowledge, patient education, 
patient management, and for a patient with dementia, this is 
hard. We were conscious of that in writing the bill. We do 
mention the issue of dementia and have some demonstrations that 
are working specifically on this issue of how do you manage 
disease management with a patient that has dementia. So, that 
is an issue raised by Dr. Berenson as well as one that we 
worked a lot on. Would you talk a little about that in the 
context of these pilots?
    Dr. MCCLELLAN. First of all, at a broad level, we need to 
be preparing for dealing with dementia issues on even a larger 
scale. As we are getting better treatments for many other 
diseases, more and more of our beneficiaries are living longer. 
Until we get truly effective treatments for dementia, this is 
going to be an important and probably growing part of our 
patient population, and dealing with it effectively is an 
essential part of providing high-quality care to all of our 
beneficiaries and doing so at the lowest possible cost.
    You mentioned a number of demo programs; also, Medicare 
Advantage programs are going to be specifically targeted to 
these types of populations, building on successes that we have 
already seen in particular instances. That is an important part 
of our response.
    I would highlight that in the CCIP itself, the program 
participants are going to be required to cover and improve 
outcomes and reduce costs for a whole beneficiary population. 
They don't get to cherry-pick the healthy beneficiaries. They 
don't get to target their interventions only at beneficiaries 
without dementia, without other kinds of cognitive impairments 
or other types of impairments that might make them harder to 
work with in terms of the standard management of care 
approaches.
    So, they will be evaluated on performance for improving 
outcomes for these segments of our population, and if they 
don't improve it, then they are not going to get the financial 
rewards, they are not going to be selected to expand coverage 
more broadly. We are absolutely committed to make sure these 
chronic care improvement services work for all, for our 
increasingly diverse population of beneficiaries, and that 
means effective techniques to work with people with Medicare 
who have cognitive impairments as well.
    Chairman JOHNSON. Thank you very much, Dr. McClellan.
    Mr. STARK. Dr. McClellan, could I deal with some concerns 
on privacy? Let's assume that I start out with one of these 
organizations, and then I decide I want to quit. What happens 
to my medical information that that chronic care group would 
have? Is it protected?
    Dr. MCCLELLAN. It is protected. The CCIP information is 
part of Medicare operations, and it is protected as part of our 
Medicare-specific activities. It doesn't continue to be 
available.
    Mr. STARK. Once XYZ corporation has my medical records and 
I decide not to continue participating, what happens to those? 
How am I guaranteed that they won't sell them?
    Dr. MCCLELLAN. The same Health Insurance Portability and 
Accountability Act 1996 (HIPAA) (P.L. 104-191) protections 
apply to these records as applied to other confidential medical 
information.
    Mr. STARK. Why aren't they a covered entity instead of a 
business associate? Covered entity, they could be subject to 
fines if they misbehaved.
    Dr. MCCLELLAN. They are covered in the sense that they are 
part of our business operations.
    Mr. STARK. Stop a minute. You could either be a business 
associate under HIPAA or you could be a covered entity, a 
provider. A covered entity has stricter disclosure regulations 
and more severe penalties for violating those. Why wouldn't 
these groups be a covered entity?
    Dr. MCCLELLAN. If they use confidential medical information 
improperly and share it outside of the Medicare operations, 
they are subject to HIPAA sanctions and penalties just like 
anyone else who uses our Medicare information inappropriately.
    Mr. STARK. My staff tells me that there are two 
classifications. If they are classified as business associates, 
the violations are not as tight and the penalties are less 
severe than if they are, in fact, a provider or covered entity. 
By putting these activities under, quote, ``health care 
operations,'' it is my understanding that beneficiaries don't 
need to give permission for their information to be shared nor 
can they track the sharing of information. So, there are some 
highly technical things in there that I hope you can look at.
    Dr. MCCLELLAN. I want to get that right and do want to 
emphasize that as business partners, they are subject to the 
HIPAA rules for business partners. If a beneficiary at their 
option decides not to participate in this program, they won't 
collect any more information, in the first place; and even for 
those beneficiaries that do participate and stay in the 
program, they are subject to the same HIPAA rules that apply to 
our health care providers and others involved in our business 
operations. I do want to work with you to make sure we address 
this effectively, so that confidentiality and security is a 
very important part.
    Mr. STARK. So much for my questions; now my free advice. 
The Chair has discussed the idea of how we would reimburse 
physicians, and the only thing I can think of--and maybe you 
know of others--is with end-stage renal disease, that the 
dialysis and the drugs are paid for on a schedule.
    There is a capitated fee to the physician to supervise this 
end-stage renal patient. I don't know how it is designed or how 
the payment was arrived at, but ought we not to look for 
something in this chronic care that parallels that? It doesn't 
cover the tests that they made and everything, but it is kind 
of a global fee--I am not sure ``capitation'' is the right 
word--that the principal or primary physician would receive for 
checking up on the patient and doing the extra work. Would that 
make sense?
    Dr. MCCLELLAN. I think any proven steps that move toward 
paying for what we really want, which is better outcome for 
patients and then giving the doctors the flexibility they need 
in this era of very modern and complex medicine, to provide 
that care as effectively as possible, that is a step in the 
right direction. I think the question for us is, how do we 
develop better evidence on whether those models can work?
    The capitated payments to dialysis organizations are a bit 
different than trying capitated payments for doctors and small 
groups who treat a very diverse range of Medicare patients. The 
small-group doctors may not be in as good a position as the 
dialysis organization is to provide those supportive services 
themselves. They may be better served by working with 
organizations like the CCIP organizations. I don't know, but we 
are going to find out more about that.
    They may not want to bear the financial risks that come 
with those capitated payments. They are not in as good a 
position to have a predictable idea of what their costs are 
actually going to be for providing high-quality care as the 
dialysis organizations are. There are some challenges there. I 
agree with the goal that we need to be pursuing all the steps 
we can to learn about what really works in paying for 
performance and giving health professionals the support they 
need.
    Mr. STARK. How many years is it going to take--2, 3, 5 
years?
    Dr. MCCLELLAN. The CCIP program is going to be a 3-year 
pilot, but we will be evaluating it before then.
    Mr. STARK. My worry is that they are not going to 
participate if they don't get paid.
    Dr. MCCLELLAN. There is a surprisingly large amount of 
interest from many medical group associations, medical doctors, 
and others that come in to talk to me about wanting to focus 
more on the bottom line of improved patient outcomes. So, I 
think there is more interest there than before.
    This is by no means the only approach that we are taking. I 
think you are seeing, across the board, more interest than ever 
in CMS, more efforts than ever to develop better quality 
measures, to try out demonstration programs for what can work, 
and giving doctors the incentives and support they need to 
provide better care. So, this program will be an important part 
of finding the answers. This is an urgent question and I would 
like to work with you.
    Mr. STARK. I think we should let the doctors do it. You 
guys should come to us and say, we don't know all the words. We 
can't talk Latin. I think just as we did in the Resource-Based 
Relative Value Scale, let the doctors come and say--look to do 
this type of protocol. It might be one, two, three, four 
chronic diseases. If you have five rates higher, we will have 
to check this and respond to the CCIP person, and we will have 
to order tests and check up on the patient, and we think in the 
course of the year, it will take this much involvement, and set 
a fee for them.
    Let them come up with it, and you guys can bargain. If the 
doctors don't design it, they are going to resent us telling 
them what they ought to charge for a new kind of way to 
practice. I would encourage us to ask the physicians to come 
and see what they think would be a fair relative to other 
procedures that they provide.
    Dr. MCCLELLAN. I agree with you about getting physician 
input. I think we can learn a lot from health professionals 
about the best ways to meet our policy goals, and we have a lot 
in already and have heard a lot of good ideas about how to do a 
whole range of new initiatives successfully, ranging from e-
prescribing to management programs to the section 649 and 
section 646 demos. You name it. There is a lot of physician 
interest out there, a lot of health professional interest that 
we can build on, and I intend to keep working with you all to 
do that.
    Mr. STARK. Thank you.
    Chairman JOHNSON. Thank you very much, Dr. McClellan. I 
think this issue of what portion of disease management can be 
supplemental to a physician action and what portion of disease 
management needs to cut across a larger swath of medical 
activity than any one individual physician would be prepared to 
manage is something we will learn from the demos and the pilots 
that we have out there. It is a very important issue.
    We are going to learn something more about how we reimburse 
for coordinated care as we work through the challenge of 
reimbursing oncologists and chemotherapists for cancer care. We 
have tried to, but not successfully, so, we have some example 
of trying to reimburse for better coordination of care for a 
bundle of services. In some places we have succeeded, and other 
places, we have failed.
    I appreciate it and I am delighted to have you as CMS 
Administrator and the experience that you bring to the table. 
It is extremely important to us achieving the kinds of goals 
that Pete and I and other Members of the Committee have.
    In closing, I just want to recognize David Kreiss, who has 
done so much work on this section of the law and, furthermore, 
who has worked so constructively and progressively and openly 
with the disease management experts, with disease management 
companies, with physicians themselves, and with a whole array 
of people over several years to get the base for these pilots 
broadly established. I thank him for his constancy and his 
work.
    I thank you for your intense interest in it and this 
tremendous step forward as you put out these RFPs. We will 
follow carefully the progress of the project and we will all 
learn a lot from it. We hope you will work closely with us as 
we look at the issue of physician payment and see if there 
aren't steps forward we can make, away from the old acute care, 
incident-oriented, test-oriented payment structure of current 
Medicare toward a more holistic approach.
    I think physicians are much more interested now than they 
were a few years ago. I see that out there. That is what they 
ask you about. That is what they want to know. They are 
beginning to say, why are you so out of touch with what it is 
we are now trying to do? Thank you for your testimony and thank 
you for the good work of you and your staff.
    Dr. MCCLELLAN. Chairman Johnson, it is really a pleasure 
working with you. I want to thank you especially for 
recognizing David Kreiss and the rest of the CMS staff. They 
have done a terrific job in putting together a very innovative 
approach.
    The biggest pleasure of this job for me in the month I have 
been there has been the enthusiasm and the talent and, really, 
the experience and expertise of the staff in taking these new 
opportunities we have to do a much better job of delivering 
high-quality, personalized care to all of our beneficiaries. It 
is going to be a real pleasure working with you.
    Chairman JOHNSON. We will invite the second panel up: 
Christobel Selecky, President-Elect and Chair of the Disease 
Management Association of America; Dr. Janet Wright, the 
Medical Director of Cardiology for the Enloe Medical Center of 
Chico, California; Vince Bufalino, Dr. Bufalino, a member of 
the Expert Panel on Disease Management of the AHA from 
Naperville, Illinois. As I say, we will respect Dr. Berenson in 
his absence, but continue to work with him when next we have a 
chance to meet with him. Dr. Selecky.

  STATEMENT OF CHRISTOBEL SELECKY, PRESIDENT-ELECT AND CHAIR, 
GOVERNMENT AFFAIRS COMMITTEE, DISEASE MANAGEMENT ASSOCIATION OF 
                            AMERICA

    Ms. SELECKY. Thank you, Chairman Johnson, and thank you for 
the promotion. I am not a doctor and I don't play one on 
television. I would like to thank you very much for inviting me 
to appear here. As you know, my name is Christobel Selecky. I 
am the President-Elect of the Disease Management Association of 
America, which is a nonprofit, interdisciplinary association 
dedicated to the advancement of health improvement for people 
with chronic disease. I also am the Chief Executive Officer 
(CEO) of LifeMasters Supported SelfCare, which is a 10-year-
old, privately held disease management organization that 
provides coaching, education, and support to more than 300,000 
people with chronic disease nationwide.
    The fact that our health care system does not adequately 
care for people with chronic disease has been well documented. 
When chronically ill patients do not receive the right 
treatment for their conditions, they get sicker and end up in 
the hospital; and this not only results in poor quality of life 
for the beneficiaries, but it costs our taxpayers and our 
health care system a great deal of money.
    This gap in care occurs because patients are inadequately 
trained to manage their illnesses and rushed practitioners do 
not always have the time, information, and systems to follow 
evidence-based guidelines and to follow up with their patients 
and other health care providers. The care gap is particularly 
acute among our Nation's seniors in traditional Medicare. Prior 
to last year's MMA, recommended solutions to this problem were 
piecemeal, incremental, and measuring their impact on cost 
containment and quality improvement was difficult, if not 
impossible.
    Fortunately, the MMA has created a framework for 
transforming chronic care in America. Most notably, section 721 
will make large-scale, population-based disease management 
available to beneficiaries in traditional Medicare. In the 
first phase, financial savings, quality improvement and 
satisfaction are guaranteed. This approach represents real 
innovation and an opportunity for Congress and CMS to support 
delivery system change and outreach to chronically ill 
beneficiaries.
    Disease management programs work. My company, LifeMasters, 
provides services to a population of mostly aged, blind, and 
disabled fee-for-service Medicaid beneficiaries in the State of 
Florida. Over a 2-year period, we were able to reduce total 
health care costs by $12.6 million on a population of just 
3,500 beneficiaries with congestive heart failure and co-
morbidities of Chronic Obstructive Pulmonary Disease, coronary 
artery disease, diabetes, and mental illness. This represented 
a 5.6-percent net cost savings to the State of Florida.
    This group also experienced a 38-percent reduction in 
hospital days, significant improvements in evidence-based care, 
and made significant lifestyle changes as well. I do want to 
say, too, physicians were actively involved in this program. In 
a survey we recently conducted, 89 percent of them said they 
would very highly recommend this program to their colleagues.
    These outcomes are typical of disease management programs. 
Extrapolating these savings to the Medicare CCIP, this could 
save billions of dollars to our health care system while 
improving the quality of life for millions of beneficiaries. 
There are many models possible under MMA, and CMS has 
encouraged consortia to apply for pilot projects. I would like 
to describe how a couple of these different kinds of consortia 
might work.
    A multispecialty medical group with sophisticated 
information technology and established disease management 
programs could contract directly with CMS. They might 
subcontract with a call center to do the outreach and 
enrollment function, but they would perform all of the chronic 
care improvement functions on their own.
    A health plan might contract with CMS and either provide 
the disease management services themselves or subcontract with 
a disease management organization. The health plan could 
provide high-risk case management and home health services, and 
they could also work with its physician network to develop 
physician incentive programs to reward active engagement in the 
program.
    A disease management organization could contract directly 
with CMS for a program. It would provide all of the standard 
disease management services and could subcontract with the home 
health agency, a biometric monitoring company and a high-risk 
case management company if necessary. At the local level, the 
disease management organization could also identify and develop 
relationships with community organizations devoted to providing 
services to seniors.
    Finally, a pharmacy benefit management company that is 
planning on being a prescription drug provider under the new 
drug benefit could partner with an entity that has an 
established disease management program. The pharmaceutical 
benefits manager could use per-member per-month payments from 
CMS to both cover the disease management costs and possibly 
even to fund a modified drug benefit that would start before 
the 2006 start date and also provide an integrated medication 
therapy management program.
    I would like to close with a few recommendations that I 
hope might help improve the effectiveness of this valuable 
program. Congress should support CMS with sufficient resources 
to build the infrastructure necessary to administer and monitor 
this program. Second, in order to ensure consistency and a 
standard level of quality, the Administration should consider 
accreditation by one of the major accrediting bodies or at 
least a minimum set of quality criteria as a threshold for 
contracting.
    Third, because the goal of Phase I is to identify models 
that can be successfully used nationwide, in Phase II, the 
Administration should ensure that models selected in Phase I 
have proven outcomes and can be scaled to take care of millions 
of people.
    Fourth, in order to more quickly realize financial savings 
and ensure equitable and consistent measurement of results, the 
Administration should consider implementing all of the pilot 
programs simultaneously. Fifth, Congress and the administration 
should be open to expanding the program earlier than currently 
specified when the results begin to show expected cost savings 
and quality improvement. Finally, Congress should consider the 
implementation of disease management programs whenever you take 
up Medicaid reform.
    In closing, I would like to express my sincere appreciation 
on behalf of the entire disease management community to you, 
Chairman Johnson, and to the entire Committee, Chairman Thomas, 
Secretary Thompson and the leadership and staff at CMS, for 
making these important services available to the millions of 
seniors with chronic conditions who need the support to help 
them live a better quality of life. Thank you.
    [The prepared statement of Ms. Selecky follows:]
Statement of Christobel Selecky, President-elect and Chair, Government 
      Affairs Committee, Disease Management Association of America
    I would like to thank Chairman Johnson for inviting me to speak 
before the Committee today.
    My name is Christobel Selecky and I am the President-elect of the 
Disease Management Association of America, a non-profit, 
interdisciplinary association dedicated to the advancement of health 
improvement for people with chronic disease.
    DMAA's membership comprises the spectrum of entities that have an 
interest in the advancement of chronic care improvement:

      Healthplans and insurance companies;
      Disease management organizations;
      Academic institutions;
      Integrated delivery systems;
      Physician group practices;
      Employers;
      Monitoring and information technology companies;
      Pharmaceutical benefit mangers (PBMs); and
      Pharmaceutical companies

    I am also the CEO of LifeMasters Supported SelfCare, a ten year old 
privately held Disease Management Organization that provides coaching, 
education, and support to more than 300,000 chronically ill individuals 
nationwide.
    The fact that our healthcare system is not set up to adequately 
care for people with chronic disease is well documented. In its 
landmark report, Crossing the Quality Chasm, the Institute of Medicine 
(IOM) gave us a roadmap for the creation of a new health system for the 
21st Century--a system that is patient centric and focused on closing 
the gap--the chasm--between best practice and actual care received. 
This gap was discussed in a well publicized study published just last 
year in the New England Journal of Medicine\1\ in which it was reported 
that people with chronic conditions receive recommended care only about 
50% of the time.
---------------------------------------------------------------------------
    \1\ McGlynn, Asch et al, The Quality of Health Care Delivered to 
Adults in the US NEJM 2003; 348:2635-48.
---------------------------------------------------------------------------
    When chronically ill patients do not receive the right treatment 
for their condition, they end up getting sicker and winding up in the 
hospital--sometimes when it's too late to help them. This not only 
results in poor quality of life but also costs our healthcare system--
and ultimately the taxpayers in the case of Medicare--more money.
    The gap between actual and recommended care occurs because patients 
are inadequately trained to manage their illnesses, rushed 
practitioners do not always have the time or information to follow 
evidence-based practice guidelines, and systems don't exist at the 
provider level to actively follow-up with their patients and other care 
providers to ensure the best outcomes. Our delivery system needs to 
change toward the Chronic Care Model described by Ed Wagner and others. 
But most physicians are operating in 2-3 person offices without 
resources, platform or staffing to achieve this--it costs a lot of 
money to build these capabilities--money that most physician practices 
simply do not have access to.
    The IOM recommended using sophisticated information technology 
systems to facilitate the conscientious, explicit, and judicious use of 
current best evidence and knowledge of patient values by well-trained, 
experienced clinicians. The goal is to integrate a fragmented system by 
building strong information pathways between all the stakeholders--
patient, physician, family members and caregivers, and payors and 
facilitating a team approach. Information technology provides the 
platform to create that integration.
    Fundamentally, disease management is the platform that can 
facilitate the delivery of evidence-based medicine on a population-wide 
basis with a goal of helping each individual in that population achieve 
optimal health. Disease Management Organizations (DMOs) and other 
healthcare organizations with substantial resources and access to large 
patient populations have built the technology platforms and developed 
the processes and specially trained staff necessary to achieve this 
goal. And Disease Management supports the Chronic Care Model without 
imposing financing or access restrictions like capitation and by 
providing the scalability necessary to handle millions of beneficiaries 
with chronic conditions.
    In fact, DMOs create systems to ensure that the guidelines 
developed and proven over many years of research by academic and 
clinical institutions get implemented and that the patients are 
following the treatment plans prescribed by their physicians.
    Disease management programs work by:

      Analyzing, on an ongoing basis, all available data (self-
reported, claims, administrative, clinical, encounter) to create a 
profile of the beneficiary that identifies how severe their illness is 
and how wide the gaps in the standard of care
      Contacting beneficiaries proactively to gain a better 
understanding of their psychosocial profile and their willingness to 
participate and to engage them in an intervention appropriate to their 
level of severity
      Educating beneficiaries and their family members on self-
care skills and providing support to help them adhere to the treatment 
plan prescribed by their physician and make necessary lifestyle changes
      Monitoring changes in vital signs and symptoms that are 
indicative of changes in clinical status
      Notifying the beneficiary's personal physician of 
relevant changes and gaps in the standard of care
      Measuring and reporting on improvements in clinical, 
financial, and satisfaction outcomes on an ongoing basis

    The care gap is particularly acute among our nation's seniors who 
have high rates of chronic disease and, in the Traditional fee for 
service Medicare program, there are neither programs nor financing for 
care coordination on a large scale. Medicare beneficiaries with five or 
more chronic conditions represent 20 percent of the Medicare population 
but 66 percent of program spending.\2\ They utilize healthcare services 
at a very high rate and, in the Traditional fee for service Medicare 
program, have a very fragmented healthcare experience. On average, 
they:
---------------------------------------------------------------------------
    \2\ Berenson & Horvath, ``The Clinical Characteristics of Medicare 
Beneficiaries, March 2002.

