[Senate Hearing 114-246]
[From the U.S. Government Publishing Office]








                                                        S. Hrg. 114-246

    A PATHWAY TO IMPROVING CARE FOR MEDICARE PATIENTS WITH CHRONIC 
                               CONDITIONS

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

                                HEARING

                               before the

                          COMMITTEE ON FINANCE
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 14, 2015

                               __________

                                     

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                          COMMITTEE ON FINANCE

                     ORRIN G. HATCH, Utah, Chairman

CHUCK GRASSLEY, Iowa                 RON WYDEN, Oregon
MIKE CRAPO, Idaho                    CHARLES E. SCHUMER, New York
PAT ROBERTS, Kansas                  DEBBIE STABENOW, Michigan
MICHAEL B. ENZI, Wyoming             MARIA CANTWELL, Washington
JOHN CORNYN, Texas                   BILL NELSON, Florida
JOHN THUNE, South Dakota             ROBERT MENENDEZ, New Jersey
RICHARD BURR, North Carolina         THOMAS R. CARPER, Delaware
JOHNNY ISAKSON, Georgia              BENJAMIN L. CARDIN, Maryland
ROB PORTMAN, Ohio                    SHERROD BROWN, Ohio
PATRICK J. TOOMEY, Pennsylvania      MICHAEL F. BENNET, Colorado
DANIEL COATS, Indiana                ROBERT P. CASEY, Jr., Pennsylvania
DEAN HELLER, Nevada                  MARK R. WARNER, Virginia
TIM SCOTT, South Carolina

                     Chris Campbell, Staff Director

              Joshua Sheinkman, Democratic Staff Director

                                  (ii)












                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page
Hatch, Hon. Orrin G., a U.S. Senator from Utah, chairman, 
  Committee on Finance...........................................     1
Wyden, Hon. Ron, a U.S. Senator from Oregon......................     3

                               WITNESSES

Conway, Patrick, M.D., M.Sc., Acting Principal Deputy 
  Administrator, Deputy Administrator for Innovation and Quality, 
  and Chief Medical Officer, Centers for Medicare and Medicaid 
  Services, Department of Health and Human Services, Baltimore, 
  MD.............................................................     6
Miller, Mark E., Ph.D., Executive Director, Medicare Payment 
  Advisory Commission (MedPAC), Washington, DC...................     8

               ALPHABETICAL LISTING AND APPENDIX MATERIAL

Conway, Patrick, M.D., M.Sc.:
    Testimony....................................................     6
    Prepared statement...........................................    35
    Responses to questions from committee members................    42
Hatch, Hon. Orrin G.:
    Opening statement............................................     1
    Prepared statement...........................................    63
Miller, Mark E., Ph.D.:
    Testimony....................................................     8
    Prepared statement...........................................    64
    Responses to questions from committee members................    73
Wyden, Hon. Ron:
    Opening statement............................................     3
    Prepared statement...........................................    83

                             Communications

American College of Clinical Pharmacy and College of Psychiatric 
  and Neurologic Pharmacists.....................................    85
Association for Community Affiliated Plans.......................    87
National Kidney Foundation.......................................    89
Wesley Enhanced Living...........................................    91


                                 (iii)
 
                      A PATHWAY TO IMPROVING CARE
                       FOR MEDICARE PATIENTS WITH
                           CHRONIC CONDITIONS

                              ----------                              


                         THURSDAY, MAY 14, 2015

                                       U.S. Senate,
                                      Committee on Finance,
                                                    Washington, DC.
    The hearing was convened, pursuant to notice, at 10:07 
a.m., in room SD-215, Dirksen Senate Office Building, Hon. 
Orrin G. Hatch (chairman of the committee) presiding.
    Present: Senators Grassley, Crapo, Thune, Burr, Isakson, 
Scott, Wyden, Cantwell, Menendez, Carper, Cardin, Brown, 
Bennet, Casey, and Warner.
    Also present: Republican Staff: Erin Dempsey, Health Care 
Policy Advisor; and Katie Simeon, Health Policy Advisor. 
Democratic Staff: Hannah Hawkins, Research Assistant; Elizabeth 
Jurinka, Chief Health Policy Advisor; and Matt Kazan, Health 
Policy Advisor.

 OPENING STATEMENT OF HON. ORRIN G. HATCH, A U.S. SENATOR FROM 
              UTAH, CHAIRMAN, COMMITTEE ON FINANCE

    The Chairman. The committee will come to order.
    Today's hearing signals the Finance Committee's first step 
in a bipartisan process that will continue over the next 6 
months. Ranking Member Wyden and myself and other members of 
the committee have expressed strong interest in understanding 
the impact chronic care coordination programs have on Medicare. 
Chronically ill patients account for a large percentage of 
Medicare spending.
    In 2010, more than two-thirds of Medicare beneficiaries had 
multiple chronic conditions, while 14 percent had six or more. 
Beneficiaries with six or more chronic conditions accounted for 
46 percent of all Medicare spending. In fact, fee-for-service 
Medicare spent an average of more than $32,000 per beneficiary 
with six or more chronic conditions compared to an average of 
around $9,000 for all other patients.
    Left unresolved, this situation can only get worse. 
Researchers at the Centers for Disease Control and Prevention 
found an increasing number of adults between 45 and 64 years of 
age--members of the baby boom generation--living with multiple 
chronic conditions, signaling even higher future spending for 
the Medicare program.
    We have to find ways to provide high quality care at 
greater value and lower cost, all without adding to our 
burgeoning deficit. The good news is that the successful 
Medicare Advantage program gives beneficiaries the option to 
receive covered benefits from private plans that are 
incentivized to manage care across all settings. That explains 
why 15.7 million beneficiaries, or 30 percent of Medicare 
participants, chose a Medicare Advantage plan in 2014.
    I am concerned that ongoing payment cuts and changes to the 
risk adjustment and quality measurements may be putting these 
plans at a disadvantage. Traditional fee-for-service Medicare 
still fails to properly incentivize providers who engage in 
labor- and time-intensive patient care coordination. While 
disease management and chronic care coordination have been 
widely used by 
private-sector health insurers, their application in fee-for-
service Medicare has been largely restricted to demonstration 
programs.
    Since Obamacare became law, there has been an increased 
focus on programs like Accountable Care Organizations and 
medical homes. But for more than a decade, the Centers for 
Medicare and Medicaid Services, or CMS, has piloted numerous 
demonstration programs to find out what does and does not work, 
and they want to find out what really works to improve health 
outcomes for patients with chronic diseases.
    These demonstration programs have shown, at best, mixed 
results. According to one Congressional Budget Office report, 
CMS paid 34 programs in six major demonstrations to provide 
disease management or care coordination services in traditional 
Medicare. On average, these 34 programs had little or no effect 
on hospital admissions or Medicare spending.
    Now, I know that the Obama administration is actively 
pursuing new care coordination programs through the Center for 
Medicare and Medicaid Innovation. My hope is that this research 
will yield long-term results. By identifying cost-effective, 
data-driven ways to improve patient health, policymakers can 
better target scarce Federal resources to get more value for 
the dollars spent. But developing and implementing new policies 
designed to improve disease management, streamline care 
coordination, improve quality, and reduce Medicare costs is a 
daunting challenge.
    The lack of success in past demonstration programs 
underscores the inherent limitations of traditional Medicare's 
fee-for-service payment system, one that rewards providers for 
delivering increased volume of services, but does not 
incentivize them to coordinate medical care. Additionally, 
programs that try to improve outcomes for patients with chronic 
conditions struggle to identify successful interventions that 
motivate individuals to alter their health habits. 
Beneficiaries often have physical and cognitive challenges that 
limit their ability to effectively communicate with multiple 
providers.
    So I think this committee understands that we have a very 
difficult task in front of us. There are no easy answers. That 
is why I am looking forward to hearing from our panel of expert 
witnesses.
    I want to thank Dr. Conway and Dr. Miller for appearing 
before us today. They will help us understand which care 
coordination efforts are most effective, which policies have 
failed, and explain why. But the committee is not stopping 
there. After this hearing, we plan to take two additional steps 
to address these important issues.
    First, today I want to announce that Ranking Member Wyden 
and I have appointed Senators Johnny Isakson and Mark Warner to 
form a full Finance Committee chronic care reform working 
group. We have tasked this bipartisan group with studying these 
complex issues and producing an in-depth analysis of potential 
legislative solutions. Their recommendations will serve as a 
foundation to develop bipartisan chronic care legislation. And 
we cannot pick two better people on the committee to do this.
    Second, in the coming days, Senators Isakson and Warner, 
along with Ranking Member Wyden and I, will issue a formal 
invitation requesting all interested public and private-sector 
stakeholders to submit their ideas on ways to improve outcomes 
for Medicare patients with chronic conditions. Stakeholder 
input is critical for this committee to work toward the goal of 
producing bipartisan legislation that can be introduced and 
marked up in the Finance Committee later this year.
    So, as you can see, today's hearing is just the first step 
in our efforts to address these issues, but it is an important 
step.
    I look forward to an informative discussion, and I think it 
is important to point out that Senator Wyden has raised these 
issues and has done a good job in bringing them to the 
forefront.
    [The prepared statement of Chairman Hatch appears in the 
appendix.]
    The Chairman. With that, I will now turn to Senator Wyden 
for his opening remarks.

             OPENING STATEMENT OF HON. RON WYDEN, 
                   A U.S. SENATOR FROM OREGON

    Senator Wyden. Thank you very much, Mr. Chairman. Let me 
thank you for your leadership on this.
    I want colleagues to know that once again Chairman Hatch is 
stepping up and providing real leadership on one of the great 
challenges of our time. This is in line with his work on CHIP 
and a whole host of other important health issues. I want you 
to know, Mr. Chairman, I am very much looking forward to 
working with you on this.
    Ten months ago, the Finance Committee came together to 
discuss what I consider to be one of the premier challenges of 
our time--addressing the chronic illnesses that dominate 
America's flagship health program, Medicare. Chronic 
illnesses--heart disease, diabetes and cancer, among others--
now account for almost 93 percent of Medicare spending. This 
was not the case when Medicare began in 1965. Back when 
Medicare began, its primary purpose was to help individuals 
with catastrophic health events that put them in the hospital.
    That picture is now turned upside down. It has been hard to 
get precise numbers from that particular era, but we do know 
this much. In 1970, according to the Centers for Medicare and 
Medicaid Services, 64 percent of total Medicare spending was 
devoted to care provided to patients in the hospital. By 2010, 
that number had dropped to 26 percent. So we are talking about 
a program that has been a lifeline for millions of older people 
and a program that has changed very dramatically since the 
program was enacted in 1965.
    Today, the vast majority of Medicare dollars are spent 
caring for patients living with multiple persistent chronic 
health conditions that require a variety of services. It is a 
good thing that care is being provided outside the hospital.
    What we have to recognize is that, too often, this care is 
poorly coordinated and needlessly costly. With a trend this 
clear, it is time for both parties to tackle this issue head 
on. And we are fortunate, colleagues, to have Chairman Hatch 
make this a priority for the Senate Finance Committee.
    I also want to point out that last month the Congress took 
an important step by ending the broken Sustainable Growth Rate 
formula. Throwing that program, which was called SGR, in the 
junk bin of history accomplished two major things. First, it 
engraved in stone the principle of rewarding medical care that 
provides quality over quantity; and second, it cleared the 
legislative logjam that has blocked the Congress from taking a 
close look at how Medicare could be tuned to work better for 
patients and encourage providers to improve the care that they 
deliver.
    So it is going to be essential to build on that progress, 
to build on the progress of getting rid of this outdated 
reimbursement formula, this formula that was common sense-
defying. We now need to build off the progress of eliminating 
that to address the challenge of treating chronic illness.
    Since our hearing last July, I have held a series of 
roundtables around my State to hear what the committee can do 
to make Medicare work better when it comes to chronic illness. 
I have received a number of valuable comments along the way, 
and I intend to work closely with Chairman Hatch, Senator 
Isakson, and Senator Warner to offer what, in my view, are a 
host of key principles that ought to be part of any attempt to 
more effectively care for patients with multiple chronic 
illnesses.
    Let me make a kind of start at that this morning. First, 
Medicare needs to encourage teams of providers to coordinate 
care for their patients with chronic conditions. Those with 
multiple chronic illnesses often have a half-dozen doctors, but 
those doctors may not communicate to provide the most efficient 
care. This is a situation that ought to be turned on its head 
in favor of a holistic approach that encourages providers to 
work together to make our patients healthy.
    Working with multiple doctors is especially challenging for 
those who live in rural communities. Treating multiple chronic 
conditions is hard to do anywhere, but it is even more 
difficult when doctors and specialists are 80 miles apart. 
Families that face chronic health issues should not have to add 
a whistle-stop tour of doctors' offices to their challenges.
    Second, the Congress needs to make life easier for 
providers who want to coordinate care, whether that means more 
information about patients, improved access to innovative 
technologies, or other measures that promote flexibility in our 
health system. At the same time, accountability is critical to 
ensure that providers are successfully treating patients while 
also providing savings from coordinating care.
    As Chairman Hatch noted, I have been passionate about this 
issue for some time, but now, with the input and efforts of the 
whole Finance Committee, I believe that we can craft a 
bipartisan solution that really gets at the heart of the 
challenges posed by chronic illness.
    So I am very pleased to be teaming up with Chairman Hatch 
on a plan that begins with this working group and ends with 
legislation being passed out of this committee. The working 
group will develop policy options to address how Medicare can 
work better for Americans with chronic illness, and we are very 
lucky to have that effort co-chaired by Senator Isakson and 
Senator Warner. They have been dogged in this issue. I commend 
them for it. I also want to take note that Senator Bennet and 
others have demonstrated an eagerness to dig into this issue 
and come up with real meaningful reforms.
    One last point, if I might, Mr. Chairman. We have gotten a 
lot of valuable feedback from patients and providers, but this 
morning I want to take special note of Stephanie Dempsey of 
Georgia, who was a witness at our hearing last July. Ms. 
Dempsey was dealing with heart disease, lupus, arthritis, and a 
seizure disorder, and I am sorry to say that she passed away in 
December due to these conditions. I talked with Ms. Dempsey's 
mother this morning, Mrs. Nancy Carter, also of Georgia, to 
convey the committee's sympathies with the family, to say how 
much we admired Ms. Dempsey's courage, her passion, and her 
intelligence.
    I will close by saying I believe Ms. Dempsey will be an 
inspiration to all of us, and we should remember what she said 
at our hearing. She said, and I quote, ``I am confident that 
you will not forget me and countless other people when you 
develop policies that will help all of us. Our goals are all 
the same: to live long, healthy, and productive lives.''
    I just wanted to use this morning, because I know Mrs. 
Carter and family are paying attention to this, to let them 
know that we are dedicating our efforts to Stephanie Dempsey, 
who spoke so eloquently for millions who have these chronic 
illnesses, and we are going to work on this in a bipartisan 
fashion until we have the reforms necessary to help the 
millions of patients who needlessly suffer in this fashion.
    Thank you very much, Mr. Chairman.
    [The prepared statement of Senator Wyden appears in the 
appendix.]
    The Chairman. Thank you, Senator.
    I would like to now welcome our expert panel. Neither 
witness here today is a stranger to the Finance Committee. Both 
are extremely well-versed in Medicare payment policy and 
delivery system reforms. Members on both sides of the aisle, I 
want you both to know, really respect your hard work, and we 
rely heavily on your policy advice and counsel, both of you.
    First we will hear from Dr. Patrick Conway, Acting 
Principal Deputy Administrator, Deputy Administrator for 
Innovation and Quality, and Chief Medical Officer at the 
Centers for Medicare and Medicaid Services.
    Second, we will hear from Mark Miller, Executive Director 
of the Medicare Payment Advisory Commission, otherwise known as 
MedPAC. This nonpartisan Federal agency advises Congress on 
Medicare payment, quality, and access issues. This committee 
depends heavily on MedPAC, as you know, Dr. Miller. We thank 
you and your talented policy team for your dedicated service.
    As we get started today, I want to remind you that your 
prepared statements will automatically be included in the 
record, and I would urge you, if you can, to limit your oral 
remarks to 5 minutes, but I am not going to be a stickler on 
that if you need more time.
    So we will start today with Dr. Conway, and then we will go 
to Dr. Miller. We are grateful to have both of you here.

  STATEMENT OF PATRICK CONWAY, M.D., M.Sc., ACTING PRINCIPAL 
 DEPUTY ADMINISTRATOR, DEPUTY ADMINISTRATOR FOR INNOVATION AND 
 QUALITY, AND CHIEF MEDICAL OFFICER, CENTERS FOR MEDICARE AND 
  MEDICAID SERVICES, DEPARTMENT OF HEALTH AND HUMAN SERVICES, 
                         BALTIMORE, MD

    Dr. Conway. Thank you. Chairman Hatch, Ranking Member 
Wyden, and members of the committee, I want to thank you for 
inviting me to discuss the Centers for Medicare and Medicaid 
Services' work to improve care for beneficiaries with chronic 
disease, and I want to thank you for your leadership in this 
area.
    In 2010, as you said, more than two-thirds or 24.1 million 
fee-for-service beneficiaries had at least two or more chronic 
conditions. Improving care for Medicare beneficiaries with 
chronic conditions is a goal that is foundational to CMS's 
work. We want to create a payment environment that promotes 
value over volume to encourage better chronic care management 
in both fee-for-service and Medicare Advantage, and to test 
innovative models of chronic care delivery through the 
Innovation Center.
    Earlier this year, Secretary Burwell announced measurable 
goals and a timeline to move the Medicare program and the 
health care system at-large toward paying providers based on 
quality rather than the quantity of care they provide to 
patients. This initiative will align Medicare payment systems 
to appropriately promote and reward care management for persons 
with chronic conditions. At the same time, CMS continues to 
make improvements to the Medicare fee-for-service payment 
systems as value-based payment models are developed.
    In 2013, CMS adopted a policy to pay Medicare providers 
separately for care transition services that are important for 
ensuring care continuity and preventing hospital readmissions. 
Building on this work, we adopted a policy in 2015 to pay 
separately for non-face-to-face care management services 
furnished to beneficiaries with two or more chronic conditions. 
Providers will now be paid for expanding access, developing 
care plans, and coordinating care with other providers. CMS is 
also taking strides to improve chronic care management in the 
Medicare Advantage (MA) program. Last year we added new 
regulations that allow MA organizations to offer beneficiaries 
rewards and incentives for participating in activities that 
promote improved health.
    The Affordable Care Act ties payment to Medicare Advantage 
plans to the quality of the coverage and the care they provide, 
including how effectively they coordinate care. Medicare 
Advantage plans that receive a 4-star or 5-star rating receive 
a bonus payment, and, in 2015, 60 percent of MA enrollees were 
enrolled in a 4-star or 5-star plan compared to an estimated 17 
percent in 2009.
    Finally, I would like to highlight just a few of the new 
payment service delivery models focused on improving quality 
and enhancing care management and care coordination that CMS is 
testing through the Innovation Center.
    First, CMS recently announced results from the second 
independent evaluation of the Pioneer Accountable Care 
Organization (ACO) model, demonstrating that it has generated 
savings of $384 million in its first 2 years. Pioneer ACOs are 
experienced groups of providers that work together to deliver 
high-quality coordinated care. They are held accountable for 
total cost of care and can share in savings to Medicare if they 
hit financial and quality targets.
    Medicare beneficiaries who are in Pioneer ACOs, on average, 
report more timely care and better communication with their 
providers, use inpatient hospital services less, and have fewer 
tests and procedures. The CMS Office of the Actuary recently 
certified that the Pioneer ACO model met the stringent criteria 
for expansion under the Innovation Center authority based on 
improving quality and lowering costs.
    Second, the Comprehensive Primary Care initiative is a 
multi-payer partnership between Medicare and Medicaid, private 
health care payers, and primary care practices in seven States 
and regions across the country. This initiative focuses on 
providing advanced primary care for those at greatest risk, 
including Medicare beneficiaries with multiple chronic 
conditions. Results from the first year suggest that CPC 
demonstrated decreases in both hospital admissions and 
emergency department visits as well as high quality.
    Third, created by the Affordable Care Act, the Independence 
at Home demonstration uses home-based primary care designed to 
improve health outcomes and reduce expenditures for Medicare 
beneficiaries with multiple chronic conditions. Practices are 
providing home-based primary care to chronically ill 
beneficiaries. The care is tailored to an individual patient's 
needs and preferences, with the goal of keeping them from being 
hospitalized.
    To close, providing coordinated care to individuals with 
multiple chronic conditions can be complex and require 
significant coordination that may not always occur in our 
fragmented health care delivery system. CMS is committed to 
improving care for Medicare beneficiaries with chronic disease, 
while increasingly transitioning our payment systems to reward 
the value of care delivered, not volume.
    We hope this work will not only improve care for Medicare 
beneficiaries, but will help inform efforts to improve 
coordination across Medicaid and other payers. As a practicing 
physician who will take care of patients with multiple chronic 
conditions this weekend, I know the importance of this work 
personally.
    We look forward to working with you to continue to improve 
the Medicare program, and I look forward to your questions, and 
thank you again for your leadership in this area.
    [The prepared statement of Dr. Conway appears in the 
appendix.]
    The Chairman. Thank you so much.
    Dr. Miller, we will take your statement.

    STATEMENT OF MARK E. MILLER, Ph.D., EXECUTIVE DIRECTOR, 
 MEDICARE PAYMENT ADVISORY COMMISSION (MedPAC), WASHINGTON, DC

    Dr. Miller. Chairman Hatch, Ranking Member Wyden, 
distinguished committee members, I am Mark Miller, Executive 
Director of the Medicare Payment Advisory Commission. As the 
chairman acknowledged, we were created to provide independent 
advice on a range of Medicare issues. And on behalf of the 
commissioners, I would like to thank you for asking us to 
testify today.
    The Commission's work in all instances is guided by three 
principles: to assure that beneficiaries have access to high-
quality care, to protect the taxpayer dollar, and to pay 
providers and plans in a way to accomplish these goals.
    All of the testimony and the opening statements 
acknowledged the complexity and cost of caring for patients 
with multiple chronic conditions. The Commission has made a 
number of recommendations in fee-for-service, Accountable Care 
Organizations, and for Medicare managed care plans that support 
chronic care coordination, and I will highlight a few for you 
today.
    The problem with fee-for-service is that our siloed payment 
systems fragment care by paying on the basis of the setting 
rather than on the needs of the beneficiary. A few ideas in 
fee-for-service: the Commission has recommended that there be a 
continuation of the 10-percent payment bonus for certain 
primary care providers and services, but the Commission went 
further and recommended that these payments be made on a per-
beneficiary basis instead of a per-visit basis. The Commission 
believes that paying on a per-beneficiary basis gives the 
provider greater flexibility to plan and coordinate care around 
the beneficiary.
    The Commission recommended readmissions penalties for 
hospitals, skilled nursing facilities, and home health agencies 
that have excessive rates of potentially avoidable 
readmissions. These penalties create an incentive across the 
setting to coordinate care, even in a fragmented fee-for-
service environment. They protect the beneficiary through care 
coordination and the taxpayer by avoiding unnecessary 
admissions. And the Congress has implemented the hospital 
penalty, and although unpopular, it has resulted in reduced 
readmission rates.
    Turning to managed care plans and Accountable Care 
Organizations, ideally our payment systems would set payment in 
advance so that the provider knows what they are working with 
and the risk to the taxpayer is mitigated. We would establish 
quality objectives to protect the beneficiary and then give 
providers latitude to plan, coordinate, and care in a seamless 
fashion.
    The Commission has made several recommendations with 
respect to managed care plans, and I will note a couple here. 
With respect to special needs plans, which focus on 
beneficiaries with chronic conditions, we recommended 
continuation of the institutional special needs plans that 
focus on beneficiaries that have a nursing level of care need. 
It recommended the continuation of dual-eligible special needs 
plans, but only in the case where the plan integrates Medicare 
acute-care services and Medicaid long-term care services and 
supports.
    But probably most importantly, the Commission recognizes 
that regular managed care plans account for the vast majority 
of chronic care beneficiaries who are enrolled in managed care 
plans. The Commission recommended greater flexibility for these 
plans to design specific service packages around chronic 
condition patients. This is a flexibility they currently do not 
have.
    Another issue, and it was mentioned in the opening remarks, 
is risk adjustment. This is critical to provide incentives for 
plans and providers so that they are willing to take the 
sickest of beneficiaries. The Commission has outlined for the 
Secretary a set of changes to the risk-adjustment system that 
better support the plans that are enrolling beneficiaries with 
chronic conditions, and I can talk more about that in 
questions.
    With respect to Accountable Care Organizations, the 
Commission has made a number of recommendations after 
discussing changes with the Accountable Care Organizations, and 
I will mention a couple here today: make beneficiary 
attribution prospective, and prospectively set the financial 
performance benchmarks. The idea here is give the ACOs a firm 
handle on the populations they are responsible for and the 
financial benchmarks they are trying to achieve.
    For the select ACOs that are willing to accept both up-side 
and down-side risk, give them greater tools to manage their 
populations. Allow them, for example, to forgive the 
beneficiary's copayment when they see an ACO primary care 
provider. This will help draw the beneficiary into the ACO 
network.
    Another example is to relieve the at-risk ACOs of certain 
fee-for-service regulatory requirements, such as the home-bound 
definition or the skilled nursing facility 3-day rule. This 
will allow the ACO to more seamlessly manage the beneficiary's 
episode.
    In closing, the Commission has consistently made policy 
recommendations that move away from a fragmented fee-for-
service system toward a coordinated delivery system.
    I look forward to your questions.
    [The prepared statement of Dr. Miller appears in the 
appendix.]
    The Chairman. Thanks to both of you.
    Senator Grassley has to leave for a very important meeting, 
so I am going to have him go before I do. After Senator 
Grassley, we will go to Senator Wyden.
    Senator Grassley. I thank you very much, Mr. Chairman, 
because that is quite an accommodation. I appreciate it.
    First of all, it is important to thank the chairman and the 
ranking member for holding this hearing and thank the witnesses 
for the very important testimony that you folks have given.
    The presumption of this hearing is that Congress should 
consider policies to improve chronic care coordination. The 
Agency for Health Care Research and Quality defines care 
coordination as ``a conscious effort between two or more 
participants involved in a patient's care to facilitate 
appropriate delivery of health care services.'' Care 
coordination becomes more important as we look at care for 
individuals with multiple chronic conditions. I think we all 
understand that.
    The question that I want to ask relates to when we should 
start providing care coordination. In Medicare, there are 
people with multiple chronic conditions and people without 
multiple chronic conditions. So my first question is, if you 
can give me a rough idea, what percentage of people without 
multiple chronic conditions today are likely to develop 
multiple chronic conditions later? If you could answer that 
shortly, then I want to go on to say something else.
    Dr. Conway. Thank you, Senator, for the question. I will 
start.
    In terms of, first, the care coordination and when to 
provide services, we think care coordination is relevant across 
beneficiaries, but it is most relevant in that population with 
multiple chronic conditions.
    I can tell you, from our Accountable Care Organizations, 
they stratify their patients based on the level of severity and 
the chronic condition severity of their patients. They will 
deliver a very high level of services, and this is true in the 
Medicare Advantage environment as well, to those with multiple 
chronic conditions. But also, even for patients without chronic 
conditions, they will deliver preventive care and other care to 
try to prevent chronic conditions from being developed.
    In the Medicare population, because of the trajectory of 
aging, we know the number of multiple chronic conditions goes 
up significantly. So, for example, in the over-75 age group, 
the majority of beneficiaries in the Medicare program do have 
multiple chronic conditions.
    Senator Grassley. So then, since we know that there is a 
likelihood that people on Medicare will develop multiple 
chronic conditions, what type of care should we be providing 
them today that would reduce the onset and severity of multiple 
chronic conditions?
    Dr. Miller. I will start off here. I cannot speak to the 
clinical progression and what particular types of services 
might be needed, but what you could read into that answer and 
certainly into my answer is the flexibility to go at the 
patient populations depending on where they are.
    I would completely reinforce Patrick's point that what you 
see is a big shift, as you get multiple chronic conditions, in 
the expenditures and the complexity of that particular patient 
and the difficulty of taking care of them. And what we are 
trying to say is, within the payment systems, allow the 
providers to tailor their approaches to the patients depending 
on where they are. And again, Patrick, I think, said much the 
same thing.
    Over here you are focused on prevention. Over here, where 
you have multiple chronic conditions, you may have very 
specific approaches tailored to clusters of populations who 
have multiple chronic conditions and certain kinds of multiple 
chronic conditions, and it is the flexibility that I think we 
are looking for.
    I will stop there.
    Senator Grassley. Did you want to say something? Because I 
think you have answered my question. I just want to sum up that 
I put in some bills related to diabetes prevention and obesity 
reduction. Both of these bills are geared toward reducing the 
offset of expensive chronic conditions.
    So my summation would be, I do believe in the value of 
chronic care coordination, but I think it must be considered as 
part of a continuum of care that is provided through Medicare 
to all beneficiaries, and we need to continue to transform 
Medicare into a program that is geared toward delaying the 
onset of chronic conditions and the severity of them when they 
do occur. Our payment and care models then must be built to 
achieve those goals.
    I thank you for your answers to my questions, and I thank 
you for your courtesy, Mr. Chairman.
    The Chairman. Thanks, Senator Grassley.
    We will turn to Senator Wyden, and then, after Senator 
Wyden is through, I will take my turn.
    Senator Wyden. Thank you very much, Mr. Chairman. I know 
both of us are going to be juggling with the trade bill that we 
want to get passed on the floor.
    Let me see if I can start it this way, Dr. Miller. In 1970, 
you could have one patient under one roof with a broken leg and 
that was pretty representative of Medicare circa 1970. And I am 
showing my age, but I was co-director of the Oregon Gray 
Panthers back in 1974, so I remember those days.
    Now, you have a patient with diabetes and perhaps a heart 
problem, and they are involved with four doctors, and they have 
six prescriptions. In Oregon at these roundtables, I heard 
again and again that that patient is just bouncing back and 
forth between various providers and systems and often ends up 
back in the hospital.
    So I would like to start this discussion--and you have 
heard, and Chairman Hatch has indicated, that this is going to 
be a whole committee effort, which I think is very, very good 
news.
    In your view, what needs to be done to coordinate the chaos 
that I just described? Because I think that chaos is really 
representative of the challenge we are going to be tackling 
under Senator Isakson's and Senator Warner's leadership.
    It is no longer one roof, one patient with a broken leg.
    Let us have Dr. Miller start.
    Dr. Miller. Either way you want to start. I think what I 
would say is that what will be key is how you construct the 
payment systems and the incentives. I think one of the 
difficulties which was acknowledged early on is that there has 
been a lot of looking at specific types of models, and the 
results have been somewhat mixed.
    I think at a very summary level, I think you see some 
improvement in quality, less clarity in terms of consistent and 
large savings--not a lot of evidence on that front.
    So I think the Commission's view is, you need to think of 
the way that you construct the payment model to allow 
flexibility, whether it is through, let us say for this 
conversation, a managed care plan or Accountable Care 
Organization, that allows the providers to come together and 
organize around groups of chronic condition beneficiaries and 
innovate in the kinds of interventions that they are going to 
undertake, which should involve the kinds of things that we 
seem to see--team care, that type of thing.
    But recognize that there may be different strategies with 
different populations, and different strategies with different 
communities. So that is why I think we are talking about the 
flexibility angle.
    Senator Wyden. Dr. Conway, is there anything you would like 
to add?
    Dr. Conway. I think I would cull out three areas, Senator 
Wyden, and you hit on these in your opening statement, I think: 
payment, care delivery, and information.
    On the payment side, I think it is aligning incentives--I 
agree with Dr. Miller--with accountability at the provider 
level for cost of care and quality of outcomes, whether that is 
in the fee-for-
service environment, as we move to alternative payment models 
which are increasing significantly, or in the Medicare 
Advantage environment, having incentives aligned with better 
care for patients.
    In the care delivery system, I think it touches on things 
like integration of mental and behavioral health with physical 
health. It touches on that which I know your State has done a 
lot of work on, integrating with the social support systems and 
the broader health system to support people in their homes and 
improve their health outcomes.
    Then the last area is information. We continue to work on 
getting the quality and cost information out that providers and 
patients and consumers need. We need to continue that journey 
so people have the data and the information they need at the 
point of care to improve care delivery.
    Senator Wyden. Thank you very much. Thank you, Mr. 
Chairman.
    The Chairman. Thank you.
    Dr. Conway, according to a January 2012 Congressional 
Budget Office report, CMS paid 34 programs in six major 
demonstrations to provide health coordination and disease 
management services in fee-for-service Medicare. Now, CBO's 
review of the demonstrations noted that, on average, these 34 
programs had little to no effect on hospital admissions or 
Medicare spending.
    Now, my question is, are current CMS chronic care 
demonstrations and pilot programs going to produce different 
outcomes, and can you explain in detail what makes them 
different?
    Dr. Conway. Thank you, Senator, for the question. I am 
familiar with that report. Those demonstrations pre-dated the 
Innovation Center, but let me talk to you about what we think 
we have learned and how we are trying to adjust to improve 
results over time.
    Many of those demonstrations included care management that 
was not integrated into the practice of medicine, so into 
hospitals, physician offices. So, for example, you had nurse 
care managers calling patients at home, trying to deliver care 
outside of integrated delivery systems.
    And then let me touch on what we are trying to do 
differently moving forward. One, in our programs, we focus on 
accountability for total cost of care and quality in an ACO 
environment for a population over a long time span and a 
bundled payment environment for an episode of care. So we are 
really focused on the outcomes we want to achieve, which Dr. 
Miller alluded to, as opposed to incremental changes on the 
margin in fee-for-service.
    Two, the data analysis and feedback cycle in CMS and in the 
Innovation Center is much more rapid, and we have the 
flexibility to adjust these models as we learn. So, for 
example, in our Accountable Care Organization program, as we 
learned what worked and what did not work in the financial 
model, we could make adjustments.
    Three, we set up a learning environment with all the models 
that we are testing currently. So, for example, in our 
Comprehensive Primary Care initiative, those 500-plus practices 
are learning from each other. So we will have a practice in 
Arkansas teach other practices in Arkansas what they are doing 
to improve care management, and we think this learning system, 
where providers are teaching best practices to each other, is 
critical.
    And then lastly, just from an evaluation method standpoint, 
we are analyzing monthly or quarterly data, depending on the 
model, and putting out annual evaluation reports. We have a 
much more rapid-cycle analysis and learning environment in the 
Innovation Center.
    The Chairman. Well, thank you.
    Dr. Conway, you mentioned in your testimony that CMS has 
implemented two new transitional care management billing codes 
and one chronic care management billing code as part of the 
Medicare physician fee schedule rulemaking process. Now, my 
understanding is that the use of these codes has been 
relatively low. CMS did issue updated guidance to clarify when 
providers should bill for the service, in an effort to increase 
the number of paid claims.
    But can you tell us if current use has increased? If not, 
what is CMS doing to address that problem?
    Dr. Conway. So first, on the transitional care management 
code from 2013, its uptake was not as robust as we would have 
liked. As you alluded to, we have tried a couple of tactics to 
try to improve the utilization of those care management 
services and appropriate coding. One was educating providers, 
so education and outreach through various physician 
organizations and others that reach physicians and clinicians 
in the field. Two was the guidance you alluded to, guidance on 
when and how to bill for those codes.
    So the uptake is not as robust as we would have liked. We 
want it to increase over time, and increase because of 
appropriate care coordination and delivery.
    On the chronic care management code, that just went into 
effect in 2015. So we are starting the process now to educate 
providers on the appropriate use of that code for care 
management services delivered to beneficiaries.
    The Chairman. Dr. Miller, you discuss a proposal to waive 
or reduce cost-sharing for Medicare beneficiaries that identify 
with an ACO which operates using two-sided risk. In your 
opinion, how effective would this policy be, given that many 
beneficiaries have supplemental Medigap policies or employer 
retiree coverage that often make them insensitive to cost-
sharing changes?
    Dr. Miller. You have definitely put your finger on another 
issue that gets implicated in this. So we think the signal in 
and of itself would be good for giving the beneficiary an 
incentive to go there. But you are right, if they have first-
dollar coverage, then that signal is going to be a lot weaker.
    The Commission made recommendations a couple of years ago 
on first-dollar coverage when it made a broad traditional fee-
for-service benefit redesign, and we made recommendations about 
discouraging first-dollar coverage so that precisely these 
kinds of incentives would have a more clear signal.
    It does kind of open another set of issues. You are right, 
in the absence of those kinds of changes, those signals will be 
weaker.
    Can I say one other thing about the question?
    The Chairman. Sure.
    Dr. Miller. On the transitional and the chronic care 
management codes--which we have made comments on and do not 
have any difficulty with--I would just also remind the 
committee that we have made a recommendation on per-beneficiary 
payment for primary care providers and services.
    Those payments, if the Congress were to act on them, would 
flow to the providers in a sense automatically and give them 
greater resources to organize care around the patient. So that 
is another mechanism that you can use to get at some of the 
issues that you were just talking to Dr. Conway about.
    The Chairman. Thank you so much.
    Senator Bennet, you are next.
    Senator Bennet. Thank you, Mr. Chairman. Thank you very 
much for holding this hearing and for your leadership on the 
trade bill.
    The Finance Committee has heard from a number of providers 
regarding the Medicare Advantage changes to the risk-adjustment 
model that determines how plans are paid when a person is 
sicker or has more major chronic conditions than a healthy 
senior.
    A number of Senators, including the majority of this 
committee, believe that CMS is moving forward with a model that 
will disproportionately hurt plans serving low-income members 
by removing codes for chronic illnesses, conditions like 
diabetes and kidney disease. Ultimately, this could be 
disastrous for seniors with chronic conditions in Medicare 
Advantage receiving the right kind of coordinated care that you 
are testifying about.
    I wonder, Dr. Conway and Dr. Miller, do you have any 
suggestions for CMS as to how they might more appropriately 
capture the health care costs and needs of chronically ill, 
vulnerable beneficiaries?
    Dr. Miller. Yes. There are two suggestions that we have 
made that we think go right at this. They are a little bit 
technical, but I will explain them at a very high level. So one 
is----
    Senator Bennet. I will explain them to Senator Warner 
later, so you can go ahead. I am just kidding. [Laughter.]
    Dr. Miller. If you need a hand with that----
    Senator Bennet. Thanks.
    Dr. Miller. So, in the risk-adjustment system, really 
quickly, you get an adjustment if you have a chronic condition. 
So there is a bump for diabetes, there is a bump for congestive 
heart failure.
    So what we did is, we went through and did an analysis that 
said--and this is as simple as it sounds--if you also enter a 
variable that says how many chronic conditions you have, that 
provides an additional bump, and it is this whole exchange that 
we have been having about, as the chronic conditions 
accumulate, at about the fifth chronic condition, there is a 
big jump in the cost of the beneficiary. So if you enter that 
factor into the risk-adjustment system, it makes an adjustment 
for the plans that have a lot of people with multiple chronic 
conditions.
    I will not take you through this one, but another one is 
parsing how you measure fully dual beneficiaries versus 
partially dual beneficiaries. We think for those plans that are 
taking disproportionate shares of fully dual beneficiaries, the 
adjustment is working against them a bit.
    It is a bit technical, but there is an issue there. I will 
stop.
    Senator Bennet. Dr. Conway?
    Dr. Conway. Yes. So first, I want to thank Mark and MedPAC 
for that recommendation. We actually are actively looking now 
internally at both of those recommendations about the risk-
adjustment model and the risk-adjustment model broadly. Our 
goal is the one that you both described. We want to pay 
appropriately in Medicare Advantage for health plans that take 
care of beneficiaries with multiple chronic conditions. We are 
looking at both of those recommendations currently in addition 
to the risk-
adjustment model broadly.
    Senator Bennet. I appreciate that, and we look forward to 
working with you in the weeks ahead.
    Dr. Miller, as you know, we passed, thank goodness, an SGR 
repeal bill last month in an effort to move away from the 
current fee-for-service system that we all know rewards volume 
over quality.
    Does that bill get rid of the fee-for-service barriers to 
coordinating care that you talk about in your testimony, and 
what more needs to be done outside of the SGR bill that we 
should consider as a committee to continue to drive us away 
from rewarding volume instead of quality?
    Dr. Miller. I think what I would say is, it gives you a 
framework to move in that direction. What I think will be 
critical is how, in the end, the law is operationalized to 
define what qualifies as an alternative payment model.
    So there are certain criteria in the bill that say X 
percent of your revenues have to be at risk, the models have to 
have certain characteristics, and either the policy process can 
water that down and define alternative payment models as 
relatively weak models or say, no, there is a certain rigor 
here and you have to clear a hurdle in order to get into the 
alternative payment model to get that higher payment.
    So what I would say to you is, and we are ready to work 
with you on this, I think there should be a lot of effort put 
in by CMS, the committee, and ourselves in defining what those 
criteria are.
    Senator Bennet. I think the last thing that people on this 
committee want is for it to be watered down.
    I do not know, Dr. Conway, if you have anything to add.
    Dr. Conway. We agree. I think the definitional elements on 
alternative payment models, building from the statute, are 
critical, and we want to define them in a way that maximally 
improves quality and has the potential for smarter spending.
    Senator Bennet. Thank you. Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Bennet.
    Senator Warner?
    Senator Warner. Thank you, Mr. Chairman. And let me also 
thank you and Ranking Member Wyden for allowing me and my good 
friend, Senator Isakson, to take on this challenge. This is an 
area that I know Senator Isakson and I have worked on a great 
deal, and we will try to educate Senator Bennet on the process 
as well. [Laughter.]
    The Chairman. We are grateful to you for doing that and 
also for your willingness to educate Senator Bennet.
    Senator Warner. Which, let me assure you, Mr. Chairman, is 
an enormous challenge. [Laughter.]
    But I think one of the things that we all hear is that we 
know the current system is not working. We are pretty good at 
reimbursing for individual procedures, but we are still trying 
to wrestle through how we manage both this enormous benefit and 
the challenge of the aging process and chronic illnesses.
    I think, Mr. Chairman, one of the things that you brought 
up and Dr. Miller responded to is really something that we have 
to grapple with a little bit. I am very excited about the risk-
sharing activities. But if the patients do not have some skin 
in the game, then the ability to have some of those market-
driven forces in terms of risk-sharing really is not going to 
be able to be fully tested. So I hope one of the things we are 
able to look at is some of these questions around first-dollar 
coverage.
    I also was very interested in your comment--I cannot recall 
whether it was Dr. Miller or Dr. Conway who mentioned this--
about the idea that, on some of these payment models, we are 
looking at a per-beneficiary payment system rather than a per-
visit, which to me makes, again, enormous sense in terms of 
moving away from quantity and again toward quality.
    One of the things that we have seen an enormous growth in 
is the emergence of both technology in digital health and 
enormous growth of devices and other tools. As we try to think 
how we not only better coordinate the medical professional 
component, Dr. Conway, what is CMS doing in thinking about 
these other tools that are kind of rushing into the 
marketplace--one, how we evaluate them and, two, we really do 
not even have much of a payment structure at all for these 
tools that could be potentially very, very beneficial on the 
case management side?
    Dr. Conway. Yes. Thank you for your question, Senator. 
First, just briefly, both on the per-member per-month or per-
beneficiary per-month issues in the consumer arenas, we would 
love to work with you and MedPAC. We also think they are 
critically important.
    On tele-health and technology, remote monitoring, let me 
tell you a few things we are doing, and we are happy to work on 
more. In our ACO environment, in the Pioneer ACO and now 
especially with our next generation ACO--which we have not 
talked about today but really moves to prospective attribution 
and prospective payment models--we have waivers in place where 
both tele-health and remote monitoring, technologies to monitor 
patients in the home, can be much greater utilized. And I can 
tell you, Accountable Care Organizations are utilizing them, 
things as simple as remote scale monitoring for congestive 
heart failure, so you are managing patients outside of the 
visit.
    In our Comprehensive Primary Care initiative, we have 
practices, including rural practices, that are using remote 
technology to monitor patients in distant environments and 
rural settings and managing patients through nurse care 
managers, with physicians and nurse practitioners on the care 
team remotely. We think that is critical. And then broadly, in 
our heath care innovation awards, we have a number of awards 
directly testing tele-health or remote monitoring technology. 
So we think this is an area that is ripe for improvement, and 
we would love to work with you in this arena.
    Senator Warner. One of the things--I want to get to one 
other question--that I would think we might want to explore is 
the enormous growth in digital wearable devices, I think 
generally more geared toward, obviously, a very different 
population, kind of the Fitbit population. I think the notion 
of trying to put out signals to the wearables, digital 
wearables, could play a role in the chronic care population 
that could spark a lot of innovation and is something that we 
ought to explore.
    Let me, in my last seconds, ask--maybe, Dr. Miller, you 
could comment on this too. One of the things we have to grapple 
with as we look at those numbers north of five chronic 
diseases, how we do a better job of management, is kind of the 
type of wraparound services that really, again, do not fall 
within a classic definition of health care delivery--again, 
some of these case management tools.
    How are we going to work through that, again, as we try to 
move away from the fee-for-service model? But clearly these 
wraparound services can, in the long run, both improve the 
quality of life for the patient and save the government money.
    Dr. Miller. I think--and I am beginning to sound like a 
broken record--when you try to do things like tele-medicine or 
add, let us say, a social service in a fee-for-service 
environment, you come to a lot of complexity in defining what 
is and what is not acceptable, and, if you do not do the 
payment system right, you can get a lot of generation of 
unnecessary services or potentially outright fraud.
    Alternatively, if you shift the payment system to put the 
provider at risk and allow the flexibility to say, look, this 
tele-monitoring will actually help me, they are going to go 
after the innovations that I think you are talking about and 
integrate them into the care.
    If you give them the flexibility to say, this is a social 
service--this is not about a medical service, this is about a 
social service--that this particular multiple chronic condition 
beneficiary needs, such as transportation to their appointment, 
and you give them that flexibility in an environment that 
mitigates the risk to the taxpayer, that is where I think you 
will get the innovation.
    A key thing is shifting how we pay for these things.
    The Chairman. Thank you.
    Senator Menendez?
    Senator Menendez. Thank you, Mr. Chairman. Thank you both 
for your testimony.
    Dr. Conway, as you know, chronic conditions 
disproportionately impact communities of color, and significant 
disparities exist in their prevalence, treatment, and 
successful management. For example, among the top chronic 
conditions affecting Medicare beneficiaries relative to their 
white peers, Latinos are 65 percent more likely to be diabetic 
and 15 percent more likely to be obese. 
African-Americans are 40 percent more likely to die from a 
stroke. American Indians and Alaska Natives are 15 percent more 
likely to have heart disease.
    So in your testimony, you mention the program CMS is 
undertaking to promote better care coordination in chronic 
condition management via physician payment incentives, care 
delivery initiatives, and improved information-sharing, and 
that is all good. However, I did not see you touch on, in your 
testimony, any efforts underway to engage beneficiaries on a 
population-wide basis.
    Are you aware of any ongoing demonstration projects or 
other initiatives that are specifically targeting minority 
beneficiaries to help improve awareness, diagnosis, and 
treatment of chronic conditions?
    Dr. Conway. We do have some programs that target those 
important populations, so let me speak to some of those.
    One, in our Million Hearts initiative, which is centered 
around cardiovascular disease, one of the major foci is on 
minority populations, including Latino populations, because of, 
as it sounds like you know, the larger disease burden in the 
cardiovascular arena.
    In the diabetes arena, everything in our core programs, 
from a program called Every Diabetic Counts--which focuses on 
reducing disparities in diabetes care and preventing diabetes 
in minority populations--to a diabetes prevention program which 
was mentioned earlier delivered through the YMCA, is trying to 
focus on safety net areas and areas that serve high proportions 
of minority populations.
    So we actually have a foundational principle in the CMS 
quality strategy of eliminating disparities. It is a critical 
issue, as you know, and our focus is to serve these populations 
well and attempt to eliminate disparities.
    Senator Menendez. Well, I appreciate that answer. I am not 
quite sure that satisfies me. Let me ask you this. What are you 
doing to engage with minority populations about chronic 
condition management and to specifically focus on the unique 
challenges that affect these communities, including language 
barriers and cultural competency?
    Dr. Conway. So, in the cultural competency and language 
barrier areas, we are trying to address these issues in a 
number of ways. One, in programs like ACOs or advanced primary 
care and other programs I spoke about today, one of the 
underlying principles in all of these is patient and consumer 
engagement, including issues like cultural competency and 
language barriers.
    So it is a focus in our learning environment around these 
models. It is a foundational principle, if you will.
    And then in things like our Health Care Innovation Awards, 
we culled out as a priority in those awards, innovations that 
focused on reducing disparities, and made multiple awards 
focused directly on reducing disparities. So we are happy to 
work with you and the committee if there are other things that 
we should be doing in this arena.
    Senator Menendez. I do think there are other things we 
should be doing, and I know the Congressional Hispanic Caucus 
has a series of ideas as well. So we would love to engage with 
you.
    One final question to you, Dr. Miller. You talked in your 
testimony about how 69 percent of Medicare fee-for-service 
beneficiaries with two or more chronic conditions account for 
98 percent of hospital readmissions. Given what we know about 
the link between multiple chronic conditions and a lower 
socioeconomic status, it is reasonable to assume that what we 
call sometimes the ``frequent flyer'' population, accounting 
for nearly all hospital readmissions, are also of lower 
socioeconomic status.
    Your testimony also mentioned the hospital readmission 
reduction program, which works to improve care coordination and 
reduce other preventable readmissions. Research has indicated 
that 77 percent of hospitals that treat a disproportionate 
share of lower-income beneficiaries were penalized under this 
program, compared to just 36 percent of hospitals that treat 
fewer low-income patients. This research is borne out in New 
Jersey, where our hospitals were penalized despite being known 
as some of the best in the country.
    So my question is, MedPAC and others have looked into ways 
to better account for socioeconomic status in the hospital 
readmission program. Can you discuss MedPAC's current thinking 
on the issue of socioeconomic status considerations in the 
hospital's readmission program?
    Dr. Miller. Yes, I can. I appreciate it. So again, we are 
short on time, but I think I would go at this in the following 
way. Number one, I think the Commission's position is, when you 
measure readmissions, you should not adjust in such a way that 
the disparities are hidden. Some people approach it and say, 
just adjust the measure and then, if you have more poor folks, 
the measure will not look as bad because it will adjust for the 
fact that a hospital is dealing with a lot of poor people.
    So the Commission's view is, no, those disparities should 
stay present because we should be focused on trying to correct 
them, because poor people should get good care as well. 
However, on the penalty, what we have said is, that should be 
moderated depending on the amount of poor people that you have 
in the hospital. And what we would say is, you stratify the 
hospitals into categories based on the percentage of their 
people who are poor, for example, and then you adjust the 
penalty in a way that is less aggressive for the poor hospitals 
and more aggressive for the hospitals that have, as a 
percentage, fewer poor. And so we would moderate the impact of 
the penalty that way.
    And the other thing--I am sorry, I just want to get this 
last point out--that this leaves in place is that, within your 
category, you still have pressure to improve because, even 
though you are not under as much pressure as a hospital that 
has less poor people, there are, in fact, hospitals that have 
lots of poor folks but have low readmission rates. And so there 
is still pressure for that hospital to improve their 
readmissions.
    Senator Menendez. What I would like to hear, Mr. Chairman, 
is, where is the status of the implementation of that thinking?
    Dr. Miller. Well, that is in the hands of the Congress.
    Senator Menendez. That is not a MedPAC decision? That is a 
congressional decision?
    Dr. Miller. We make recommendations to the Congress and to 
the----
    Senator Menendez. Right. But that is your recommendation.
    Dr. Miller. Yes, it is.
    Senator Menendez. Thank you very much, Mr. Chairman.
    The Chairman. Thank you, Senator.
    Senator Carper?
    Senator Carper. Thanks, Mr. Chairman. This is a great 
hearing, and we appreciate very much our witnesses being here.
    The Chairman. It is a good hearing.
    Senator Carper. Dr. Conway, I think you wear three hats. I 
do not know if we give you three paychecks on payday.
    Dr. Conway. You do not, sir. [Laughter.]
    Senator Carper. We will have to do something about that. 
Thanks for working so hard, both of you.
    In my old job as Governor, I championed preventive 
screenings and wellness programs as a way to get better health 
outcomes and try to keep costs in check. I was encouraged--in 
fact, I pushed to make sure that we took the same approach in 
the Affordable Care Act by giving seniors free annual checkups 
and preventive care, especially for chronic conditions such as 
heart disease, high blood pressure, Alzheimer's disease, and 
obesity. However, as you know, these programs only work if 
seniors and their doctors know about these benefits and 
actually take advantage of them.
    Give us a sense of how many seniors you think are taking 
advantage of these free screenings and these preventive 
services? And maybe you all could tell us what CMS is doing to 
ensure that seniors and their docs understand these benefits 
and take advantage of them.
    Dr. Conway. First of all, Senator, thank you for your 
leadership in this arena. Dr. Miller may have the exact number 
memorized. I apologize. I will have to get back to you with the 
exact number, but it was--at last count, I believe it was 5 
million and growing. But we should get back to you with the 
exact number.
    Senator Carper. If you could, I would appreciate that very 
much.
    Dr. Miller, do you want to give us the exact number?
    Dr. Miller. I do want to give you the exact number. I just 
do not have it. I am sorry.
    Senator Carper. I am pleased to hear it is about 5 million, 
and I am pleased to hear it is growing. And we will just wait 
for something in writing. That would be good.
    Next, a question on nutritional counseling services. Over 
two-thirds of our senior population is overweight or obese, and 
13 million seniors in this country are obese, meaning they are 
more likely to suffer, as you know, from heart disease, high 
blood pressure, stroke, arthritis, and other chronic 
conditions.
    In 2013, I am told that less than half a percent of these 
seniors--that is about 50,000 seniors--received free weight 
loss counseling from their doctors. Why do you suppose so few 
seniors take advantage of nutritional counseling? Is CMS doing 
anything to help more seniors and their physicians take 
advantage of weight loss counseling? What else should we be 
doing here on our side of the dais to ensure that docs and 
their patients know about these services and take advantage of 
these benefits?
    Dr. Conway. Thank you for the question.
    I will answer from two of my hats at CMS. So first, in the 
coverage arena, based on the statute that you supported, we 
have now covered, with no cost-sharing, the USPSTF-recommended 
* prevention services, including, as you alluded to, obesity 
counseling.
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    * United States Preventive Services Task Force.
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    We do want the rate of that counseling to go up. So we are 
taking a multi-pronged approach. One is education and working 
with physicians and clinicians. Two is really encouraging team-
based care so physicians or clinicians can work with dietitians 