      Fill 49 prescriptions per year;
      Have 37 physician office visits per year;
      Visit 14 different (unique) providers each year; and
      Stay 7 days in the hospital.

    Several approaches have been suggested to fixing this problem in 
Medicare including:

      Introducing capitation or a gatekeeper structure into the 
fee for service program
      Increasing reimbursement to physicians who provide care 
to patients with chronic conditions
      Expanding the benefit structure by adding a variety of 
chronic care components such as home health visits, prescription drugs, 
and virtual (email or telephonic) office visits

    While all of these suggestions have merit, the challenge is that 
these are all incremental changes and do not address the fundamental 
problems with chronic care that Disease Management can.

      The impact of any one of these changes can't be measured 
or controlled--which components are truly creating value? How can CMS 
make sure that services being rendered are truly appropriate to the 
management of chronic disease? How will the overall cost savings to the 
trust fund be measured? Population based disease management programs 
incorporate all of the components required to improve chronic care and 
are measurable at the population level.
      It is premature to change the physician payment structure 
without the platform to measure quality and outcomes. Arguments to pay 
doctors more are about the increased amount of time and staffing 
resources necessary to care for chronically ill patients. Disease 
Management programs do nothing to reduce the number of office visits 
(and, as a result, do not compromise physician reimbursement) but do 
improve the efficiency of office visits and provide information and 
support to patients, thereby improving the cost effectiveness of each 
visit. As a result, the physician's time is more efficiently used and 
they can treat more patients with less office staff.
      Taking a piecemeal approach to chronic care management 
would significantly increase CMS's oversight requirements and 
administrative cost--determining appropriate reimbursement levels, 
defining eligible services, increasing the number of transactions 
(claims), etc. With population based Disease Management programs, CMS 
would need to work with fewer contractors and wouldn't need to change 
the basic structure of Traditional Medicare.
      These changes are primarily provider-centric and do 
nothing to reach out to and engage beneficiaries with chronic disease. 
However, because people with chronic disease are providing their own 
monitoring and treatment 24 hours a day, they need support and tools to 
enhance their self-management skills. Population-based Disease 
Management programs provide this outreach and support.
      Capitation and gatekeeper models limit access to care and 
eliminate the element of choice fundamental to the Traditional Medicare 
program. Chronically ill patients generally need to see multiple 
physicians. The problem isn't one of overutilization, it's how to avoid 
preventable utilization. Disease Management programs often increase 
access to primary care and specialist physicians, reduce avoidable 
hospitalizations and emergency room visits, and operate as effectively 
in fee for service environments as they do in managed care.

    Disease Management programs have been available for several years 
to Medicare beneficiaries in M+C programs and employer retiree health 
benefit programs with documented improvements in clinical quality and 
reduced costs and, as a result, improved quality of life and 
satisfaction for patients and their physicians.
    In spite of being the largest insurance company in the world, 
however, the Medicare program has lagged the commercial marketplace. 
This is not for lack of trying. In the past several years, CMS and the 
legislature have been experimenting with disease management through a 
variety of small demonstration projects.
    Fortunately, the Medicare Modernization Act has now created a 
framework for transforming chronic care in America. Several sections 
are devoted to improving care for chronically ill beneficiaries:

      Requirement to coordinate Medication Therapy Management 
Programs (Section 1860D-4) with DM
      Consumer-directed Chronic Care Demos (Section 648)
      Care Management Pay for Performance Demos (Section 649)
      Requirement for Medicare Advantage (M+C) Plans to have DM 
(Section 722)
      Increases in payments to Medicare Advantage Plans--such 
payments to be passed along to beneficiaries--can be used to fund DM 
programs
      Benefit changes

          Coverage of Rx
          Coverage of preventive physical exams
          Coverage of diabetes screening tests
          Coverage of cardiovascular screening tests

    Most important, however, Section 721 will make large scale, 
population based Disease Management available to beneficiaries in 
traditional Medicare. It will for the first time ever provide:

      A single point of contact for beneficiaries to reduce 
fragmentation
      Education for beneficiaries and caregivers to help manage 
their self-care
      Technological support and education for physicians and 
other providers to help them better manage clinical information about 
the beneficiary
      Biometric monitoring technologies and processes to 
enhance exchange and timely response to clinical information
      Information to beneficiaries about hospice, end of life, 
and palliative care

    This approach represents real innovation and an opportunity for 
Congress and CMS to support delivery system change, outreach to 
chronically ill beneficiaries, and real, measurable reductions in 
healthcare cost trend and improvements in the quality of life for 
beneficiaries, their family members, and their physicians. Rather than 
taking an incremental approach, this bill has jump started the 
fundamental and necessary change to deal with the chronic care crisis 
in America.

      It takes a holistic approach to helping beneficiaries 
deal with their chronic conditions--ensuring that CCIOs focus not just 
on the primary condition to be managed but also on co-morbidities 
(other chronic conditions that exist simultaneously in the same person) 
and that efforts are made to enhance education, access to care, and 
physician/patient communication
      It is patient/beneficiary centric rather than provider 
centric and will provide support for beneficiaries that busy physicians 
cannot afford to provide
      It anticipates the use of proven models of disease 
management and chronic care improvement that can handle large 
populations and will be scalable after the initial evaluation phase
      It will result in improved efficiency and increased time 
for physicians because it addresses many of the problems that 
chronically ill patients create for physician practices
      It will result in the opportunity to provide enhanced 
quality of care and quality of life for millions of Medicare 
beneficiaries without increasing costs to the Trust Fund. In fact, it 
will result in a guaranteed reduction in costs to the Trust Fund and 
where else in Medicare have we seen that requirement?
      In addition to resulting in cost savings, it will require 
clinical quality improvement and enhancement of patient and physician 
satisfaction
      It will provide incontrovertible proof of the benefits of 
disease management because of its use of a randomized control 
methodology and a third party evaluator
      It recognizes the critical importance of Information 
Technology and data analysis in large scale chronic care improvement 
efforts
      It has the opportunity to provide measurable, large scale 
savings because it is population-based (meaning that it holds CCIOs 
accountable for engaging and then improving quality and reducing costs 
for all people in the population and it initially targets the 
conditions (CHF, Diabetes, and COPD) that will yield the greatest 
immediate savings for the Trust Fund
      It provides an opportunity for all stakeholders to 
benefit--no one is cut out:

          Primary care physicians and specialists
          Home health agencies
          Community organizations
          Health insurance carriers
          Disease Management Organizations
          Technology companies
          Beneficiaries
          Taxpayers (through a more efficient and effective use 
        of the Medicare Trust Fund)

    At LifeMasters, we have two recent examples of programs like this 
that have generated significant results in relevant populations--
retirees in a PPO and fee for service Medicaid beneficiaries.
    We provided a Disease Management program to the Ohio State Teachers 
Retirement System whose members received their healthcare through a 
PPO. We saved the system $8.6 million in total healthcare costs in one 
year on a 6,000 member subset of their population with CHF, COPD, CAD, 
and Diabetes. This represented a 6.9% net reduction in total healthcare 
costs for a 3.5 to 1 return on investment. These savings were generated 
through an 18% reduction in hospitalizations and resulted in a greater 
than 90% rate of high satisfaction with the program.
    We also provided a Disease Management program to fee for service 
Medicaid beneficiaries in the state of Florida. Over a two year period 
we saved the state of Florida approximately $12.6 million on an average 
population of 3,500 fee for service Medicaid beneficiaries with CHF and 
comorbidities of COPD, Diabetes, CAD, and mental illness. This 
represented a 5.6% net reduction in total healthcare costs for a 1.5 to 
1 return on investment. These savings were generated through a 38% 
reduction in hospital days. The group also experienced significant 
increases in evidence based care including a 32% increase in patients 
taking ACE inhibitor/angiotensin receptor blocker therapy and a 77% 
increase in cholesterol screenings. In addition, there were significant 
lifestyle changes including an average of 5 pound weight loss across 
the entire population and 25% of participants quitting smoking.
    In another example, American Healthways has provided disease 
management for one of the nation's remaining Medicare cost-plus plans 
with its diabetes population since July 1, 2000. It has done the same 
for this plan's Medicare cost-plus members with cardiac disease since 
November 1, 2001. In the first two years, the net savings of the 
diabetes program was $12.9 million, with $5.1 million savings in year 
one and $7.8 million savings in year two. Net savings in the first year 
of the cardiac program was $20.2 million. The rates of savings are 
consistent with American Healthways results in other populations and 
geographic locations.
    These kinds of outcomes have been repeatedly shown in Medicaid, 
Medicare+Choice, and commercial populations across the country. 
Extrapolating these savings to the Traditional Medicare population, 
Disease Management or chronic care improvement programs could save 
billions of dollars while concurrently enhancing the quality of life 
for millions of beneficiaries and their family members.
    There are many models possible under MMA and CMS has encouraged 
consortia to apply for pilot projects. I can attest that my company and 
several members organizations of DMAA are actively working toward 
building solutions that are collaborative in nature.
    Here's how some of these consortia might work:

      A multispecialty physician group or integrated delivery 
system with sophisticated information technology including electronic 
medical records and claims analysis capabilities, established disease 
management programs, and a high risk case management program contracts 
directly with CMS. The physician group subcontracts with a call center 
company to perform the outreach and enrollment functions to get the 
intervention group engaged but performs all of the chronic care 
improvement functions on its own and holds all of the financial risk. 
The revenue flows to the physician group or IDN which uses the money to 
fund its services and subcontract and also to establish differential 
payment systems (pay for performance) for their physicians based on the 
outcomes and their willingness and effectiveness in participating.
      A health plan subcontracts with a DMO. The DMO provides 
the outreach, educational, support, and monitoring services. The health 
plan provides high risk case management and home health services. The 
revenue flows to the healthplan which uses the money to pay the DMO for 
its services and also to cover its high risk case management costs, 
home health costs, and a risk premium to hold the bulk of the financial 
risk. The DMO retains a portion of the financial risk to ensure that 
incentives are aligned.
      A DMO contracts directly with CMS for a program. It 
provides all of the standard disease management services and 
subcontracts with a home health agency, a biometric monitoring company, 
and a high risk case management company if needed. At the local level, 
the DMO also identifies and develops relationships with community 
agencies that provide social services to seniors. The revenue flows to 
the DMO which uses it to cover its own costs and to pay the 
subcontractors and perhaps even provide funding for the community 
agencies. The financial risk is carried by the DMO which may allocate 
some of this risk to its partners depending on what services they 
provide.
      A pharmacy benefit management company (PBM) that is 
planning on being a Prescription Drug Provider (PDP) under the new drug 
benefit partners with a physician group practice with an established 
disease management program or a DMO. The PBM begins offering a modified 
drug benefit prior to the 2006 drug benefit start date and includes a 
Medication Therapy Management (MTM) program. The DMO provides the DM 
services. The PBM and DMO integrate their data systems and builds 
interfaces between the DM and MTM programs.

    In closing, I'd like to express my sincere thanks on behalf of the 
entire disease management community to you, Mrs. Johnson, and the 
entire Committee, Chairman Thomas, Secretary Thompson, and the 
leadership at CMS for your leadership in making these important 
services available to the millions of seniors with chronic conditions 
in America who need the support and programs to help them lead a better 
quality of life.
    As you may know, DMAA has submitted an extensive set of comments 
and recommendations to CMS in response to the RFP recently issued for 
Phase 1 of the Chronic Care Improvement program. In addition to that 
submission, I'd also like to make a few recommendations that I hope 
might help improve the effectiveness of this valuable program:

      That you continue to support CMS with the resources they 
will need to build the infrastructure necessary to administer and 
monitor this program
      That you consider the implementation of disease 
management programs whenever you take on Medicaid reform
      That CMS consider accreditation by one of the major 
accrediting bodies--or at least a set of minimum criteria--as a 
threshold for contracting in order to ensure consistency and a standard 
level of quality
      That CMS consider incentivizing chronic care improvement 
organizations to devote resources over and above those necessary to 
achieve the minimum net savings requirement by allowing them to receive 
a share of savings over and above the 5% minimum guaranteed financial 
savings
      That CMS consider implementing all of the pilot programs 
simultaneously rather than staging implementation over an extended 
period of time in order to ensure that results can be measured 
equitably and consistently
      That you and CMS be open to expanding the program earlier 
that the currently specified two years from inception when the results 
begin to show the expected cost savings and quality improvements
      That CMS ensures that models selected provide a win-win 
for all stakeholders in the chronic care community
      Yet at same time, ensure that models selected have proven 
outcomes and reflect models that can be easily scaled for Phase 2. 
While we applaud the concept of experimentation, we want to make sure 
that this program is successful in reducing costs and improving the 
quality of life for the millions of beneficiaries with chronic disease 
and their families

    Thank you again for the opportunity to comment on the Chronic Care 
Improvement program and I would be happy to try and answer any 
questions you might have.

                                 

    Chairman JOHNSON. Thank you very much, Ms. Selecky. Dr. 
Wright.

 STATEMENT OF JANET S. WRIGHT, MEDICAL DIRECTOR OF CARDIOLOGY, 
            ENLOE MEDICAL CENTER, CHICO, CALIFORNIA

    Dr. WRIGHT. Good afternoon. I also appreciate this 
opportunity to come before you. As I mentioned in my written 
comments, I couldn't presume to represent all the opinions of 
cardiologists in the country, but I do come here on behalf of 
my patients and what I think--on behalf of the hope that this 
is a breakthrough to improve medical care. I decided rather 
than read to you excerpts from my written comments that I would 
tell you a story that I hope illustrates my personal experience 
with the transformation of medical care.
    Bill Cosby started an album, ``A long time ago, I started 
out as a child.'' Well, I started out as a medical child. My 
father practiced family medicine in a small town in Arkansas 
for almost 50 years. He took care of a chunk of people in 
northeast Arkansas. For many of those years, my mother was his 
nurse. At night, on weekends, summer and Christmas vacations, I 
ran the front desk. I took cash and I recorded dutifully--on 
those folks who came under a farm account, I recorded their 
care in a ledger. The three of us were essentially the health 
care delivery system.
    I learned a lot of things from my parents and I learned, I 
think, how to do medicine. My father was available 24/7. He did 
not have an unlisted number. Everyone knew my dad's number. I 
learned to answer the phone, ``Dr. Wright's residence.'' I 
learned early on to hear the anxiety that is in a sick person's 
voice.
    We used to joke that a light went on in the water tower 
when we sat down to dinner, because that is when the phone 
started to ring. I remember that my father felt privileged to 
be a physician. He drew tremendous satisfaction from his job. I 
think the reason he did is that he worked hard, he prepared 
well, but he also felt he was doing a good job for his 
patients. I also remember him escaping occasionally the 30 
miles or so to Memphis to spend a night in a hotel. He did what 
I called the death sleep where we often wondered whether he was 
alive, but he used it as a recovery.
    That deep satisfaction made a great impact on me and, in 
fact, it bent my career early toward medicine. I could have 
done nothing else. So, I will tell you about the 48 hours that 
I spent before I came here. I was on call for my group of 
seven. As I said, I am a cardiologist so that limits my scope 
already. I think I had 56 patient encounters in that 48 hours. 
I took the numbers down because I thought you might be 
interested.
    Out of those 56 encounters, 27 of those people were over 
the age of 80. As you know, we make problem lists and no 
patient had a problem list shorter than three; that was the 39-
year-old. Everyone else had problems listing up to 12 or 15.
    I was usually one of three specialists on each of those 
person's case. If you think that the lab sheet we look at, 
about 3 different sets of lab sheets and 3 times 58 comes out 
to be 168 or something, there were a lot of lab tests to go 
over.
    My practice is different than my father's practice, but the 
requirement for satisfaction is just as great; and although a 
different reimbursement might give me some satisfaction, taking 
better care of my patients will give me the best satisfaction. 
I think that is what pulls my interest into disease management.
    From what I have read and what I have observed, their 
approach, looking at large numbers of people with similar 
medical problems who still need individual care and who need 
care continuously rather than episodically, makes a lot of 
sense; and I think physicians need the benefit of their 
expertise.
    I think physicians, as you mentioned, Representative Stark, 
are beleaguered. In addition to the five sources of information 
telling me how to practice, I also have the entire Internet 
source telling me how to practice, but I do need some 
assistance. I think there is hope in this program to learn from 
the initial experiments and then apply those in wider 
spectrums, not just to all my beneficiaries, but in different 
settings of practice; not just in large groups, as you said, 
Chairman Johnson, but in the smaller, individual practices. I 
appreciate all of your efforts on our behalf.
    [The prepared statement of Dr. Wright follows:]
  Statement of Janet S. Wright, M.D., Medical Director of Cardiology, 
                Enloe Medical Center, Chico, California
    Chairman Johnson and members of the subcommittee:
    I am here today as a practicing cardiologist and a Fellow of the 
American College of Cardiology, (ACC) an organization whose mission is 
to advocate for quality cardiovascular care-through education, research 
promotion, development and application of standards and guidelines-and 
to influence health care policy. My comments reflect the policy 
position of the College, although I could not presume to represent the 
diverse opinions of the over 30,000 members of the ACC. I do however, 
represent the interests of my patients and on their behalf, I express 
my gratitude for the efforts you make on a daily basis to improve 
health care in America. I believe that your contributions will initiate 
an historic improvement in the quality of health care for Medicare 
beneficiaries.
    Any policy maker, health care professional or sick person in 
America knows that our health care system is broken. Our striking 
success in combating life-threatening illnesses has extended the lives 
of millions of Americans, and in that victory, converted acute events 
into chronic conditions. Our older citizens suffer multiple diseases, 
visit an average of seven doctors a year, and take more than twice that 
many medications each day. These patients need near-constant oversight 
and continuous care coordination to stabilize their conditions and to 
avoid the episodic, usually urgent and costly rescue from a preventable 
deterioration.
    As seniors' complex medical conditions multiply, the physician 
workforce is shrinking due to unmet needs for job satisfaction, 
adequate reimbursement, and liability protection, among other factors. 
Quality medical care takes time and resources to deliver and good 
doctors are struggling these days to care for the burgeoning chronic 
disease population. The therapeutic alchemy of the patient-physician 
relationship disintegrates under the pressures of today's fragmented 
care interaction. When the personal connection breaks down between 
patient and doctor, so does adherence to advice, trust, satisfaction, 
and inevitably, the clinical outcome. To deliver excellent care, 
physicians need additional resources to provide patient and family 
education, to track practice adherence to established guidelines, and 
to supply our statistics to a variety of ``measurers'' in the health 
care arena. To practice 21st century medicine, practitioners must have 
current, complete, and accurate data. Those data, and the resources for 
gathering them, are absent in most medical practices today.
    Advances in science, funded robustly by this Congress, have been 
translated into evidence--or guideline-based medicine, setting the 
standards of care and shaping medical decision-making. Yet few doctors 
can afford the information technology or human resources to bring these 
recommendations to the point of care delivery, much less to record, 
track, and report their performance, an increasingly common requirement 
in the medical marketplace. Despite best efforts of well-trained and 
dedicated physicians, our own measures of quality have demonstrated 
dispiriting gaps in care. Health care has metamorphosed; health care 
delivery systems have not.
    Although I do not know the solutions to our complex health care 
crisis, I can list the basic characteristics of those solutions. 
Collaboration is critical as the problems are clearly insurmountable by 
any single organization or entity. Improvements will be incremental or 
staged because the distance we must travel from our present state to a 
significantly better one is staggering. Evidence or guideline-based 
medicine is the accepted standard, and a steady focus on quality, with 
all the attendant difficulties, will help guide us to a better system 
of care. The solution must be comprehensive, in the sense that quality 
care is to be delivered in all settings, for all conditions. Finally, 
and most importantly, the new system will be marked by enhanced 
communication on the macro level by adaptable IT and appropriate 
infrastructure, and on a personal level by a resuscitated patient-
physician relationship.
    The approach known formally as disease management has grown 
exponentially in the current chaos because it provides among other 
things, vital systematic links among participants in the health care 
system. Emphasis on populations, self-care instruction, and continuous 
cross-talk between patients and the care team mark a few of the unique 
features of the disease management approach that are missing in the 
traditional care model. Disease management harnesses information 
technology and other important tools to assist with application of 
evidence-based medicine, data collection and analysis, patient and 
physician adherence, and performance enhancement. Disease management 
brings constructive additions to current health practices and holds 
promise for improvements in care delivery.
    As an example of highly effective disease management, I call your 
attention to a mature and profoundly valuable program which has 
provided education in self-management and health preservation, linked 
patients and doctors through frequent progress reports, and not just 
satisfied, but indeed, life-changed its participants. That program is 
one of the original disease management approaches known as Cardiac 
Rehabilitation. The design has from its inception been 
multidisciplinary, bringing together cardiac nurses, exercise 
physiologists, dieticians, and cardiologists with expertise in disease 
prevention and health promotion. These sophisticated programs begin 
with detailed intake interviews, identifying not only the medical 
conditions which require monitoring and management, but also the social 
and psychological hurdles to achieving and maintaining good health. The 
structured weekly sessions provide the continuous and repetitive 
feedback proven to effect changes in behavior. The care team members 
support these gradual, key behavioral shifts, become trusted sources of 
information, and most importantly, serve as community-extended radar, 
detecting early signs of decompensation, medication errors or poor 
adherence, and new or recurrent disease states.
    Patients undergoing cardiac rehabilitation ``graduate'' armed with 
knowledge of their disease process, their prognosis, and their 
limitations; the latter most certainly reduced by the personalized 
protocol of exercise, nutritional counseling, stress-reduction 
training, and medical supervision. In these days of ``drive-by'' open 
heart surgery and two-day admissions for heart attacks, the educational 
process is so critical for the restoration of physical and mental 
health and improved functional status takes place in one and only one 
place: Cardiac Rehabilitation. Even with the fiscally constrained reach 
of cardiac rehabilitation programs, the disease management principles 
have succeeded in improving the outcomes and outlook for patients with 
cardiac disease.
    The Voluntary Chronic Care Improvement Programs will incorporate 
many features present in the CR/DM model, features which are 
fundamental to solving our health care crisis. This unique design calls 
for collaboration among the system experts (DM), the medical pros 
(physicians and health care team), and the payers in a mutually 
rewarding arrangement for the benefit of patients with congestive heart 
failure, complex diabetes, and chronic obstructive pulmonary disease. 
The successful models/components will be identified in a three-year 
process and made available to the appropriate Medicare population in a 
staged fashion. Outcome measures of quality and satisfaction will be 
selected in advance, monitored, and reported, highlighting the use of 
information technology and reinforcing the practice of guideline-based 
medicine.
    Even though there are specific targeted diseases in the Phase I 
programs, the approach is most appropriately comprehensive in the 
attention given to co-morbid conditions and overall health status. This 
is both complicating for the program administrators and absolutely 
necessary for the applicability of these approaches to real-life 
medical care of aged and disabled Americans. Cost data will be 
important, but not sole determinants of program success. Although 
typically unprofitable for hospitals, cardiac rehabilitation programs 
achieve striking gains in quality of life, patient satisfaction, and 
clinical outcomes. Phase I programs that predominantly emphasize well-
established clinical outcomes are in the patients' and ultimately, the 
country's best interest. In fact, the very foundation of a disease 
management strategy is that early and frequent intervention ( whether 
education, medication adjustment, further evaluation, and/or alteration 
in treatments) improves the patient's ability to function at the 
highest level possible. I strongly encourage selection of programs that 
focus on quality improvement, as those are most likely to result in 
concomitant enhancements in beneficiary and provider satisfaction. 
Finally, I trust that the programs selected for Phase I will recognize 
the therapeutic value of a healthy patient-physician relationship and 
will support fluid communication among members of the care team, family 
members, and caregivers.
    In Section 721 of the Medicare Prescription Drug, Improvement, and 
Modernization Act (MMA) of 2003, Congress has broken new ground in 
health care delivery design. Many aspects of the MMA are revolutionary 
in the transformation of health care in the United States. New 
partnerships will be formed, innovative approaches will be tested, and 
the underlying audacious concept is that quality medical care will lead 
to better financial, satisfaction, and clinical outcomes.
    That said, I believe that the greatest achievements of this 
legislation will be realized in an evolutionary way. Section 721 sets 
in motion a new direction in health care which will find expression in 
ways we cannot anticipate. We will learn from the experience of Phase 
I, and future innovators and disseminators will adapt the processes as 
populations and medical conditions mandate. I expect to discover 
through the Phase I project, the techniques and processes that work and 
those that need further modification or perhaps application in a 
different subset of patients. Learning where and how and in whom to 
apply these principles of care will be an invaluable lesson. I 
anticipate that practices, health plans, and other care delivery 
systems which are not part of the Phase I projects will follow the 
progress reports closely and begin to implement the winning strategies. 
The goal is to improve the quality of care for all, to close the gaps 
that still exist, and to do so in a cost effective manner which will 
enable us to provide care to all in need. It is my hope that as much 
meticulous care and concern go into these future designs as was 
invested in the crafting of this legislation and in its implementation.
    I encourage physicians to investigate the Chronic Care Improvement 
Programs, to consider the potential benefits to their patients and 
their practices, and to participate however possible so that the 
ultimate delivery model reflects what we know to be true: compassionate 
individualized care is effective, essential, and rewarding. We will 
always treat one human being at a time and, in that moment, serve the 
larger population well. The opportunity now presents to combine this 
best practice of the healing arts with a high tech, population-based 
approach, a challenge which calls for the integrity and commitment of 
the brightest minds in health policy, system design, and medicine.
    In closing, I share a physician's wish list for the future perfect 
state of medical care. Many of these wishes could come true in the 
Phase I and II programs and they are essential components of a fit and 
functional health care system.

    1.  I want to be on the design team for the process of care. 
(Physician involvement)
    2.  I want to know my ``score,'' how it is calculated, and to whom 
it is reported (Quality/performance measurement)
    3.  I want my patients to have ready access to a team of experts in 
my practice and community who can extend health care beyond our office 
visit. (Team care, primary and secondary prevention)
    4.  I want current, accurate, complete data available when I need 
it so that I can incorporate it into my practice. (Information 
technology)
    5.  I want my patients to have validated, self-care advice when 
they need and so they can use it. (Patient education, prevention, 
information technology)
    6.  I must have the ability to afford to deliver this care. 
(Adequate reimbursement for a chronic care management system)

    I deeply appreciate the efforts of this subcommittee in improving 
our health care system. Your dedication and commitment challenge all 
participants in health care to contribute our best to achieve creative 
and cooperative solutions.

                                 

    Chairman JOHNSON. Thank you very much, Dr. Wright. Dr. 
Bufalino.

  STATEMENT OF VINCE BUFALINO, M.D., MEMBER, EXPERT PANEL ON 
  DISEASE MANAGEMENT, AMERICAN HEART ASSOCIATION, NAPERVILLE, 
                            ILLINOIS

    Dr. BUFALINO. Thank you. Good afternoon, Madam Chairman, 
Representative Stark, Representative Crane. I thank you for the 
opportunity to testify on this important initiative. My name is 
Vince Bufalino. I am a practicing cardiologist for 22 years and 
the President/CEO of Midwest Heart Specialists, a 55-physician 
practice in suburban Chicago.
    I have been an active volunteer for the AHA over the last 
20 years and the incoming Chairman of the Advocacy Coordinating 
Committee nationally, and also serve as the Chairman of the 
Emergency Cardiac Care Committee where we direct 
Cardiopulmonary resuscitation and Advanced Cardiac Life Support 
programs for the United States. Currently, I am the president 
of the Midwest Region, of the seven States, and have been named 
to the board of directors. Finally, and why I am here is, I am 
a member of the AHA's Expert Panel on Disease Management.
    I am speaking today on behalf of the AHA's 22.5 million 
volunteers. As the largest voluntary health organization, the 
AHA's mission is to reduce cardiovascular disease and stroke by 
25 percent by the end of this decade. Our organization is 
unique. Our volunteers are patients, physicians, nurses, and 
other stakeholders, all dedicated to fighting heart disease and 
stroke, our Nation's number one and number three killers.
    The AHA believes that chronic care management programs, if 
properly structured and carefully implemented, may help 
transition the Medicare Program into a more responsive and 
comprehensive health care program for America's seniors.
    We are encouraged that the voluntary CCIP appears to be an 
important step in this regard. We applaud your leadership, 
Madam Chairman, in ensuring that this issue was addressed in 
the MMA. We look forward to working with you, this Committee, 
and CMS to ensure that the CCIP fulfills its considerable 
promise to demonstrate improvements in patient outcomes and 
quality of life.
    We believe CMS has done an admirable job in developing the 
RFP. Much of what will ultimately matter most, however, cannot 
be explicitly detailed in an RFP. True success will depend on 
the extent to which this program recognizes and promotes 
practices to provide value to our patients. By this, I am 
referring to improved patient outcomes, the translation of 
evidence-based research into practice, the institution of 
measures to promote primary and secondary disease prevention, 
and effective beneficiary outreach so the beneficiaries can 
understand the true benefits of this program. If, however, the 
program becomes overly focused on reducing expenditures, we are 
concerned that much of the potential value to the patient may 
not be realized.
    I would like to devote my comments today to a series of 
recommendations focused on these issues that we believe address 
the improved patient outcomes for Medicare beneficiaries. After 
conducting extensive research, the AHA's Expert Panel has 
established a set of principles on disease management and 
chronic care management. We believe these principles should be 
applied to chronic care management programs in both the public 
and private sectors and consistently across disease states and 
patient populations.
    Although the number of existing disease management programs 
and chronic care programs seek to balance cost containment with 
quality, quality and improved patient outcomes must always be 
the priority. The AHA recommends the following guiding 
principles for the implementation of the CCIP.
    Number one, the main goal of CCIPs should be to improve the 
quality of care and patient outcomes. The core principle 
underlying all of our recommendations is ensuring treatment and 
practices that improve outcomes. We appreciate the fact that 
this principle was the motivation for the inclusion of the CCIP 
in the MMA. Our challenge, however, is to implement this 
program in a way that meets the objective.
    Number two, evidence-based guidelines should form the 
foundation for all CCIPs. Efforts to manage beneficiaries with 
chronic conditions should incorporate the use of guidelines 
such as those developed by the AHA and other organizations in 
the medical community that provide clear direction as to how to 
reduce the risk of these chronic conditions and to ensure the 
beneficiaries received optimal care.
    Number three, performance measures should be designed to 
improve quality of care in clinical outcomes. Scientifically 
based quality indicators should be the key measurement upon 
which the success of the CCIP is evaluated. Careful attention 
should be given to the appropriate translation of these 
scientifically based guidelines into chronic care practices.
    Number four, to ensure the optimal patient outcomes, the 
CCIP must address the complexities in medical co-morbidities. 
According to recent research, 78 percent of the medical 
beneficiaries in Medicare have at least one chronic illness. 
Almost 32 percent have four or more. Chronic care improvement 
must include the management strategies for these complex 
interactions.
    Number five, scientifically based evaluations should be a 
critical component of all of these programs. Ongoing evaluation 
efforts should examine the extent to which the chronic care 
management efforts have produced better quality of care and 
improved clinical conditions for our beneficiaries.
    Number six, the chronic care management program should 
exist within an integrated and comprehensive system of care in 
which the patient-physician relationship is central. Chronic 
care management services should not substitute a patient-
provider relationship, particularly the patient-physician 
relationship, that is critical to the delivery of care. 
Instead, chronic care management programs should be one of 
several strategies to support and enhance the patient-provider 
relationship.
    A significant challenge exists for the enrollment of these 
beneficiaries in the CCIP. Successful enrollment will be 
closely linked to beneficiary education and outreach. Outreach 
efforts should include clear and easily understood information 
for beneficiaries that helps them understand the impact of this 
program. Beneficiaries should know that this new program will 
not force them to give up their doctor or reduce their current 
benefits. Instead, this pilot program should help them 
coordinate what is oftentimes a fragmented health care system 
through which the beneficiaries receive their care.
    In addition, beneficiary participation will be influenced 
by its impact on the patient-physician relationship. 
Individuals will not be receptive to a program that threatens 
their ability to be treated by their physician of choice or 
otherwise intrudes on this relationship. We urge CMS to reject 
proposals that attempt to supplant the care provided by the 
patient's provider.
    A beneficiary willing to participate in the CCIP is also 
dependent on his or her understanding of this program, its 
benefits, its processes, and its objectives. The CMS must 
ensure that chronic care improvement organizations engage in 
substantial education efforts to inform the beneficiaries how 
the CCIP will improve quality of care, prevent future adverse 
events, and improve outcomes. Patients and their physicians 
must be convinced that the program will utilize the best 
science to aid in determining the most effective treatment 
course.
    Finally, it is important to recognize that each geographic 
area chosen for this program will have its own unique cultural 
and linguistic characteristics. In order for any beneficiary 
communication effort to be effective, it must consider these 
factors and develop outreach activities in a culturally 
significant manner. The AHA appreciates the opportunity to 
testify before the Committee on this important issue, and we 
look forward to working with you and CMS on this important 
initiative. Thank you.
    [The prepared statement of Dr. Bufalino follows:]
 Statement of Vince Bufalino, M.D., Member, Disease Management Expert 
        Panel, American Heart Association, Naperville, Illinois
Introduction
    Good morning, Madame Chairperson and members of this Committee. 
Thank you for the opportunity to testify on behalf of the American 
Heart Association before your committee on this important initiative.
    My name is Vince Bufalino. I am the President/CEO of Midwest Heart 
Specialists, a 55 physician Cardiology practice in the Chicagoland area 
with fifteen offices located in the western and northern suburbs. As 
chairman of the Midwest Heart Foundation, a non-profit research arm of 
Midwest Heart Specialists, I oversee approximately 30 clinical research 
trials.
    I have been an active volunteer for the American Heart Association 
for the past 20 years. I am the incoming chair of Advocacy Coordinating 
Committee nationally and serve as national chairman of the Emergency 
Cardiac Care Committee with responsibility of directing the CPR and 
Advanced Cardiac Life Support Programs for the United States.
    I am also currently president of the American Heart Association's 
Greater Midwest Affiliate and have recently been named to the AHA Board 
of Directors and Administrative Cabinet, both at the national level. 
Finally, I am an active member of the AHA's Expert Panel on Disease 
Management.
    I am speaking today on behalf of the American Heart Association and 
its 22.5 million volunteers and supporters. As the largest voluntary 
health organization, the American Heart Association's mission is to 
reduce cardiovascular disease and stroke by 25% by 2010. Our 
organization is unique. Our volunteers includes patients, physicians, 
nurses and other stakeholders dedicated to fighting cardiovascular 
disease and stroke, our nations #1 and #3 killers respectively.
    The American Heart Association believes that chronic care 
management programs, if properly structured and carefully implemented, 
may help transition the Medicare program into a more responsive and 
comprehensive health care program for America's seniors.
    We are encouraged that the Voluntary Chronic Care Improvement 
Program appears to be an important step forward in this regard. We 
applaud your leadership, Madame Chairperson, in ensuring that this 
issue was addressed in the Medicare Modernization Act. We look forward 
to working with you, this committee, and the Centers for Medicare and 
Medicaid Services (CMS) to ensure that the Voluntary Chronic Care 
Improvement Program fulfills its considerable promise to demonstrate 
improvement in patient outcomes and quality of life.
    We believe CMS has done an admirable job in developing the request 
for proposals for this program. Much of what will ultimately matter 
most, however, cannot be explicitly detailed in an RFP. True success 
will depend on the extent to which the program recognizes and promotes 
practices that provide value to the patient. By this, I am referring to 
improved patient outcomes, the translation of evidence-based research 
into practice, the institution of measures to promote primary and 
secondary disease prevention, and effective beneficiary outreach so 
that beneficiaries can understand the benefits of this program. If, 
however, the program becomes overly focused on reducing expenditures, 
we are concerned that much of the potential value to the patient will 
not be realized.
American Heart Association's Principles for Chronic Care Improvement 
        Programs
    I would like to devote my comments today to a series of 
recommendations focused on issues that we believe must be addressed to 
ensure improved patient outcomes for Medicare beneficiaries in the 
implementation of the Chronic Care Improvement Program. After 
conducting extensive research, the American Heart Association Expert 
Panel on Disease Management established a set of principles on disease 
management and chronic care management. We believe that these 
principles should be applied to chronic care management programs in 
both the public and private sectors and consistently across disease 
states and patient populations.
    Although a number of existing disease management programs and 
chronic care management programs seek to balance cost containment and 
quality, quality and improved patient outcomes must always be the 
priority.
    The American Heart Association recommends the following guiding 
principles for the implementation of the chronic care improvement 
program to ensure improved patient outcomes for Medicare beneficiaries:

    1.  The main goal of chronic care management should be to improve 
the quality of care and patient outcomes.

    Evaluation of chronic care management programs should be based on 
more than just a reduction in health care expenditures. The emphasis 
should be on the ``value'' of chronic care management (i.e., the extent 
to which chronic care management efforts result in better quality for a 
given investment rather than on cost savings alone). Improvements in 
quality of care and patient outcomes should be the primary indicator of 
successful chronic care management. The use of performance standards in 
assessing quality of care and outcomes is critical in evaluating 
success.