and others to deliver counseling. In addition, on the 
Innovation Center side, we have some models directly focused on 
obesity and obesity prevention; for example, the diabetes 
prevention program that was mentioned.
    We also, in our various payment models--because obesity, as 
you alluded to, is a risk factor for exacerbation of other 
diseases, our primary care medical home models are working on 
obesity and obesity prevention as well, and thinking about this 
as an important focus.
    The last thing I will mention is, we have a population 
health group in the Innovation Center that is working on a 
couple models on broader population health issues in the 
cardiovascular arena, but also in broader community-based 
intervention. So, some of those could address obesity as well.
    Senator Carper. Dr. Miller, do you want to add anything? Do 
you approve that message?
    Dr. Miller. I approve that message.
    Senator Carper. I would just say to my colleagues, 
including the Senator from Washington, we have 13 million 
people in our country who are obese, 13 million, and the year 
before last, less than \1/2\ of 1 percent of those folks--that 
is 50,000 seniors--actually received free weight-loss 
counseling from their doctor.
    That is crazy, and we need to do something about it, and I 
appreciate your efforts. And we on this side, we need to do 
more, and I certainly intend to do that.
    The last thing I would like to mention is root causes, and 
let me just ask, what is CMS doing to reduce obesity and 
smoking rates among seniors? What else should we be doing to 
address these two root causes for so many of the chronic 
conditions that are affecting Americans?
    Dr. Conway. So, obesity and smoking rates are critical 
issues. Our Million Hearts initiative focuses directly on 
decreasing smoking. We are partnering with CDC in this 
initiative, the ABCS, of which the S is 
smoking reduction. We are working with States and the Medicaid 
programs on smoking cessation programs. One of them has been 
published from Massachusetts on decreasing smoking rates.
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blood pressure control; cholesterol management; and smoking cessation.
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    We recently put out a paper on CMS's role in population 
health. So, we do believe that CMS and Medicare and Medicaid 
have an important role as payers to improve the long-term 
health of the population.
    Senator Carper. Good. Let me just say, in this country, Mr. 
Chairman, in this country, we are pretty good at focusing on 
symptoms of problems. We do not always focus on root causes of 
problems, and it is clear as the noses on our faces what is the 
root cause of a bunch of the health care problems we have, 
whether it is obesity or whatnot, and we are trying to do some 
things. Some of them are succeeding. We just need to figure out 
what works and do more of that.
    Thank you so much.
    Senator Isakson [presiding]. Thank you, Senator Carper.
    Senator Hatch has asked me to finish the hearing for him, 
since he had to go to the floor. The order of those members 
remaining to ask questions is Senator Casey, Senator Isakson, 
Senator Brown, and Senator Cantwell.
    Senator Casey?
    Senator Casey. Thank you, Senator Isakson.
    Both doctors, thank you for being here, and we are grateful 
for your testimony and for your work on this.
    Dr. Conway, I want to start with you. Since the incidence 
of chronic illness is higher in low-income populations, could 
you walk us through some of the steps that you are taking, or 
CMS is taking, to adjust the Medicare readmissions program to 
better account for the greater degree of difficulty involved in 
treating these low-income populations? Could you walk us 
through that?
    Dr. Conway. Yes. I would be happy to, sir.
    Senator Casey. And I know it may be by way of reiteration.
    Dr. Conway. Thank you, Senator, for the question. First, in 
terms of the actual measures, we are working with the National 
Quality Forum on a pilot project to look at how we could deal 
at the measure level with socioeconomic factors. I will let Dr. 
Miller speak to the MedPAC recommendation about whether to put 
providers in different quartiles or quintiles based on the 
population they serve in terms of socioeconomic status. So, we 
are doing that work with the National Quality Forum multistate 
effort.
    Two, from the IMPACT Act, Congress approved funding for the 
Department to look at socioeconomic factors and work on risk-
adjustment issues. We are working with the Office of the 
Assistant Secretary for Planning and Evaluation on studies 
looking at appropriate risk adjustment or stratification or 
other payment adjustments based on socioeconomic factors.
    So, we are undertaking that work now and are looking at the 
readmissions program as part of the work. And I would let Dr. 
Miller speak to the MedPAC recommendations.
    Dr. Miller. So the key thing is, we would keep the measures 
of readmissions unadjusted so that you can focus on the 
disparities and not hide them, and we would tier hospitals 
based on--and I am going to use income here, because we think 
that data is most readily available. And to the extent that you 
can research this issue, we think that is a dominant factor, 
and it encompasses a lot of other issues.
    We would rank the hospitals based on the percentage of 
patients who are poor and then say there is a criterion, so let 
us just say the 40th percentile, and then you say the 40th 
percentile will always be the 40th percentile in each of those 
categories, but it will be more or less aggressive depending on 
the proportion of poor folks that you have, and then you are 
mitigating the impact a bit.
    I should point out that there are other things we would 
change about the penalty that we think make it a lot fairer for 
hospitals. We would have a constant multiplier. As I said, we 
would have this criterion, and the really important point about 
the criterion is that we would say, when you cross the 
criterion, there is no penalty.
    MedPAC's recommendation is, ideally, there are no penalty 
dollars. You actually move people to avoid the readmission. The 
beneficiary and the program benefit from the fact that you do 
not have a readmission and you do not have to collect the 
readmissions penalty.
    So we would urge also the Congress to think about these 
other changes that we have recommended, because we think that 
there is a much better way to design this in its totality.
    Senator Casey. I appreciate both of your answers.
    Here is the problem. We have hospitals telling us, and 
others that are impacted, that they need help now. So I 
appreciate that this is difficult and you have to consult 
studies and complete an assessment, but I think what we need to 
see is some kind of a bridge so they can get some more 
immediate help, and I urge CMS to consider that.
    Yes, Doctor?
    Dr. Miller. I will keep this really brief. This tiering and 
adjustment on the basis of income is within reach. This is data 
that people have now and could organize now. You could change 
things in a relatively short order. Further back, we made 
recommendations to reorient how the QIO dollars are allocated--
those are dollars for quality improvement--that would target 
them to the providers that have these kinds of issues. Those 
are two things that could happen relatively quickly while other 
things are going on.
    Dr. Conway. We adopted the second recommendation, and the 
first recommendation, we believe, would require congressional 
action.
    Senator Casey. Thanks very much. Really just for the 
record, Dr. Conway, I will submit a question regarding Medicare 
Advantage and particularly the star rating system and, more 
particularly, how CMS can better measure the impact of clinical 
risk factors. So, rather than taking time here, we will make 
sure we submit that for the record.
    Dr. Conway. Thank you, Senator.
    [The question and answer appear in the appendix on p. 55.]
    Senator Casey. Thanks very much.
    Senator Isakson. Thank you, Senator Casey.
    I will ask my questions very quickly and then go to Senator 
Brown and then Senator Cantwell.
    Experience is a great teacher, and you all can correct me 
if my memory is bad, because one of my chronic conditions at my 
age is my memory. But in 1993, my mother passed away. In the 5 
years prior to her passing away, my wife and I helped take care 
of her. She had multiple chronic illnesses. One of them was 
dementia, which turned into Alzheimer's. We would have to pick 
her up and take her to physicians for the care, because the 
fee-for-service system incentivizes that kind of care.
    When she fell and broke her hip in the nursing home, 
Medicare introduced a program called Evercare, where they 
provided the health care in the nursing home rather than 
causing us to call an ambulance to take her to the doctor's 
office. The cost of taking care of my mother went down, not up, 
because, instead of calling ambulances, the doctor was coming 
to the home to treat her, and her quality of life ended up 
being better in the waning months of her life than it was prior 
to the time that she fell.
    Evercare incentivized the right result because of the fact 
that she was immobile and not ambulatory, and I think that is 
the kind of thing we are looking at here. In the fee-for-
service system, what you incentivize is what you get. And we 
incentivize people to go to the doctor, and the doctors 
incentivize the bill for the reimbursement that Medicare 
approves, and the more doctor visits, the more health care 
costs. The absence of coordination ensures you that you may 
have complications that are unintended, but they generate more 
fee-for-service visits, going to the doctors.
    So my question is this, for both of you to respond to or 
just comment on. CMS has announced the target of tying 50 
percent of Medicare payments to alternative value-based payment 
models by 2018. That is an admirable goal, but it is worth 
noting that 30 percent of Medicare beneficiaries are already 
enrolled in Medicare Advantage, and they receive capitated 
payments.
    I am concerned that CMS policies continue to discourage 
plans from signing up seniors with multiple chronic conditions 
who would benefit the most from care coordination. MedPAC has 
estimated that Medicare's risk-adjustment model already 
underpays by 29 percent for the sickest beneficiaries, for CMS 
purposes, resulting in additional costs to Medicare Advantage 
risk adjustment.
    What comment would you have, Dr. Miller?
    Dr. Miller. Well, on your last point with respect to risk 
adjustment, as I said earlier, there are a couple of 
recommendations that we have made, technical recommendations, 
that could be used to adjust the model, that would rebalance 
the payments. If you take multiple chronic condition patients, 
your payments go up. If you have healthier patients, your 
payments go down.
    So within the MA system, this would kind of go on, and we 
have made a couple of recommendations that we think would move 
in that direction.
    Senator Isakson. Dr. Conway?
    Dr. Conway. So we are directly----
    Senator Isakson. Dr. Conway, excuse me for interrupting. 
You were nodding when I was talking. Was my recollection of 
Evercare right?
    Dr. Conway. Yes, sir, from my knowledge of Evercare.
    Dr. Miller. It was, and I will back that up. And I would 
also just point out that the Commission made a recommendation 
to continue the ISNP, the Institutional Special Needs Plans 
option. That encompasses the Evercare approach to care.
    Dr. Conway. So, agreed. Let me take the risk-adjustment MA 
issues and then the payment goals.
    On the risk adjustment for Medicare Advantage, we 
appreciate MedPAC's recommendations on the number of chronic 
conditions and the fully dual-eligible adjustments. We actually 
have a group within CMS looking at that, those two issues now, 
plus the risk-adjustment methodology broadly. And I agree with 
you, Senator, we want to pay appropriately Medicare Advantage 
plans that take care of the population with multiple chronic 
conditions.
    Specifically, on the payment goals, it is 30 percent in 
alternative payment models to providers by 2016 and 50 percent 
by 2018, so it is important. As we pay Medicare Advantage plans 
capitated rates--and I work with all those health plan chief 
medical officers--we also want to make sure that they are 
paying providers for care coordination as well.
    And it is important to note, we launched a health care 
payment and learning and action network where the majority of 
major private payers in this country, including those in 
Medicare Advantage, set tangible goals that are directly 
aligned with the goals that we set for Medicare. So we think 
that is going to be very helpful for moving our broader health 
system forward.
    Those alternative payment goals, the point of those, is 
exactly as you described, that we incentivize providers, health 
systems, physicians, and clinicians to care for patients in the 
highest-quality way and the most cost-efficient way, which, by 
the way, is often in other settings of care, such as in the 
home-based environment or other settings and not based on a 
fee-for-service volume-based system.
    So, thank you for your comments.
    Senator Isakson. Well, thank you for your comments. And my 
time is up, except to acknowledge the fact that I am really 
looking forward to serving with Senator Warner on this task 
force on coordinated care. I think, in terms of medical errors, 
in terms of efficiency, and in terms of quality of care, care 
coordination is the future of health care reimbursement, in my 
judgment.
    With that said, Senator Brown?
    Senator Brown. Thank you, Senator Isakson. I appreciate 
your questions too.
    I want to talk about community health workers. We have seen 
in my State--in fact, in my hometown of Mansfield, OH we saw 
some very creative use of community health workers, a program 
called CHAP, the Community Health Access Project, that 
significantly, quantifiably made a huge difference in the 
number of low-birth-weight babies. That has been patterned in 
some other communities around the State.
    As I think you know from--you are nodding, Dr. Conway; 
thank you. We were able to get some assistance to help with 
paying community health workers--generally low-income women 
with typically high school educations or sometimes GEDs, paid 
sometimes as little as $9 or $10 or $11 an hour--which was 
often raised by private funds or through other creative ways, 
and the impact they have had on preventive care has been pretty 
phenomenal. And it has also emboldened a number of these young 
women to move on and become nurses and have opportunities they 
would not have had otherwise.
    So, I have two questions for both of you about community 
health workers. One, if you would, just talk about the role you 
see potentially for them, certainly dealing with issues of 
early care of pregnant women and early care of babies.
    Second, has MedPAC or CMS considered any opportunities 
within Medicare for community health workers, such as 
authorizing payment for services of some kind so we can see the 
use of community health workers proliferate a little more than 
it has?
    Dr. Conway. I will start on this. First, I am familiar with 
the program. I was at Cincinnati Children's twice in my career, 
so I am familiar with Ohio, and it is terrific work.
    On community health workers, it is actually part of the 
Innovation Center portfolio in many places, first, in terms of 
Strong Start, which is focused on decreasing pre-term birth, 
and the medical home portion of that. Those entities can use, 
and many do, health workers to interact with mothers and 
decrease pre-term birth. So that is one.
    Two, in our health-care innovation awards, a number of them 
are using community health workers--we actually have a whole 
portfolio we are learning from--and many very effectively in 
terms of improving quality and lowering cost.
    Then the three that Dr. Miller mentioned earlier, and I 
would cull out, as we have payment models like Comprehensive 
Primary Care or Pioneer Accountable Care Organizations that are 
putting per-member per-month, per-beneficiary per-month fees 
into organizations, many of them take those fees and use them 
to apply much more of a team-based workforce, everything from 
certainly nurse practitioners and care managers, but also many 
of them are employing community health workers as well. 
Especially, some of our ACOs that serve more safety net 
populations have seen this as an incredibly powerful tool to 
improve quality and lower costs for the populations they serve.
    Dr. Miller. I am not familiar with the program, I 
apologize, but that does cross over into the principles that 
the Commission has been talking about, to identify population-
based payment, per-
beneficiary payment, per-episode payment, put the providers at 
risk, give them the flexibility to use the money in a way that 
is appropriate. If it is a team-based care and a continuum of 
skill sets from very low skill to the physician, then that kind 
of team approach should be allowed, that flexibility should be 
granted, and that would be a way to support the concept that 
you are talking about, whether it is these specific workers or 
other types of aides who get involved in the process.
    Senator Brown. If I could, Mr. Chairman. What Mansfield 
did--Mansfield, OH, a city of about 50,000--they had two zip 
codes, one predominantly Appalachian white, one predominantly 
African-American, where they had very high low-birth-weight 
baby rates. They hired young women from each area, young black 
women to serve the African-American community, young white 
women to serve the white community, and dropped the low-birth-
weight baby rate significantly by doing outreach in the 
community.
    They would bring pregnant women in so they could sign up 
for Medicaid for the doctors when they took them to OB/GYNs or 
to pediatricians later. But they had no way, except for a local 
foundation, of paying the actual workers themselves. And 
quantifiably, it was 50 or 60 babies who were born, if you had 
looked at demographic trends over a 5-year or 6-year or 7-year 
period, who were not low-birth-weight who probably would have 
been if not for the intervention.
    So it has tremendous potential at very low cost, with very 
important human gains and very important financial gains, if we 
can do it. So thank you, Dr. Conway, for your knowledge of it 
and your interest, and, Dr. Miller, for your potential interest 
in this.
    Thank you.
    Senator Isakson. Thank you, Senator Brown.
    Next will be Senator Thune, followed by Senator Cardin, 
followed by Senator Cantwell.
    Senator Thune. Thank you, Mr. Chairman. This is an 
important hearing, and particularly as we look at continuing to 
reform Medicare reimbursement away from paying for volume to 
rewarding quality. As the witnesses and other members of the 
committee have highlighted, Medicare beneficiaries with six or 
more chronic conditions account for a large percentage of 
Medicare fee-for-service outlays.
    My main concern has to do with how new payment models 
account for rural areas. Over 23 percent of beneficiaries live 
in rural areas, where the promises of integrated care are left 
unfulfilled for a lot of seniors largely because of where they 
live.
    So the question has to do with the Medicare Shared Savings 
Program. It is the only program to date that allows rural 
communities the opportunity to transform their care delivery. 
And as you, I am sure, know, rural health systems have a 
difficult time reaching the beneficiary threshold of 5,000 to 
participate. But by aggregating together, these systems have 
created virtual networks that share data and best practices and 
are improving health outcomes in areas with no availability of 
care coordination.
    So rural beneficiaries deserve integrated care, coordinated 
care. Current policies do not support that transformation for 
rural areas, in my opinion. What can we do to help rural 
facilities on-ramp into providing coordinated care?
    Dr. Miller. I would start my answer in the Accountable Care 
Organization space, which is where I think you are starting 
off, and give you at least a conceptual point that the 
Commission would, I think, make.
    You are right. It is an aggregation problem because, if you 
have very small numbers of beneficiaries, you have very noisy 
data. You cannot tell whether you have saved money, you cannot 
tell whether you have improved quality, because you basically 
just have noise, no signal, and that is the problem that needs 
to be overcome.
    You basically have two tactics here. One is the rural 
community teams with an urban kind of configuration, so that 
the ACO encompasses both an urban and rural organization. There 
you get your numbers and your count that you need. You also may 
have some reconfiguration of care there that may be a good 
continuum that you can work through. I can get into that more.
    The alternative approach--this one is a little bit more 
complex--is you knit together rural communities and treat them, 
in a sense, as an aggregate ACO. Now, there are tradeoffs 
there. How much integration there is when you are moving from 
communities that are distant from one another--you are 
definitely tolerating an average performance: this community is 
doing well, this community is doing poorly, but on average, 
this is where things stand.
    But conceptually, those are kind of the models, and I do 
know that we have had a lot of rural ACOs through the office. 
Those kinds of conversations are occurring.
    Senator Thune. Dr. Conway?
    Dr. Conway. I would hit on a few points. One, in our 
proposed regulation, we expanded the attribution model after 
the statutory sort of physician-based model to include nurse 
practitioners, physician assistants, et cetera. So the hope is, 
that will help with some of the attribution issues. In the 
President's budget, as you know, we suggested Congress consider 
allowing Federally Qualified Health Centers or rural health 
clinics to count in the attribution model.
    We have looked at some of these aggregation issues as well. 
In our proposed rule, we actually reached out for input from 
rural communities, and we meet frequently with rural providers 
and representatives of rural providers on what is the best 
financial model here.
    And then the last thing I would cull out is, we have 
provided advanced payment to Accountable Care Organizations to 
get started on that transformation journey, and we have 
targeted that advance payment to rural areas and to small 
physician practice areas. So, we think the support in these 
areas is critically important as well.
    Senator Thune. Good. Thank you. I appreciate your thoughts 
on that and look forward to working with you and with this 
committee to address the rural concerns.
    Last Congress, Senator Stabenow and I introduced a bill. It 
was a bipartisan bill to require a demonstration project for a 
value-based insurance design, or VBID, in Medicare Advantage 
based on the principle that we need to remove the cost barriers 
that prevent people with certain chronic conditions, such as 
diabetes or heart disease, from accessing the basic medications 
that can keep them healthy and out of the hospital.
    Given the move now toward these alternative payment models, 
I think it is important that we see benefit designs similarly 
adjust to remove the cost barriers that discourage Medicare 
beneficiaries from accessing these same high-value services 
that help them manage their conditions. I think now is the time 
to see a demonstration program move forward, and I would like 
to know if that is something that we can work on together and 
what else you would need from us to help these Medicare 
beneficiaries with these chronic conditions better manage them.
    Dr. Conway. So I will start, and I will make two points. 
One, we would welcome the opportunity to work with you and 
others on a potential demonstration program and provide 
technical assistance.
    Two, we put out from the Innovation Center a request for 
information on health plan innovation and what could CMS test 
in the health plan/Medicare Advantage space, for example. 
Value-based insurance design was culled out frequently from the 
public comments, indicating that this was an area we should 
think about. So, we are evaluating that now.
    Dr. Miller. If I could just add a couple things. I think 
this fact is correct. I think the CMS folks did, in their 
demonstration authority, allow the attribution through the 
nurse practitioners, but I think in the Medicare Shared Savings 
Program, still by law--so I would just point out there is a law 
change that also, I think, would encourage this kind of 
interaction that the two of you just discussed.
    The only other thing I would say is the Commission--again, 
this opens a different issue, so I will be really quick. We 
made recommendations on redesigning the traditional fee-for-
service benefit and, as part of that, said there should be 
authority for the Secretary to use VBID-types of evidence to 
adjust copayments if they think that there is a high-value 
service, but also a low-value service.
    And so we have put that into the debate, and, if you and 
your staff want to talk in more detail about that, I would be 
happy to do that.
    Senator Thune. That would be good. I think flexibility is 
important. Thank you.
    Thank you, Mr. Chairman.
    Senator Isakson. Thank you, Senator Thune.
    Senator Cardin, followed by Senator Cantwell.
    Senator Cardin. Thank you, Mr. Chairman, and thank you for 
this hearing. Improving care for Medicare patients with chronic 
conditions is a matter that I think we are all very interested 
in.
    Let me just share this with you. Last week I was at the 
ribbon-cutting for Mosaic, which is a community-based mental 
health services clinic in Baltimore, set up in conjunction with 
Sheppard Pratt in order to provide community care in an 
integrated setting for individuals with mental health and 
addictive disorders. It has made arrangements with qualified 
health centers so that they are doing primary care, as well as 
mental health.
    I have been working on the adoption of a collaborative care 
model--and I know, Senator Cantwell, that in your State they 
have used the collaborative care model successfully--in which 
you provide help to primary care physicians to deal with common 
mental disorders, providing them with care managers and 
designated psychiatric consultants. This model has been tested 
in 80 randomized, controlled research settings. The largest one 
to date is the IMPACT study which showed major progress in 
quality, plus showed a six-to-one savings in dollars.
    I am sorry that the court stenographer cannot see Dr. 
Conway nodding his head in a positive way as I have been making 
these comments. I would like that to be part of the record. And 
of course, there is also the CMMI's COMPASS initiative, where 
you did a study, a model on depression, to more effectively 
treat patients with diabetes and cardiovascular disease, and we 
saw tremendous progress there.
    So my question is, what steps are we taking or can we take 
in order to encourage more of these integrated and 
collaborative care models that will save us dollars but have 
faced challenges under the current system, in order to 
implement them in a more widespread way?
    Dr. Conway. So, thank you, Senator, for your question. This 
is a critically important topic and important to me, both on a 
professional and personal level. I was actually at a meeting 
hosted by the Kennedy Forum last week on this issue. I will 
name a couple of possibilities in this arena and things we are 
doing.
    One, with the collaborative care model, we are trying to 
embed those concepts throughout our learning environments and 
our ACOs and our Comprehensive Primary Care initiatives and 
these alternative payment models. In our Comprehensive Primary 
Care initiative, they are focused very strongly on 
collaborative care and integrating behavioral health with the 
physical health delivery system.
    Two, in the health care innovation awards--you mentioned 
COMPASS, which is one of the largest ones--we are testing the 
model very directly using the Innovation Center authority. You 
mentioned the evidence-based effort, so I will not repeat it, 
but you are correct. There is a strong evidence base over time.
    Three, recently we have gotten some comments asking us, in 
our fee-for-service system, do we have the authority to somehow 
think about care coordination codes or other codes in this 
arena?
    So, I think we are trying to tackle it through population-
based payments, where, as you said, when we incentivize quality 
and lower cost, these type of models will deliver that to the 
patients that they serve. We are also trying to address it 
directly through some of our innovation awards and testing the 
model very directly.
    Then lastly, in the fee-for-service environment, we are 
always thinking about what we can take that we are learning 
from the Innovation Center and these new models and the 
evidence base out there, and are there ways to integrate that 
into our core payment program.
    Senator Cardin. That is encouraging. I would just point out 
that, with mental health needs, a large percentage go untreated 
and then become a more difficult problem and we see them in the 
emergency rooms, and they become very costly.
    We have seen historic neglect in dealing with mental health 
needs compared to other physical illnesses. So I think for all 
those reasons, there is a great return here in doing the right 
thing as far as care is concerned, as well as saving dollars.
    There are reimbursement challenges today in the system that 
we need to correct. So I just urge us to work together as to 
how we can--different coding might work, but we have to 
eliminate the disincentives that are in the current system, 
where an integrated or collaborative care model is not 
financially rewarded for saving money.
    Dr. Miller, any comments?
    Dr. Miller. I think a lot of them were encompassed by Dr. 
Conway's comments. I think that the payment system has to be 
structured so you are allowed to approach the beneficiary 
through an episode-type of approach. So we are talking about 
bundled or population-types of approaches, which I believe Dr. 
Conway mentioned.
    Quality metrics have to point people in that direction, 
which I believe he mentioned. And the only thing I would add is 
that your risk-adjustment mechanism has to back in behind that. 
So, if you take those very complicated populations--and again, 
I am happy to hear about the success here, but I also know, 
around the country, approaches for behavioral health have also 
had huge problems in trying to just identify the people who 
would benefit from them and bring them into a coordinated care-
type of model.
    So I think there are unique challenges here and that risk-
adjustment models have to reach to those.
    Senator Cardin. Build on the successful models. We have a 
lot of successful models out there that have been done. Let us 
build on those to provide the services that are needed that are 
not being provided today and, by the way, save money in our 
health care system.
    Thank you, Mr. Chairman.
    Senator Cantwell [presiding]. Thank you, Senator Cardin. 
And thanks for mentioning the University of Washington and the 
Washington, Wyoming, Alaska, Montana, and Idaho (WWAMI) system 
on this particular effort of collaborative care. I think 
bringing mental health services into the primary care setting 
in the region has really been key. So thank you for mentioning 
that.
    Dr. Conway, Dr. Miller, now that I have, so to speak, the 
gavel, I could stay here for a long time until the Pacific 
Northwest reimbursement rate issues were solved, but I think 
instead I will just ask you some basic questions and hopefully 
we can move this discussion forward. First, do you agree that 
the high-performing providers of Medicare Advantage plans help 
us improve chronic care management in the Medicare population? 
Dr. Conway?
    Dr. Conway. Yes. I agree we have Medicare Advantage plans 
that are high-performing and improve chronic condition 
management.
    Senator Cantwell. So how does Medicare currently incent 
providers who take on risk by being paid the capitated rate by 
Medicare Advantage plans?
    Dr. Miller. If I am following the line of questions, the 
payment system incents a plan to take those kinds of 
populations in two or three ways: number one, a risk-adjustment 
system that actually increases their payments when they take 
more complex patients; number two, quality metrics, to the 
extent that they are aimed at the kinds of outcomes that would 
occur with these patients, increase the benchmark and, 
therefore, the possible reimbursement that that plan can get; 
and three, through greater flexibility to kind of reorganize 
how they approach and try different strategies for managing the 
population.
    Senator Cantwell. Well, I guess I am saying, how could you 
better incent Medicare Advantage to--we have this reimbursement 
rate way lower than the rest of the country because we are more 
efficient. In some ways, we have better outcomes because of it. 
So I guess we can be grateful for that.
    Where we practice, we have better outcomes. But we also 
have people who do not want to practice there because of a 
lower reimbursement rate. So we want the rest of the Nation to 
be more efficient, but we obviously want the ACO model, which 
is determined on historic numbers.
    So you are going to take these ACOs, they are going to use 
historic numbers, so we are already going to get less right 
there. And then, with the way we wrote the SGR language, 
Medicare Advantage is also not as incentivized. We have 
language in there saying, let us study and work on it.
    So I guess I am asking you today, this morning, what are 
your ideas to make sure that they are properly incented so that 
these ACOs basically get off the fee-for-service, on that 
historic rate, and get onto something that really incents that?
    We have seen phenomenal success here. I always think of the 
Everett Clinic, because they had to manage the sickest 
population at Boeing and they did a phenomenal job--phenomenal 
job--in reducing those costs.
    It is kind of basic. People kind of overlook it, but it 
really works. We do not want those people who are already 
moving forward to be shackled or basically slowed down because 
of these historic rates, and we want to figure out a way to 
enable them within the Medicare Advantage program.
    So I want to hear your thoughts on that.
    Dr. Miller. I will start off, and Dr. Conway, I am sure, 
will have things to say. But sticking to managed care for a 
second, first off, we made the recommendation--I went through 
this before you got into the room--in which we said there 
should be new flexibilities in the regular order managed care 
plans that allow them to construct targeted programs around 
chronic conditions or combinations of chronic conditions and 
allow them flexibility to say, these particular sets of 
services are for people who have these kinds of issues. Right 
now, they do not have that flexibility. It is too simplistic, 
but they kind of have to give everything to everyone, and we 
want to give them greater ability to target.
    The second thing is to pay for higher quality when the 
managed care plan's performance is greater than the ambient 
fee-for-service. So, again, I understand your payment issue, 
but to the extent that the MA outperforms the ambient fee-for-
service, payment should be increased in the managed care 
environment.
    To quickly jump to the ACO environment--and I believe CMS 
has taken action in some of its demonstrations on this--we said 
that in the ACOs, if you are in a market that is below average 
and you are in an ACO that is performing below that average, 
then when you adjust your utilization downward, your benchmark 
should not follow it. So, in other words, we do not penalize 
the fact that you are starting from a lower historical level 
and then take it down from that point. And I believe in the new 
generation, CMS is trying to take that idea on.
    Senator Cantwell. Well, how will some of these Washington 
providers achieve those goals if they are already starting at 
great efficiencies?
    Dr. Miller. I think the point with the Washington providers 
is that, at their current reimbursements, as you have said, 
there is some evidence that the quality does perform well 
there, and if, under ACOs, the benchmark does not come down in 
those kinds of environments, then it should help Washington in 
that instance. Over the longer haul--this is a longer 
conversation--there has been this discussion of moving off of 
the historical benchmarks for ACOs, and we have outlined some 
of this and the need to move to a different benchmark to 
address some of the issues that we are talking about here.
    I have to say, there is a complexity that is going to be 
very hard to overcome in Washington in the sense that, if a 
managed care model----
    Senator Cantwell. In which Washington?
    Dr. Miller. I am sorry; in the Northwest of the United 
States, there is sort of a practice pattern where, if fee-for-
service is low utilization, a managed care plan or an ACO 
cannot outperform that. There are going to be sets of issues 
that are going to be difficult to overcome, because the 
response in many parts is to say, well, let us increase what we 
pay. Then the savings begin to evaporate, and I think that is 
the issue that needs to be----
    Senator Cantwell. No, no, no. We just want to be--listen, 
we are not happy that we are so efficient and produce better 
outcomes, and the rest of the--whatever you want to call it--
political spectrum wants to now reward bad providers with worse 
outcomes with very tiny incentives and, in the meantime, 
continue to shackle us with complexity when we can drive even 
more innovation and even more savings.
    So we are not happy. It is a start. What we did in the SGR 
is a start. We would be more aggressive, and we would reward 
good performance. So I guess my point is, instead of the way 
you described it--listen, we want to get off the fee-for-
service for sure. We want to reward outcomes. I think the 
question is, how can you use that ACO model and Medicare 
Advantage plans to get those savings? Instead of penalizing 
them, reward them.
    We are not saying we want higher reimbursement rates just 
for higher reimbursement rates. We want the United States of 
America to have an aggressive policy towards these very 
successful lower-cost, better-outcome models and incent people.
    But the incentive is still driven now towards the very 
expensive providers and trying to tease them into doing good 
things. We wish that we would be way more aggressive than we 
currently are.
    Dr. Miller. And I see your point. I am sorry that I came 
across differently. We have made specific comments on the ACOs, 
and in the managed care environment, that I think do try to 
address some of the issues you are getting at.
    Senator Cantwell. Well, we will look forward to seeing 
those details.
    So, Dr. Conway, do you agree that we need to do something 
here to make sure that ACOs and Medicare Advantage are more 
harmonized toward achieving, again, not just more fee-for-
service rates, but actually cost savings that then can be 
turned into other things?
    Dr. Conway. Yes. I would mention three things, briefly. One 
is that we are looking at the Medicare Advantage risk-
adjustment payment methodology.
    Two, with the Medicare Shared Savings Program, we are 
looking at some of the benchmarking issues and recommendations 
from MedPAC and others, and input from--thank you for your 
leadership in this area.
    Then, three, with the next-generation ACO model, which we 
recently announced and have a robust interest in, we set the 
benchmarking very differently so there is greater opportunity 
for traditionally low-cost providers to be rewarded if they 
achieve that attainment of quality and cost, and they are 
awarded that financially in the model.
    Senator Cantwell. Having been involved in many discussions 
as we led up to the SGR repeal, the immediate response was, oh 
well, Medicare Advantage, no, no, they already have some 
incentives, so we should exclude them, and that is really not 
the point.
    The point is, you want to deal with this chronic 
population, and they are part of dealing with that chronic 
population, and you want them to be in an ACO. So if people can 
achieve more savings, if people can achieve better outcomes and 
reduce the utilization and better target what the patients 
really need, we should figure out how to incent that, not 
basically penalize certain sectors.
    So, again, I get that this is almost a cultural issue 
between where we are in the Northwest and where some other 
parts of the country are, but this is about, in very specific 
terms, better outcomes, and what we want to achieve for all our 
health care delivery systems is better outcomes.
    But when we can show that you can get better outcomes at 
lower cost, it is a win-win situation for everyone. So 
hopefully we can get this issue resolved as it relates to 
Medicare Advantage and ACOs.
    So with that, I am going to say that the record is going to 
remain open until the 21st, and we hope members who have any 
other comments or input can submit those by then.
    Otherwise, the hearing is adjourned, and I thank our 
witnesses.
    [Whereupon, at 11:53 a.m., the hearing was concluded.]

                            A P P E N D I X

              Additional Material Submitted for the Record

                              ----------                              


  Prepared Statement of Patrick Conway, M.D., M.Sc., Acting Principal 
Deputy Administrator, Deputy Administrator for Innovation and Quality, 
and Chief Medical Officer, Centers for Medicare and Medicaid Services, 
                Department of Health and Human Services
    Chairman Hatch, Ranking Member Wyden, and members of the Committee, 
thank you for inviting me to discuss the Centers for Medicare and 
Medicaid Services' (CMS) work to improve care for beneficiaries with 
chronic disease. CMS is working hard to ensure that all Americans 
receive better care; that we spend our health care dollars more wisely; 
and that we have healthier communities, a healthier economy, and 
ultimately, a healthier country.

    Medicare beneficiaries have serious chronic care needs. In 2010, 
more than two-thirds, or 21.4 million fee-for-service beneficiaries, 
had at least two or more chronic conditions.\1\ In the same year, 
almost 60 percent of beneficiaries had heart disease, another 45 
percent had high cholesterol and roughly 30 percent had diabetes.\2\ 
Although chronic disease affects Medicare subpopulations differently--
for example, depression is more common among beneficiaries with 
disabilities--all beneficiaries are at risk.\3\
---------------------------------------------------------------------------
    \1\ http://www.cms.gov/Research-Statistics-Data-and-Systems/
Statistics-Trends-and-Reports/Chronic-Conditions/Downloads/
2012Chartbook.pdf.
    \2\ Id.
    \3\ Id.

    The high prevalence of chronic disease has both social and economic 
costs. Medicare beneficiaries with multiple chronic conditions are the 
heaviest users of health care services. As the number of chronic 
conditions increases so does the utilization of health care services 
and health care costs. In 2010, among the 14 percent of Medicare 
beneficiaries with six or more chronic conditions, over 60 percent were 
hospitalized, which accounted for 55 percent of total Medicare spending 
on hospitalizations. Beneficiaries with six or more chronic conditions 
also had hospital readmission rates that were 30 percent higher than 
the national average.\4\ Caring for the chronically ill can be 
complicated and requires effective communication and collaboration of 
various providers across health care settings. Fee-for-service payment 
systems do not always support effective care management for persons 
with chronic disease. CMS is working to improvecare for Medicare 
beneficiaries with chronic conditions by encouraging better chronic 
care management in both fee-for-service and Medicare Advantage, while 
testing innovative models to help identify better ways to provide 
health care.
---------------------------------------------------------------------------
    \4\ Id.
---------------------------------------------------------------------------
             establishing the payment framework for success
    Earlier this year, Health and Human Services Secretary Burwell 
announced measurable goals and a timeline to move the Medicare program, 
and the health care system at large, toward paying providers based on 
the quality, rather than the quantity of care they give patients. This 
initiative will ultimately create a payment environment that 
appropriately promotes and rewards better care management for persons 
with chronic illness.

    HHS has set a goal of tying 30 percent of traditional, or fee-for-
service, Medicare payments to quality or value through alternative 
payment models, such as Accountable Care Organizations (ACOs) or 
bundled payment arrangements by the end of 2016, and tying 50 percent 
of payments to these models by the end of 2018. HHS also set a goal of 
tying 85 percent of all traditional Medicare payments to quality or 
value by 2016, and 90 percent by 2018, through programs such as the 
Hospital Value Based Purchasing and the Hospital Readmissions Reduction 
Programs.

    To achieve better care, smarter spending and healthier people, we 
are focused on three key areas: (1) improving the way providers are 
paid, (2) improving and innovating in care delivery, and (3) sharing 
information more broadly to providers, consumers, and others to support 
better decisions while maintaining privacy.

    Payment Incentives: When it comes to improving the way providers 
are paid, we want to reward value and care coordination--rather than 
volume and care duplication. Many providers today receive a payment for 
each individual service, such as a physician visit, surgery, or blood 
test, and it does not matter whether these services help (or harm) the 
patient. Conversely, providers are generally not paid to keep their 
patients healthy before chronic diseases like diabetes develop or 
worsen. In other words, providers are paid based on the volume of care 
provided rather than the value of care provided. We want to pay 
providers for what works--whether it is something as complex as 
preventing or treating disease or something as straightforward as 
making sure a patient has time to ask questions.

    Care Delivery: To improve care delivery, we are supporting 
providers to find new ways to coordinate and integrate care. And we are 
also focused on improving the health of our communities--with a 
priority on prevention and wellness to help prevent chronic disease in 
the future. When a patient is admitted to the hospital or referred to a 
specialist without effective coordination between providers, it can 
lead to duplicative X-rays or lab tests that mean wasted time and money 
to the patient. With more emphasis on coordinated care, patients are 
more likely to get the right tests and medications rather than taking 
tests twice or getting procedures they do not need. Better care 
coordination can also mean giving patients more quality time with their 
doctor; expanding the ways patients are able communicate with the team 
of clinicians taking care of them; or engaging patients and families 
more deeply in decision-making. For example, if a patient is discharged 
from the hospital without clear instructions on how to take care of 
themselves at home, when they should take their medicines, or when to 
check back in with the doctor, it can lead to an unnecessary 
readmission back into the hospital for easily preventable harms. This 
is especially true of individuals who have complex illnesses or 
diseases that may be more difficult to manage. We are supporting care 
improvement through a variety of channels, including facilitating 
hospitals and community groups teaming up to share best practices.

    Information Sharing: As we look to improve the way information is 
distributed, we are working to create more transparency on the cost and 
quality of care, to use electronic health information to inform care, 
and to bring the most recent scientific evidence to the point of care 
so we can bolster clinical decision-making. While we have made great 
strides in encouraging and supporting the adoption of electronic health 
records, there are many areas where important information is missing. 
For example, many providers in the health system such as nursing homes 
do not have electronic health records to be able to store and share 
health information electronically with their patients or other 
providers, and some providers find that their electronic health records 
do not share information (i.e., are not ``interoperable'') with other 
systems as easily as they would have hoped.

    When information is available to the treating physician across all 
settings of care, patients can rest assured that all their relevant 
information is being tracked accurately and they are not asked to 
repeat information from recent hospitalizations or laboratory tests. 
Doctors can get electronic alerts from a hospital letting them know 
that their patient has been discharged and can proactively follow up 
with special care transition management tools. CMS is bringing together 
partners in the private, public and non-profit sector in pursuit of 
these goals. HHS has established the Health Care Payment Learning and 
Action Network, which will serve as a forum where payers, providers, 
employers, purchasers, states, consumer groups, individual consumers, 
and others can discuss, track, and share best practices on how to 
transition towards alternative payment models that emphasize value. The 
Network will be supported by an independent contractor that will act as 
a convener and facilitator.
         supporting care management in fee-for-service medicare
    CMS will continue to make improvements to Medicare fee-for-service 
payment systems as value-based payment models are developed. Recent 
improvements that promote more effective chronic care management 
include enhancing the Medicare Shared Savings Program, paying for care 
transitions and chronic care management services in the Medicare 
physician fee schedule, and emphasizing communication and care 
coordination through quality measurement.

    Care Coordination through the Medicare Shared-Savings Program 
(Shared Savings Program): Shared Savings Program participants, also 
known as Accountable Care Organizations (ACOs), are groups of doctors, 
hospitals, and other health care providers that work together to give 
Medicare beneficiaries in Original Medicare (fee-for-service) high 
quality, coordinated care. ACOs can potentially share in savings they 
generate for Medicare, if they meet specified quality and financial 
targets. In December 2014, CMS announced that 89 new ACOs would join 
the Shared Savings Program on January 1, 2015. With the addition of 
those new participants CMS now has a total of 404 ACOs participating in 
the Shared Savings Program, serving more than 7.2 million 
beneficiaries. When combined with the 19 ACOs participating in the 
Pioneer ACO models--discussed in more detail below--we have a total of 
423 ACOs serving over 7.8 million beneficiaries.

    CMS is seeing promising results from the Shared Savings Program. In 
fall 2014, we released results from the ACOs who started the program in 
2012. Shared Savings Program ACOs improved on 30 of the 33 quality 
measures in the first two years, including patients' ratings of 
clinicians' communication, beneficiaries' rating of their doctors, and 
screening for high blood pressure. They also outperformed group 
practices reporting quality on 17 out of 22 measures. We are also 
seeing promising results on cost savings with combined total program 
savings of $417 million for the Shared Savings Program and the Pioneer 
ACO Model.

    While we are encouraged by what we have seen so far, we also 
understand there are opportunities to improve the program to make it 
stronger. In late 2014, we published a proposed rule to update the 
requirements for the program. We are reviewing comments from ACOs, 
beneficiaries, and their advocates, providers, and other interested 
stakeholders.

    New Codes for Care Transitions and Chronic Care Management: For 
2013, CMS adopted a policy to pay separately for care management 
involving the transition of a beneficiary from care furnished by a 
treating physician during a hospital stay to care furnished by the 
beneficiary's primary physician in the community. This policy pays 
providers for activities that are critical for smoothing transitions 
back into the community and for preventing hospital readmissions. These 
activities include: reviewing discharge instructions and ensuring 
beneficiaries understand them, collaborating with outpatient providers 
that will be assuming care of the patient, making referrals to 
community resources and assisting with scheduling appointments with 
community-based providers.

    CMS built on this work by adopting a policy in Calendar Year 2015 
to pay separately for non-face-to-face care management services 
furnished to beneficiaries with two or more chronic conditions. This 
policy responds to the physician community, which has told us that the 
care coordination included in many of the evaluation and management 
services, such as office visits, does not adequately describe the 
typical non-face-to-face care management work involved with these types 
of beneficiaries. Providers will now be paid for expanding access to 
both in-person care and alternative (e.g., over-the-phone) 
appointments, developing care plans, and coordinating care with other 
providers. Chronic care management can help to avoid adverse events 
like unnecessary hospitalizations, improve beneficiary outcomes, and 
avoid a financial burden on the health care system. Successful efforts 
to improve chronic care management could improve the quality of care 
while simultaneously decreasing costs. Taken together, these policies 
signal CMS's commitment to improving care management for the 
chronically ill and better supporting primary care providers, which are 
frequently on the front lines delivering these services.

    Emphasizing Communication and Care Coordination through 
Measurement: CMS operates several quality measurement programs that 
help providers improve their performance and support the agency's goal 
of paying for value. Programs like the Physician Quality Reporting 
System (PQRS) and Hospital Readmission Reductions Program also include 
measures that promote effective care coordination and care management.

    PQRS: PQRS is a pay-for-reporting program that promotes reporting 
of quality information by eligible professionals. Most providers are 
required to report nine measures of their choice from a comprehensive 
list, giving them flexibility and options in achieving program 
expectations. Over time, CMS has updated the measures list with several 
that emphasize the delivery of well-coordinated effective care across 
health care settings. These measures evaluate if care is coordinated 
with specialists (``closing the referral loop''), if patients are seen 
following a mental health hospitalization (``follow up after 
hospitalization for mental illness''), and if a patient's medication is 
reconciled following a discharge from a hospital (``medication 
reconciliation'').

    Hospital Readmissions Reduction Program: This program continues 
CMS's progress towards creating a payment landscape that supports 
integrated and high-
quality care. When patients are consistently readmitted to hospitals, 
it can be a symptom of dysfunctional and poorly coordinated health 
systems. Under the Readmission Reduction Program, hospitals have a 
strong incentive to work collaboratively with other health care 
providers to manage care transitions and smooth beneficiaries' path 
back to the home. Beneficiaries with chronic illness, because of their 
vulnerability, are particularly at risk for admissions and 
readmissions.\5\ By reducing Medicare payments to hospitals with excess 
readmissions, this program creates incentives to better coordinate care 
and reduce readmissions for Medicare beneficiaries, including those 
with multiple chronic conditions. In Fiscal Year (FY) 2015, the maximum 
reduction in payments under the Hospital Readmissions Reduction Program 
increased from two percent to three percent of base discharge amounts, 
as required by law. For FY 2016, CMS will assess hospitals' excess 
readmission rates and calculate penalties using five readmissions 
measures endorsed by the National Quality Forum.
---------------------------------------------------------------------------
    \5\ http://www.cms.gov/Research-Statistics-Data-and-Systems/
Statistics-Trends-and-Reports/Chronic-Conditions/Downloads/
2012Chartbook.pdf.
---------------------------------------------------------------------------
                           medicare advantage
    Unlike ``traditional Medicare'' which is fee-for-service based, 
Medicare Advantage plans are offered by private companies that contract 
with CMS to provide Medicare Part A and B benefits. Most Medicare 
Advantage Plans also offer prescription drug coverage. Medicare 
Advantage Plans include Health Maintenance Organizations, Preferred 
Provider Organizations, Private Fee-for-Service Plans, Special Needs 
Plans, and Medicare Medical Savings Account Plans. Beneficiaries 
enrolled in a Medicare Advantage plan, have their Medicare services 
covered and paid through the plan. Medicare Advantage plans are 
expected to leverage their provider networks to coordinate high-quality 
care for beneficiaries, including those with chronic conditions. As a 
part of their required Quality Improvement program, all Medicare 
Advantage organizations must conduct a Quality Improvement Project and 
a Chronic Care Improvement Program; these initiatives focus on reducing 
hospital readmissions and reducing the incidence and severity of 
cardiovascular diseases, respectively. Both aim to improve health 
outcomes and beneficiary satisfaction through increased quality of 
care, especially for those with chronic conditions. Each CMS-
approved program is tailored to a Medicare Advantage organization's 
particular population and includes elements of shared decision-making 
and care coordination.

    Rewards and Incentives Programs in Medicare Advantage Plans: In 
2014, CMS added new regulations that allow Medicare Advantage 
organizations to offer beneficiaries rewards and incentives for 
participating in activities that focus on promoting improved health, 
preventing injuries and illness, and promoting efficient use of health 
care resources. The goal of Rewards and Incentives Programs is to 
encourage enrollees to be actively engaged in their health care and, 
ultimately, improve and sustain their overall health and well-being. 
Medicare Advantage organizations may use these programs to target 
beneficiaries with chronic conditions and to encourage behaviors that 
aid in disease management and/or prevention.

    Improving Quality in Medicare Advantage Plans: The Affordable Care 
Act ties payment to private Medicare Advantage plans to the quality 
ratings of the coverage they offer. A Medicare Advantage plan that 
receives a four- or five-star rating receives a bonus payment. As care 
coordination is one measurement used to determine a plan's star rating, 
plans are encouraged to deliver high-quality, coordinated care. Since 
those payment changes have been in effect, more beneficiaries are able 
to choose from a broader range of higher-quality Medicare Advantage 
plans, and more seniors have enrolled in these higher-quality plans as 
well.

    In recent years, the Medicare Advantage program has continued to 
grow, quality of participating plans has continued to increase, and 
premiums have remained stable. Medicare Advantage enrollment has 
increased by 42 percent since enactment of the Affordable Care Act in 
2010 to an all-time high of more than 16 million beneficiaries, with 
nearly 30 percent of Medicare beneficiaries enrolled in MA plans. In 
2015, 60 percent of MA enrollees will be enrolled in four- or five-star 
plans,\6\ compared to an estimated 17 percent back in 2009. Average 
premiums today are lower than before the Affordable Care Act went into 
effect, dropping six percent between 2010 and 2015.
---------------------------------------------------------------------------
    \6\ CMS calculates star ratings from one to five (with five being 
the best) based on quality and performance for Medicare health and drug 
plans to help beneficiaries, their families, and caregivers compare 
plans.

    The Medicare Prescription Drug, Improvement, and Modernization Act 
of 2003 (MMA) established a Medicare Advantage coordinated care plan 
(MA CCP) that was specifically designed to provide targeted care to 
individuals with special needs.\7\ MA CCPs that are set up to provide 
services to these special needs individuals are called ``Specialized MA 
plans for Special Needs Individuals,'' or Special Needs Plans (SNPs). 
SNPs offer the opportunity to improve care for Medicare beneficiaries 
with special needs, primarily through improved coordination and 
continuity of care. SNPs may be any type of MA CCP, including a health 
maintenance organization, or a local or regional preferred provider 
organization plan.
---------------------------------------------------------------------------
    \7\ The MMA defines ``special needs individuals'' as: (1) 
institutionalized beneficiaries; (2) dual eligibles; and/or (3) 
individuals with severe or disabling chronic conditions as specified by 
CMS.

    Chronic Condition Special Needs Plans (C-SNPs) restrict enrollment 
to special needs individuals with specific severe or disabling chronic 
conditions. C-SNPs focus on monitoring health status, managing chronic 
diseases, avoiding inappropriate hospitalizations and helping 
beneficiaries move from high risk to lower risk on the care continuum. 
CMS has approved 15 SNP-specific chronic conditions for which C-SNPs 
can target enrollment.\8\ C-SNPs are expected to have specially 
designed Plan Benefit Packages that offer benefits and services that go 
beyond the provision of basic Medicare Parts A and B services and care 
coordination required of all CCPs.
---------------------------------------------------------------------------
    \8\ For the full list of SNP-specific chronic conditions, please 
visit:
    https://www.cms.gov/Medicare/Health-Plans/SpecialNeedsPlans/
Chronic-Condition-Special-Need-Plans-C-SNP.html#s1.

    Health plans increasingly have responded to market developments and 
fiscal pressures with innovations in care delivery, plan design, 
beneficiary and provider incentives, and network design. Though 
evidence suggests that these innovations may reduce cost, improve 
quality, and enhance beneficiary satisfaction, adoption of some of 
these innovations has been limited in stand-alone Medicare Prescription 
Drug Plans, Medicare Advantage and Medicare Advantage Prescription Drug 
plans, Medicaid managed care plans, Medigap plans, and Retiree 
---------------------------------------------------------------------------
Supplemental health plans.

    Last year, the CMS sought input on initiatives to test innovations 
in plan design, including but not limited to value-based insurance 
design; care delivery; beneficiary and provider incentives and 
engagement; and/or network design in Medicare health plans and Medigap 
and Retiree Supplemental health plans. Many of these approaches have 
potential to improve the quality and efficiency of care provided to 
individuals with serious, chronic illness.\9\
---------------------------------------------------------------------------
    \9\ http://innovation.cms.gov/files/x/hpi-rfi.pdf.
---------------------------------------------------------------------------
                 delivery system reform demonstrations
    The Affordable Care Act created the CMS Center for Medicare and 
Medicaid Innovation (``Innovation Center'') for the purpose of testing 
``innovative payment and service delivery models to reduce program 
expenditures . . . while preserving or enhancing the quality of care'' 
for those individuals who receive Medicare, Medicaid, or Children's 
Health Insurance Program benefits. The Innovation Center is testing new 
payment and service delivery models focused on improving quality, 
reducing spending and enhancing care management and care coordination. 
The results of this work will help to inform efforts to improve care 
for individuals with multiple chronic conditions across the health care 
system. Examples of this work includes:

    Pioneer Accountable Care Organization Model: Nineteen ACOs are 
currently participating in the Pioneer ACO Model, which is designed for 
health care organizations and providers that are already experienced in 
coordinating care for patients across care settings. Results from the 
second independent evaluation of the Pioneer ACO Model show that 
Pioneer ACOs have generated gross savings of $384 million in the 
Model's first two years. Pioneer ACOs generated Medicare savings of 
$279.7 million in their first year and $104.5 million in 2013.\10\ 
Medicare beneficiaries who are in Pioneer ACOs, on average, report more 
timely care and better communication with their providers, use 
inpatient hospital services less, have fewer tests and procedures and 
have more follow-up visits from their providers after hospital 
discharge. Earlier this month, the CMS Office of the Actuary certified 
that the Pioneer ACO Model meets the stringent criteria for expansion 
under the Innovation Center Authority. The Actuary's certification that 
expansion of Pioneer ACOs would reduce net Medicare spending, coupled 
with Secretary Burwell's determination that expansion would maintain or 
improve patient care without limiting coverage or benefits, means that 
we will consider ways to scale the Pioneer ACO Model into other 
Medicare programs.
---------------------------------------------------------------------------
    \10\  See http://innovation.cms.gov/Files/reports/
PioneerACOEvalRpt2.pdf.

    Building on this success, the Innovation Center recently launched a 
new ACO model called the Next Generation ACO Model, which further 
enables innovation by providers to improve care for patients. The Next 
Generation ACO Model offers a new opportunity in accountable care--one 
that sets more predictable financial targets, enables providers and 
beneficiaries greater opportunities to coordinate care, and aims to 
attain the highest quality of care. ACOs in the Next Generation ACO 
Model will take on greater financial risk than those in current 
Medicare ACO initiatives, while also potentially sharing in a greater 
portion of savings. Next Generation ACOs will have a number of tools 
available to enhance the management of care for their beneficiaries. 
These include additional coverage of telehealth and post-
discharge home services, coverage of skilled nursing care without prior 
hospitalization, and reward payments to beneficiaries for receiving 
---------------------------------------------------------------------------
care from ACOs.

    Bundled Payments for Care Improvement Initiative: The Innovation 
Center is testing how bundling payments for episodes of care can result 
in more coordinated care for Medicare beneficiaries and lower costs for 
Medicare. Bundling payment for services that patients receive across a 
single episode of care, such as heart bypass surgery or a hip 
replacement, is one way to encourage doctors, hospitals and other 
health care providers to work together to better coordinate care for 
patients, both when they are in the hospital and after they are 
discharged. The initiative currently has 181 Awardees in Phase 2 (risk-
bearing), including 55 conveners of health care organizations, 
representing 512 Medicare organizational providers. Additionally within 
Phase 1 (preparatory) of the initiative are 607 participants, including 
87 conveners of health care organizations, representing 5,479 Medicare 
organizational providers.

    Comprehensive Primary Care Initiative: The Innovation Center is 
currently testing the Comprehensive Primary Care initiative (CPC), 
which is a multi-payer partnership between Medicare, Medicaid, private 
health care payers, and primary care practices in four states \11\ and 
three regions.\12\ This initiative includes providing care management 
for those at greatest risk; improving health care access; tracking 
patient experience; coordinating care with hospitals and specialists; 
and using health information technology to support population health. 
Practices receive non-visit based care management fees from the 
participating payers, and the opportunity to share in savings. Results 
from the first year suggest that CPC has generated nearly enough 
savings in Medicare health expenditures to offset care management fees 
paid by CMS, with hospital admissions decreasing by two percent and 
emergency department visits by three percent. Results should be 
interpreted cautiously as effects are emerging earlier than 
anticipated, and additional research is needed to assess how the 
initiative affects cost and quality of care beyond the first year.
---------------------------------------------------------------------------
    \11\ Arkansas, Colorado, New Jersey, and Oregon.
    \12\ New York's Capital District and Hudson Valley, Ohio and 
Kentucky's Cincinnati-Dayton region, and Oklahoma's Greater Tulsa 
region.

    Multi-Payer Advanced Primary Care Initiative: The Innovation Center 
is currently supporting the Multi-Payer Advanced Primary Care Practice 
(MAPCP), which is a multi-payer initiative in which Medicare is 
participating with Medicaid and private health care payers in eight 
advanced primary care initiatives in Maine, Michigan, Minnesota, New 
York, North Carolina, Pennsylvania, Rhode Island, and Vermont. The 
demonstration completed its original three-year performance period at 
the end of 2014 but was extended for an additional 2 years in five of 
the states.\13\ Under this demonstration, participating practices and 
other auxiliary supports (e.g., community health teams) receive monthly 
care management fees from the participating payers and additional 
support (e.g., data feedback, learning collaboratives, practice 
coaching). More than 3,800 providers, 700 practices, and 400,000 
Medicare beneficiaries participated in the first year. Unlike CPC, the 
eight states participating in MAPCP convene the participants and 
administer the initiatives rather than CMS. During the first year, the 
demonstration produced an estimated $4.2 million in savings. Also, the 
rate of growth in Medicare fee-for-service health care expenditures was 
reduced in Vermont and Michigan, driven largely by reduced growth in 
inpatient expenditures.
---------------------------------------------------------------------------
    \13\ The five states are New York, Vermont, Maine, Rhode Island, 
and Michigan.