    2.  Scientifically derived, evidence-based, consensus-driven peer 
reviewed guidelines should be the basis of all chronic care management 
programs.

    Chronic care management strategies should be derived when available 
from scientifically-based guidelines such as those written by the 
American Heart Association/American Stroke Association and groups such 
as the American College of Cardiology and the American Academy of 
Neurology. These guidelines represent consensus in the cardiovascular 
disease and stroke communities regarding appropriate treatment and 
management of patients with cardiovascular disease and stroke. Careful 
attention must be given to the appropriate translation of these 
scientifically based guidelines into chronic care management practices.

    3.  Chronic care management programs should include consensus-
driven performance measures.

    Improved quality of care and outcomes for patients with 
cardiovascular disease and stroke should be the pivotal measurement 
upon which the success of a chronic care management program is 
evaluated. To measure improved quality of care and outcomes, consensus-
based performance measures should be used to evaluate a chronic care 
management program's effectiveness. Performance measures used in 
evaluating chronic care management programs should be those measures 
that are developed by a broad consensus-driven process such as the 
National Quality Forum and/or others. Ideally, these performance 
measures should be evidence-based.

    4.  To ensure optimal patient outcomes, chronic care management 
programs should address the complexities of medical co-morbidities.

    Many chronic care management programs are designed to treat single 
disease states. A significant population of patients with chronic 
disease suffers from multiple co-morbidities. Some of the greatest 
challenges in caring for these patients involve the complex 
interactions of these co-morbidities. Chronic care management programs 
and guideline committees should develop algorithms and management 
strategies to fully address patients with co-morbidities.

    5.  All chronic care management efforts must include ongoing and 
scientifically based evaluations, including clinical outcomes.

    Chronic care management programs have not traditionally undergone 
rigorous scientific evaluation regarding their impact on patient 
outcomes. The true measure of any health intervention is whether 
patients are better off having received the service or care provided. 
This determination requires a meaningful examination of clinical 
outcomes. Frequent scientifically-based evaluations should be included 
as a critical component of any chronic care management program, and 
these evaluations should allow for continued improvement in the program 
to maximize benefit.

    6.  Chronic care management programs should increase adherence to 
treatment plans based on best available evidence.

    An important focus of chronic care management should be to 
influence the behavior of providers, patients and other caregivers to 
better understand and adhere to treatment plans that will help improve 
patient outcomes. The targets of such efforts may include a broad 
community of caregivers, e.g., physicians, nurse practitioners, family 
members and community-based organizations. To be meaningful, it is 
essential that such treatment plans be derived from the best available 
clinical and scientific evidence. The evidence and resulting treatment 
plans should be revisited periodically to reflect evolving standards 
and scientific knowledge.

    7.  Chronic care management programs should be developed to address 
members of the under-served or vulnerable populations.

    Currently, most chronic management programs arise from employer-
based, private health plans. Although a number of states have begun 
using chronic care management approaches within their Medicaid 
programs, in general, most chronic care management programs serve an 
employed, insured and healthier population. Chronic care management 
programs should be developed to incorporate or to specifically address 
the unique challenges of the under-served and vulnerable populations.

    8.  Chronic care management programs should exist within an 
integrated and comprehensive system of care, in which the patient-
provider relationship is central.

    Chronic care management services should not substitute for the 
patient-provider relationship(s), particularly the physician-patient 
relationship that is critical to the delivery of effective care. 
Instead, chronic care management programs should be one of several 
strategies employed to support and enhance the patient-provider 
relationship, resulting in an overall improvement in the quality of 
care and coordination of care delivered to patients with cardiovascular 
disease and stroke.

    9.  Organizations involved in chronic care management should 
scrupulously address and avoid potential conflicts of interest.

    Organizations that provide chronic care management services should 
act in the best interest of the patient and avoid conflicts of 
interest. The primary goal of chronic care management organizations 
should be to improve patient outcomes. Efforts to achieve secondary 
goals such as product marketing or product sales, should not adversely 
affect the primary goal of improving patient outcomes. To the extent 
any conflict of interest arises that may compromise the primary goal of 
improving patient outcomes, it should not be pursued.
Beneficiary Outreach and Education Should be Prioritized
    A significant challenge exists for enrollment of beneficiaries in 
the new chronic care improvement program. Successful enrollment will be 
closely linked to beneficiary education and outreach.
    Outreach efforts should include clear and easily understood 
information for beneficiaries that will help them understand the impact 
of this new program. Information and outreach to beneficiaries should 
be provided to help them understand that this program will not replace 
their relationship with their physician but instead, if done correctly, 
it will supplement or enhance the patient-physician relationship. 
Beneficiaries should know that this new program will not force them to 
give up their doctor or reduce their current benefits in any way. 
Instead, this pilot program should help coordinate what often times is 
the fragmented health care system through which beneficiaries receive 
care.
    In addition, beneficiary participation is influenced by its impact 
on the physician-patient relationship. Individuals will not be 
receptive to a program that threatens their ability to be treated by 
their physician of choice or otherwise intrudes upon the physician-
patient relationship. In order to succeed, the CCIP must be viewed and 
implemented as a tool to support and enhance existing provider-patient 
relationships. We urge CMS to reject proposals that attempt to supplant 
the care provided by a patient's provider of choice.
    A beneficiary's willingness to participate in the CCIP also is 
dependent upon his or her understanding of the program--its benefits, 
processes, and objectives. Thus, beneficiary education and outreach are 
essential. CMS must ensure that chronic care improvement organizations 
engage in substantial education efforts to inform beneficiaries about 
how the CCIP can improve the quality of care, prevent future adverse 
events, and improve patient outcomes. Patients and their physicians 
must be convinced that the program will utilize the best scientific 
research to aid in determining the most effective course of treatment.
    Patient communications must facilitate enrollment. Special efforts 
should be made to emphasize the voluntary nature of this program with 
beneficiaries. If the enrollment process is perceived as too complex, 
it may serve as a disincentive to beneficiary participation.
    Finally, it is important to recognize that each geographic area 
chosen for the program will have its own unique cultural and linguistic 
characteristics. In order for any beneficiary communication effort to 
be effective, it must consider these factors and develop outreach 
activities in a culturally sensitive manner.
    The American Heart Association appreciates the opportunity to 
testify before the Committee on Ways & Means Subcommittee on Health on 
this important issue, and we look forward to working with Congress and 
CMS on this important initiative.

                                 