    Providing states with additional flexibility and resources to 
enhance care: The State Innovation Models Initiative aims to help 
states deliver high-quality health care, lower costs, and improve their 
health system performance. Together with awards released in early 2013, 
over half of states (34 states and 3 territories and the District of 
Columbia), representing nearly two-thirds of the population are 
participating in efforts to support comprehensive state-based 
innovation in health system transformation aimed at finding new and 
innovative ways to improve quality and lower costs. Seventeen states 
are currently implementing comprehensive state-wide health 
transformation plans.\14\
---------------------------------------------------------------------------
    \14\ Arkansas, Colorado, Connecticut, Delaware, Idaho, Iowa, Maine, 
Massachusetts, Michigan, Minnesota, New York, Ohio, Oregon, Rhode 
Island, Tennessee, Vermont, and Washington.

    Integrating care for individuals enrolled in Medicare and Medicaid: 
Many of the ten million Medicare-Medicaid enrollees suffer from 
multiple or severe chronic conditions. Total annual spending for their 
care is approximately $300 billion. Twelve states have entered into 
agreements with CMS to integrate care for Medicare-
Medicaid enrollees.\15\ Enrollees participating in the Financial 
Alignment Initiative have access to coordinated services and, in some 
states, services that were not available outside of this demonstration, 
like dental, vision, and community-based behavioral health services. 
These demonstrations are designed to provide enrollees with person-
centered, integrated care that provides a more easily navigable and 
seamless path to accessing and using services covered by Medicare and 
Medicaid.
---------------------------------------------------------------------------
    \15\ California, Colorado, Illinois, Massachusetts, Michigan, 
Minnesota, New York, Ohio, South Carolina, Texas, Virginia, and 
Washington.

    Independence at Home: Created by the Affordable Care Act, the 
Independence at Home demonstration uses home-based primary care teams 
designed to improve health outcomes and reduce expenditures for 
Medicare beneficiaries with multiple chronic conditions. Under the 
demonstration, fourteen primary care practices and three consortia of 
physician practices are providing home-based primary care to targeted 
chronically ill beneficiaries for a three-year period. The care is 
tailored to an individual patient's needs and preferences with the goal 
---------------------------------------------------------------------------
of keeping them from being hospitalized.

    Transforming Clinical Practice Initiative: Through this initiative, 
CMS will invest in the creation of evidence-based, peer-led 
collaboratives and practice transformation networks to support 
clinicians and their practices as they move towards and navigate a 
value-based health care system that rewards value and high quality 
care.

    The initiative leverages the preliminary success of existing 
programs and models that have proven effective in achieving 
transformation, specifically in quality improvement, health care 
collaborative networks, and financial and program alignment. It 
identifies existing successful healthcare delivery models and works to 
rapidly spread these models to other health care providers and 
clinicians. We believe many of these clinician-driven quality 
improvement strategies and interventions could promote more effective 
communication and better coordinated care for individuals with multiple 
chronic conditions.
                               conclusion
    Providing coordinated care to individuals with multiple chronic 
conditions can be complex, and requires significant coordination that 
may not always occur in our fragmented health care delivery system. CMS 
is committed to improving care for Medicare beneficiaries with chronic 
disease while increasingly transitioning our payment systems to reward 
the value of care delivered--not volume. We believe these actions will 
create a payment environment that supports improved chronic care 
delivery. At the same time, the agency is testing new models of care 
delivery and pursuing improvements in traditional Medicare and Medicare 
Advantage that aim to improve quality, enhance patient satisfaction and 
lower costs. CMS hopes that this work in the Medicare program will not 
only improve care of our beneficiaries, but will help to inform efforts 
to improve coordination across other payers. We look forward to working 
with you and other stakeholders to continue to improve the Medicare 
program to better care for its most vulnerable beneficiaries.

                                 ______
                                 
          Questions Submitted for the Record to Patrick Conway
               Questions Submitted by Hon. Orrin G. Hatch
    Question. Dr. Conway, Medicare now offers a per-beneficiary monthly 
payment to certain physicians who provide care management services to 
patients with two or more chronic conditions. CMS implemented this new 
billing code in the standard budget-neutral manner, but I am curious 
how much money CMS expects to spend on this particular code? 
Additionally, does CMS have an estimate of how many beneficiaries may 
be helped under this code? Finally, is there any concern that creation 
of this new code may cause an increase in fraud and abuse should 
physicians classify patients as having two or more chronic conditions 
when they actually don't?

    Answer. Chronic care management (CCM) is a Medicare service that 
can be billed, under certain conditions, by a physician or non-
physician practitioner for managing a patient's care for a month. It is 
only paid if a minimum level of service is provided. As you note, these 
payments are designed to support care management activities for 
beneficiaries with two or more chronic conditions. In 2012, HHS 
research found that more than two-thirds, or 21.4 million fee-for-
service (FFS) beneficiaries, had at least two or more chronic 
conditions.\1\ We believe that these vulnerable Medicare beneficiaries 
can benefit from care management and want to make this service 
available to all such beneficiaries. Because the payment was 
implemented as part of the 2015 Physician Fee Schedule, with payments 
beginning January 1, 2015, we do not yet have any data on how much 
Medicare is spending on CCM. Once we have data, we will evaluate the 
utilization of this service to determine what types of beneficiaries 
elect to receive the service, what types of practitioners are reporting 
it, and consider any changes in payment that may be warranted in the 
coming years. If a physician classified a patient as having two or more 
chronic conditions when they did not in order to qualify for a CCM 
payment, the claim would be inappropriate and the physician potentially 
would be subject to penalties related fraud or abuse. Like we do for 
all other services, we will review and investigate patterns of 
utilization that suggest inappropriate behavior.
---------------------------------------------------------------------------
    \1\ See http://www.cms.gov/Research-Statistics-Data-and-Systems/
Statistics-Trends-and-Reports/Chronic-Conditions/Downloads/
2012Chartbook.pdf.

    Question. Dr. Conway, private health plans like PPOs and HMOs can 
create preferred networks of providers where beneficiaries are charged 
lower cost-sharing if they seek medical services in network. ACOs and 
other alternative fee-for-service Medicare payment models do not 
operate the same way. Given this restriction in Medicare fee-for-
service, it appears our options to strengthen care coordination 
services are somewhat limited to, for example, changing the provider 
payment structure. Because ACOs are not allowed to navigate their 
patients to specific providers, how effective do you believe ACOs will 
---------------------------------------------------------------------------
ultimately be at coordinating care and lowering costs?

    Answer. Although the Accountable Care Organization (ACO) model is 
relatively new, we have preliminary results demonstrating that it is 
possible for Medicare-
enrolled providers and suppliers to improve care coordination and 
quality for FFS beneficiaries while also creating cost efficiencies. 
For example, results from the second independent evaluation of the 
Pioneer ACO Model show that Pioneer ACOs have generated gross savings 
of $384 million in the Model's first two years. In addition, Medicare 
beneficiaries who are aligned to Pioneer ACOs, on average, report more 
timely care and better communication with their providers, use 
inpatient hospital services less, have fewer tests and procedures and 
have more follow-up visits from their providers after hospital 
discharge. In fact, the independent CMS Office of the Actuary recently 
certified that expansion of the Pioneer ACO Model, as tested in the 
first two years of the Model, would reduce net program spending under 
Medicare. In the first year of the Medicare Shared Savings Program, 58 
ACOs held spending $705 million below their targets and earned 
performance payments of more than $315 million as their share of 
savings. Together, ACOs in the Pioneer ACO Model and Medicare Shared 
Shavings Program generated over $417 million in savings for Medicare. 
An additional 60 ACOs reduced health costs compared to their benchmark 
but not sufficiently enough to qualify for savings. Shared Savings 
Program ACOs also improved on 30 of 33 quality measures.

    Because ACOs are assessed on the total cost of care the beneficiary 
receives, not just the care provided by the ACO, program incentives 
encourage coordination of care and referrals to high quality and lower 
cost providers and suppliers, regardless of whether that provider or 
supplier is part of the ACO. Even if a beneficiary sees a doctor 
outside of the ACO--it is still in the ACO's best interest to work with 
that doctor to help coordinate and improve care for the beneficiary. 
ACOs can also be successful without restricting beneficiary access by 
educating beneficiaries about providers who collaborate with the ACO to 
improve care.

    In addition, the Center for Medicare and Medicaid Innovation (CMMI) 
is soliciting applications for ACOs interested in participating in the 
Next Generation ACO Model, which includes a model design element to 
test whether financial rewards for beneficiaries who use providers that 
the ACO has identified as high value providers improve health outcomes 
and reduce spending for those beneficiaries. This is an alternative to 
designing a preferred network, and aims to improve beneficiary care 
without restricting access.

    Question. Dr. Conway, how many ACOs do you think will really be 
willing to take on two-sided risk and actually write checks to the 
government when they exceed their spending target?

    Answer. In 2011, Medicare made almost no payments to providers 
participating in CMMI models or ACOs promoting delivery system reform, 
but today such payments represent approximately 20 percent of Medicare 
payments. Earlier this year, the Secretary announced the goal of tying 
30 percent of Medicare FFS payments to alternative payment models, such 
as the Shared Savings Program, by 2016 and 50 percent by 2018.

    It is our desire to encourage ACOs to progressively take on more 
performance-based risk to drive quality improvement and efficiency in 
care delivery. For this reason, we established both a shared savings 
only (one-sided) model and a shared savings/losses (two-sided) model. 
This structure provides a pathway for organizations to increasingly 
take on performance-based risk. In the recently published Shared 
Savings Program final rule, we build on these principles and have 
finalized a set of policies we believe aligns with and advances the 
Secretary's goals. We believe the refinements to our existing two-sided 
risk model and the addition of our new Track 3 model, which provides 
greater rewards for taking on greater risk and includes greater 
flexibilities to coordinate care and improve quality will encourage 
organizations to take on performance-based risk. In addition, 
refinements to the requirements for a repayment mechanism reduce burden 
on ACOs and continue to ensure payment of losses to Medicare.

    ACOs positioned to manage the total cost of care and population 
health will be interested in two-sided risk models because they offer 
the highest reward. We continue to believe that accountability for 
losses is an important motivator for providers to change their behavior 
and to maximize reductions in unnecessary expenditures, and that the 
prospect of accountability for losses will ensure that the program 
attracts participants that take seriously their commitment to achieving 
the program's goals. While there are ACOs that may not be ready for 
that level of risk now, these ACOs could become ready over time. CMS 
has many initiatives designed to help support providers as they 
integrate care including the Health Care Payment Learning and Action 
Network, the State Innovation Model Initiative and the Transforming 
Clinical Practice Initiative. We continue to hear support from 
stakeholders for offering a spectrum of ACO models with varying levels 
of risk, accountability, and reward.

    Question. Dr. Conway, you mentioned Secretary Burwell's goal of 
tying at least 50 percent of traditional, fee-for-service Medicare 
payments to the use of alternative payment models by 2018. This is an 
aggressive target. While recent ACO demonstrations have shown some 
promise, these payment initiatives are still relatively new. There is 
no definitive data to prove if ACOs will improve quality and 
significantly reduce Medicare spending long-term. Ultimately, is it 
your intention to have as many ACOs as possible, with as many Medicare 
beneficiaries placed in them as possible, to meet this goal--even if 
all the ACOs are not effective? How will CMS quantify success? Will you 
act to streamline alternative payment models that fail and promote the 
ones that are most successful?

    Answer. CMS offers bundled payment initiatives, advanced primary 
care models, and other payment models (along with ACOs) that support 
the Department's payment reform goals. Organizations and providers are 
free to choose the delivery system reform path and model that is right 
for them. Based on formal evaluations and operational experience, we 
have a robust process in place for periodically assessing the 
effectiveness of various models and to expand, adjust or discontinue 
models based on those assessments. The law also requires that models 
tested by the Innovation Center shall be modified or terminated, unless 
the Secretary determines (and the CMS Chief Actuary certifies, with 
respect to spending) that the model is expected to improve the quality 
of care without increasing spending, reduce spending without reducing 
the quality of care, or improve the quality of care and reduce 
spending. The Innovation Center, working in concert with the Office of 
the Actuary, continuously monitors progress and results in order to 
identify successful and unsuccessful models and take necessary action.

    One example of data that proves ACOs are improving quality and 
would reduce Medicare spending in the long-term is the Secretary's 
determination that the Pioneer ACO Model, as tested in the first two 
years of the Model, met the Affordable Care Act's criteria for 
expansion of a model. The independent evaluation report for CMS found 
that the Pioneer ACO Model generated over $384 million in savings to 
Medicare over its first 2 years--an average of approximately $300 per 
participating beneficiary per year--while continuing to deliver high-
quality patient care. The Actuary's certification that expansion of the 
Pioneer ACO Model would reduce net Medicare spending, coupled with the 
Secretary's determination that expansion would maintain or improve 
patient care without limiting coverage or benefits, means that HHS will 
consider ways to scale the Pioneer ACO Model into other Medicare 
programs.

    This summer CMS will again assess the financial and quality 
performance of Medicare ACOs participating in both the Shared Savings 
Program and the Pioneer ACO Model--providing an additional set of data 
points that the Agency can use to assess the effect of ACOs on quality 
and cost of care. Rapid growth in Medicare ACO participation rates has 
certainly signaled increasing interest among the provider community and 
while the Agency is pleased with the preliminary health, quality and 
cost outcomes of ACOs, it will continue to assess and evolve the 
program/models to promote their success and continued program 
participation. The initial quality and financial performance results 
are promising in that we're seeing improvements in beneficiary 
experience of care and health outcomes, as well as reductions in the 
growth of per capita Medicare spending. To ensure long-term success and 
the continued promotion of accountability for the health and cost 
outcomes of Medicare beneficiaries, we plan to adopt successful 
elements of models currently being tested in our national valued-based 
payment programs.

    Question. Dr. Conway, your testimony indicates all ACOs produced a 
total Medicare savings of $417 million. I assume that ACOs achieve 
greater savings in parts of the country that have the highest fee-for-
service Medicare utilization. Can you please give me more details as to 
how, exactly, this saving was generated?

    Answer. CMS is pleased with the quality and financial results so 
far and recognizes that it takes time for providers to invest in and 
diffuse care redesign practices that lead to higher quality and better 
care. Early results have shown that ACOs with diverse organizational 
structures and located in diverse geographies have shared savings and/
or lowered growth in spending.

    ACOs have generated savings in diverse regions of the country, in 
areas of both higher and lower Medicare costs and utilization. Recent 
evaluations indicate ACO savings were achieved through reducing 
inpatient hospital utilization and skilled nursing care, as well as 
decreasing some types of diagnostic procedures and physician services.

    ACOs have implemented a variety of strategies designed to improve 
care coordination for beneficiaries and lower the rate of growth in 
expenditures. Above and beyond the early quality data generated by 
participating organizations, we have anecdotal evidence that 
illustrates the importance of encouraging beneficiary participation in 
the Shared Savings Program. For example, ACO providers/suppliers report 
very meaningful changes in patient engagement through beneficiary 
participation in the governing body of the ACO and on patient advisory 
committees. In response to beneficiary input, clinical practices are 
offering extended office hours, including weekend hours, and ensuring 
timely appointments and access to clinical staff. Using the data shared 
by CMS, ACOs are able to identify high risk beneficiaries that require 
additional clinical attention, assign case managers, and actively work 
to improve care for these beneficiaries. One ACO reported that it has 
implemented a process for performing in home medication reconciliation 
and review of care plans as a follow up to hospital discharge and for 
one third of those patients, discovered an intervention that avoided an 
unnecessary hospital readmission. Active identification and management 
of patients also has uncovered previously unaddressed issues that 
factored into patient inability to adhere to treatment plans. For 
example, one ACO reported that it has uncovered several psycho social 
issues that were resulting in avoidable readmissions, such as the 
inability to self-medicate. In that instance, the ACO addressed the 
concern by arranging for home health services for those beneficiaries.

    Question. Dr. Conway, your testimony notes that the CMS Office of 
the Actuary certified that expansion of the Pioneer ACO model will 
reduce net Medicare spending. CMS reports that Pioneer ACOs generated 
gross savings of $384 million during the program's first 2 years--
$279.7 million in 2012 and $104.5 million in 2013. That is a drop of 
$175.2 million between the program's first year results compared to its 
second year. Now, I understand that if Medicare spending remains flat, 
but beneficiary health outcomes increase, we may be heading in the 
right direction. But objectively, I want to know what this drop signals 
to you in terms of long term savings projections? Has the CMS Actuary 
looked into this?

    Answer. While we expect some volatility in spending and savings 
from year to year, the decrease in savings between the first and second 
performance year parallels broader spending trends in the Medicare 
program. Since the spending of FFS beneficiaries aligned with Pioneer 
ACOs is compared against the spending of their FFS peers, if those 
peers have a lower growth in spending, it would be more difficult for 
Pioneer ACOs to demonstrate savings in their aligned beneficiary 
populations.

    Spending results for both performance years varied across all 32 
Pioneer ACOs. In 2012--the first year of the model--19 organizations 
had statistically significant savings compared to their near market. 
The estimated savings and losses compared to the near market for the 
remaining 13 ACOs were not statistically significant in 2012.

    In 2013, 11 Pioneers had significant savings. Of those, all but 
one, Allina Health, already had achieved significant savings in 2012. 
Among the remaining 21 ACOs, 19 had spending that was not significantly 
different from their near markets. Two Pioneer ACOs--Partners 
Healthcare and Monarch--had significantly higher spending than their 
near-market comparison populations in 2013 totaling $41.7 million, 
offsetting some of the savings accrued by the 11 Pioneers with 
significant savings in that year. Fewer Pioneer ACOs having 
statistically significant savings in the second performance year and 
two Pioneer ACOs having higher spending that offset savings from other 
ACOs in that year are two causes for the lower overall gross savings 
figure in the second performance year.

    Additionally, the CMS Office of the Actuary's examination of the 
specific markets utilized in the evaluation report confirms that a 
majority of chosen comparison populations were significantly affected 
by the formation of new Medicare Shared Savings Program ACOs in mid-
2012 and, to a greater extent, in 2013 and beyond. This outcome is 
potentially related to the lower average savings estimated by the 
evaluation for the second performance year under both near- and far-
market comparisons.

    CMS believes that the certification by the independent CMS Office 
of the Chief Actuary that expansion of the Pioneer ACO Model, as tested 
in the first 2 years of the Model, would reduce net spending in the 
Medicare program lends further support to the potential for long-term 
savings from Medicare ACOs.

    Question. Dr. Conway, ACOs are likely to be geographically limited 
in areas where there are enough willing providers and beneficiaries to 
form them. Assuming ACOs work in the long run, what do patients do who 
live in areas of the country with little to no ACO penetration?

    Answer. We share your interest in making sure that Medicare 
beneficiaries and providers can participate in innovative care models, 
such as ACOs, no matter where they live. We also recognize that 
communities have different health care challenges. Some geographic 
areas may feature multiple organizations engaging in delivery system 
reform while others may face barriers to developing and implementing 
models aimed at achieving delivery system reform.

    Already, many beneficiaries can access CMMI payment and service 
delivery models and Medicare Shared Savings Program (MSSP) ACOs aimed 
at promoting delivery-system reform efforts. Although payment- and 
delivery-transformation work is happening across the country, there are 
some areas that have comparatively less penetration of alternative 
payment models. Further, beneficiaries that live in rural areas are on 
average less likely to have access to Innovation Center payment and 
service delivery models or MSSP ACOs than those living in urban areas.

    Because of these differences CMS has targeted initiatives to expand 
delivery-
system reform efforts to more rural and underserved areas. These 
initiatives include:

    The Advance Payment ACO Model, which was designed to help entities 
        such as smaller practices and rural providers with less access 
        to capital participate in the MSSP.

    The ACO Investment Model, a new model of pre-paid shared savings 
        that builds on the experience with the Advance Payment Model to 
        encourage new ACOs to form in rural and underserved areas and 
        also to support existing ACOs.

    The Transforming Clinical Practice Initiative, which will invest 
        in the creation of support and alignment networks and practice 
        transformation networks. These networks will serve as important 
        resources for clinicians in rural areas as they navigate the 
        new value-based health care system.

    The State Innovation Model Initiative, in which participating 
        states are testing and evaluating multi-payer health system 
        transformation models. States like Idaho, Utah, Michigan, and 
        Texas have received grants to develop their payment and 
        delivery system reform plans. Other states like Maine, Oregon, 
        Colorado, Minnesota Tennessee, and Arkansas have received 
        testing grants to implement their plans.

    Finally, under the Health Care Innovation Awards initiative, 
        awards have been made to organizations that are implementing 
        the most compelling new ideas to improve care and overall 
        health while lowering costs to people enrolled in Medicare, 
        Medicaid, and the Children's Health Insurance Program, 
        particularly those with the highest health care needs. There 
        have been 50 awards in Round One and 12 awards in Round Two 
        testing interventions in rural areas. These have included 
        projects in 37 states and a combined total funding for projects 
        that include rural interventions in the Health Care Innovation 
        Award portfolio at almost $554 million.

                                 ______
                                 
                 Questions Submitted by Hon. Ron Wyden
               reimbursement for community health workers
    Question. Community health workers have become an increasingly 
important part of our health system post-ACA. They are an integral part 
of care teams, particularly for vulnerable populations with complex and 
chronic health needs However, even in states like Oregon that are 
leading the way in care coordination, there is a need for more patient 
education and follow-up services like medication management. These are 
areas where community health workers can make a big difference.

    Fortunately, the ACA and subsequent CMS regulations/guidance took 
steps to increase the role of community health workers in Medicaid. In 
2013, CMS changed Medicaid regulations to clarify that states can 
reimburse for preventive services ``recommended'' by a physician or 
licensed practitioner, even if the service is ultimately provided by a 
community health worker or other health professional that falls outside 
the state's licensing scheme. Previously, such services were only 
reimbursed if they were provided by a physician or licensed 
practitioner. Beginning January 2014, CMS also allowed Medicaid 
agencies to reimburse for preventive services ordered by a physician 
but provided by a community health worker. However, no such 
reimbursement exists for the Medicare program, which also has 
vulnerable, high-risk populations.

    How have states been using new Medicaid options to reimburse 
community health workers and other health professionals that fall 
outside state licensing schemes?

    Answer. As you note, CMS revised our regulations to conform to the 
current statutory definition of preventive services, requiring that a 
physician or other licensed practitioner recommend these services 
rather than specifically providing them. We agree that making the 
conforming changes to our regulations to implement the statutory 
requirements broadened the availability of these important preventive 
services in keeping with statutory intent. As commenters noted, 
increasing the pool of providers could result in greater access to care 
and treatment for Medicaid and CHIP beneficiaries.

    Given the importance of this issue, we noted in a February 2013 
State Medicaid Director Letter that we had proposed the change to our 
regulations and that with the finalization of this change, states would 
be able to claim the one-percentage-point FMAP increase for services 
delivered by practitioners other than physicians or other licensed 
providers.

    Beyond the guidance we provided in February 2013, we have described 
the opportunity for states to include additional practitioners in the 
delivery of these services through the use of webinars and regular 
communication with the states. As states continue to consider this new 
flexibility, we remain available to work with those states that are 
interested in updating their state plans accordingly.

    Question. How can we better utilize community health workers in 
Medicare? Are there beneficiary sub-populations where community health 
workers could make a particularly big difference?

    Answer. CMS recognizes that community health workers can be an 
important part of our work to improve health care delivery and is 
building evidence about how to best use them, specifically in the 
Innovation Center. A number of Health Care Innovation Awards recipients 
have utilized community health workers as part of their efforts to 
provide higher quality care at lower costs.

    Accountable Care Organizations (ACOs) and the Comprehensive Primary 
Care initiative (CPC) are two additional ways CMS is working to ensure 
better health care, better health, and lower growth in expenditures 
with the help of community health workers. Participants in both the 
Pioneer ACO model and the CPC are employing a team-based workforce that 
can include community workers to improve beneficiaries' quality of 
care, while lowering cost.

    Question. Has CMS explored potential reimbursement options for 
community health workers in Medicare?

    Answer. We have a number of Health Care Innovation Award awardees 
employing Community Health Workers or other types of lay-health workers 
to improve patient and caregiver engagement, care coordination, and 
many other crucial aspects of health care delivery. Our evaluation of 
these awards is looking closely at the various ways these workers have 
been deployed and the related barriers and facilitators to their use. 
While we have some preliminary findings related to implementation, we 
do not yet have data across these awardees to suggest either success or 
failure in improving patient outcomes. We hope to have these data in 
the near future, as our evaluators continue to analyze the awardees. We 
will carefully review these results with the intention of informing 
future models and CMS policy more generally.

    Currently, community health workers are not eligible to enroll in 
Medicare to receive payment for services provided to Medicare 
beneficiaries. CMS routinely evaluates its provider enrollment 
policies, and has implemented new safeguards as a result of provisions 
in the Affordable Care Act. In considering potential enrollment of 
Community Health Workers in Medicare, CMS will need to ensure that 
necessary program integrity safeguards are in place.

    Question. Does CMS need anything from Congress, legislative or 
otherwise, in order to expand the role of community health workers in 
Medicare?

    Answer. CMS is committed to using all tools available to provide 
comprehensive, high-quality health care coverage to Medicare 
beneficiaries with chronic conditions. CMS is constantly looking for 
ways to improve beneficiary care and outcomes while reducing 
beneficiary and taxpayer costs. We are happy to provide technical 
assistance on any legislation that the Committee considers.
      alternative payment models in areas with high prevalence of 
              chronic disease and little care coordination
    Question. Many areas of the country have a high prevalence of 
chronic disease with corresponding high health care costs. The current 
fee-or-service system lacks care coordination which is a necessity for 
those living with chronic illness. Increased care coordination can cut 
down on duplicative costs, which Medicare has no way of avoiding in the 
fee-for-service system. Addressing these areas with different payment 
incentives may be helpful.

    Are there areas with a high prevalence of chronic disease that also 
have little enrollment in Medicare Advantage or alternative payment 
models?

    Why haven't these areas of the country moved towards alternative 
payment models?

    Answer. We share your interest in ensuring that all Medicare 
beneficiaries with chronic disease can have access to integrated and 
coordinated care. Already, many beneficiaries can access a Center for 
Medicare and Medicaid Innovation (CMMI) payment and service delivery 
model or Medicare Shared Savings Program (MSSP) ACO. In addition, 
ninety-nine percent of Medicare enrollees have access to at least one 
Medicare Advantage plan and over half of Medicare Advantage enrollees 
are now in high-quality plans with 4 or more stars.

    We also recognize that communities face different challenges as 
they work to transform the way they deliver health care. Some 
geographic areas may have a long history of mature managed care where 
others do not. Other areas feature multiple organizations engaging in 
delivery system reform while others may face barriers to developing and 
implementing alternative payment models. There are scattered areas, 
including some in the Southeast and Midwest, where beneficiaries have 
both high incidence of chronic disease but less robust access to 
Innovation Center payment and service delivery models or MSSP ACOs than 
beneficiaries in other parts of the country. In response to concerns 
and available research suggesting that some providers lack adequate 
access to the capital needed to invest in infrastructure necessary to 
successfully implement population care management, and to encourage new 
ACOs to form in rural and underserved areas, CMMI developed the ACO 
Investment Model initiative. The ACO Investment Model structures its 
payments to address both the fixed and variable costs associated with 
forming an ACO for new ACOs and with making ongoing investments to 
improve care coordination for existing ACOs.

    Question. What can Congress do to encourage alternative payment 
models in these areas? Are there unique circumstances in these areas 
that require a different type of model?

    Answer. CMS has several targeted initiatives to expand alternative 
payment models to more rural and underserved areas, including areas 
that have both fewer CMMI payment and service delivery models or MSSP 
ACOs and high burdens of chronic disease. These initiatives include:

    The Advance Payment ACO Model, which was designed to help entities 
        such as smaller practices and rural providers with less access 
        to capital participate in the MSSP.