    Chairman JOHNSON. I thank you all for your testimony. I 
want to clarify. First of all, you have all pointed to 
important aspects of how this program must work. Certainly it 
must work with physicians and not be dictated to physicians. It 
has to be collaborative at every level and throughout its 
parts. I do want to point out something about the underlying 
law that some of you may be aware of, but not all of you.
    While these RFPs do require that you demonstrate savings, 
the underlying law does not. The Secretary retains the 
authority to roll out to the broad Medicare Program things that 
improve health quality, the quality of care and patient 
satisfaction, even if they do not save money. Now, he does not 
have that authority if they cost money, but he does have that 
authority if they just improve quality and do not save money.
    So, we were very deliberate in how we wrote the law so that 
saving money would not be one of the criteria that you had to 
meet in order to roll out an initiative in this area. You have 
to meet a criterion that enables you to demonstrate there is an 
improvement in patient quality and patient satisfaction. So, 
while I was not entirely happy with the 5-percent savings, I 
think, on these particular ones they are starting out with, 
that should be able to be met; and there seems to be no 
disagreement in the provider community that that was able to be 
met, and certainly the huge response to these RFPs indicates 
that that does not seem to be a problem.
    I did want you to know that that does not hamper the 
Secretary's authority in the future. I also want to thank you, 
Dr. Wright, for the story about your father's practice and your 
practice. That is a very, very important story. It is important 
that there were three of you in most of these cases.
    It is important that the quantity of medical knowledge is 
exploding at such a rate that it is very hard to keep track. I 
have had many physicians report to me to have some program that 
can remind your patient to come back, can make sure they bought 
the next refill of their prescriptions to keep the process of 
care moving accurately in a way that it would be very hard for 
a physician and his staff to do without today's technology and 
the automatic flags that it can raise.
    I also want to mention an experience that we had at the 
press conference, that the Secretary and I had, announcing the 
RFPs, because your comment about needing care immediately as 
opposed to intermittently is really the heart of this change 
and doctors know it. It is not that they do not know it; it is 
that we do not know it, and we cannot recognize it in our 
payment structure. We do not recognize it until something is 
bad enough, until it triggers a doctor's office visit or 
hospital visit.
    We had very interesting testimony or a comment at the press 
conference from a well-educated gentleman who was about 80, who 
was diagnosed with diabetes when he was 48 or 42. He was 
experienced as a young person in managing diabetes, he was 
experienced as a retiree in managing diabetes; and about 5 
years earlier he had gotten into one of these chronic disease 
management programs.
    What was spectacular about it was that his mental health 
was so much better. He understood so much more about his 
disease. He felt so at home about it. He made the statement 
that, ``I always felt sort of selected for this terrible 
burden, resentful of this terrible burden, angry at this 
terrible burden of diabetes; and now I understand it is just 
part of my body. It is the way things function. I can 
understand it. I know about it. I can manage it. Furthermore, I 
have an expert friend who is there as close as the telephone to 
ask any question about it.''
    Now, when you look at how we are using the Internet and the 
possibilities for communicating, no doctor can absorb all of 
those communications and still see the number of patients that 
it is important for him or her to see. So, if you want to talk 
about any aspect of that, this continuity of care and this 
continuousness of care, that is what is unique about chronic 
disease management, it would be helpful to us or anything else 
you want to add. Dr. Wright.
    Dr. WRIGHT. Thank you. I had the privilege of sitting in on 
that press conference and that patient's words, what he said 
exactly was, ``I finally got friendly with my diabetes.'' I 
thought that was so powerful after having fought it so long as 
the enemy.
    Chairman JOHNSON. It is not that he did not have good 
coverage. He had terrific coverage. He had retiree coverage. 
There is a need that incident-based health care cannot meet and 
we have got to understand that.
    Now, there is also a way in which not only does our payment 
system not reimburse for that, but we are positively hostile to 
it. The Inspector General will look over your shoulder and say, 
you did not need to do that; that was not necessary. So, 
meeting this challenge as to how we restructure the payment 
system is going to be a big challenge, and I think this variety 
of pilots will help us. You need to make sure that the doctors 
in your area, in your specialty, and the doctors in other 
specialties begin to think about this, and that you work 
collaborative.
    I want to know, if all three of you on these cases sat down 
and figured this out, what solution would you--would you tell 
us, what would you tell us to pay for and how would you tell us 
to pay for it? So, in your spare time if you would raise that.
    Dr. WRIGHT. Yes. I have a plane ride back tonight. The 
frightening thing to me is not so much that 48 hours of call 
and the fact that there were so many specialists, but my 
hospital, which is an excellent institution, it has invested in 
a good computerized system, not a computerized medical record, 
but at least lab data that pops up and we can download it on a 
computer and get access to it. So, we are caring for those 
patients in-house pretty well.
    Those patients are discharged from the hospital into those 
specialists' offices, all of which are spread out over a two-
county area, and there is no link between the nephrologist's 
office and my own except for me. That is where the system 
really disintegrates, trying to manage chronically ill 
patients, people who are sick every day of their lives, trying 
to help manage them episodically. We do it and we wait until 
they get sick enough to come back into the hospital. That is 
not a good plan.
    Dr. BUFALINO. One other comment to add to that. The 
congestive heart failure that we are talking about today is 
surely one of our biggest challenges. These are our sickest 
patients. So, your comments about the need for continuum are 
critical.
    Although we have episodic care when they are really sick in 
the hospital, our biggest need is over the time frame when they 
are at home and needing follow-up. Most of these patients are 
on 8 to 12 drugs, with a fair number of interactions, 
obviously. We have had to, in our own practice, extend 
ourselves by using nurse clinicians in the office setting by 
being able to connect to them at home, to be able to follow up 
and do some of the visits, because we cannot meet the need.
    So, we are always in need of more effort to be able to 
connect to this sickest group of patients, and they tend to 
have the most confusing set of problems altogether. A lot of 
what you heard today is that four or five illnesses are routine 
in a lot of the Medicare patients because these things all 
interact together. They have diabetes, high blood pressure, 
high cholesterol, bad arteries and a weak heart all together. 
That is a typical story. So, we are clearly challenged.
    Chairman JOHNSON. It is important for all of you and 
particularly for your group and their nurse practitioners to be 
able to think through exactly what do those nurse practitioners 
do. We tried to do that in the disease management section of 
the bill with enormous help from the disease management 
professionals. We need to know, what are those practical things 
that we would include were we to give a reimbursement, so there 
is as clear a delineation as possible? Because the clearer the 
regulations are, the less the Inspector General causes 
problems. Now, I have respect for the Inspector General, but 
you can micromanage this law so that you do not have much left 
at all.
    So, I do appreciate those comments and I urge you to 
encourage the physicians to think, if we were to accept a 
global fee for all of this, what would be the things that we 
needed to say we would be able to do? Even to look at these 
requests for proposals, if that were out there just as a 
reimbursement for you all, rather than a whole system of care, 
does it include everything that you do? What would be the 
appropriate payment?
    So, we do face a lot of challenges, but we cannot, we 
cannot continue with the current system we have. That is why 
passage of this bill called the MMA was crucial, because we 
were making no progress on what is the most underlying 
challenge in Medicare and that is to modernize what it is we 
are paying for and how we are relating to our own providers. 
So, thank you very much. Mr. Stark.
    Mr. STARK. Thank you, Madam Chairman.
    I guess CCIP fills the gap for certain people. I guess 
mostly those who are healthy enough to manage their own care 
and respond to suggestions that are for their benefit. I am 
concerned about those who are not responsible for reasons of 
dementia or a whole host of other, perhaps economics and they 
cannot perhaps buy the drugs that are required.
    I can see a potential conflict between the vendors that 
have to cut 5 percent and the pharmaceutical companies who want 
to sell more drugs and perhaps the physician who has prescribed 
the drug that the benefit manager might try to cut out. I am 
not sure there is not some conflict brewing in that area. It is 
just this year, after 35 years or whatever it is, of Medicare 
that we decided to pay for an initial physical examination. In 
other words, Medicare beneficiaries were pretty much charged 
with going around and picking their own specialist if a 
specialist would take them without a referral because there was 
no way to get clocked into the system. I can see the advantage 
of having Ask a Nurse or any of these benefit groups helping us 
along the way.
    I guess my question to the physicians on the panel is, does 
the physician not have to start out by assessing a patient and 
determining what is wrong, how many of these diseases does this 
patient have, and what ought to be the plan? Is that not where 
it all starts, or am I missing something?
    Dr. BUFALINO. I will be glad to answer that. I think you 
are absolutely right. The initial diagnosis is clearly made 
with the physician, either the family practice internist or a 
cardiologist, depending on the care loop. Those diagnoses are 
made and then a plan is laid out in terms of what needs to be 
done in terms of their therapy. So, most definitely.
    Mr. STARK. That plan has to be designed by a physician, 
does it not?
    Dr. BUFALINO. I think the initial plan, whether they are in 
the office or in the hospital is laid out by the physician. The 
question remains then is the follow-up, I think what Chairman 
Johnson was referring to, and the continuous loop. Although 
that initial interaction where we evaluate, decide the 
magnitude of their problem, do whatever diagnostic tests are 
necessary, the follow-up there is this chronic problem of 
trying to keep them out of the hospital.
    I guess from our reading of a lot of the savings, it is 
about, can we keep folks at home with these chronic conditions 
as opposed to having them have to come back through the 
hospital because they did not take the right drug or did not 
take the right dose or had not had that close follow-up. 
Whether it be the physician or another entity, somebody needs 
to be watching that they are taking their medications properly, 
clearly.
    Mr. STARK. Dr. Wright, what is your take on that?
    Dr. WRIGHT. I would perish if someone took away my job of 
outlining a plan for my patient. That is the diagnostic and 
therapeutic process. Therapeutic process, that is what I do. I 
think the way I see disease management techniques benefiting 
just an average physician like me is to select data to record 
and report data for me that I do not have time or the 
inclination, but I desperately need in order to assess my own 
performance. I see them assisting in the notification and the 
execution of the plan that I have set up with my patient. I 
agree with you that there are tremendous hurdles, not just in 
the complexity of these medical problems, the number and 
complexity, but also in the patients who have the cognitive 
deficits.
    Mr. STARK. Now, the practice of geriatrics, I guess, I was 
looking for their testimony which was submitted. Do they not 
attempt, the people who call them, whatever they call 
themselves, geriatrists?
    Dr. WRIGHT. Geriatricians, I think.
    Mr. STARK. Geriatricians. Is not that their role in a sense 
with old guys like me? Do they not say, okay, we are going to 
manage you, Stark, and look at you because you have problems at 
your age that younger people will not have. They are really, I 
hate to say ``glorified internists;'' that may be mean to 
somebody, but is that not their role then to refer them, if I 
have a heart problem, to you all, or if I have sciatica, to 
send me to a neurosurgeon or to a physical therapist.
    Dr. WRIGHT. I would have to tell you that at least in 
northern California, and I think this applies in more places, I 
also am a geriatrician because of the depth and breadth of 
cardiologic problems and because of the paucity of 
geriatricians in smaller communities. I would be delighted if 
someone came to town, but because of what I do every day, I am 
taking care of that population.
    Mr. STARK. Go ahead.
    Dr. BUFALINO. Your assessment is right. These are 
internists who specialize in patients over the age of 65 or 
over the age of 70. So, I think you are right on. 
Unfortunately, in our world, half of our patients are over the 
age of 65 just by the nature of heart disease.
    Mr. STARK. Then I am getting that once you all have 
determined what the protocol for keeping all of my moving parts 
in working order should be, you turn to Ms. Selecky and say, 
here is the plan for Mr. Stark; will you guys call him, follow 
up. You have determined that I am not in very serious dementia, 
and I can answer the phone; and maybe somebody comes by the 
house and checks to see where the pill bottles are, and then 
they come back to you. Is that the way you see the system 
working?
    Ms. SELECKY. Yes, thank you, Mr. Stark. My company was 
actually founded by a physician who was trying to find ways of 
delivering better care to his chronically ill patients, because 
these people have the disease 24 hours a day, 7 days a week, 
and the physician cannot be available all the time.
    Mr. STARK. They can if you pay the $1,500 for the boutique 
kind.
    Ms. SELECKY. What we do as an entity really is to support 
the physician's plan of care. We very strongly support the 
doctor-patient relationship. We understand what the plan of 
care is. We try to reinforce it with the patient to make sure 
they understand why their physician told them to do something, 
why it is important to follow through with that. We help remind 
them to do things that they need. To your earlier point about 
people with dementia and people who otherwise have trouble 
understanding the program, these people still have family 
members that need to care for them.
    In the case where we cannot communicate directly with the 
patient, we communicate with their family member, because we 
are generally held accountable for the outcome of the entire 
population. Regardless of whether we can really engage that 
individual or not, we look for other ways of engaging them. So, 
there are a lot of things that we do to customize the program 
to the individual needs of our patient populations.
    While we do provide services to the commercial, employed 
populations, I would say the majority of people we take care of 
are people more in their seventies and eighties and people who 
have very serious combinations of chronic conditions.
    Mr. STARK. Thank you. I thank the panel very much.
    Chairman JOHNSON. Thank you very much. This issue, the 
physician retaining control and that relationship with their 
patient, is of course central. You cannot have a health care 
system if you do not protect that relationship. I was very 
interested, Dr. Wright, in your comments about these three 
doctors, and then the comments about follow on care even if it 
is just one doctor; this issue of continuous need for care and 
continuous need for care of patients with multiple illnesses. 
This RFP, what we started with was those seniors that have 
multiple chronic conditions, so we are starting with that group 
that go beyond the one physician but have three physicians who 
have gone through this care plan and made decisions; and how do 
we integrate those plans?
    We also require everyone in the RFP to deal with patients 
who are cognitively impaired because there is no sense in 
learning how to do all of this when half of the population of 
our retirees have some level of cognitive compromise. So, we do 
need to learn that from the ones that are totally compromised 
to the ones that are just partially compromised. Recognizing 
the real dearth of geriatric physicians, we did have two of the 
demonstrations, I think it is two, specifically focused on: how 
do you couple a geriatric center capability with, particularly, 
small-practice physician capability? Because there the 
practicing physician is making the plan, and we are going to 
create a collaborative organization to oversee the 
implementation of that plan when there are multiple illnesses 
involved, but having that geriatric capability to look at that 
situation is going to be very useful to us. How do we spread 
the power of the geriatrician over a larger number of 
physicians, since there is never going to be a geriatrician in 
every community even as our population ages?
    So, I just wanted to clarify that, that the RFP is about 
multiple illness and involves people with cognitive problems so 
that we will get the full variety of solutions out there to 
this challenge. Mr. Crane.
    Mr. CRANE. Thank you, Madam Chairman. Dr. Wright, when you 
were reminiscing about your dad being a physician, it reminded 
me of my own personal experience. My dad got his first 
doctorate in psychology and he was treating at Northwestern. My 
mom went into labor on a Saturday and the obstetrician was out 
of town. So, my dad said he put newspapers on the bed and 
started boiling water and had the dog come in and sit at my 
mother's side and he delivered me. I said, Pop, were you not a 
little intimidated by that? He said, oh, we delivered pigs and 
cows at the farm; it was no big deal.
    Then he got his medical doctorate and he delivered the next 
three of my siblings at home on purpose. He used to do surgery 
on the dining room table. My great-grandmother, when she was 
92, had cataracts in both eyes, and he operated on one and 
restored her vision in one eye. We were excited to hear about 
that, and we said, well, that is just one eye. Are you not 
going to do the other? He said that she is 92. All she needs is 
one.
    Dr. WRIGHT. Cost conscious even then.
    Mr. CRANE. I could not follow in his footsteps. I could not 
even stand to look at a needle going in your skin and my kid 
brothers got their doctorates, one dentist and one physician, 
but I was overwhelmed by that sort of thing. I still reminisce 
for entertainment purposes about those years growing up.
    I would like to ask you one question about your testimony. 
You discussed the success of the cardiac rehabilitation 
program. Can you provide some insights as to why these programs 
have been so successful and what lessons from them should be 
incorporated into the CCIP and Medicare?
    Dr. WRIGHT. Thank you, I would love that opportunity. I 
learn, I hope, I am getting wiser with time. I did not 
understand why I had always been interested in cardiac rehab, 
and then when disease management came across the radar, it 
struck me as something that was fascinating and important. It 
was not until I tried to put this essay together--it has been a 
while since I have written an essay, by the way--that I 
realized how linked they are, that cardiac rehab is actually 
one of the original disease management programs.
    I think there are many parallels between the successful 
programs that we have come to see in the medical care system, 
that we see right now, and the original one. Cardiac rehab, 
first of all, is based in science and it is successful because 
it builds personal relationships. When a sick person knows that 
the person caring for them is invested in them, actually cares 
about the outcome, and that contact is not continuous but 
frequent, and that the medical care person is well informed 
about the specifics of that person's medical situation, that is 
a very powerful mechanism for healing. I think that is what 
cardiac rehab does.
    It is so much more than an exercise program. It actually 
allows surveys of that patient's medical world, if you will, 
their environment, so that if a patient who has a recent 
angioplasty, starts to have a little chest discomfort on the 
track, the patient already has a contact with the nurse, the 
nurse already knows what that patient looks like going around 
the track, and when he or she starts to look a little 
different, questions are asked. Immediately we know that 
something is brewing and the patient gets referred early and 
the patient gets restudied or stented, restented, whatever the 
situation is.
    So, it works for prevention. It works for disease 
surveillance and treatment. It reinforces that the medical care 
system is designed to deliver medical care through to each 
individual according to his or her needs.
    Mr. CRANE. Ms. Selecky, in your testimony, you talk about 
the different ways that organization will partner to respond to 
the RFPs. Given the objectives of the RFP and the unique needs 
of Medicare beneficiaries with multiple chronic conditions, do 
you believe that an approach involving multiple organizations 
will be necessary and do you think such consortia can be 
successful?
    Ms. SELECKY. I think that what is necessary is 
understanding that disease management is really about creating 
a team environment to take care of people. People who have 
chronic disease, as we have already talked about here, not only 
have several different physicians, but there are a lot of 
people who are involved and a lot of entities that are involved 
in trying to make them successful in managing their health.
    Really, what disease management organizations are about is 
trying to defragment that system and make kind of a central 
location for all of that information and all of those efforts 
to be coordinated. So, it is very important that we not view 
this as an opportunity for any particular kind of an entity to 
be successful here. I think what is important is that all of 
these efforts really reach out and make an effort to connect 
the different entities in the health care system.
    That being said, I think that what is important in this is 
really that the programs and the groups of providers and 
suppliers and whatever that come together to do these programs 
really understand what their role is and that there is good 
data integration among them and they come with some proven 
outcomes, that they can actually show CMS that the approach 
that they are going to take is going to be one that will 
enhance the outcomes for the beneficiaries as well as reduce 
cost.
    Mr. CRANE. Very good. Now, my neighbor, I would like to ask 
you this final question here. Dr. Bufalino, throughout your 
testimony you discussed the need for evidence-based performance 
measurements to evaluate quality of care and beneficiary 
satisfaction. Can you discuss further the types of measurement 
that CMS might want to consider in reaching agreements with 
bidders under the CCIP?
    Dr. BUFALINO. Thank you. I think it is a complex issue. 
They already have in the RFP a number of quality measures, and 
many of them are physician--driven. They are the assessment of 
that patient's heart muscle function.
    If we talk about heart failure, which is my area of 
interest, and the measure of are they on the right drugs, is 
their blood pressure controlled, how often are they 
hospitalized, how often are they rehospitalized, how many trips 
do they make to the emergency room, those are all measures 
there.
    I think we would love to have the opportunity at the AHA, 
involved with the National Quality Forum, to help set some 
further outcomes, the opportunity to take science and give some 
meaningful measures. We want to know that these patients have 
better quality of life because of this program. Do they feel 
better? Are they able to spend more time with their family? Are 
they able to function at a higher level is important as part of 
this measure. Also, do they live longer? As much as this is a 
chronic disease and we are talking about do we keep them out of 
the hospital, do we prolong their lives is a critical question 
for us in terms of the benefits.
    I think those are important things, and we would like to 
participate in an opportunity that helps set those clearly 
science-based outcomes because we think there is an opportunity 
to make this meaningful. I think the Chairman has made it very 
clear here that this is about doing a better job, and we would 
love to participate in this. Our goal as physicians, or part of 
the organizations we are involved in is, how do we reduce death 
and disability from this disease? We still lost a million lives 
last year to heart disease, a huge problem. We have about 4.5 
million folks in the country with heart failure. So, we can use 
all the help we can get, quite frankly. I think our plea is 
that we would like to be involved in helping improve those 
outcomes. I think there is a tremendous opportunity there to 
work on this together.
    Mr. CRANE. Thank you very much. I thank all three of you 
for your testimony, and we look forward to working with you in 
the future.
    Chairman JOHNSON. I thank you all for being with us here 
today. I hope as we work on this together and we see how these 
pilots work and we combine our experience now in the government 
arena with your experience as practicing physicians, we can 
within the near future develop a sounder approach to 
encouraging coordinated care and integrated care in our health 
system systematically.
    I would also ask that you think, because all of you are 
where these decisions are made, what are we going to draw from 
this in terms of helping patients deal with end-of-life care 
decisions? Because we cannot continue--this is my personal 
opinion; this is nobody else's opinion; this does not come from 
the Subcommittee. If we are going to serve twice as many 
seniors in the future, we have to enable them to live a 
healthier life, and this is crucial to that. We have to get 
them more involved in their health care, and this will do that.
    We also have to more intelligently understand the declining 
process and at what point does one really look for just 
palliative care, supportive care, those kinds of support 
systems that recognize that we are now in a different era of 
medical experience and personal experience. So, we need to 
think about, how does disease management better prepare us for 
understanding when the disease process is reaching a point at 
which it has a logic of its own and interventions are of little 
human value and of great social cost? So, I do not ask you to 
respond to that.
    Ms. SELECKY. I could though, Chairman Johnson, if you do 
not mind. I think, speaking to what Dr. Wright said earlier, it 
is about the personal relationships that you build with your 
patients and, in our case, with our program participants. That 
whole process is also a team approach where you have family 
members and physicians.
    Chairman JOHNSON. Are you seeing some of that?
    Ms. SELECKY. We see much of it because we take care of tens 
of thousands of people with congestive heart failure, and it is 
a terminal disease. We do end up spending a lot of time working 
with people, to have them understand what the consequences are 
of their condition; and as it appears that that might be 
something that we need to help them with, we refer them to 
hospice programs. We talk to them about living wills. We talk 
to them about advance directives. I tell you, it is always very 
sad when one of our program participants passes away, but we 
have many cases in which their family members have called us 
afterward and thanked our nurses for the care and consideration 
that they have shown them. So, it is a process. It is about 
trying to make people's quality of life better regardless of 
what that quality of life entails.
    Chairman JOHNSON. Do either of you want to comment?
    Dr. BUFALINO. Two ends of the spectrum: I think the one 
thing that the MMA saw, very importantly, was to do a 
preventive piece, which we were missing, the idea to do 
screenings and get this disease early so we can do something 
about it. We have the tools and the ability to make a 
difference. We just sometimes do not get the chance.
    So, to prevent heart failure before it happens is where 
there is a huge savings to the country, and to that individual 
patient obviously.
    On the other end, I think it is fascinating to see the 
difference--and I think you are very insightful on your 
comments about having people be comfortable when the end is 
near, and that really comes with that physician-patient 
relationship and with the family.
    I am sure Janet has the same experience to be able to sit 
and talk to that family and say, you know what, we have done 
everything we could for Grandma; I think we should keep her 
comfortable. I find many, many more patients today and their 
families much more comfortable with that decision than there 
were 10 or 15 years ago. They know where this could go and the 
outcome is not likely to be any better.
    Heart failure is cancer of the heart. We just call it 
something different. It is a terminal disease. So, we prepare 
them from the beginning, once that diagnosis is made, that 
there is only so much we will be able to accomplish. We do want 
to keep them comfortable, but we need to decide when we have 
done all we can do.
    Dr. WRIGHT. I do not have anything else. They have said it 
and said it beautifully, and I do appreciate your interest in 
this also. I do not think we have done as good of a job as we 
should, but I would like to just add two quick thoughts about 
this legislation. Frankly, Chairman Johnson, hearing you speak 
about the potential impact for it and seeing your dedication 
and that of the Committee, it has given me hope.
    I did not tell you that my dad was disappointed when I went 
into medicine. He told me not to because the government was 
going to meddle in it, and I would not be able to enjoy 
practicing. I am glad I ignored him. It is the only piece of 
advice I ignored.
    My hope is that what we have seen happen with women's 
health will happen with chronic disease health. By that I mean, 
in the early days of doing cardiology, we knew that women were 
dying, but we did not understand why. We did not understand 
that they were actually different than men. It sounds like such 
a novel thought.
    Women were not part of the research protocols, not because 
of a gender bias, but because women are hard to study. You 
cannot pick a research subject that is literally, from day to 
day, might be pregnant or might be nursing or in the menopause 
years, a period of 5 or 6 years. The woman is different 
literally from day to day; I can testify to that.
    So, women were not selected for research until this body, 
until Congress said, you will include women; they are tough 
research subjects, but you will include them; we mandate that 
so we can learn about them. As a result, we have a flood of 
information. We have learned so much that will protect women 
and prevent heart disease, not to mention all the other 
problems, as a result of the action of this body. I have the 
same hope that this legislation and its implementation will 
create that kind of transformation in the care of older people 
with multiple diseases.
    Chairman JOHNSON. Thank you. I think we are capable of that 
and we are capable of some other alternatives which I hope to 
block. So, I appreciate your testimony today. This is a 
challenging time. It is an exciting time both in medicine and 
in government policymaking. I thank you for your participation 
in the process, in being with us today. Thank you. The hearing 
is adjourned.
    [Whereupon, at 4:00 p.m., the hearing was adjourned.]
    [Submissions for the record follow:]
                          Statement of AdvaMed
    AdvaMed is pleased to provide this testimony on behalf of our 
member companies and the patients and health care systems we serve 
around the world. AdvaMed is the largest medical technology trade 
association in the world, representing more than 1100 medical device, 
diagnostic products, and health information systems manufacturers of 
all sizes. AdvaMed member firms provide nearly 90 percent of the $71 
billion of health care technology products purchased annually in the 
U.S. and nearly 50 percent of the $169 billion purchased annually 
around the world.
    Significant advances in health care technologies--from health 
information systems that monitor patient treatment data to innovative 
diagnostics tests that detect diseases early and lifesaving implantable 
devices--improve the productivity of the health care system itself and 
vastly improve the quality of the health care delivered. New 
technologies can reduce medical errors, make the system more efficient 
and effective by catching diseases earlier--when they are easier and 
less expensive to treat, allowing procedures to be done in less 
expensive settings, and reducing hospital lengths of stays and 
rehabilitation times.
    AdvaMed would like to thank the Congress for passing the Medicare 
Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) 
(P.L. 108-173). We share your goals for the new law to make the 
Medicare program more efficient and effective for providers and 
Medicare beneficiaries. We believe it is in the best interest of 
patients and the Medicare program to have the system capitalize on 
advanced technologies, which have revolutionized the U.S. economy and 
driven productivity to new heights and new possibilities in many other 
sectors.
Chronic Care Improvement Programs: Improving Patient Care and 
        Modernizing Medicare
    AdvaMed strongly supported the inclusion of the Chronic Care 
Improvement Program (CCIP) in the MMA to establish a voluntary pilot 
program in fee-for-service Medicare focusing on congestive heart 
failure, diabetes, and chronic obstructive pulmonary disease. If 
designed appropriately, coordinated care for patients with chronic 
conditions and diseases will keep patients healthier and happier, as 
well as reduce the number of expensive hospital visits from 
complications related to the chronic illnesses.
    In fact, a report published in February 2004 by MEDTAP 
international entitled ``The Value of Investment in Health Care: Better 
Care, Better Lives,'' shows the benefits of investing in health care 
far outweigh the costs, and it measures those benefits in human and 
economic terms. The study shows from 1980 to 2000 that each additional 
dollar spent on health care in the U.S. produced tangible health gains 
of $2.40 to $3. Overall findings by the year 2000 show that annual 
mortality rates declined 16%; disability rates declined 25%; life 
expectancy increased 4%, or 3.2 years; and hospital days fell 56%. In 
the four major diseases studied, the report finds in the year 2000, 
mortality from heart attack was cut almost in half; deaths from stroke 
were cut by over one third; breast Cancer mortality declined 20%; and 
diabetes management improved dramatically and produced a 25 percent 
reduction in complications such as blindness, kidney failure, stroke 
and death.
The Important Role of Technology in Designing a Successful CCIP
    AdvaMed is monitoring implementation of the CCIP to ensure that it 
delivers the value promised to Medicare beneficiaries by the Members of 
this subcommittee who crafted the pilot program. In choosing 
organizations to participate in the pilot program, CMS should consider 
an organization's ability to integrate a range of technologies into its 
proposed chronic care improvement program. Such technologies include, 
but are not limited to, remote monitoring devices, implantable devices, 
and information technology-based solutions. In addition, CMS should set 
per patient per month fees paid to organizations at a rate sufficient 
to cover the costs of the technologies and the staff necessary to 
employ them.
    We worked closely with CMS in between passage of the MMA and the 
issuance of the Request for Proposals (RFP) on April 20th and have 
provided comments to CMS with our specific concerns and questions about 
the RFP. Specifically, clinical management of patients with multiple, 
progressive, chronic conditions--such as complex diabetes, congestive 
heart failure, and chronic obstructive pulmonary disease--often 
requires intensive monitoring and intervention. However, the CMS 
solicitation for the CCIP states that there will be no change in the 
amount, duration, or scope of a participant's fee-for-service Medicare 
benefits. AdvaMed seeks clarification from CMS as to whether existing 
Medicare Part B utilization controls will be modified or suspended 
under the CCIP. We are concerned that requiring awardees to reduce 
preventable hospitalizations, health care costs, and adverse health 
outcomes, in the context of an acute care-oriented program in which 
strict utilization controls continue to be enforced, could frustrate 
the purpose of the CCIP.
    For example, in an attempt to obtain and maintain tighter glycemic 
control, an organization might require certain patients with complex 
diabetes to perform blood glucose self-monitoring more often than 
current Medicare policies allow. Under current Medicare program 
guidelines, without additional medical necessity documentation, 
Medicare Part B reimbursement for blood glucose reagent strips and 
lancets is limited to 100 every three months in patients with 
noninsulin-treated diabetes. Instead of a rigid formula, CMS should 
provide CCIP contractors sufficient flexibility to maximize patient 
outcomes.
    In addition, as part of the per patient per month fees, 
organizations submitting bids must include the costs of services not 
currently covered by Medicare. CMS has left it unclear how these 
organizations should treat services for which the coverage varies by 
local carrier.
    Lastly, under the CCIP, organizations will be financially at risk 
for their fees if they fail to meet agreed upon performance guarantees 
for clinical quality, beneficiary and provider satisfaction, and 
savings targets. Notwithstanding the enforcement role of the threat of 
financial penalties, it would be in the best interests of the 
beneficiaries and organizations alike if the organizations' programs 
improve themselves throughout the duration of the CCIP to increase the 
chances of executing Phase II. Therefore, AdvaMed has requested that 
CMS consider requiring each organization, as part of its beneficiary 
satisfaction and quality assurance measures, to establish an internal 
Beneficiary Ombudsman. The Ombudsman would ensure a clear channel of 
communication between beneficiaries and the organization, as well as 
provide the organization with a check on the quality of care that its 
beneficiaries are receiving.
Conclusion
    AdvaMed thanks the Subcommittee members again for their 
collaborative efforts to improve and strengthen the Medicare program. 
We look forward to working with the Administration and this Committee 
on designing a comprehensive and successful CCIP to improve the quality 
of care for Medicare patients.

                                 

                Statement of the Alzheimer's Association
    Since our founding in 1980, the Alzheimer's Association has 
provided more than $150 million to support research into the 
prevention, treatment and eventual cure for Alzheimer's. Our nationwide 
network of chapters offer frontline support to individuals affected by 
Alzheimer's with services that include 24/7 information and referral, 
safety services, and education and support groups.
    Section 721 of the Medicare Prescription Drug, Improvement, and 
Modernization Act authorizes Chronic Care Improvement Programs that 
will focus on one or more of three threshold conditions: congestive 
heart failure (CHF), diabetes, and chronic obstructive pulmonary 
disease (COPD). The Act requires entities that implement a Chronic Care 
Improvement Program to ``have a process to screen each targeted 
beneficiary for conditions other than threshold conditions, such as 
impaired cognitive ability and other comorbidities, for the purpose of 
developing an individualized, goal-oriented care management plan.''
    When Alzheimer's disease is present, the Medicare costs of already-
expensive conditions like COPD, congestive heart failure or diabetes 
double. The attached fact sheets show: 1) the proportion of Medicare 
beneficiaries with each of the threshold conditions who also have 
Alzheimer's disease and other dementias; and, 2) the impact of 
coexisting Alzheimer's and other dementias on total Medicare 
expenditures and hospital use for beneficiaries with the threshold 
conditions. Although it might be assumed that older average age of 
beneficiaries with the threshold conditions plus Alzheimer's or other 
dementias explains the higher Medicare expenditures and hospital use, 
data presented in the fact sheets show that this is not true. In fact, 
the difference between average Medicare expenditures for beneficiaries 
with any of the threshold conditions plus Alzheimer's or other 
dementias vs. beneficiaries with the threshold condition but no 
Alzheimer's or dementia is greatest in the youngest age group 
(beneficiaries age 65-74).
    Entities that implement Chronic Care Improvement Programs should 
have procedures in place to accurately identify Alzheimer's and 
dementia in their program participants. In addition, these entities 
should have procedures in place for developing and implementing a care 
management plan that takes into account the effects of Alzheimer's and 
dementia-related cognitive impairment on a person's ability to follow 
treatment recommendations, take medications as prescribed, and manage 
other aspects of his or her care. These entities should have procedures 
for identifying a family caregiver, if any, and managing care for 
participants with Alzheimer's and other dementias who do not have 
family caregivers.
    Patient self-care and self-management approaches, which are used in 
many disease management programs are unlikely to be effective for many 
program participants with Alzheimer's and other dementias. The entities 
that implement the Chronic Care Improvement Programs will have to adapt 
these approaches for participants with Alzheimer's and dementia. Use of 
community services, including Alzheimer's Association chapter services, 
is likely to improve outcomes for program participants with Alzheimer's 
and other dementias. The entities that implement the Chronic Care 
Improvement Programs will have to develop effective ways of linking 
program participants with Alzheimer's and dementia to these essential 
services.
                                 ______
                                 

 Medicare Beneficiaries with Congestive Heart Failure And Co-existing 
                 Alzheimer's Disease or Other Dementias

Prevalence of co-existing Alzheimer's disease and other dementias in 
        Medicare beneficiaries with congestive heart failure (CHF)
    Medicare claims data for a 5% national random sample of fee-for-
service Medicare beneficiaries age 65+ indicate that in 1999, 11% of 
these beneficiaries had CHF. Of the beneficiaries with CHF, 21% also 
had Alzheimer's disease or other dementias (AD/D). In 2000, 12% of 
Medicare fee-for service beneficiaries age 65+ had CHF, and 21% of 
these individuals also had AD/D.\1\
Medicare expenditures and hospitalizations for beneficiaries with CHF 
        and co-existing Alzheimer's and other dementias
    In 1999, average Medicare expenditures and hospital use were 
substantially 
higher for beneficiaries with CHF and AD/D than for beneficiaries with 
CHF but no AD/D.
      Total average per person Medicare expenditures for those 
with CHF and 
AD/D were 47% higher than for those with CHF but no AD/D ($22,459 vs. 
$15,271).\1\
      Average per person Medicare hospital expenditures for 
those with CHF and 
AD/D were 40% higher than for those with CHF but no AD/D ($13,210 vs. 
$9,414).\1\
      Medicare beneficiaries with CHF and AD/D were almost 
twice as likely as those with CHF but no AD/D to be hospitalized and 
almost twice as likely to have a preventable hospitalization.
    In 2000, total average Medicare expenditures and average hospital 
expenditures were about 50% higher for those with CHF and AD/D than for 
those with CHF but no AD/D.1
Increased expenditures for CHF with Alzheimer's disease and other 
        dementias are not explained by older age

                Total Medicare expenditures for Beneficiaries with CHF by AD/D Status and Age\1\
----------------------------------------------------------------------------------------------------------------
                                        Beneficiaries with CHF   Beneficiaries with CHF   % Increase associated
                 Age                         and no AD/D                and AD/D                with AD/D
----------------------------------------------------------------------------------------------------------------
 65-74...............................  $17,993................  $34,304................  91%
 75-84...............................   15,515................    25,368...............  64%
 85 and over.........................   11,947................   17,632................  48%
----------------------------------------------------------------------------------------------------------------

   Medicare Beneficiaries with Diabetes And Co-Existing Alzheimer's 
                       Disease or Other Dementias

Prevalence of co-existing Alzheimer's disease and other dementias in 
        Medicare beneficiaries with diabetes
    Medicare claims data for a 5% national random sample of fee-for-
service Medicare beneficiaries age 65+ indicate that in 1999, 16% of 
these beneficiaries had diabetes. Of the beneficiaries with diabetes, 
11% also had Alzheimer's disease or other dementias (AD/D). In 2000, 
17% of Medicare fee-for-service beneficiaries age 65+ had diabetes, and 
12% of them also had AD/D.1
Medicare expenditures and hospitalizations for beneficiaries with 
        diabetes and co-existing Alzheimer's and other dementias
    In 1999, average Medicare expenditures and hospital use were much 
higher for those with diabetes and AD/D than for beneficiaries with 
diabetes but no AD/D.

      Total average per person Medicare expenditures for those 
with diabetes and AD/D were 144% higher than for those with diabetes 
but no AD/D ($19,395 vs. $7,940).\1\
      Average per person Medicare hospital expenditures for 
those with diabetes and AD/D were 163% higher than for those with 
diabetes but no AD/D ($11,192 vs. $4,254).\1\
      Medicare beneficiaries with diabetes and AD/D were 3 
times as likely as those with diabetes but no AD/D to be hospitalized 
and more than three times as likely to have a preventable 
hospitalization.\2\

    In 2000, total average Medicare expenditures were 150% higher and 
average hospital expenditures were 160% higher for those with diabetes 
and AD/D than for those with diabetes but no AD/D.\1\
Increased expenditures for diabetes with Alzheimer's disease and other 
        dementias are not explained by older age
    Medicare beneficiaries with diabetes and AD/D are older on average 
than those with diabetes but no AD/D. In 2000, 29% of those with 
diabetes and AD/D were age 85+ compared with only 8% of those with 
diabetes but no AD/D;\1\ however, older average age does not explain 
the higher Medicare expenditures for those with diabetes and AD/D. In 
fact, the difference between average Medicare expenditures for those 
with diabetes and AD/D vs. those with diabetes and no AD/D was greatest 
for beneficiaries age 65-74.

            Total Medicare Expenditures for Beneficiaries with Diabetes by AD/D Status and Age, 2000
----------------------------------------------------------------------------------------------------------------
                                          Beneficiaries with       Beneficiaries with     % Increase associated
                 Age                     diabetes and no AD/D      diabetes and AD/D            with AD/D
----------------------------------------------------------------------------------------------------------------
 65-74...............................  $7,469.................  $24,392................  227%
 75-84...............................   8,563.................   19,920................  133%
 85 and over.........................   8,979.................   16,569................   85%
----------------------------------------------------------------------------------------------------------------

 Medicare Beneficiaries with Chronic Obstructive Pulmonary Disease And 
          Co-existing Alzheimer's Disease and Other Dementias

Prevalence of co-existing Alzheimer's disease and other dementias in 
        Medicare beneficiaries with chronic obstructive pulmonary 
        disease (COPD)
    Medicare claims data for a 5% national random sample of fee-for-
service Medicare beneficiaries age 65+ indicate that in 1999, 10% of 
these beneficiaries had COPD. Of the beneficiaries with COPD, 15% also 
had Alzheimer's disease or other dementias (AD/D). In 2000, 10% of 
Medicare fee-for-service beneficiaries age 65+ had COPD, and 15% of 
them also had AD/D.\1\
Medicare expenditures and hospitalizations for beneficiaries with COPD 
        and co-existing Alzheimer's disease and other dementias
    In 1999, average Medicare expenditures and hospital use were 
substantially higher for beneficiaries with COPD and AD/D than for 
beneficiaries with COPD but no AD/D.

      Total average per person Medicare expenditures for those 
with COPD and 
AD/D were 93% higher than for those with COPD but no AD/D ($23,614 vs. 
$12,220).\1\
      Average per person Medicare hospital expenditures for 
those with COPD and AD/D were 90% higher than for those with COPD but 
no AD/D ($14,225 vs. $7,472).\1\
      Medicare beneficiaries with COPD and AD/D were twice as 
likely as those with COPD but no AD/D to be hospitalized and almost 
twice as likely to have a preventable hospitalization.\2\

    In 2000, average Medicare expenditures were 90% higher and average 
hospital expenditures were 84% higher for those with COPD and AD/D than 
for those with COPD but no AD/D.\1\
Increased expenditures for COPD with Alzheimer's disease and other 
        dementias are not explained by older age
    Medicare beneficiaries with COPD and AD/D are older on average than 
those with COPD but no AD/D. In 2000, 32% of those with COPD and AD/D 
were age 85+ compared with only 12% of those with COPD but no AD/D;\1\ 
however, older average age does not explain the higher Medicare 
expenditures for those with COPD and 
AD/D. As shown below, the difference between average Medicare 
expenditures for those with COPD and AD/D vs. those with COPD and no 
AD/D was greatest for beneficiaries age 65-74.

              Total Medicare Expenditures for Beneficiaries with COPD by AD/D Status and Age, 2000
----------------------------------------------------------------------------------------------------------------
                                       Beneficiaries with COPD  Beneficiaries with COPD   % Increase associated
                 Age                         and no AD/D                and AD/D                with AD/D
----------------------------------------------------------------------------------------------------------------
 65-74...............................  $12,059................  $28,463................  136%
 75-84...............................   12,782................   24,416................   91%
 85 and over.........................   12,847................   19,557................   52%
----------------------------------------------------------------------------------------------------------------


REFERENCES
    \1\ These figures come from FY 1999 and FY 2000 Medicare claims for 
a 5% national random sample of fee-for-service Medicare beneficiaries 
age 65+. Those with no claims are included. Medicare beneficiaries who 
were enrolled in Medicare managed care and beneficiaries under age 65 
are excluded. Beneficiaries were classified as having COPD based on 
Clinical Classification Software (CCS) categories. Beneficiaries were 
classified as having AD/D if they had at least one Medicare claim with 
an ICD-9 code diagnosis 290, 294, or 331 in the relevant year.
    \2\ Bynum JPW, Rabins PV, Weller W, et al., ``The Relationship 
Between a Dementia Diagnosis, Chronic Illness, Medicare Expenditures, 
and Hospital Use,'' Journal of the American Geriatrics Society, 
52(2):187-194, 2004.

                                 