    The ACO Investment Model, a new model of pre-paid shared savings 
        that builds on the experience with the Advance Payment Model to 
        encourage new ACOs to form in rural and underserved areas and 
        also to support existing ACOs.

    The Transforming Clinical Practice Initiative, which will invest 
        in the creation of support and alignment networks and practice 
        transformation networks. These networks will serve as important 
        resources for clinicians in rural areas as they navigate the 
        new value-based health care system.

    The State Innovation Model Initiative, in which participating 
        states are testing and evaluating multi-payer health system 
        transformation models. States like Idaho, Utah, Michigan, and 
        Texas have received grants to develop their payment and 
        delivery system reform plans. Other states like Maine, Oregon, 
        Colorado, Minnesota, Tennessee, and Arkansas have received 
        testing grants to implement their plans.

    Finally, under the Health Care Innovation Awards initiative, 
        awards have been made to organizations that are implementing 
        the most compelling new ideas to improve care and overall 
        health while lowering costs to people enrolled in Medicare, 
        Medicaid, and the Children's Health Insurance Program, 
        particularly those with the highest health care needs.

    We appreciate the Committee's interest in this important issue and 
we look forward to working with the Chronic Care Workgroup to further 
enhance beneficiary access to high-quality, cost-effective care.
                     targeting the chronically ill
    Question. Chronic diseases are the most costly conditions to treat 
in the healthcare system, accounting for almost all of Medicare 
spending--93%. In the 2014 physician fee schedule, CMS added a new code 
for non-face-to-face chronic care management (CCM) services. The 
beneficiary, however, must have at least 2 chronic conditions to be 
eligible to receive the CCM services. While the implementation of this 
code is a start, more than two-thirds of Medicare beneficiaries are 
living with multiple chronic conditions; those with more than the 
average of 2 conditions require more treatment and care coordination 
and how that is targeted must be addressed.

    As the committee begins the undertaking of chronic care reform, 
what is the best way to identify and target Medicare beneficiaries who 
need help the most?

    Answer. CMS looks forward to working with you and the Committee as 
you examine options for chronic care reform. We know that advanced 
primary care practices, ACOs and Medicare Advantage plans use a variety 
of administrative and clinical data sources to stratify their patients 
based on level of severity and number of chronic conditions. This 
information enables providers to strategically deliver the appropriate 
level of services to beneficiaries depending on their health status and 
individual needs. For example, providers can use this information to 
both make intensive care management services available to beneficiaries 
with multiple chronic conditions and identify lower-risk beneficiaries 
in need of important preventive care. One of our goals through 
developing and increasing the availability of alternative payment 
models is to give more organizations this type of flexibility to 
identify and provide appropriate care and coordination for 
beneficiaries based on their individual needs.

    Question. How do we identify beneficiaries in which we know better 
care coordination will decrease spending and improve the quality of 
care they receive?

    Answer. Improved care coordination and care management can be 
important for all Medicare beneficiaries. For those with multiple 
chronic conditions, better-
organized care can lower costs by reducing duplicative tests and 
procedures and reducing inpatient and emergency room use. Better and 
consistent preventive care for those without (or with few) chronic 
conditions may help catch and prevent the onset of disease. Currently, 
providers are generally not incentivized to keep their patients healthy 
before diseases like diabetes develop or worsen. In other words, 
providers are paid based on the volume of care provided rather than the 
value of care provided. We want to pay providers for what works--
whether it is something as complex as preventing or treating disease or 
something as straightforward as making sure a patient has time to ask 
questions.

    Question. Do we define the number of conditions like the chronic 
care management codes do? If so, what is the right number of 
conditions?

    Should we focus on specific diseases? If so which ones?

    Answer. All beneficiaries, regardless of the number of chronic 
conditions they have, may benefit from the care coordination afforded 
by an APM, while other more intensive and focused interventions may be 
more appropriate for beneficiaries with multiple serious conditions. 
Strategies for identifying patients for chronic care management 
services--whether by Medicare fee-for-service (FFS) costs, the number 
of chronic conditions, the types of conditions or the severity of those 
conditions--may depend on the particular policies or interventions the 
Committee considers for reforms.

    As you noted, CMS added a code to the 2015 Physician Fee Schedule 
to pay separately for non-face-to-face care management services. Prior 
to establishing this code, CMS learned from stakeholders that payments 
for Evaluation and Management services, which bundle together both 
face-to-face and non-face-to-face care management activities, did not 
adequately make payment for non-face-to-face services for complex 
beneficiaries. CMS adopted the separate payment for beneficiaries with 
multiple chronic conditions to address payment accuracy for resource 
costs. In other initiatives, including the Medicare Shared Savings 
Program (MSSP) and the Comprehensive Primary Care initiative, all FFS 
Medicare beneficiaries are attributed to participating providers based 
on where they seek care. Providers in these initiatives are encouraged 
to risk-stratify their patients to focus their chronic care 
interventions.

    In regards to focusing on specific diseases, the CMS has several 
initiatives targeted at improving quality and lowering costs for 
beneficiaries with select chronic conditions. These initiatives include 
the Million Hearts initiative, which focuses on cardiovascular disease, 
and the Every Diabetic Counts initiative, which hopes to reach and 
improve health outcomes in 18,000 Medicare beneficiaries with diabetes. 
The Innovation Center's Oncology Care Model focuses on Medicare 
beneficiaries with certain types of cancer, while the Comprehensive End 
Stage Renal Disease (ESRD) Care initiative concentrates on Medicare 
beneficiaries with ESRD. Finally, many condition-specific initiatives 
are also being tested through the Innovation Center's Health Care 
Innovation Awards and we would be happy to discuss these further with 
the Committee.
 understanding the roles of accountable care organizations (acos) and 
            other alternative payment models in chronic care
    Question. The Affordable Care Act (ACA) created the Medicare Shared 
Savings Program (MSSP), a voluntary program in which the participants 
are ACOs--groups of doctors, hospitals or other providers that work 
together to provide high quality, coordinated care. ACOs can 
potentially share in the savings they generate for Medicare if they 
also meet quality standards.

    Is there more that Medicare can do to incentivize ACOs to focus on 
chronically ill individuals?

    Answer. The Shared Savings Program incentives present in the 
program have motivated many ACOs to focus their efforts on improving 
care for chronically ill individuals. ACOs have created methods to 
identify Medicare FFS beneficiaries with multiple chronic conditions 
because these are often high-risk individuals who benefit most from 
proactive care coordination. CMS provides Medicare data to ACOs to help 
them identify beneficiaries at greatest need for care coordination. In 
addition, CMS continues to engage ACOs in robust shared learning where 
organizations at the forefront of transforming care can rapidly share 
their experiences--both successes and failures--with peers.

    Additionally, the Chronic Care Management and Transitional Care 
Management codes now provide additional care coordination payments for 
all FFS physicians and practitioners, including those belonging to an 
ACO. Due to the structure of the Shared Savings Program, participating 
organizations welcome high-risk chronic condition patients because that 
is where the greatest opportunity for care improvement and cost savings 
exist. We also have aligned our physician quality reporting and 
performance based incentive programs, such as the Physician Quality 
Reporting System and the Physician Value Modifier with the ACO quality 
reporting structure, which places emphasis on evidence based chronic 
disease measures and patient experience of care.

    Question. Should there be ACOs that are specifically focused on the 
chronically ill?

    Answer. ACOs, by nature of their mission to manage total cost of 
care for a population, pay attention to the needs of chronically ill 
patients. We believe that care for FFS beneficiaries is improved by 
encouraging ACOs to focus on care process improvement for all patients, 
rather than by encouraging focus on a particular type of patient or 
type of provider. Additionally, ACOs have the flexibility to identify 
care needs that are specific for their unique populations. We believe 
giving ACOs the flexibility to redesign care to meet the needs of their 
unique populations and communities ultimately supports healthcare 
process transformation that improves care for all patients.

    CMS has developed one ACO model, the Comprehensive End Stage Renal 
Disease (ESRD) Care initiative, focusing on one specific chronic 
illness (end-stage renal disease), reflecting the unique nature of 
payment for dialysis services and ESRD beneficiaries' high burden of 
disease.

    Question. What other payment models could help further care 
coordination for these fragile patients?

    Answer. The Oncology Care Model (OCM) is another model in which 
care coordination will be emphasized for a patient population with 
complex health care needs. The goal of OCM is to improve care 
coordination, appropriateness of care, and access to care for Medicare 
beneficiaries with cancer. To that end, the model will use aligned 
financial incentives, including performance-based payments and monthly 
care management payments, aimed at encouraging oncology practices to 
provide comprehensive, patient-centered, and coordinated care.

    Additionally, the Comprehensive Primary Care initiative, a multi-
payer initiative fostering collaboration between public and private 
health care payers to strengthen primary care, has a strong focus on 
care coordination for the chronically ill. This initiative includes 
providing care management for those with multiple chronic conditions; 
improving health care access; tracking patient experience; and 
coordinating care with hospitals and specialists.
         integrating drug spending into delivery system reform
    Question. Currently, CMS is implementing a number of alternative 
payment models such as ACOs and bundled payments that are attempting to 
coordinate care for a beneficiary in traditional fee-for-service 
Medicare. While these efforts are focusing on the medical side of the 
patient's care, like hospital, physician and nursing home services, 
drug spending is not involved. Under Medicare Advantage, some plans 
have integrated the Medicare drug benefit into the general MA benefit. 
This allows for one organization to coordinate all health under ``one 
roof.''

    Can we do more to integrate the proper use of prescription drugs 
into efforts to better coordinate care for those beneficiaries with 
chronic diseases who are enrolled into traditional Medicare?

    Answer. CMS has worked to improve care for high-risk fee-for-
service beneficiaries under the stand-alone Part D program. The Part D 
Medication Therapy Management (MTM) Program is specifically designed to 
improve outcomes for Medicare beneficiaries. MTM programs are designed 
to ensure optimum therapeutic outcomes for targeted beneficiaries 
through improved medication use and are coordinated with any care 
management plan established for those individuals under a chronic care 
improvement program. Targeted beneficiaries for a Part D plan's MTM 
program, in general, are enrollees who meet all of the following 
criteria: have multiple chronic diseases, are taking multiple Part D 
drugs, and are likely to incur annual Part D drug costs that meet or 
exceed a certain threshold ($3,138 for 2015).

    Another specific area where the Part D program is working to better 
coordinate care is with beneficiaries who are at high risk for an 
adverse drug event due to their use of opioids and for whom focused 
case management may be appropriate. As part of this case management 
approach, Part D sponsors work with prescribers to identify a medically 
appropriate dose and, in some cases, identify a primary prescriber to 
better manage the beneficiary's care. Part D sponsors may adapt this 
approach to other drugs or classes of drugs, including HIV drugs, as 
long as they use the same level of diligence and documentation that CMS 
expects with respect to opioids.

    Question. Can CMS integrate more of Part D into these new payment 
models similar to how Medicare Advantage has done?

    Answer. CMS shares the goal of finding mechanisms for alternative 
payment models to include accountability for drug spending and 
utilization. For example, the Oncology Care Model will give providers 
some accountability for beneficiaries undergoing chemotherapy.

    The design of the Medicare Part D program, in which CMS contracts 
with private entities (stand-alone prescription drug plan (PDP) 
sponsors, MA organizations and other types of Medicare health 
organizations) who then act as the payers and insurers for prescription 
drug benefits, may pose challenges to full accountability for Part D 
expenditures for entities like ACOs. However, CMS believes it is 
important to find strategies for including Part D accountability into 
ACO initiatives and is exploring options for facilitating partnerships 
between Part D Plans and ACOs in the Next Generation ACO Model. The 
earliest CMS would be able to implement such Part D interaction for the 
Next Generation ACO Model would be Performance Year 2 (2017). Any Part 
D interaction would be subject to appropriate safeguards and conditions 
to protect against fraud and abuse.

    CMS continues to work to integrate Part D into payment models. The 
Medicare Part D program pays a capitated amount to private insurers to 
manage the prescription drugs of Medicare FFS beneficiaries. Under this 
structure, savings in prescription drug spending within the capitated 
amount result in savings to the Part D plans rather than savings to 
Medicare. Incorporating drug costs under Medicare Advantage, on the 
other hand, works because it allows a single private insurer to manage 
all of the risks for a single patient to work to earn a profit.

    Some conditions such as cancer, however, have prescription drug 
spending that is high enough to require direct payments from the 
Medicare Trust Funds, such as during the catastrophic phase of the Part 
D benefit. These costs can be tied directly to Medicare spending for 
FFS beneficiaries, as opposed to the capitated payments made to their 
Part D plans. Because the Oncology Care Model will hold participating 
practices accountable for certain Part D costs, the model is expected 
to incent the use of high-value Part D drugs.

                                 ______
                                 
               Questions Submitted by Hon. Sherrod Brown
                        community health workers
    Question. Poor care coordination can lead to worse health outcomes, 
increased hospital admissions, and higher cost. Community Health 
Workers (CHWs) play an integral role in public health, prevention, cost 
containment, and care coordination.

    In Ohio, we have seen how CHWs help patients--including high cost 
patients--understand and navigate our nation's complex health care 
system, teach healthy behaviors that can prevent disease before it 
starts, and help patients manage chronic disease by coordinating their 
care among many providers and reminding them to take their medicine, do 
their exercises, and stay on track with their other self-
treatment tasks.

    The Affordable Care Act (ACA) has helped expand opportunities for 
CHWs to contribute to increased value and care coordination; however 
the health reform law offered no direct new funding for the employment 
of CHWs within the dominant fee-for-service (FFS) delivery system.

    Dr. Conway--to follow up on the question I asked during the 
hearing, can you both talk about the role of CHWs in care coordination 
and the value of integrating CHWs with other health care professionals 
into care teams?

    Answer. With more emphasis on coordinated care, patients are more 
likely to get the right tests and medications rather than taking tests 
twice or getting procedures they do not need. Better care coordination 
can also mean giving patients more quality time with their doctor; 
expanding the ways patients are able communicate with the team of 
clinicians taking care of them; or engaging patients and families more 
deeply in decision-making. We are supporting care improvement through a 
variety of channels, including facilitating hospitals and community 
groups teaming up to share best practices.

    CMS recognizes that community health workers can be an important 
part of our work to improve health care delivery and is building 
evidence about how best to use them, specifically in the Innovation 
Center. A number of Health Care Innovation Awards recipients have 
utilized community health workers as part of their efforts to provide 
higher quality care at lower costs.

    Accountable Care Organizations (ACOs) and the Comprehensive Primary 
Care initiative (CPC) are two additional ways CMS is working to ensure 
better health care, better health, and lower growth in expenditures 
with the help of community health workers. Participants in both the 
Pioneer ACO model and the CPC are employing a team-based workforce that 
may include community workers to improve beneficiaries' quality of 
care, while lowering cost.

    CMS is committed to improving care for Medicare beneficiaries with 
chronic disease while increasingly transitioning our payment systems to 
reward the value of care delivered--not volume. We believe these 
actions will create a payment environment that supports improved 
chronic care delivery.

    Question. Dr. Conway--you mentioned that many of the innovation 
grants coming out of the Center for Medicare and Medicaid Services' 
(CMS) Center for Medicare and Medicaid Innovation (Innovation Center, 
or CMMI), incorporate CHWs. Has CMS collected enough data to comment on 
the results of these demonstrations that involve CHWs? If so, can you 
elaborate on what the data tells us? Has CMS considered any 
opportunities for CHWs within the Medicare program, such as the 
authorization of payment for services for CHWs? If not, is this an area 
where a specific charge from Congress might be helpful?

    Answer. We have a number of Health Care Innovation Award awardees 
employing Community Health Workers or other types of lay-health workers 
to improve patient and caregiver engagement, care coordination, and 
many other crucial aspects of health care delivery. Our evaluation of 
these awards is looking closely at the various ways these workers have 
been deployed and the related barriers and facilitators to their use. 
While we have some preliminary findings related to implementation, we 
do not yet have data across these awardees to suggest either success or 
failure in improving patient outcomes. We hope to have these data in 
the near future, as our evaluators continue to analyze the awardees. We 
will carefully review these results with the intention of informing 
future models and CMS policy more generally.
                       innovation and prevention
    Question. Dr. Conway, your testimony highlights how CMS's 
Innovation Center is testing new ways to deliver care that will improve 
quality, reduce spending, and enhance care management and coordination. 
The Innovation Center seems to represent one of our best opportunities 
to rethink and test how we deliver health care services.

    I am especially interested in how we can do more to promote health 
and prevention, which means investing in prevention to keep populations 
healthy and out of the hospital instead of waiting for some members of 
a population to become patients with one or more chronic diseases.

    We already know that a major portion of health outcomes is not 
driven by care delivery, but by other factors that drive either poor or 
positive health outcomes.

    Dr. Conway--you've spoken publicly about the potential for an 
Innovation Center funding opportunity to pilot and test a model you've 
referred to as ``Accountable Health Communities.'' It is my 
understanding that this would be an investment at the community level 
to bring public health and the social determinants of health 
infrastructure together with the health care delivery system. What more 
can you tell us about this concept? Does CMS have a timeline for this 
Funding Opportunity Announcement?

    Answer. CMS is considering an Accountable Health Communities model, 
which has not yet been finalized. CMS is happy to update you and the 
Committee on any related Funding Opportunity Announcements.
                    prevention and population health
    Question. For a lot of the most important delivery system reform 
work, states are in the driver's seat. A great example of this is the 
State Innovation Model (SIM) grant program being administered through 
the Innovation Center.

    Ohio is one of 17 states that is currently implementing a 
comprehensive, state-wide health transformation plan through the SIM 
Initiative. Ohio is using the SIM grant to develop a plan to develop 
and expand the utilization of patient-centered medical homes (PCMH) to 
the majority of Ohioans covered under Medicaid, Medicare, and 
commercial health plans. These PCMHs are designed to integrate physical 
health with behavioral health and improve care coordination, thereby 
lowering costs.

    Dr. Conway, can you tell us what tools and resources are being 
provided to states who are interested in promoting both clinical and 
community prevention as part of their SIM initiatives?

    Answer. The purpose of SIM is to accelerate transformation of state 
delivery and payment systems for the preponderance of a state 
population. Through SIM, the Innovation Center works with other 
components of CMS, as well as other Federal partners including CDC and 
ONC, to help states design and implement clinical and prevention 
transformation activities in delivery and payment models.

    SIM is collaborating with other payers to ensure that basic 
clinical preventive service delivery is reflected in any delivery and 
payment reforms implemented in a state.

    The Innovation Center has developed a robust learning system that 
catalogs and disseminates common evidence based interventions across 
all SIM states. CMS's Center for Medicaid and CHIP Services 
participates with SIM states through assisting the states to develop 
State Plan Amendments and waivers that can accelerate the 
implementation of alternative payment models such as PCMH and ACOs that 
can help promote prevention and population health. ONC is working with 
the SIM states to ensure that community health services providers 
receive and use clinical and claims data to drive improvement.

    CMS has also worked with additional Federal partners to assist 
states to take advantage of Behavior Health and Primary Care 
integration programs through SAMHSA and Community Health Worker 
curricula through HRSA.
                            risk adjustment
    Question. MedPAC research shows that the Medicare Advantage HCC 
risk-
adjustment model--which is used for Dual Eligible Special Needs Plans 
(D-SNPs) and the Medicare-Medicaid Plans (MMPs) in financial alignment 
demonstrations--often underpays for high-cost beneficiaries, and does 
not always accurately pay the cost of full-benefit duals. Some D-SNPs 
and MMPs--including those in Ohio, exclusively enroll high-cost duals 
because they are integrating these individual's Medicare and Medicaid 
benefits as Congress intended. Yet CMS's risk-adjustment model 
undermines the sustainability of these programs.

    Dr. Conway--when will CMS fix the risk-adjustment model, either by 
adopting MedPAC's recommendations or making other changes so as to not 
undermine Congress' and the administrations' integrated care programs 
for duals?

    Answer. CMS takes very seriously the concerns raised by commenters 
that the model may disproportionately affect specific populations, 
particularly dual eligibles. We are evaluating the impact of the model 
on these populations (including exploring ideas raised by MedPAC and 
others such as whether partial duals and full duals should be treated 
differently).

    CMS is evaluating the impact of the Medicare Advantage risk-
adjustment model to ascertain whether it underpays plans that serve a 
large share of dual eligibles. Once the analysis is complete, as 
appropriate and consistent with the data, we could make changes to the 
risk-adjustment model. This work could inform risk-
adjustment payment policies in 2017.

    In addition, in 2014 and 2015, CMS has undertaken a public process 
to investigate how the share of enrollees in a plan who are dually 
eligible affects a contract's star quality ratings (and thereby its 
quality bonus payment and rebate share) under the Medicare Advantage 
Stars Rating Program. CMS received and reviewed 65 submissions to a 
Request for Information on this topic. We are committed to continuing 
to study this issue and would propose, where appropriate, alternate 
payment adjustments in this fall's request for comment on 2017 star 
quality ratings.

    We will share our analysis with stakeholders and, if appropriate, 
propose modifications to the model to improve predictive accuracy in a 
future year's process.
                     cancer as a chronic condition
    Question. For many Medicare beneficiaries, cancer is not a one-time 
disease, but can be a reoccurring condition and even a chronic disease 
that never entirely goes away. The occurrence of cancer, like many 
other chronic conditions, becomes more common with age. By doing more 
to detect, prevent, and treat cancer, we can help control costs and 
prevent some chronic conditions from occurring.

    Colorectal cancer is a great example. Despite being the second 
leading cause of cancer death in the United States, colorectal cancer 
is largely preventable. Providers have the tools to both prevent 
colorectal cancer and detect it during early stages, when treatment is 
most successful. The most effective preventive action for this disease 
is a screening colonoscopy, which allows for the early detection and 
removal of tissue that could become cancerous.

    Under current law, seniors covered by Medicare are eligible for 
colorectal cancer screenings without cost sharing. However, if a 
physician takes a further preventive action--like removing a polyp--
during the screening, the procedure is billed as a ``treatment'' rather 
than a ``screening,'' and the cost is passed on to the patient. Because 
it is impossible to know in advance if a polyp will be removed during a 
screening colonoscopy, Medicare beneficiaries do not know whether or 
not their screening will be fully covered until the procedure is over. 
The financial barrier that coinsurance creates (approximately $100-300 
depending on site of service) may lead to Medicare beneficiaries not 
choosing this highly effective method of colorectal cancer prevention.

    Medicare-aged individuals account for two-thirds of colorectal 
cancer diagnoses. The current co-pay policy seems to be counter to the 
intent of the law and a poor way of preventing a chronic condition from 
occurring.

    Dr. Conway--do you agree that the current co-pay under Medicare is 
a disincentive to getting people screened?

    Ultimately, it seems that we are actually creating new costs for 
the program if folks aren't getting screened because of the potential 
out-of-pocket charge. If we decrease the disincentives for screenings, 
we can improve health outcomes and save money for both seniors and 
taxpayers.

    Dr. Conway--the Removing Barriers to Colorectal Cancer Screening 
Act (S. 624) would fix this discrepancy by waiving Medicare's cost-
sharing requirement for preventive colonoscopies, even if a polyp or 
tissue is removed. Do you support eliminating this barrier to care? By 
increasing access to these screenings, is it possible to help prevent 
the occurrence of colorectal cancer and the associated costs to the 
Medicare program?

    What other regulatory or legislative fixes would help ensure 
seniors have access to cancer screening services and high-quality 
treatment options before their diseases become chronic?

    Further, I understand that there is a similar problem with the much 
cheaper stool-based screening tools. For instance, if a Medicare 
beneficiary gets a fecal immunochemical test (FIT) and it comes back 
positive, it is recommended that the beneficiary then go in for a 
colonoscopy as a continuation of the screening process. However, if the 
beneficiary goes in for that additional screening, they are charged a 
co-pay. Faced with the cost, it seems to me that they may skip the 
follow-up colonoscopy altogether and potentially limit the potential to 
stop cancer before it starts.

    Dr. Conway--what is the logic behind the refusal to cover (without 
a co-pay) the follow-up colonoscopy to a positive FIT test?

    Answer. Medicare covers a broad range of cancer screening 
procedures to detect cancer early when it's most treatable. We also 
cover high-quality treatment options and have transparent, evidence-
based processes in place to consider coverage of new treatments and 
technology as they become available. A colonoscopy furnished under the 
circumstance you described in subpart d. of the question would be 
considered a diagnostic colonoscopy, not a screening colonoscopy, for 
which cost-sharing is not waived under current law.

    I am aware of the dilemma faced by Medicare beneficiaries who find 
out, after the fact, that their colonoscopy has been coded as a non-
preventive service due to discovery and removal of a polyp, and 
unexpected cost-sharing may apply. This results from two sections of 
current law: one (enacted in Section 4104 of the Affordable Care Act) 
that waives application of the Part B deductible in this circumstance 
but does not waive coinsurance, and one (titled ``Special Rule for 
Detected Lesions'' at Section 1834(d)(3)(D) of the Social Security Act) 
that requires that a colonoscopy in which a lesion or growth is 
biopsied or removed must be classified and paid as a ``colonoscopy with 
such biopsy or removal,'' not as a screening colonoscopy. Amending 
these provisions would require a legislative change.

    We would be glad to provide technical assistance on any legislation 
the Committee considers on this issue.

                                 ______
                                 
            Questions Submitted by Hon. Robert P. Casey, Jr.
   factors to consider in the medicare advantage star rating program
    Question. The National Quality Forum (NQF) and other peer reviewed 
journals, have concluded that the current star rating system for 
Medicare Advantage should include measures related to social 
determinants of health, such as socioeconomic status, education or 
ethnicity because many of the quality performance criteria measured by 
the star rating program (i.e., medication adherence rates) are directly 
correlated to member socioeconomic characteristics. So in the ongoing 
effort to drive high standards and high quality care for all MA 
beneficiaries, including dual eligible and some of the more vulnerable 
beneficiaries, how can CMS better measure the impact of clinical risk 
factors, low-income status and other sociodemographic factors in the 
star rating program?

    Answer. Multiple MA organizations and PDP Sponsors believe that 
plans with a high percentage of dual-eligible and/or Low-Income Subsidy 
(LIS) enrollees are disadvantaged in the current Star Ratings Program. 
Further, NQF has recommended that each performance measure should be 
assessed individually to determine the appropriateness of adjustments 
for socioeconomic status. Thus, CMS is examining whether performance on 
Star Ratings clinical measures is sensitive to the percentage of dual-
eligible/LIS enrollees in the plan. Extensive internal and contract-
supported research has been commissioned and continues to date.

    CMS issued a Request for Information (RFI) that provided the 
opportunity for the public and plans to submit their analyses and 
research regarding any relationship between dual-eligible status and 
lower MA and Part D quality-measure scores. In the RFI, we also 
solicited examples of any research that demonstrated high-quality 
performance in MA or Part D plans can be achieved in plans serving 
dual-eligible beneficiaries.\2\
---------------------------------------------------------------------------
    \2\ The research conducted and information collected related to 
dual-eligible/LIS status and Star Ratings measures is publically 
available at http://go.cms.gov/partcanddstarratings.

    CMS's research has found some differences in measure-level 
performance for dual-eligible/LIS beneficiaries, although for the 
majority of measures the differences are small. However, evidence of an 
association between higher dual-eligible/LIS enrollment and lower Star 
---------------------------------------------------------------------------
Ratings does not prove causality.

    CMS believes additional research into what is driving the 
differential performance on a subset of measures is necessary before 
seeking stakeholder comment on any proposed changes to the Star Ratings 
system. It is the goal of the research to provide the evidence as to 
whether sponsors that enroll a disproportionate number of Dual/LIS 
beneficiaries are systematically disadvantaged by the Star Ratings. In 
addressing any disparities in performance, we need to ensure that any 
changes to the Star Ratings system do not mask true differences in 
quality.