    Statement of Virginia Zamudio, American Association of Diabetes 
                      Educators, Chicago, Illinois
    Thank you, Chairwoman Johnson, Ranking Member Stark, and members of 
the Subcommittee, for holding this important hearing today on the newly 
instituted Medicare Chronic Care Improvement Program (CCIP). I am 
Virginia Zamudio and I am a registered nurse, certified diabetes 
educator, and President of the American Association of Diabetes 
Educators. On behalf of AADE, a group of health care professionals 
dedicated to improving the care of people living with chronic disease, 
I am submitting this written testimony to express our strong support 
for the CCIP and to suggest additional measures the Committee should 
consider in its efforts to strengthen the Medicare program to improve 
care for beneficiaries with diabetes.
About the American Association of Diabetes Educators
    Founded in 1973, the American Association of Diabetes Educators is 
a multi-disciplinary professional membership organization dedicated to 
advancing the practice of diabetes self-management training and care as 
integral components of health care for persons with diabetes, and 
lifestyle management for the prevention of diabetes.
    AADE's more than 10,000 members are healthcare professionals who 
are members of the diabetes care team. They include nurses, dieticians, 
pharmacists, physicians, social workers, exercise physiologists and 
other members of the diabetes teaching team. AADE currently has 105 
local chapters and 17 specialty practice groups.
The Burden of Chronic Disease
    Chronic diseases such as heart disease, diabetes, and cancer are 
the leading cause of death in the United States, killing seven out of 
ten Americans. The costs of chronic disease are staggering--more than 
75 percent of health care expenditures in the United States are for 
chronic illness. And that figure is expected to grow. By 2020, $1 
trillion, or 80 percent of health expenditures, will be spent on 
chronic diseases. More than 125 million Americans live with some form 
of chronic disease, and millions of new cases are diagnosed each year. 
The challenges of treating chronic disease are myriad--patients often 
have more than one chronic condition and therefore see multiple health 
care providers. This results in un-coordinated care, duplicitous and 
sometimes contradictory treatment plans, and healthcare inefficiencies.
    Chronic diseases are especially burdensome in the Medicare program. 
Beneficiaries with more than five chronic conditions account for only 
20 percent of the Medicare population, yet 66 percent of Medicare's 
budget is spent treating these individuals. We can and should do more 
to improve disease management programs under the Medicare program.
The Burden of Diabetes
    Diabetes poses a particular burden for the Medicare program. As you 
know, diabetes is a serious, debilitating chronic illness that afflicts 
more than 18 million Americans, including eight million Medicare 
beneficiaries. An additional eight million seniors suffer from a 
condition known as ``pre-diabetes'' that, when left untreated, will 
develop into diabetes.
    Diabetes' devastating complications--kidney failure, blindness, 
lower extremity amputation, heart disease and stroke--result in 
significant costs to the program. Although beneficiaries with diabetes 
comprise only 20 percent of the Medicare population, spending on 
diabetes related complications account for more than 30 percent of 
expenditures. With the current obesity epidemic, the aging of the baby 
boom generation, and the expected growth in numbers of Medicare 
beneficiaries with diabetes, the cost of diabetes related complications 
could seriously undermine the financial stability of the Medicare 
program.
The Value of Diabetes Self Management Training
    While the costs and complications of diabetes are daunting, there 
is much that can be done to prevent diabetes and reduce its 
complications. Patient self-management is cornerstone of chronic 
disease care, and in no case is that more true than diabetes self-
management. Diabetes self-management training (DSMT), also called 
diabetes education, provides the skills that patients with diabetes 
need to successfully manage their illness. DSMT helps patients identify 
barriers, facilitate critical thinking and problem solving and develop 
coping skills to effectively manage their diabetes. Initial diabetes 
self-management training occurs over a four to six month period, with 
additional follow-up as needed.
    The goal of diabetes self-management training is to achieve 
measurable behavioral change outcomes in areas such as physical 
activity; meal planning; medication administration; blood glucose 
monitoring; problem solving for high and low blood glucose and sick 
days; reducing risk factors for diabetes-related complications; and 
living with diabetes/psychosocial adaptation. National standards for 
Diabetes Self-Management Programs were established in the 1980s.
    Certified Diabetes Educators (CDEs) are highly trained healthcare 
professionals--often nurses, pharmacists, or dieticians--who specialize 
in helping people with diabetes develop these skills. To earn the CDE 
designation, a health care professional must be licensed or registered, 
or have received an advanced degree in a relevant public health 
concentration, have professional practice experience and have met 
minimum hours requirements in diabetes self-management training, and 
have met certification and recertification requirements.
    The value of DSMT is well documented. The Diabetes Prevention 
Program study of 2002 demonstrated that participants (all of whom were 
at increased risk for developing type 2 diabetes) were able to reduce 
that risk by implementing the lifestyle changes taught as part of DSMT. 
Additional studies have found that patients with diabetes achieved 
significantly better outcomes when part of comprehensive diabetes 
management programs.
Diabetes Self Management Training and the Medicare Program
    The Chronic Care Improvement Program is an important measure aimed 
at improving the quality of care for chronically ill beneficiaries 
under Medicare fee-for-service. While we support this effort, we feel 
it is important to note that this is not the first time that Congress 
has attempted to improve disease management for beneficiaries with 
diabetes.
    Congress recognized the value of DSMT when it enacted the Balanced 
Budget Act (BBA) of 1997. Section 4105 of BBA provided coverage and 
reimbursement for DSMT by physicians and other individuals or providers 
who were eligible to bill Medicare for services or supplies, provided 
that DSMT was furnished incident to other covered services, regardless 
of whether those items or services are related to diabetes care.
    Under current law, all recognized providers can bill Medicare for 
DSMT, provided CMS guidelines and American Diabetes Association 
education recognition criteria are met. Because Certified Diabetes 
Educators are not recognized as Medicare providers, however, they are 
precluded from directly billing Medicare for DSMT. They must bill 
either through a hospital-based program or through a physician's 
office. We believe that it is counterintuitive and counterproductive to 
exclude the group of health care providers that are most skilled and 
capable of providing this critical benefit.
    This provision could also seriously threaten beneficiary access to 
DSMT. As it is, the Centers for Medicaid and Medicare Services (CMS) 
reports that the DSMT benefit is underutilized--only 30 percent of 
eligible beneficiaries are receiving DSMT. This situation is likely to 
grow worse, however, as hospital based DSMT programs are closing at a 
rate of 2-5 per month. Absent legislative action, fewer and fewer 
Medicare beneficiaries will be able to access the services of a CDE.
    H.R. 3194, introduced by Congressman Curt Weldon and Congresswoman 
Diana DeGette, would correct this problem by recognizing CDEs as 
providers under the Medicare program. This legislation would help 
realize Congress' intent in BBA, which was to expand access to DSMT 
programs for all beneficiaries with diabetes. As this committee 
considers ways to improve disease management for patients with chronic 
illnesses, we strongly recommend the enactment of H.R. 3194.
Conclusion
    In conclusion, we wholeheartedly support efforts to improve 
diabetes care, such as CCIP. We feel it is incumbent upon the Congress, 
however, to ensure that measures already in place to improve diabetes 
care--such as the DSMT benefit--are strengthened so that beneficiaries 
with diabetes can gain the critical skills they need to manage their 
illnesses.
    Thank you, Madam Chairwoman, for allowing AADE this opportunity to 
express its concerns. We welcome the opportunity to work with you, and 
this Subcommittee, to further our mutual goals of improving diabetes 
care under the Medicare program.

                                 

            Statement of the American College of Physicians
    The American College of Physicians (ACP), representing over 115,000 
internal medicine physicians and medical students, is pleased to 
provide written comments on Section 721 of the Medicare Modernization 
Act of 2003, the Medicare Chronic Care Improvement (CCI) demonstration 
program. These comments are provided in follow-up to the May 11, 2004 
hearing on the CCI program held by the Subcommittee on Health of the 
House Ways and Means Committee.
1.  Care for Chronically Ill Medicare Patients with Multiple Co-Morbid 
        Conditions is Fragmented and Unduly Costly Under Medicare Fee-
        for-Service, Making CCI Pilot Testing Crucial for Medicare's 
        Future

    The CCI program represents an attempt to study the cost-
effectiveness, quality of care outcomes, and provider and patient 
satisfaction which may result from using a coordinated care approach 
for selected chronically ill Medicare patients. According to the 
Centers for Medicare and Medicaid Services (CMS), while Medicare 
patients with 5 or more chronic conditions represent 20 percent of the 
total Medicare population, this group represents 66 percent of all 
Medicare spending, making it vital that their care be more cost-
effective. The CCI program's initial focus on patients with congestive 
heart failure or complex diabetes is a recognition by CMS that these 
beneficiaries have exceptionally high self-care burdens and high risks 
of experiencing poor clinical and financial outcomes.
    Case management of the care of chronically ill Medicare patients is 
a vital, high level service which, until now, has not been duly 
recognized and compensated under Medicare fee-for-service (FFS). Yet, 
there is accruing evidence that case management of the chronically ill 
can have a significant positive impact on the quality of patient care 
and reduce costs, when compared to receiving care in a fragmented, hit-
or-miss fashion under Medicare FFS.
    In a January 2004 Issue Brief, Georgetown University's Center on an 
Aging Society concludes that ``disease management programs can reduce 
health care use and expenditures'' by being ``successful at improving 
self-care practices and reducing use of various health care services, 
including hospital admissions and emergency room visits. As a result, 
health care expenditures for certain populations with chronic 
conditions have decreased.''
    The Disease Management Association of America (DMAA), in a paper 
titled, ``The Benefits of Disease Management in Medicare and 
Medicaid,'' cites evidence of how disease management improves quality 
of care and lowers cost. These positive findings led to DMAA's 
statement that it ``fully supports and commends the Congress and CMS 
for promoting the expansion of disease management programs in its 
efforts to modernize and revitalize Medicare+Choice and through 
coordinated care provisions of the Medicare, Medicaid, SCHIP Benefits 
Improvement and Protection Act of 2000 (BIPA), and other demonstration 
projects.''
    Unlike a number of other CMS chronic care demonstration programs, 
which are experiments with no statutory requirement for later adoption, 
the CCI program is intended to identify new approaches to coordinating 
and paying for chronic care case management which ultimately will 
become a permanent part of Medicare. As such, ACP applauds Congress's 
willingness to use the CCI pilots to determine which models of care 
oversight work best for chronically ill patients, in terms of cost-
effectiveness and improved patient outcomes, and then implement them 
nationally for the benefit of all Medicare patients.
2.  Internists Are Best Suited to Lead and Oversee the Care of 
        Chronically Ill Patients

    ACP believes strongly that a physician skilled in the management of 
multiple chronic adult illnesses should lead the care management team. 
Only doctors of internal medicine are specially trained and experienced 
in caring for these complex patients. By using a patient-centered, 
physician-guided approach to care, all elements of care are supervised 
and monitored by a single responsible medical expert, who places the 
patient's well being at the heart of care. Not only does this permit 
much tighter coordination of a patient's care than is possible with a 
disease management (DM) organization, the physician team leader is free 
to make the best choices for high quality efficient care for their 
patients, without profit motives which impact clinical decision making.
3.  A Patient-Centered, Physician-Guided CCI Pilot Model Should Include 
        a Physician Case Management Fee and Incentives for Performance

    It is ACP's position that the heightened responsibility of this 
physician team leader position, as well as its potential to produce 
better patient outcomes at lower cost, clearly warrant an augmented 
payment to physicians for the extra coordination work this entails, as 
well as an additional incentive payment for improved patient outcomes 
and lowered costs.
    ACP's position on the importance of using a patient-centered, 
physician-guided model which is linked to payment incentives is echoed 
loudly in the testimony of Robert A. Berenson, M.D., Senior Fellow at 
the Urban Institute, provided to the Subcommittee on Health on May 11, 
2004:

          ``Although the CCI program may be a good start, in my opinion 
        it is insufficient for truly addressing chronic care needs in 
        Medicare because it lacks a focused physician component . . . 
        The financial underpinnings of a typical medical practice do 
        not support physicians who actually do recognize the need to be 
        more fully engaged in the components of chronic care 
        coordination--Bounced around the system, too many Medicare 
        beneficiaries do not even recognize a particular physician who 
        is responsible for coordinating their care--Among other areas 
        that need attention is the overlooked issue of physician 
        payment policy. Simply put, the incentives inherent in most 
        fee-for-service payment systems, including Medicare's and those 
        of most private payers, penalize primary care physicians who 
        would alter their professional interactions with patients to 
        respond to the challenge posed by the reality of patients with 
        multiple complex conditions. Yet, the Medicare Modernization 
        Act mostly ignores alternative payment approaches affecting 
        physician behavior. These payment approaches should go hand in 
        hand with the new chronic care program to ensure the kind of 
        change needed to improve care for Medicare beneficiaries.''

    ACP agrees strongly with the CCI program's provision of a per 
enrollee per month case management fee to organizations winning CCI 
contracts with CMS. However, since these fees are paid to the 
contractors, we would urge CMS ensure that, wherever a physician case 
manager is the head of the care delivery team, that participating 
organizations be required to share this fee with their physician case 
managers
    The CCI program's RFP also does not explicitly call for or preclude 
contractors from paying performance bonuses to their physician case 
managers. The major issue is that contractors' are at risk for their 
case management fees, meaning if negotiated health improvement targets 
for their chronic care enrollees are not met in terms of cost savings, 
the shortfalls will be taken out of their case management fees. 
Considering the novelty of the CCI pilots in terms of care delivery 
models being tested and size of pilot populations, contractors may be 
hesitant to risk using case management fees for expanding IT adoption 
or paying physician case managers for performance in the early stages 
of the program.
    In developing health care improvement targets for CCI contractors 
and their physician case managers, it is important for CMS to keep in 
mind that these performance goals be limited to elements of care 
completely under the physician's control. To the degree possible, each 
physician case manager's caseload must be appropriately risk adjusted 
for the complexity of their patients, while patients who fail to comply 
with prescribed care plans should not be counted when measuring 
physician performance.
    The CCI program is available to a wide array of organizations: 
Health insurers, disease management companies, physician group 
practices, integrated delivery systems, consortia of these entities, 
and any other legal entity that meets the requirements of the 
solicitation in the Federal Register. The scope of the CCI program is 
vast, operating in at least 10 pilot locations and requiring each 
contractor to oversee the care of 15,000 to 30,000 Medicare 
beneficiaries--far out of the reach and capabilities of the small 
physician group practice. Among ACP's practicing members, 67.4 percent 
are in practices of 10 or less, while 50.2 percent are in practices of 
5 or less. Clearly, the CCI program is biased in favor of large 
organizations such as DMs, making it virtually impossible that a small 
physician group practice could win a CCI contract.
    Since, by statute, elements of the CCI program pilots which prove 
themselves successful will eventually become a permanent components of 
Medicare, it is critically important to have practicing physicians 
fully vested in the all the care models tested, in order to demonstrate 
that physician case management is the key to successful CCI efforts
4.  Use of Advanced Information Technology Should be an Essential 
        Element of CCI Phase I Pilot Testing

    ACP is a strong advocate of bringing the advances of information 
technology (IT) to enhance the quality of patient care, as reflected in 
two major papers released in 2004 (see references at end of this 
testimony). We believe optimal case management of chronic care patients 
cannot occur without instantly accessible electronic information from 
all sources of care, the goal of an interoperable national health care 
information system--a goal ACP supports and is actively pursuing. The 
CCI program represents an ideal opportunity to provide incentives for 
adoption of quality enhancing IT. Having rapid electronic access to all 
vital patient information, as well as clinical decision support 
software such as ACP's Physician Information and Education Resource, 
will be crucial in assuring the physician case manager can optimally 
serve his/her patients, which is why incentives for IT adoption are so 
important. The CCI program's Request for Proposal (RFP) does encourage 
contractors to assist care providers in adopting enhanced 
communications technology, though any such support they provide to 
physicians and other providers must come out of their negotiated case 
management fee.
    However, ACP believes there is sufficient leeway for CMS, in 
negotiating case management fees and health improvement targets with 
contractors, to allow contractors to offer information technology 
incentives. ACP would thus urge CMS to assign one or more of its pilot 
sites to test use of these additional incentives.
Summary
    ACP strongly encourages CMS to ensure that one or more of its CCI 
pilot sites utilize a patient-centered, physician-guided approach to 
care as defined above, to be certain this model is fairly evaluated 
against all other models tested. ACP also urges this model include a 
physician case management fee and incentives for physician performance 
and IT adoption. If such a model is not selected for testing in Phase I 
of the CCI program, ACP would ask Congress to pass corrective 
legislation to address this major oversight.
    ACP also heartily endorses CMS's stated goals for the CCI pilot 
program, listed on the CMS website, as follow:

      It leads toward a stronger focus on improving health 
outcomes for prospectively identified targeted populations who are not 
well served by the fragmented FFS health care delivery system.
      It creates a new focus on setting measurable performance 
goals and tracking improvements in clinical quality, provider and 
beneficiary satisfaction, and cost-effectiveness in a regional, 
population-based framework.
      It develops and tests the concept of tying contractor 
payment to results in achieving quality and cost targets and 
satisfaction levels.
      It helps modernize Medicare by creating incentives for 
the private sector to harness advances in information technology and 
innovation in care management on behalf of FFS Medicare beneficiaries
      It addresses quality failings without changing 
beneficiary's benefits, providers, or access to care.
      It is an approach that is regional, yet potentially 
replicable nationally.
      It is a substantial investment for those beneficiaries 
who need it most that will help reduce avoidable costs.
      Minority populations suffer disproportionately from 
chronic diseases and will stand to benefit most from the program.

    ACP urges CMS to ensure that a physician-centric CCI model is 
tested at a least one of its 10 pilot sights. ACP also stands ready to 
work with any CCI bidders that offer a physician-centric model that 
includes the incentives identified above, and would also encourage use 
of its clinical decision support tool, PIER. For any bidder which 
offers a physician-centric model which, upon close inspection meets all 
ACP requirements, the College may be willing to endorse the bidder's 
proposal and encourage ACP members residing in that particular 
geographic area to participate in the pilot program

                               References

    \1\ The Paperless Medical Office: Digital Technology's Potential 
for the Internist, ACP Discussion Paper, March 2004. Available at: 
http://www.acponline.org/hpp/paperless.pdf?hp
    \2\ Enhancing the Quality of Patient Care Through Interoperable 
Exchange of Electronic Healthcare Information, ACP Policy Paper, April 
2004. Available at: http://www.acponline.org/hpp/quality_care.pdf?hp

                                 

      Statement of American Geriatrics Society, New York, New York
    The following written testimony is on behalf of the American 
Geriatrics Society (AGS), an organization representing geriatricians 
and other health care professionals dedicated to the care of older 
adults.
Brief History of Geriatrics
    Geriatric medicine promotes preventive care, with emphasis on care 
management and coordination that helps patients maintain functional 
independence in performing daily activities and improves their overall 
quality of life. With an interdisciplinary approach to medicine, 
geriatricians commonly work with a coordinated team of other providers 
such as nurses, pharmacists, social workers, and others. The geriatric 
team cares for the most complex and frail of the elderly population.
    Geriatricians are primary--care oriented physicians who are 
initially trained in family practice or internal medicine, and who, 
since 1994, are required to complete at least one additional year of 
fellowship training in geriatrics. Following their training, a 
geriatrician must pass an exam to be certified and then pass a 
recertifying exam every 10 years. There are almost 7,000 geriatricians 
in the United States.
The Frail Elderly/Chronically Ill Population
    Americans are not dying typically from acute diseases as they did 
in previous generations. The Partnership for Solutions, a Robert Wood 
Johnson founded initiative of which we are a partner, has found that 
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.
    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.
Medicare Reform and the Geriatric Patient: How Does Disease Management 
        Differ from Geriatric Care?
    The Medicare program has recently undergone major reforms: the 
addition of outpatient prescription drug coverage and disease 
management. Will these new changes address the problems faced by frail 
older persons and the physicians who treat them?
    Little is being done to change the nature of the system from acute 
episode care to sustained chronic care. As today's hearing notes, the 
Medicare bill included several new chronic care provisions, including a 
new study on chronic care, a small scale physician-oriented 
demonstration program, and, of relevance today, a larger scale disease 
management pilot program. Unfortunately, the new disease management 
program may not adequately address the needs of persons with multiple 
chronic conditions.
    The new disease management pilot program establishes chronic care 
improvement organizations (CCIOs) under the Medicare fee-for-service 
program. CCIOs, which may include disease management organizations, 
health insurers and integrated delivery systems, will be required to 
improve clinical quality and beneficiary satisfaction and achieve 
spending targets in Medicare for beneficiaries with certain chronic 
conditions. CCIOs will be held at full risk for their role in helping 
beneficiaries manage their health through decision-support tools and 
the development of a clinical database to track beneficiary health.
    Why aren't disease management programs sufficient to transform the 
system of care for frail older persons?
    Disease management covers many different activities influencing 
individual health status and the use of health care services. 
Typically, disease management programs treat patients with specific, 
clearly-defined diseases, such as diabetes, asthma, congestive heart 
failure or chronic obstructive pulmonary disease where the evidence is 
clear and management strategies are straightforward. Disease management 
focuses on patient education and evidence-based self-management 
strategies as tools to improve care. Disease management relies on 
improved disease outcomes to improve health and reduce disease-specific 
health care utilization. Patients who are the best candidates for 
disease management programs are those who have the motivation and 
cognitive skills to appreciate their role in illness management and 
implement self-management strategies.
    Geriatric care is another term for coordinated care or care 
management. Care coordination programs generally enroll patients with 
multiple chronic conditions. The combinations of conditions puts the 
patients at high risk of medical and social complications that requires 
specific interventions tailored to the specific needs of each enrollee. 
These interventions include an array of services, such as telephone 
coordination with other physicians, extensive family caregiver support, 
referrals for social supports, and high levels of medication 
management.
    While disease management is appropriate for certain Medicare 
beneficiaries with a single chronic condition, such as diabetes, asthma 
or hypertension, it fails to address key issues for patients that have 
multiple chronic illnesses and/or dementia.  This issue is further 
explored below.
    First, disease management is not typically appropriate for persons 
with more than one chronic condition. Imagine putting a patient with 
diabetes, hypertension, dementia, asthma, and COPD into a disease 
management program for each of these conditions. Most of the people who 
are most costly to Medicare have multiple conditions and the care for 
these people can not be segmented into different disease management 
programs. In fact, many of these individuals with one or more chronic 
conditions also have Alzheimer's disease or another dementia. Disease 
management focusing on diabetes without taking dementia into account 
wouldn't be successful. While some disease management companies suggest 
that they have taken a new holistic approach to patient care, this 
evidence remains anecdotal.
    Second, when used for patients with multiple co-morbidities, 
disease management can disrupt a patient's critical relationship with a 
primary care physician. Some disease management programs utilize 
specialists that focus only on specific interventions tailored to one 
condition. The nature of chronic illness requires a comprehensive, care 
coordination based approach that utilizes a variety of interventions. 
Disease management programs that lack a physician component do little 
to coordinate the care of older persons with multiple illnesses and 
little to mitigate the safety hazards of fragmented, redundant care 
delivered by multiple providers. Significantly, a recent, large-scale 
Mathematica best practices study noted that maintaining and fostering 
the physician-patient relationship is critical to the success of 
chronic care delivery.
    Third, a major component of disease management involves self-
management and patient education. These simply do not work for persons 
with Alzheimer's disease or a related dementia. Diabetes self 
management often involves patient education or patient self management 
which is inappropriate for a beneficiary with Alzheimer's disease or 
related dementia. Likewise, disease management for asthma and 
hypertension depends on patient compliance with treatment 
recommendations; this would not be effective for persons with 
Alzheimer's disease or related dementia. In comparison, care 
coordination models rely on engaging family and caregivers and 
maximizing their involvement.
    Fourth, disease management does not always address functional 
issues that are common in old age or the complications that arise from 
multiple chronic illnesses.
    Fifth, treatment guidelines provide little guidance when multiple 
chronic illnesses co-exist. Therapeutic decisions are less 
straightforward, making treatment decisions less amenable to 
algorithmic self-management protocols.
    Finally, disease management programs place little importance on 
using social support services, a major component of a care coordination 
approach which relies on a holistic model of patient care.
    Additional physician participation and attention to the needs of 
multiple chronic conditions and especially dementia could improve 
project outcomes, but the model remains different from the approach of 
a new fee-for-service care coordination benefit.
    Instead, the AGS recommends the legislative authorization of a new 
Medicare fee-for-service chronic care benefit, which would include a 
physician assessment and team based care management benefit. This is 
based on the Geriatric Care Act, legislation introduced in the House by 
Congressman Gene Green (D-TX) and in the Senate by Senator Blanche 
Lincoln (D-AR) and the Medicare Chronic Care Improvement Act, 
legislation introduced in the House by Congressman Pete Stark (D-CA) 
and in the Senate by Senator John D. Rockefeller IV (D-WVA).
Conclusion
    While the introduction of the CCIO program represents a modest step 
forward in the delivery of chronic care, we remain convinced that a 
significant portion of our nation's needs will remain unmet without the 
addition of a related but different physician directed chronic care 
benefit within the fee-for-service system. We hope to work with the 
Subcommittee on Health on such a change.

                                 

   Statement of Sandeep Wadhwa, 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 May 11, 2004 hearing on the Medicare 
Chronic Care Improvement Program (CCIP).
    As the world's largest healthcare services company, McKesson is an 
industry leader in the provision of disease management services to the 
Centers for Medicare and Medicaid Services (CMS) through our Medicaid 
fee-for-service contracts with seven states. We commend the members of 
the Committee and the Congress for incorporating a disease management 
program for Medicare beneficiaries within the Medicare Modernization 
Act and are pleased to share our perspective on the use of disease 
management programs to improve quality and clinical outcomes in CMS 
populations while decreasing health care costs.
    Our disease management clients cover a broad host of purchasers of 
health care, including:

      State contracts for the Fee-for-Service Medicaid 
populations in Mississippi, Washington, Oregon, Colorado, Florida, New 
Hampshire, and Montana
      Managed Medicaid plans such as Triple-C (Puerto Rico) and 
the Santa Clara Family Health Plan
      Individual high risk insurance pools like CoverColorado 
and the Oklahoma Health Insurance High Risk Pool, Utah High Risk Pool
      Commercial health plans such as Blue Cross Blue Shield 
Federal Employees Program and Blue Cross Blue Shield of Texas
      Medicare+Choice plans such as Order of Saint Francis and 
Group Health Insurance

    McKesson is the industry leader in care management services and 
software and also 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 170 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.
    Over the past three years, many states have turned to disease 
management programs to help contain their rising Medicaid budgets and 
provide better services for low-income population groups. Our analyses 
of the Medicaid fee-for-service (FFS) population show a surprising 
similarity to many of the issues confronting the Medicare FFS 
population. In particular, the blind and disabled Medicaid utilization 
patterns are similar to the Medicare population that we serve in 
Medicare+Choice plans. Like the Medicaid FFS blind and disabled 
population, the Medicare population has highly complex health care 
needs. Both groups are considered vulnerable populations because of 
their age, poverty or disability. Additionally, both are able to see 
any physicians or emergency rooms that accept Medicaid or Medicare 
payment.
    In the following sections, we provide comments on the CCIP through 
the lens of our experience overseeing similar interventions in the 
Medicaid FFS population. Some of the specific concerns likely to be 
factors in the CCIP have been addressed in our Medicaid FFS experience.
Patient Identification and Participation
    One of the most significant barriers to the success of the CCIP 
will be successfully engaging patients to participate in these 
interventions in a manner that is respectful and non-discriminatory. 
Experience in the Medicaid fee-for-service setting is illustrative. 
Patients are identified for these programs primarily through historical 
claims analysis. This process is highly efficient and accurate and 
allows for a comprehensive population based identification method 
rather than relying on costly and more fallible chart reviews at 
physicians' offices. Initially, the physicians of these identified 
patients are also contacted. Direct mailings then go out to the 
patients informing them of the chronic care management program's design 
and goals. Community based awareness campaigns help to raise awareness 
among patients and physicians.
    Once patients have been identified, enrollment campaigns ensue. 
Initial enrollment and assessment takes place telephonically or through 
face-to-face meetings with patients. In our experience, fewer than five 
percent of eligible patients have opted out of these programs, and the 
highest rates of participation are among those who are the sickest, the 
frailest and the most vulnerable. These patients are also the heaviest 
utilizers of services and thus afford the greatest opportunities for 
generating savings. Interviews we have conducted indicate tremendous 
appreciation for these outreach services. These programs also comply 
with all HIPAA standards. The proposed methodology for enrollment for 
the CCIP by CMS will largely follow this Medicaid model. In our 
experience, this process is highly respectful, professional, and well-
received by beneficiaries.
    In the Medicare population, we also anticipate much higher rates of 
cognitively impaired beneficiaries due to dementia, which is similar to 
the cognitive impairment of the Medicaid population due to 
schizophrenia. Disease management programs which serve the Medicaid 
schizophrenia population make strong efforts to involve the 
beneficiaries' caregivers. Caregiver involvement is a key tenet for all 
disease management programs; for patients with cognitive impairments 
and insight disorders, it is especially critical. Our experience has 
shown that caregivers appreciate the emotional support, skill training, 
and counseling services that are provided. Furthermore, we have found 
that these programs help sustain and renew caregivers in providing care 
for an often unappreciated and demanding role. Similar services need to 
be provided to those who are acting as caregivers to the Medicare 
population.
Provider Involvement
    During the recent hearing, concern was expressed that those who are 
awarded CCIP contracts to provide disease management services will find 
it challenging ``to develop the necessary links with physicians''.\1\ 
Most disease management programs are successfully able to overcome 
physicians' concerns that these programs replace or disrupt their care. 
Prior to contacting patients, disease management organizations 
typically engage in an extensive physician awareness campaign about the 
programs' methods and objectives. These efforts have dramatically eased 
physicians' concerns about the nature of disease management programs 
and have increased physician participation. It is critical to educate 
physicians that disease management programs promote adherence to their 
treatment recommendations and provide their patients with education 
services to augment their efforts. In Mississippi, McKesson has 
partnered with the University of Mississippi Medical Center and with 
the Mississippi Primary Health Care Association, the Mississippi trade 
organization of community health centers, to educate Mississippi 
providers about the disease management initiative. Similar types of 
interventions will be beneficial for providers before Medicare patients 
are enrolled.
---------------------------------------------------------------------------
    \1\ Robert Berenson, Testimony to Subcommittee on Health of House 
Ways and Means Committee, May 11, 2004.
---------------------------------------------------------------------------
    A key issue in treating the Medicare population is the slow 
adoption of national clinical practice guidelines. The elderly are more 
apt to be under treated. An important component of disease management 
interventions is to accelerate the adoption of these national clinical 
practice guidelines. Patients are educated on the guideline 
recommendations and encouraged to discuss the appropriateness of the 
recommendations with their physicians. Disease management firms are 
able to present reports to physicians on the gaps that exist between 
practice and guideline recommendations. Patient safety deliberations 
often focus on medical errors that have been committed, rather than on 
errors which result from omitted treatment. Through clinical decision 
support tools and patient empowerment, disease management programs are 
designed to reduce these errors of omission.
Care Coordination
    In Medicare FFS, patients often see multiple physicians without one 
serving as a primary coordinator of care. The absence of a physician 
``quarterback'' contributes to excessive testing, medication errors, 
and miscommunications. A key dimension of the CCIP will be to assist 
the patient in identifying a ``medical home'', which is a physician or 
a clinic primarily responsible for treating and managing the patient's 
chronic condition. Once a medical home is established, the disease 
management nurse cements the relationship by serving as an advocate for 
the patient and informing the physician of symptoms, self management 
practices, and gaps with nationally accepted clinical guidelines. The 
quality of the patient/physician interaction is enhanced through 
patient education and nurse advocacy.
    CMS has recommended greater communication and collaboration among 
those involved in caring for the elderly, and the CCIP provides 
incentives for such increased collaboration between disease management 
organizations and providers. McKesson welcomes the opportunity to 
further integrate our services and enhance our collaboration with 
provider organizations to fulfill the vision of a population-based, 
patient-centered, provider-coordinated chronic care model.
Proven Benefits from Disease Management Programs
    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. Overall, patients 
in our programs have reported very high satisfaction with the service 
and noted improvements in their overall quality of life. Attached are 
case studies that summarize the positive results achieved in the 
Washington, Oregon and Mississippi state Medicaid programs.
Conclusion
    In conclusion, the experience we have obtained from providing 
Medicaid FFS disease management services indicates that many of the 
expected barriers and concerns with the Medicare population can be 
addressed and overcome. Realization of cost savings, patient 
participation, provider involvement, adherence to guidelines and 
coordination of care are all barriers that have been surmounted in 
similar settings, through a rigorous process that provides the 
necessary respect and privacy for those who participate in the program. 
The outcomes-focused, evidence-based interventions provided in disease 
management programs improve patients' ability to participate in their 
care and to assist physicians by reinforcing their medical 
recommendations. As Congress continues to deliberate about new ways to 
improve the quality and delivery of health care, we believe the greater 
utilization of disease management programs is a vital way to enhance 
care outcomes for the elderly and other vulnerable populations while 
concurrently reducing the cost of delivering better care.
    We look forward to working with you and members of this 
Subcommittee as you address these important concerns.

                                 

Statement of Brian J.G. Pereira, National Kidney Foundation, New York, 
                                New York
    The National Kidney Foundation (NKF) congratulates Congress for 
authorizing the Secretary of the Department of Health and Human 
Services to develop a program of chronic care improvement under 
Subtitle C of the Medicare Prescription Drug, Improvement and 
Modernization Act of 2003 (MMA). This program could promote better 
outcomes for the 20 million Americans who have chronic kidney disease 
and are at risk for developing End Stage Renal Disease (ESRD), many of 
whom are Medicare beneficiaries. Nevertheless, we maintain that this 
chronic care improvement program would be enhanced if the Centers for 
Medicare and Medicaid Services (CMS) included a specific focus on 
chronic kidney disease in its implementation of the legislative 
mandate. We recommend that this be accomplished in two ways: first, by 
establishing a chronic care improvement program specifically designed 
for Medicare beneficiaries with chronic kidney disease, and secondly, 
by refining the request for applications for diabetes care and heart 
failure that the CMS published on April 20, 2004. Evidence-based 
clinical practice guidelines developed by the NKF provide the 
scientific foundation for the development of the programs that we 
recommend. Those guidelines are part of NKF's Kidney Disease Outcomes 
Quality Initiative (K/DOQI) program.
I.  Basis for a Chronic Care Improvement Program for Chronic Kidney 
        Disease
    MMA provides that chronic care improvement programs shall be 
designed to improve clinical quality and patient satisfaction for 
Medicare beneficiaries with one or more threshold conditions as well as 
enhance provider satisfaction and reduce avoidable costs. The term 
``threshold condition'' is defined in section 721 (a)(2)(D) of Public 
Law 108-173 as a chronic condition, such as congestive heart failure, 
diabetes, chronic obstructive pulmonary disease (COPD), or other 
diseases or conditions, as selected by the Secretary as appropriate for 
the establishment of a chronic care improvement program.'' (Emphasis 
added.) For the reasons stated below, we believe that chronic kidney 
disease meets the statutory criteria for a chronic care improvement 
program.

      a.  The K/DOQI Guidelines for the Evaluation, Classification and 
Stratification of Chronic Kidney Disease establish that chronic kidney 
disease is a major public health problem in the United States, based on 
data from the 1998 report from the third cycle of the National Health 
and Nutrition Examination Survey (NHANES III). NHANES III, conducted 
from 1988 to 1994, estimated that 6.2 million individuals over 12 years 
of age had reduced kidney function, as defined by serum creatinine 
concentration. This represents an almost 30-fold higher prevalence of 
reduced kidney function compared to the prevalence of ESRD during the 
same interval.
      b.  Timely identification and treatment of patients at risk of 
developing End Stage Renal Disease is crucial. The United States Renal 
Data System's (USRDS) 2003 Annual Report estimates that the number of 
patients with ESRD may reach 2.24 million by 2030. (As of December 31, 
2002 there were a total of 297,928 people on dialysis in the U.S.) The 
rates of ESRD are high in both minority and elderly populations and the 
projected growth of minority populations, coupled with the rising age 
of the post-World War II ``baby boomers,'' show the potential for a 
dramatic increase in the number of people needing ESRD therapy in the 
next 30 years. Disease management could play a significant role in 
delaying and preventing the progression of chronic kidney disease and/
or its complications and, thereby reduce avoidable costs. See, for 
example, the study by Hock Yeoh, et al., ``Impact of Predialysis Care 
on Clinical Outcomes,'' published in Hemodialysis International last 
year.
      c.  The K/DOQI Clinical Practice Guidelines for Chronic Kidney 
Disease: Evaluation, Classification, and Stratification specify the 
diagnostic criteria that can be used to identity patients in the 
various stages of chronic kidney disease and suggest interventions that 
would be appropriate to prevent or delay the progression of chronic 
kidney disease and/or its complications at each stage.
II.  Kidney Disease and Chronic Care Improvement for Diabetes and Heart 
        Failure
    The Notice that CMS published on April 20, 2004 to implement the 
Section 721 initiative reads: ``In these initial programs, we will 
focus primarily on implementing and evaluating programs for 
beneficiaries with congestive heart failure (CHF) and/or diabetes with 
significant co-morbidities (hereafter referred to as complex 
diabetes).'' (Emphasis added.) However, the terms ``diabetes with 
significant co-morbidities'' and ``complex diabetes'' are not defined 
anywhere in this 76-page document. The CMS should specify that kidney 
disease is a significant co-morbidity for Medicare beneficiaries with 
diabetes and that relevant diagnostic and therapeutic interventions for 
individuals with diabetes and kidney disease be included in proposals 
to participate in this pilot project.
    According to the USRDS 2003 Annual Report, the population of 
existing patients whose ESRD is caused by diabetes, which tripled from 
1990 to 2000, is expected to grown ten-fold by 2030, to 1.3 million, 
and the number of patients diagnosed each year with ESRD caused by 
diabetes is expected to grow from 41,000 in 2000 to 300,000 in 2030, a 
600 percent increase. Furthermore, according to Guideline 14 of the 
National Kidney Foundation's Guidelines for Evaluation, Classification 
and Stratification of Chronic Kidney Disease, the risk of 
cardiovascular disease, retinopathy and other diabetic complications is 
higher in patients with diabetes and kidney disease than in diabetic 
patients without kidney disease.
    An expanded focus on chronic kidney disease in Medicare 
beneficiaries with diabetes would require expansion of the initial 
chronic care improvement program guidelines. For example, on April 20, 
2002, the CMS published a core set of clinical quality indicators for 
which applicants are required to establish expectations. ``Monitoring 
for nephropathy (test for microalbumin)'' is appropriately included 
among the diabetes measures. On the other hand, there is an important 
indicator of chronic kidney disease missing from this core set. 
Medicare beneficiaries with diabetes should be evaluated for possible 
decline in kidney function through estimates of Glomerular Filtration 
Rate (GFR). GFR estimates are the best overall indices of the level of 
kidney function. Individuals with reduced GFR should, in turn, be 
evaluated and treated for complications of reduced GFR. This includes 
measurement of anemia, nutritional status and bone disease. Estimated 
GFR should be monitored yearly in patients with chronic kidney disease 
and diabetes.
    Similarly, non-diabetic patients with chronic kidney disease have 
an increased prevalence of cardiovascular disease compared to the 
general population. (K/DOQI Guideline 15 for Evaluation, Classification 
and Stratification of Chronic Kidney Disease.) Measures for chronic 
care improvement for Medicare beneficiaries with heart failure should 
be expanded to include assessment of kidney function (by GFR 
measurement) and kidney damage (by tests for protein in the urine).
III.  Conclusion
    The National Kidney Foundation respectfully requests that the 
Committee monitor the implementation of the MMA chronic care 
improvement program by the CMS to insure that Medicare beneficiaries 
with chronic kidney disease, as a co-morbidity with diabetes and/or 
heart failure, benefit to the fullest extent possible from the agency's 
initial program announcement. Furthermore, while diabetes is the 
largest single cause of End Stage Renal Disease, constituting 44% of 
new ESRD cases annually, more than half of new ESRD patients do not 
have diabetes. Additionally, there could be millions of Medicare 
beneficiaries with chronic kidney disease but without diabetes, who 
could benefit from the diagnostic and therapeutic interventions that 
are recommended by the K/DOQI program. Therefore, we respectfully 
request that the Committee urge the CMS to develop a chronic care 
improvement program for chronic kidney disease in the near future.

                                 
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