    The IMPACT Act (Pub. L. 113-185) instructs the Assistant Secretary 
for Planning and Evaluation (ASPE) to conduct a study that examines the 
effect of individuals' socioeconomic status on quality measures and 
resource use and other measures for individuals under the Medicare 
program. All CMS components are in the process of coordinating their 
research with ASPE. The Star Ratings team will continue to work 
collaboratively with ASPE to examine the issue and its impact on the 
Star Ratings.

    Upon completion of additional research, any adjustments for the 
2017 Star Ratings would be proposed in the fall Request for Comments.

                                 ______
                                 
               Question Submitted by Hon. Chuck Grassley
    Question. In his February 2014 letter to then-CMS Administrator 
Tavenner, MedPAC Chairman Hackbarth noted the challenges that Medicare 
continues to face in achieving better medication management quality and 
outcomes. He suggested that ``. . . better medication management might 
be achieved through programs offered by ACO's, medical homes and other 
team-based delivery models.'' He further noted that ``Providers working 
within these care models have more incentive to improve their patients' 
medication regimens'' and that . . . ``patients, encouraged by their 
physicians and pharmacists . . . may be more likely to participate in 
[such] programs and follow the advice they receive.'' Is CMS actively 
pursuing policy changes and payment structures that would more 
effectively support a team-based approach to comprehensive medication 
management programs throughout the Medicare program?

    Answer. We agree that better medication management could 
potentially improve beneficiary outcomes and lower program costs. When 
appropriately applied, medication management has the potential to 
reduce adverse drug events, reduce unnecessary hospital and emergency 
room utilization, and improve medication adherence. Accordingly, CMS 
has made it a priority to integrate the proper use of prescription 
drugs into new payment and service-delivery models in an effort to 
better coordinate care for beneficiaries. For example, the Million 
Hearts: Cardiovascular Disease Risk Reduction Model test is a 
randomized-controlled trial designed to identify and test models of 
care delivery that reduce cardiovascular risk. Each participating 
practice must develop an Individual Risk Modification Plan, which 
includes medication reconciliation with a review of beneficiary 
adherence and potential interactions as well as medication compliance 
and self-management.

                                 ______
                                 
               Questions Submitted by Hon. Johnny Isakson
    Question. Earlier this year, CMS announced a target of tying 50 
percent of Medicare payments to alternative, value-based payment models 
by 2018. That's an admirable goal, but I think it's worth noting that 
30 percent of Medicare beneficiaries are already enrolled in Medicare 
Advantage plans that receive capitated payments. I'm concerned that CMS 
policies continue to discourage plans from signing up seniors with 
multiple chronic conditions who would benefit the most from care 
coordination. MedPAC has estimated that Medicare's risk-adjustment 
model already underpays by 29 percent for the sickest beneficiaries, 
yet CMS proposes additional cuts to Medicare Advantage risk adjustment.

    It's been nearly 3 years since MedPAC discussed the need to improve 
risk adjustment for Medicare Advantage enrollees with multiple chronic 
conditions. But instead of increasing incentives for plans to enroll 
the sickest patients, CMS has been cutting back these incentives. Do 
you agree that Medicare beneficiaries with multiple chronic conditions 
have the most to gain from the care coordination services provided by 
the best Medicare Advantage plans? Why hasn't CMS implemented MedPAC's 
recommendations?

    Answer. We agree that beneficiaries with chronic conditions benefit 
from care coordination. Published research, as well as our own findings 
related to the Medicare Advantage plans with the highest star ratings, 
indicates that care coordination activities are key to reducing 
hospitalizations and ER use, slowing disease progression, and 
preventing development of complications and comorbidities.

    The CMS Hierarchical Condition Category risk-adjustment model is an 
additive model, meaning that we add together the factors for each 
condition a beneficiary has. When we measure model performance, we find 
that our model predicts well for beneficiaries across risk categories. 
That is, for the 10 percent of beneficiaries with the highest predicted 
costs, our model predicts almost exactly. For the sickest group of 
beneficiaries, i.e., the one percent of beneficiaries with the highest 
predicted costs, our model predicts 94 percent of their costs.\3\
---------------------------------------------------------------------------
    \3\ For more information, see the model's evaluation report at 
http://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/
Downloads/Evaluation_Risk_Adj_Model_2011.pdf.

    Question. The chronically ill comprise 15% of Medicare 
beneficiaries--yet they account for 75% of costs. More than two decades 
ago, CareMore began to address this disparity with a new model of care 
based on three key pillars: chronic care management, acute care 
management, and predictive modeling and early intervention. These plans 
diagnose conditions early by providing beneficiaries access to disease 
management and care coordination programs that are demonstrating 
improvements in quality compared to FFS Medicare with 67% fewer 
hospitals days and 50% fewer admissions. What strategies should be 
employed to encourage MA plan programs that focus on prevention and 
---------------------------------------------------------------------------
early detection of health conditions?

    Answer. All Medicare Advantage (MA) plans have both a Chronic Care 
Improvement Program (CCIP) and Quality Improvement Project (QIP), as 
required by regulation. Both CCIPs and QIPs in MA organizations consist 
of a comprehensive, well-organized, and logical plan that is expected 
to improve health outcomes and enrollee satisfaction. This often 
includes disease prevention and early detection. Since 2012, all CCIPs 
have focused on reducing cardiovascular disease through disease 
management. Beginning in 2015, all QIPs will focus on population 
specific chronic conditions and incorporate aspects of care 
coordination that will facilitate the use of disease management 
strategies to manage current chronic conditions, promote healthier 
lifestyles and utilize routine/preventive care to achieve optimal 
health outcomes.

    Additionally, CMS recently adopted a rule permitting rewards and 
incentives in the final rule published in May 2014. MA programs may now 
provide enrollees with rewards/incentives in exchange for participating 
in health related activities. We believe MA plans may use such programs 
to encourage enrollees to participate in health screenings and other 
disease management services.

    Finally, MA special needs plans (SNPs) are required to complete a 
comprehensive Health Risk Assessment (HRA) and Model of Care (MOC) for 
each individual enrollee. The HRA is a key step in evaluating each 
beneficiary in order to create an appropriate MOC complete with a care 
coordination team and disease management plan. While completion of HRAs 
is not a requirement for non-SNP MA plans, all MA plans are strongly 
encouraged to complete HRAs within 90-days of enrollment.

    Question. In January, we saw the implantation of the new payment 
code for managing Medicare patients with multiple chronic conditions. 
This is a great step towards complex care management and improving 
transitions of care. As part of the code's utilization requirement, I 
am pleased to see the requirement of creating a 
patient-centered care plan and providing a copy of the plan to the 
patient. Although the code is just in the beginning stages of 
implementation, has CMS seen any positive results from providers in 
improving patients' care while they navigate the health care system?

    Answer. Because the payment was implemented as part of the 2015 
Physician Fee Schedule, with payments beginning January 1, 2015, we do 
not yet have any results on the impact from this code. We will evaluate 
the utilization of this service to evaluate what types of beneficiaries 
receive the service and what types of practitioners are reporting it, 
and consider any changes in payment that may be warranted in the coming 
years.

                                 ______
                                 
                 Questions Submitted by Hon. Tim Scott
    Question. Given that we know that beneficiaries with four or more 
chronic conditions account for more than 70% of all Medicare spending 
in a given year, I think we are in need of serious solutions that 
prevent seniors from even getting to that point. Fortunately, Medicare 
Advantage plans are doing just that by identifying high risk 
beneficiaries in order to improve their health, instead of manage the 
decline. More importantly, we know these plans are specifically 
designed to provide a full spectrum of care, and the outcomes have been 
great. Unfortunately for seniors on traditional Medicare, their plans 
are not designed with this same focus on coordination. Dr. Conway, 
given the successes of Medicare Advantage plans in mind and as we move 
forward with legislative solutions, what does Congress need to do to 
ensure that all Medicare beneficiaries have access to benefits that 
keep them well, as opposed to simply treating people once they get 
sick?

    Answer. CMS agrees that all beneficiaries, regardless of whether 
they are enrolled in traditional Medicare or Medicare Advantage, should 
receive high-quality care designed to prevent chronic illness. All 
Medicare beneficiaries have access to preventive care because the 
Affordable Care Act eliminated coinsurance and the Part B deductible 
for recommended preventive services covered by Medicare, including many 
cancer screenings and other important benefits.\4\ By making certain 
preventive services available with no cost sharing, and by removing 
barriers to prevention, Americans and health care professionals can 
better prevent illness, detect problems early when treatment works 
best, and monitor health conditions. In 2014, nearly 39 million 
Medicare beneficiaries received at least one free preventive 
service.\5\
---------------------------------------------------------------------------
    \4\ For a full list of free preventive services available, see
    http://www.cms.gov/Medicare/Prevention/PrevntionGenInfo/index.html.
    \5\ http://downloads.cms.gov/files/Beneificiaries-Utilizing-Free-
Preventive-Services-by-State-YTD-2014.pdf.

    CMS also added a code to the 2015 Physician Fee Schedule to pay 
separately for non-face-to-face chronic care management (CCM) services. 
The CCM service is extensive, including structured recording of patient 
health information, an electronic care plan addressing all health 
issues, access to care management services, managing care transitions, 
and coordinating and sharing patient information with practitioners and 
providers outside the practice. Prior to establishing this code, CMS 
learned from stakeholders that payments for Evaluation and Management 
services, which bundle together both face-to-face and non-face-to-face 
care management activities, did not adequately make payment for non-
face-to-face services for complex beneficiaries. CMS adopted the 
separate payment for beneficiaries with multiple chronic conditions to 
---------------------------------------------------------------------------
address payment accuracy for resource costs.

    With more emphasis on coordinated care, patients are more likely to 
get the right tests and medications rather than taking tests twice or 
getting procedures they do not need. Better care coordination can also 
mean giving patients more quality time with their doctor; expanding the 
ways patients are able communicate with the team of clinicians taking 
care of them; or engaging patients and families more deeply in 
decision-making. We are supporting care improvement through a variety 
of channels, including facilitating hospitals and community groups 
teaming up to share best practices.

    Additionally, CMS is committed to improving care for Medicare 
beneficiaries with chronic disease while increasingly transitioning our 
payment systems to reward the value of care delivered--not volume. We 
believe the actions outlined below will create a payment environment 
that supports improved chronic-care delivery and prevention.

    HHS has set a goal of tying 30 percent of traditional, or fee-for-
service (FFS), Medicare payments to quality or value through 
alternative payment models, such as Accountable Care Organizations 
(ACOs) or bundled payment arrangements, by the end of 2016, and tying 
50 percent of payments to these models by the end of 2018. HHS also set 
a goal of tying 85 percent of all traditional Medicare payments to 
quality or value by 2016, and 90 percent by 2018, through programs such 
as Hospital Value Based Purchasing and Hospital Readmissions Reduction.

    CMS is already making progress towards these goals, developing and 
testing different payment models. For example, Medicare Shared Savings 
Program participants, also known as ACOs, are groups of doctors, 
hospitals, and other health care providers that work together to give 
Medicare FFS beneficiaries high quality, coordinated care. ACOs can 
potentially share in savings they generate for Medicare, if they meet 
specified quality and financial targets. In December 2014, CMS 
announced that 89 new ACOs would join the Shared Savings Program on 
January 1, 2015. With the addition of those new participants CMS now 
has a total of 404 ACOs participating in the Shared Savings Program, 
serving more than 7.2 million beneficiaries.

    An additional 19 ACOs are currently participating in the Pioneer 
ACO Model, which is designed for health care organizations and 
providers that are already experienced in coordinating care for 
patients across care settings. Medicare beneficiaries who are in 
Pioneer ACOs, on average, report more timely care and better 
communication with their providers, use inpatient hospital services 
less, have fewer tests and procedures and have more follow-up visits 
from their providers after hospital discharge.

    Question. It has been brought to my attention that there is anomaly 
in current CMS policy and local Medical Advisory Committees (MACs) 
coverage decisions regarding patient access to technology and 
innovation. CMS grants, under specific circumstances subsequent to a 
rigorous application process, a ``New Technology DRG Add-On Payment'' 
(NTAP) for new innovative medical technology that demonstrates a 
substantial clinical improvement over existing therapy. When CMS makes 
this determination, the intent is clear that a technology receiving 
NTAP designation should be made available to Medicare beneficiaries. 
Despite NTAP designation, a MAC may make a separate non-coverage 
determination, thereby denying beneficiary access to innovative 
technology that has undergone an extensive review by CMS, which has 
already determined substantial clinical improvement over existing 
therapies based upon the evidence. Can you comment on this incongruity 
between CMS determinations of NTAP and local MACs establishing contrary 
coverage decisions?

    Answer. Before payment is made, an item must be covered by 
Medicare. Decisions regarding Medicare coverage are generally made by 
Medicare contractors that administer the program in their local areas. 
Independently, CMS makes national decisions on whether a new technology 
is a ``substantial clinical improvement'' and meets other criteria for 
an additional payment beyond our normal fee schedule payment amounts. 
On a few rare occasions, the local Contractor Medical Director may come 
to a different conclusion on whether a given technology is reasonable 
and necessary for the treatment of illness or injury (Medicare's 
coverage criteria) than physicians in CMS's Central Office regarding 
whether a technology is a substantial clinical improvement (a Medicare 
payment criterion for NTAP).

    The Medicare Administrative Contractors (MACs) have authority to 
make reasonable and necessary determinations within their respective 
jurisdictions. Local coverage determinations (LCDs), like national 
coverage determinations, are based on a thorough review of published 
scientific evidence. The NTAP and LCD process are both grounded upon 
evidence, and carried forth through separate authorities, which 
infrequently may lead to varying decisions depending upon circumstances 
such as when the evidence reviews and analyses were conducted.

                                 ______
                                 
              Questions Submitted by Hon. Debbie Stabenow
    Question. Dr. Conway, I recently reintroduced my bipartisan HOPE 
for Alzheimer's Act, which would provide Medicare reimbursement for a 
care-planning session for newly diagnosed Alzheimer's patients and 
their caregivers in order to educate families about the disease, their 
loved one's needs, community supports, clinical trials, and the like. 
Nearly 10 percent of Medicare beneficiaries have Alzheimer's disease 
and 1 in 5 Medicare dollars is going to treat these patients. We're 
hard pressed to talk about protecting the Medicare program for future 
generations and addressing Medicare spending without addressing the 
serious financial toll this disease is taking on the program. We need 
to find a cure, but we also need to help families right now. Dr. 
Conway, could the new chronic care management code be used in some way 
to address this issue? What other things are CMS and CMMI working on to 
give Alzheimer's patients and caregivers access to the services and 
information they need? What role do you see a care-planning session 
like the one described in the HOPE for Alzheimer's Act could plan in 
combating Alzheimer's and reducing federal health care spending?

    Answer. Care planning and care coordination can play an important 
role in effectively managing chronic conditions, including Alzheimer's 
disease. Chronic Care Management (CCM) payments are designed to support 
care management activities for beneficiaries with two or more chronic 
conditions. Medicare began making separate payment for non-face-to-face 
CCM services under the physician fee schedule beginning on January 1, 
2015. The CCM service is extensive, including structured recording of 
patient health information, an electronic care plan addressing all 
health issues, access to care management services, managing care 
transitions, and coordinating and sharing patient information with 
practitioners and providers outside the practice. If a beneficiary has 
two or more chronic conditions, which may often be the case for many 
Medicare beneficiaries with Alzheimer's disease, the beneficiary would 
qualify to receive CCM services.

    The Innovation Center is testing several projects within its Health 
Care Innovation Awards initiative on different aspects of dementia-care 
support. For example, in 2012, the Trustees of Indiana University 
received an award to test The Aging Brain Care program, a care 
coordination program for 2,000 Medicare and Medicaid beneficiaries 
living with dementia and/or depression and their caregivers. In this 
program, care coordinators conduct extensive person-centered planning 
and care-
coordinator assistants go into the home and check medications, fall 
risks, changes in cognitive functioning, and medical needs. They 
ascertain the social networks and resources available to these 
beneficiaries and offer referrals for senior-center services, day 
programs, or other available services, such as transportation, 
counseling services, or home-based supports. Caregivers get supports as 
well, including peer-
support groups and respite services.

    The Aging Brain Care program surpassed their goal of enrolling 
2,000 beneficiaries and the local health system has agreed to continue 
to fund the program after the close of the Health Care Innovation Award 
period and funding. While our findings are not yet final for this and 
the other dementia-related projects, our preliminary data suggest that 
person-centered, coordinated care planning is important for persons 
newly diagnosed and living with Alzheimer's disease, and for their 
caregivers. Many of the Innovation Center models include care 
coordination as a central aspect of delivery system and payment reform. 
The learning around care planning from the Health Care Innovation 
Awards will be used in the design and execution of current and future 
models.

    Question. Dr. Conway, I am happy that CMS is now reimbursing 
providers for non-face-to-face chronic care management. We know that 
the work health care professionals can do behind the scenes--
coordination between providers, medication reconciliation, and patient 
monitoring--reduces costs and improves the health of patients with the 
most complex, chronic conditions. Far too many seniors were left 
without access to these services and this new reimbursement is a great 
step forward. However, I am concerned that the co-pay associated with 
this new benefit--about $8 per month--could be restricting access. Just 
last week, a group of family physicians from across Michigan told my 
staff that many seniors who were initially excited about receiving the 
services asked to withdraw after receiving the first bill. A senior not 
being able to afford an $8 co-pay should not be a barrier to an 
improved care delivery system that can ultimately save Medicare 
thousands of dollars. Please discuss the utilization rates of this 
benefit and what role the $8 copay could have on enrollment. Please 
also discuss why there may be a need for this copay, as well as ways we 
can work together to reduce or eliminate it.

    Answer. The Medicare statute only waives deductible and coinsurance 
for preventive and screening services. As chronic care management is 
not a screening or preventive service, the Medicare statute requires 
that coinsurance be charged.

    Question. Dr. Conway, several members on the committee, including 
myself, are looking into how poverty impacts delivery system reform 
efforts such as reducing the rate of hospital readmissions. We know 
that the incidence of chronic illness is higher in low-income 
populations, which is why I am happy CMS and others are looking at how 
to account for socioeconomic status in health reform efforts. 
Unfortunately, hospitals are facing financial penalties today. To 
ensure that our policies are truly improving hospital outcomes and not 
merely penalizing hospitals that act as community safety-nets for our 
most vulnerable constituents, can you discuss what steps you believe 
the administration could take right now to offer temporary relief for 
hospitals in this situation?

    Answer. CMS notes there are differing opinions regarding whether 
measures should be risk adjusted for socioeconomic status. While some 
stakeholders argue in favor of making socioeconomic status risk 
adjustments, others believe such adjustments may mask the potential 
disparities of care provided by hospitals and could potentially result 
in lower-quality care for vulnerable populations, including Medicare 
beneficiaries.

    CMS applies a risk-adjustment methodology to our outcomes measures 
to account for comorbidities and other factors, including age, sex, and 
markers of severity (such as cardio-pulmonary arrest) to ensure 
hospitals are not penalized for serving populations that are sicker or 
have higher incidences of chronic disease.\6\ In addition, CMS monitors 
the impact of socioeconomic status on hospitals' results as it 
continuously refines the measures used in its quality reporting and 
payment programs.
---------------------------------------------------------------------------
    \6\ Readmission measure methodology reports available at: https://
www.qualitynet.org/dcs/
ContentServer?cid=1219069855841&pagename=QnetPublic%2FPage%2FQnetTier4&c
=Page.

    In order to specifically address the issue of risk adjustment for 
socioeconomic status, the Office of the Assistant Secretary for 
Planning and Evaluation (ASPE) is conducting research on this issue as 
directed by the IMPACT Act (Pub. L. 113-185), and will issue a report 
to the Congress by October 2016. CMS will closely examine the 
recommendations issued by ASPE and consider how they apply to CMS 
---------------------------------------------------------------------------
quality programs.

    CMS remains committed to working with the Committee and other 
stakeholders to reform the delivery system while addressing any 
unintended consequences.

                                 ______
                                 
              Question Submitted by Hon. Patrick J. Toomey
    Question. Medicare beneficiaries with multiple chronic conditions 
are the largest users of health care services. For example, the 14 
percent of beneficiaries with six or more chronic conditions, such as 
chronic kidney disease, heart failure, and chronic obstructive 
pulmonary disorder (COPD), accounted for 55% of total Medicare spending 
on hospitalizations. What models, including coordinated care models, 
currently exist that could be translated to improve quality and reduce 
Medicare costs for those with ESRD and/or multiple chronic conditions?

    Answer. The Comprehensive ESRD Care (CEC) initiative focuses on 
Medicare beneficiaries with ESRD. Currently, the ESRD Prospective 
Payment System bundles the cost of dialysis into a single fee for 
dialysis care, but does not provide care coordination outside the 
dialysis center. The new CEC initiative is designed to further align 
incentives inside and outside the dialysis center through the creation 
of ESRD Seamless Care Organizations (ESCO). ESCOs are groups of 
healthcare providers and suppliers who work together to provide 
Medicare beneficiaries with ESRD with more patient-centered coordinated 
care across the spectrum of their services, from physician offices to 
hospitals to dialysis centers.

    This type of coordinated care can be found in many models at CMS. 
Models stressing improved care coordination include the Oncology Care 
Model, the Comprehensive Primary Care initiative, the Pioneer ACO 
Model, and the Next Generation ACO Model. Providers in these models 
have deployed improved care coordination to manage their highest risk 
patients.

                                 ______
                                 
               Questions Submitted by Hon. Mark R. Warner
    Question. As CMS continues to reimburse for care transitions and 
begins reimbursement for care coordination, how do you plan to ensure 
that adequate quality measures are developed, and that providers are 
actually coordinating care in a manner that is beneficial to the 
patient?

    Answer. The scope of service requirements for transitional care 
management (TCM) and chronic care management services (CCM) is aimed at 
ensuring a patient's care is coordinated in a manner that is the most 
beneficial for him or her. For example, the CCM service is extensive, 
and requires at least 20 minutes of clinical staff time, directed by a 
physician or other qualified health care professional, per calendar 
month. These services include structured recording of patient health 
information, an electronic care plan addressing all health issues, 
access to care management services, managing care transitions, and 
coordinating and sharing patient information with practitioners and 
providers outside the practice.

    In addition to the payment requirements, CMS is also ensuring 
adequate development of quality measures. CMS has added a care 
transition measure to our hospital patient experience of care survey to 
incorporate patient assessments of their care-coordination services. 
The three-question Care Transition Measure was adopted in the Hospital 
Inpatient Quality Reporting Program starting in 2013, and initial 
measure data were posted on Hospital Compare in December 2014. The 
Hospital VBP Program has proposed to adopt this measure to pay on 
hospital performance beginning with 2016 discharges.

    CMS also encourages providers to coordinate care by measuring 
outcomes where care coordination is critical to success, such as 
reducing hospital readmissions. CMS includes hospital readmission 
measures in both the Hospital Inpatient Quality Reporting Program and 
the Hospital Readmissions Reduction Program. Through public reporting 
and payment incentive programs, and other initiatives such as 
Partnership for Patients, national rates of readmissions for Medicare 
beneficiaries have been trending down for several years.

    This care transition measure provides insight to CMS to further 
determine progress towards meeting the goals of the CMS Quality 
Strategy. One of the basic aims of CMS focuses on strengthening person 
and family engagement as partners in their healthcare in addition to 
promoting effective communication and coordination of care. CMS has 
committed to incorporating an emphasis on improving these essential 
elements as part of the quality improvement activities being 
implemented in communities across the Nation. This commitment further 
aligns with efforts to make care safer, more effective, and more 
affordable for all.

    Initiatives have been designed to ensure the transitions across 
settings are 
person-centered and maximize an individual's ability to remain in the 
community. Attention towards the individual and their complex needs 
support the movement towards creating a high quality healthcare 
experience. The QIN-QIOs, Hospital Engagement Networks and Community-
Based Care Transitions Program, and others, focus their work on 
understanding the suitability of the community infrastructure through 
the development of community collaborations. In an effort to ensure 
care is coordinated effectively and proactively, providers are 
implementing tools to help patients and caregivers prepare for post-
acute care needs, such as Discharge Planning Checklists, upon 
admission, and in some cases prior to scheduled admissions. Many 
facilities are tracking the implementation and use of these tools and, 
when an unsuccessful care transition occurs, examining the contributing 
factors in order to identify opportunities for improvement. CMS has 
also engaged patients and families in its learning and actions networks 
to improve transitions of care. Continuing assessment provides feedback 
as to the success of these efforts and serves to direct future 
initiatives and continuous quality improvement.

    Question. When does CMS plan to begin reimbursement for the 
advanced care planning CPT codes? Are the codes sufficient to providing 
patients and caregivers with the information needed to make informed 
decisions? What steps is CMS taking to ensure new and innovative 
advanced care models are properly studied and scaled?

    Answer. In the 2015 Physician Fee Schedule Final Rule, CMS 
indicated that we will consider whether to pay for the new CPT codes 
for advance care planning after there is an opportunity for public 
comment. We are considering this issue as we develop the CY 2016 
Physician Fee Schedule proposed rule.

    Question. How important is it to integrate non-medical services 
that support activities of daily living into the care regularly 
provided for patients with chronic conditions? How does CMS plan to 
bring proven high-touch, care coordination models to beneficiaries in 
the Medicare Fee-For-Service program? Are there any entities leading 
the way in this regard?

    Answer. The integration of non-medical services that support 
activities of daily living can have an important role in ensuring 
quality care for patients with chronic conditions. The Independence at 
Home Demonstration tests home-based primary care for Medicare fee-for-
service (FFS) beneficiaries with multiple chronic illnesses. 
Participating practices make in-home visits tailored to an individual 
patient's needs and coordinate their care. Treating people at home may 
allow practitioners to provide more holistic care by observing how 
patients actually function in their day-to-day environment and 
identifying unmet needs for services that can help their patient remain 
independent.

                                 ______
                                 
              Prepared Statement of Hon. Orrin G. Hatch, 
                        a U.S. Senator From Utah
WASHINGTON--Senate Finance Committee Chairman Orrin Hatch (R-Utah) 
today delivered the following opening statement at a committee hearing 
examining how Congress can address the challenges Medicare patients 
with chronic conditions face:

    Today's hearing signals the Finance Committee's first step in a 
bipartisan process that will continue over the next 6 months. Ranking 
Member Wyden, myself, and other members of the committee have expressed 
strong interest in understanding the impact chronic care coordination 
programs have on Medicare.

    Chronically ill patients account for a large percentage of Medicare 
spending. In 2010, more than two-thirds of Medicare beneficiaries had 
multiple chronic conditions, while 14 percent had six or more. 
Beneficiaries with six or more chronic conditions accounted for 46 
percent of all Medicare spending. In fact, fee-for-service Medicare 
spent an average of more than $32,000 per beneficiary with six or more 
chronic conditions compared to an average of around $9,000 for all 
other patients.

    Left unresolved, this situation will only get worse.

    Researchers at the Centers for Disease Control and Prevention found 
an increasing number of adults between 45 and 64 years old--members of 
the Baby Boom generation--living with multiple chronic conditions, 
signaling even higher future spending for the Medicare program.

    We have to find ways to provide high quality care at greater value 
and lower cost--all without adding to the deficit.

    The good news is that the successful Medicare Advantage program 
gives beneficiaries the option to receive covered benefits from private 
plans that are incentivized to manage care across all settings. That 
explains why 15.7 million beneficiaries--or 30 percent of Medicare 
participants--chose a Medicare Advantage plan in 2014. I am concerned 
that ongoing payment cuts and changes to the risk adjustment and 
quality measurements may be putting these plans at a disadvantage.

    Traditional fee-for-service Medicare still fails to properly 
incentivize providers who engage in labor and time intensive patient 
care coordination. While disease management and chronic care 
coordination have been widely used by private sector health insurers, 
their application in fee-for-service Medicare has been largely 
restricted to demonstration programs.

    Since Obamacare became law, there has been an increased focus on 
programs like Accountable Care Organizations and medical homes. But for 
more than a decade, the Centers for Medicare and Medicaid Services, or 
CMS, has piloted numerous demonstration programs to find out what does 
and does not work to improve health outcomes for patients with chronic 
diseases.

    These demonstration programs have shown, at best, mixed results.

    According to one Congressional Budget Office report, CMS paid 34 
programs in six major demonstrations to provide disease management or 
care coordination services in traditional Medicare. On average, these 
34 programs had little to no effect on hospital admissions or Medicare 
spending.

    Now I know that the Obama Administration is actively pursuing new 
care coordination programs through the Center for Medicare and Medicaid 
Innovation. My hope is that this research will yield long-term results. 
By identifying cost-effective, data-driven ways to improve patient 
health, policymakers can better target scarce federal resources to get 
more value for the dollars spent.

    But developing and implementing new policies designed to improve 
disease management, streamline care coordination, improve quality, and 
reduce Medicare costs is a daunting challenge. The lack of success in 
past demonstration programs underscores the inherent limitations of 
traditional Medicare's fee-for-service payment system--one that rewards 
providers for delivering increased volume of services, but doesn't 
incentivize them to coordinate medical care.

    Additionally, programs that try to improve outcomes for patients 
with chronic conditions struggle to identify successful interventions 
that motivate individuals to alter their health habits. Beneficiaries 
often have physical and cognitive challenges that limit their ability 
to effectively communicate with multiple providers.

    So, I think this committee understands that we have a very 
difficult task in front of us. There are no easy answers. That is why I 
am looking forward to hearing from our panel of expert witnesses. I 
want to thank Dr. Conway and Dr. Miller for appearing before us today. 
They will help us understand which care coordination efforts are most 
effective, which policies have failed, and explain why.

    But the committee is not stopping there. After this hearing, we 
plan to take two additional steps to address these important issues.

    First, today I want to announce that Ranking Member Wyden and I 
have appointed Senators Johnny Isakson and Mark Warner to form a full 
Finance Committee chronic care reform working group. We have tasked 
this bipartisan group with studying these complex issues and producing 
an in-depth analysis of potential legislative solutions. These 
recommendations will serve as a foundation to develop bipartisan 
chronic care legislation.

    Second, in the coming days, Senators Isakson and Warner, along with 
Ranking Member Wyden and I, will issue a formal invitation requesting 
all interested public and private sector stakeholders submit their 
ideas on ways to improve outcomes for Medicare patients with chronic 
conditions. Stakeholder input is critical for this committee to work 
toward the goal of producing bipartisan legislation that can be 
introduced and marked up in the Finance Committee later this year.

    So, as you can see, today's hearing is just the first step in our 
efforts to address these issues. But, it is an important step. I look 
forward to an informative discussion.

                                 ______
                                 
   Prepared Statement of Mark E. Miller, Ph.D., Executive Director, 
             Medicare Payment Advisory Commission (MedPAC)
    Chairman Hatch, Ranking Member Wyden, distinguished Committee 
members, I am Mark Miller, executive director of the Medicare Payment 
Advisory Commission (MedPAC). The Commission appreciates the 
opportunity to discuss improving care for Medicare beneficiaries with 
chronic conditions.

    MedPAC is a congressional support agency that provides independent, 
nonpartisan policy and technical advice to the Congress on issues 
affecting the Medicare program. The Commission's goal is a Medicare 
program that ensures beneficiary access to high-quality care, pays 
health care providers and plans fairly by rewarding efficiency and 
quality, and spends tax dollars responsibly.

    Although traditional fee-for-service (FFS) presents the greatest 
obstacles to successful chronic care management, the Commission 
believes that improving care coordination for beneficiaries with 
chronic conditions will require policy improvements in each of 
Medicare's three current payment models: FFS, Medicare Advantage (MA), 
and Accountable Care Organizations (ACOs).

    The Commission has been concerned for many years that FFS Medicare 
does not incentivize or facilitate comprehensive care coordination. The 
resulting lack of coordination can fail beneficiaries, particularly 
those with multiple chronic conditions who would benefit most from 
effective care management. The Commission has identified a number of 
policies to encourage FFS providers to coordinate care and take greater 
responsibility for beneficiaries' outcomes rather than focusing on 
individual services or settings. These policies would reward and 
facilitate better care for beneficiaries with chronic conditions in 
FFS.

    In the longer run, the Commission maintains that Medicare must move 
away from a siloed and disjointed FFS approach to care and toward 
integrated payment and delivery systems that are focused on meeting 
patients' needs, coordinating care, and ensuring positive outcomes. 
Payment models that incentivize plans and providers to take 
responsibility for the full spectrum of a beneficiary's care, such as 
ACOs and MA plans, may offer better incentives and tools for care 
coordination and chronic care management. However, there is also room 
for improvement within these models. The Commission has discussed 
policies to increase the incentives for ACOs and MA plans to care for 
the sickest patients and to give these organizations greater tools and 
flexibility to deliver high-quality, coordinated care.

    In the following testimony, I will review the obstacles to chronic 
care management in FFS, outline the Commission's recommendations for 
promoting care coordination in FFS, and discuss improvements to MA and 
ACO policy that would increase their willingness and ability to care 
for beneficiaries with chronic conditions.
                               background
    Coordinating care for Medicare beneficiaries with multiple chronic 
conditions is a substantial task. More than two-thirds of beneficiaries 
have two or more chronic conditions, and 14 percent of beneficiaries 
have six or more (Centers for Medicare and Medicaid Services 2012). The 
most common chronic conditions among Medicare beneficiaries include 
high blood pressure, high cholesterol, ischemic heart disease, 
arthritis, and diabetes. Certain chronic conditions are highly 
comorbid, meaning they are likely to be accompanied by other chronic 
conditions. For example, about 55 percent of beneficiaries with stroke 
or heart failure have five or more additional chronic conditions.

    Beneficiaries with multiple chronic conditions account for a large 
share of both Medicare service use and Medicare spending. Beneficiaries 
with zero or one chronic conditions account for 32 percent of the 
Medicare FFS population but only 7 percent of Medicare FFS spending, 
whereas beneficiaries with six or more chronic conditions account for 
14 percent of the Medicare FFS population but 46 percent of total 
Medicare FFS spending (Centers for Medicare and Medicaid Services 
2012). The more chronic conditions beneficiaries have, the more likely 
they are to have high service use and account for high program 
spending. For example, among the 32 percent of FFS beneficiaries in 
2010 with zero or one chronic conditions, only 4 percent had a 
hospitalization. By contrast, of the 14 percent of FFS beneficiaries 
with six or more chronic conditions, more than 60 percent had a 
hospitalization, accounting for 55 percent of total Medicare FFS 
spending on hospitalizations. Beneficiaries with many chronic 
conditions are also disproportionate users of post-acute care (PAC) and 
physician services. Particularly problematic for care coordination, 
beneficiaries with multiple chronic conditions are more likely to visit 
many different physicians. Beneficiaries with zero to two chronic 
conditions visited a median of three physicians in a year, including 
one primary care provider and two specialists, in contrast with 
beneficiaries with seven or more chronic conditions, who visited a 
median of 11 physicians in a year, including three primary care 
providers and eight specialists (Pham et al. 2007).

    Coordinating care is challenging even in a single health event. The 
challenge increases significantly for beneficiaries who have multiple 
events in a year, requiring interactions with a wide variety of 
providers who have little incentive or ability to coordinate their 
care. Without effective care coordination, beneficiaries may have to 
repeat medical histories and tests, receive inconsistent medical 
instructions or information, experience poor transitions between sites 
of care, and use higher intensity settings when it is not necessary. 
Beneficiaries with multiple chronic conditions also have high rates of 
rehospitalization, which can result when hospitals do not coordinate 
with a patient's physician or post-acute care provider after the 
original hospitalization. In 2010, the 69 percent of FFS beneficiaries 
with two or more chronic conditions accounted for 98 percent of all 
Medicare FFS hospital readmissions (Centers for Medicare and Medicaid 
Services 2012).

    Improving care coordination for beneficiaries with chronic 
conditions may represent an opportunity to simultaneously raise quality 
and lower costs. Fewer repeated and unnecessary medical tests, 
physician instructions that are clear and consistent, care delivery in 
lower intensity settings, and fewer readmissions can all result in 
better care that may also cost less for the beneficiary and the 
Medicare program. However, the incentives in FFS Medicare to increase 
volume often work at cross-purposes with efforts to coordinate care and 
improve care delivery.
Reasons for Poor Care Coordination in FFS
    Health care under traditional FFS Medicare can be poorly 
coordinated for several reasons. First, FFS payment generally does not 
specifically pay for non-face-to-face care activities, which include 
providers communicating with each other to coordinate a beneficiary's 
care. Second, there is no financial incentive to avoid duplicative 
services. Third, no easy way exists to collaborate across providers and 
settings. And finally, no one entity is accountable for care 
coordination.

    Medicare's FFS system, which generally pays for discrete episodes 
or services within siloed settings for face-to-face encounters, gives 
little incentive to providers to spend time coordinating care. Services 
provided by a physician or other health care professional that do not 
involve a face-to-face encounter are not billable under Medicare's fee 
schedule (there are a few exceptions to this general rule). Instead, 
care coordination activities are largely subsumed in the fee schedule's 
evaluation and management codes, which pay for in-person visits.

    FFS, which contains financial incentives for providers to increase 
volume, does not discourage duplicative services. If a physician 
performs a diagnostic test for a beneficiary, and that beneficiary 
visits a second physician who replicates the test, both physicians are 
paid the same rate. Thus, providers have little incentive to avoid 
duplicating services--for example, by requesting a patient's test 
results from a different provider rather than simply repeating the test 
themselves.

    Even if a provider sought to request information or collaborate on 
a plan of care with a beneficiary's other providers, there are limited 
mechanisms for communication and collaboration across settings and 
services in FFS. In fact, there is significant evidence that 
communication across providers and settings is poor. Important 
instructions are often not received before patients have their first 
visit with the provider. For example, a community-based physician may 
treat a patient who has been discharged from the hospital before the 
physician received the hospital's discharge summary (Callen et al. 
2011, Kripalani et al. 2007). One study found that only a quarter of 
hospital discharge summaries mentioned that there were test results 
outstanding, even though all patients had results outstanding and their 
discharge summaries should have included such information (Were et al. 
2009).

    Similar incompleteness was found in transfers between primary care 
and specialty physicians and between community-based physicians and 
hospital-based physicians (McMillan et al. 2013, Pham et al. 2008, 
Schoen et al. 2005). Even providers with robust information technology 
systems are often unable to use them to communicate easily with other 
providers because their systems are not interoperable (Elhauge 2010). 
Obstacles to communication make it difficult for multiple providers in 
different practices and settings to work together on developing and 
managing a coherent plan of care for a beneficiary.

    Care coordination in FFS might occur more consistently if there 
were a single entity responsible for overseeing a patient's care across 
multiple healthcare providers and settings. However, there is no such 
entity in FFS. This function is most nearly replicated by the patient's 
primary care provider. The Commission believes that primary care is an 
essential part of comprehensive, holistic, and ongoing care for 
patients, including facilitating the transitions between settings and 
handoffs between providers during which patients with chronic 
conditions are particularly vulnerable. Therefore, the Commission is 
concerned about the current state of support for primary care. Primary 
care is essential for creating a coordinated health care delivery 
system, but the Medicare fee schedule undervalues it relative to 
specialty care. Even though the relative payment for primary care 
services under the fee schedule has increased over the last decade, 
compensation for primary care practitioners is still substantially less 
than that of other specialties. Disparities in compensation could deter 
medical students from choosing primary care practice, deter current 
practitioners from remaining in primary care practice, and leave 
primary care services at risk of being underprovided.
             policies to encourage care coordination in ffs
    While the Commission believes that integrated payment and delivery 
systems are more promising models for fostering care coordination, FFS 
is likely to remain a viable Medicare payment model for the foreseeable 
future. Therefore, it is necessary to take intermediate steps to 
improve care coordination and provide explicit payments for the related 
activities that are not currently paid for under the FFS system. Policy 
options could include adding codes or modifying existing codes in the 
fee schedule that allow practitioners to bill for care coordination 
activities, creating a per-beneficiary payment, or using payment policy 
to reward or penalize outcomes resulting from coordinated or fragmented 
care.
Adding or Modifying Fee Schedule Codes
    One path to bolster Medicare's support of beneficiaries with 
chronic conditions requiring ongoing and episodic management is to add 
additional codes to the fee schedule for physicians and other health 
professionals for a bundle of care coordination services. CMS has taken 
steps along these lines. In 2013, CMS established and began paying for 
a Transitional Care Management (TCM) code that covers 30 days of 
transitional care provided to beneficiaries recently discharged from a 
hospital or skilled nursing facility (SNF). The TCM payment is designed 
to cover both an in-person visit with the patient as well as non-face-
to-face activities supporting the beneficiary's transition home. In 
addition, starting in 2015, CMS will pay for a Chronic Care Management 
code, which is designed to support the ongoing, non-face-to-face 
management of patients with chronic conditions. The code does not 
require an in-person visit with the beneficiary.

    Expanding the current fee schedule codes to more fully capture care 
coordination activities could be designed to be budget-neutral within 
the fee schedule, and codes could be inserted within the current fee 
schedule structure through the standard notice and comment process.

    However, there are potential disadvantages. Unless new codes are 
carefully defined, including which beneficiaries are eligible, who can 
bill, and what services are provided, these proposals may generate more 
spending without commensurate improvement in the quality of care for 
beneficiaries with chronic illness. Beneficiaries would also be 
required to pay standard Part B cost sharing for new codes.

    More broadly, it is the Commission's view that only practitioners 
who provide comprehensive, ongoing care to a beneficiary over a 
sustained period of time should be eligible to receive care 
coordination payments. Furthermore, the fee schedule itself, which 
comprises 7,000 discrete services, cannot be depended on to result in 
the comprehensive management of a patient's ongoing illness.
Per-Beneficiary Payment for Primary Care
    In response to its concern about the current state of primary care, 
the Commission made a recommendation in 2008 to create a budget-neutral 
primary care bonus funded from non-primary care services. The Patient 
Protection and Affordable Care Act of 2010 (PPACA) created a primary 
care bonus program called the Primary Care Incentive Payment program 
(PCIP). PCIP provides a 10 percent bonus payment on fee schedule 
payments for primary care services provided by eligible primary care 
practitioners. It expires at the end of this year.

    The Commission recommends that the additional payments to primary 
care practitioners continue after the PCIP expires; however, they 
should be in the form of a per-beneficiary payment as a step away from 
a per-visit payment approach and toward a beneficiary-centered payment 
that supports care coordination. The Commission recommends funding the 
per-beneficiary payment by reducing fees for all services in the fee 
schedule other than primary care services. (Fees for primary care 
services would not be reduced, even if those services were provided by 
a non-
primary care practitioner). Beneficiaries would not pay cost sharing, 
just as beneficiaries do not pay cost sharing to fund the PCIP. This 
method of funding would be budget-neutral and would help rebalance the 
fee schedule to achieve greater equity of payments between primary care 
and other services. At least as an initial starting point, the 
Commission supports funding the per-beneficiary payment at the same 
level as the PCIP. At that funding amount, and given an average patient 
panel size, eligible practitioners would receive about $3,900 in 
additional Medicare revenue per year.
Readmissions Penalties
    Hospital readmissions are a prime example of bad outcomes that can 
result from poor care coordination. The Commission recommended in 2008 
that hospitals be penalized for relatively high risk-adjusted 
readmission rates. As of October 2012, a readmission policy now 
penalizes hospitals with high readmission rates for certain conditions, 
and readmission rates have started to decline.

    Expanding readmission policies to PAC settings could help reduce 
unnecessary rehospitalizations and better align hospital and PAC 
incentives. If hospitals and PAC providers were similarly at financial 
risk for rehospitalizations, they would have an incentive to better 
coordinate care between settings. Aligned readmission policies would 
hold PAC providers and hospitals jointly responsible for the care they 
furnish. In addition, the policies would discourage providers from 
discharging patients prematurely or without adequate patient and family 
education. Aligned policies would emphasize the need for providers to 
manage care during transitions between settings, coordinate care, and 
partner with providers to improve quality.

    The Commission has recommended payments be reduced to both SNFs and 
home health agencies with relatively high risk-adjusted readmission 
rates (Congress subsequently enacted a SNF readmissions penalty in the 
Protecting Access to Medicare Act of 2014). The proposed readmissions 
reduction policies would be based on providers' performance relative to 
a target rate. Providers with rates above the target would be subject 
to a reduction in their base payment rate, while providers below would 
not. Such an approach could encourage a significant number of providers 
to improve. The proposed policies also seek to establish incentives for 
all providers to improve, without penalizing providers that serve a 
significant share of low-income patients. To do so, providers' 
performance would be compared with other providers that serve a similar 
share of low-income patients.
      medicare advantage and beneficiaries with chronic conditions
    Currently, nearly one third of Medicare beneficiaries are enrolled 
in private Medicare Advantage (MA) plans that are responsible for 
providing the full range of 
Medicare-covered services to their enrollees. For beneficiaries with 
chronic conditions, the siloed nature of FFS could potentially be 
remedied in a managed care setting.
MA Payment Reform
    The Commission has long supported a private plan option in 
Medicare. Private plans have greater incentives to innovate and use 
care-management techniques that fill potential gaps in care delivery. 
However, until recently, Medicare payments to private plans were set at 
levels that strongly encouraged plan entry, and the most rapidly 
growing plan--the private FFS option--did not coordinate care but 
merely mimicked the FFS system. This option flourished because MA 
benchmarks, which are the basis of MA plan payments, were set at levels 
far above FFS expenditures. These high benchmarks resulted in MA 
program growth, but at a high cost to taxpayers and all Medicare 
beneficiaries, who faced higher Part B premiums as a result of the 
program's higher overall Part B expenditures. Observing these trends, 
the Commission recommended that MA benchmarks be reduced in order to 
align them more closely with FFS expenditures. The Commission's 
objective was to create incentives for plans to be less costly than 
FFS, while quality incentives would incentivize plans to exceed FFS 
outcomes. Enacted legislation addressed the Commission's concerns with 
the PFFS option and reduced MA benchmarks, leading to greater 
efficiency in the MA program.
Plans Are Becoming More Efficient; Both the Medicare Program and 
        Beneficiaries Benefit
    The changes in payment policy that have brought MA benchmarks 
closer to FFS expenditures have increased the financial pressure on MA 
plans, and they have become more efficient, as we can judge from the 
trend that we see in MA plan bids. The MA plan bid is a plan's 
statement of the revenue needed to provide the Medicare Part A and B 
benefit. In 2015, MA plan bids averaged 94 percent of FFS, a 10-
percentage-point decline from 2010, when they averaged 104 percent. 
Thus, in 2015, MA plans on average are able to provide the Medicare 
benefit at a cost that is lower than the Medicare FFS program, although 
there are a significant number of plans that do not bid below FFS.

    When MA plans can provide the Medicare benefit at a lower cost than 
the MA benchmark, a portion of the difference is paid back to plans. 
Although plan bids for the Medicare benefit average 94 percent of FFS 
in 2015, actual plan payments average 102 percent of FFS because while 
plans are bidding below their benchmarks, the benchmarks are still 
higher than FFS on average. When bids are below benchmarks, MA plans 
are required to use the additional revenue to provide extra benefits to 
their Medicare enrollees. The extra benefits can be reduced premiums, 
lower cost sharing, or the provision of additional benefits that 
Medicare does not cover. These types of benefits make MA an attractive 
option for Medicare beneficiaries, and in particular for Medicare 
beneficiaries who have high health care expenditures because of their 
chronic conditions. In addition, MA plans are required to have out-of-
pocket maximum liability amounts. That is, unlike FFS Medicare, there 
is a cap on the amount of out-of-pocket expenditures a beneficiary can 
incur in a given year. Beneficiaries with chronic conditions perhaps 
derive the greatest benefit from the out-of-pocket cap requirement.
Special Needs Plans Are Available, but all Plans Should Be Able To 
        Manage Chronic Conditions
    One feature of the MA program is that plans can choose to 
specialize in the care of beneficiaries with chronic conditions by 
offering special needs plans (SNPs). The chronic condition SNPs (C-
SNPs) offer tailored benefit packages to an enrolled population 
consisting exclusively of beneficiaries with specific chronic 
conditions. As of April 2015, there were 52 MA contracts that included 
C-SNP offerings, enrolling just over 300,000 beneficiaries (or about 2 
percent of total MA enrollment). The most common condition covered by 
C-SNPs is diabetes: 90 percent of the enrollment in C-SNPs is in plans 
for beneficiaries with diabetes (often in combination with other 
conditions). By having a plan that includes only beneficiaries with a 
specific chronic condition, a C-SNP offers a set of benefits that 
address the needs of that population. For example, C-SNPs for diabetics 
offer medical transportation as an extra benefit to ensure that 
diabetics have good access to health care professionals who will 
monitor the management of their disease. This kind of benefit is 
offered in a C-SNP in lieu of benefits that might appeal to a more 
general population, such as gym memberships or a foreign travel 
benefit.

    Diabetes is a common condition in the Medicare population: 28 
percent of beneficiaries in FFS Medicare have been diagnosed as 
diabetics. Among MA enrollees, there is a similar proportion with a 
diagnosis of diabetes. This means that the vast majority of MA 
beneficiaries with diabetes (and other chronic diseases) are being 
cared for in general MA plans, not in specialized C-SNPs. It is also 
noteworthy that all of the current C-SNP plans for diabetics are plans 
within a larger general MA contract (non-SNP) offered by the same 
organization in the same service area as the C-SNP.

    Because certain chronic conditions are so prevalent among Medicare 
beneficiaries, the view of the Commission is that all MA plans should 
be able to offer programs and benefits that can be tailored to the 
needs of beneficiaries with chronic conditions. MA plans do have a 
certain amount of flexibility in designing benefit packages, but the 
current requirement that a plan must offer a uniform benefit package to 
all its enrollees prevents a non-SNP plan from having a benefit package 
that is available only to beneficiaries with a specific illness. The 
Commission has recommended that all plans be allowed to modify their 
benefit structure to permit variation in the benefits offered, 
depending on their enrollees' health care needs. In other words, the C-
SNP concept of having a benefit package designed for beneficiaries with 
certain chronic conditions should be folded into the general MA 
structure, given how many beneficiaries have chronic conditions, and 
given that an enrollee of a plan may be relatively healthy on first 
enrolling in a plan but is likely to develop chronic conditions as he 
or she ages.
Certain Categories of Beneficiaries May Continue To Need SNPs
    The Commission's recommendations on C-SNPs are based on the belief 
that all plans should be equipped to manage Medicare beneficiaries with 
chronic conditions that are prevalent among Medicare beneficiaries. At 
the same time, the Commission recognizes that for certain beneficiaries 
with specific diseases that are less prevalent, the C-SNP option should 
continue to be available. The Commission has recommended that C-SNPs 
continue to serve beneficiaries with diseases such as end-stage renal 
disease (ESRD) and HIV-AIDS. In the case of ESRD, the C-SNP option 
exists in part because the Medicare law prohibits Medicare 
beneficiaries with ESRD from enrolling as new enrollees of an MA plan. 
The Commission has recommended removing this prohibition.

    The Commission also made recommendations regarding the two 
additional types of SNPs. The Commission recommended the continuation 
of the SNP option for plans specializing in the care of 
institutionalized beneficiaries (I-SNPs), which perform well on a 
number of quality measures, particularly hospital readmission rates. 
Reducing hospital readmissions for beneficiaries in nursing homes 
suggests that 
I-SNPs provide a more integrated and coordinated delivery system than 
beneficiaries could receive in traditional FFS. For plans specializing 
in Medicare beneficiaries who are dually eligible for Medicare and 
Medicaid (D-SNPs), the Commission recommended continuing this option 
only for plans that fully integrate Medicare and Medicaid coverage.
The Risk Adjustment System Can Be Refined To Improve Payment for 
        Chronic Conditions
    Appropriate risk adjustment is an important part of paying MA plans 
fairly and equitably for the care of patients with different clinical 
needs. The Medicare program makes risk-adjusted payments to MA plans, 
using health status as one of the bases of risk adjustment. With risk 
adjustment, payments to plans increase in relation to the expected 
costs of providing medical care to each enrollee. Plans are paid more 
for beneficiaries with chronic conditions, and the relative level of 
payment for each condition is determined on the basis of treatment 
costs in FFS Medicare. The objective is to ensure that plans are 
willing to enroll patients with chronic conditions, and that they are 
paid fairly to manage these patients.

    However, the Commission has found that the current risk-adjustment 
system overpays for beneficiaries who have very low costs and underpays 
for beneficiaries who have very high costs. This inequity could 
encourage plans to avoid high-cost beneficiaries, who are more likely 
to be the chronically ill. The Commission has suggested three 
refinements to the risk-adjustment system that would likely lead to 
more accurate payments to MA plans caring for beneficiaries with 
chronic conditions: using 2 years of diagnosis data to determine a 
person's risk profile, using the number of conditions a person has as a 
risk-adjustment factor, and introducing a distinction in the risk-
adjustment system between ``full'' and ``partial'' Medicare and 
Medicaid dually eligible beneficiaries. Beneficiaries with full 
Medicaid coverage (``full duals'') have higher expenditures than 
``partial duals.'' To the extent that the higher expenditures found 
among ``full duals'' is due to the greater prevalence of chronic 
conditions in this population, the suggested change may have the effect 
of increasing plan payments for a subset of beneficiaries with chronic 
conditions.
Quality Bonus Payments Give Plans an Incentive To Improve Care
    Another impetus for plans to provide good care to enrollees with 
chronic conditions is the quality bonus program (QBP). As of 2012, MA 
plans receive bonus payments based on their ranking in a 5-star rating 
system. Under the statutory provisions that introduced the bonus 
program, plans with a star rating of 4 or higher get an increase in 
their benchmarks. As a result, plans at the bonus level have additional 
revenue to provide extra benefits to their enrollees.

    A plan's star rating is based on its performance on a set of up to 
46 measures of quality, patient satisfaction, and contract performance. 
The quality measures have the greatest weight in determining the star 
rating. Outcome measures make up about 40 percent of the weighting in 
the star rating calculation; patient experience measures make up about 
19 percent; clinical process measures make up another 20 percent of the 
weight; and two measures of overall improvement have a weight of 12 
percent. Thus, these categories of measures comprise over 90 percent of 
the weight of the star rating.

    The individual quality measures that feed into the star ratings are 
often measures that track care provided to beneficiaries with chronic 
conditions. Seven of the 46 measures (with a weight of nearly 20 
percent) are specific measures related to the treatment of diabetics. 
Other measures, such as hospital readmission rates and whether plans 
improved their enrollees' physical health, would also reflect how a 
plan performs with respect to the care rendered to enrollees with 
chronic conditions. It is therefore in the best interest of plans to 
perform well in providing care to beneficiaries with chronic 
conditions.
There Are Issues With the Star Rating System
    Special needs plans serving Medicare-Medicaid dually eligible 
beneficiaries have raised concerns with the star rating system, and 
there is evidence showing an association between poorer star ratings 
and a higher proportion of dually eligible, or low-income, enrollees. 
CMS acknowledges this situation and has found that for certain quality 
measures in the star rating system there may be a bias affecting such 
plans. CMS has been considering ways to identify and address any bias 
in the star rating system. The Commission's work has found that a 
factor that also needs to be examined is the proportion of enrollees in 
a plan who are under the age of 65--beneficiaries entitled to Medicare 
on the basis of disability or end-stage renal disease. The Commission's 
March 2015 report showed that plans with a high proportion of under-65 
enrollees tend to have far lower overall star ratings and lower ratings 
on certain measures that are components of the star rating system.
         accountable care organizations (acos) and chronic care
    In 2012, Medicare introduced a new payment model, the ACO, which 
pays for care on a FFS basis but includes incentives for providers to 
reduce unnecessary care while improving quality. The ability of ACOs to 
manage patients with multiple chronic conditions will be crucial to 
their success. Under the ACO model, a group of providers is accountable 
for the spending and quality of care for a group of beneficiaries 
attributed to them. The goal of the ACO program is to give groups of 
FFS providers incentives to reduce Medicare spending and improve 
quality, similar to the incentives for MA plans. Because beneficiaries 
with multiple chronic conditions have historically accounted for a 
large share of Medicare spending and ACOs' spending targets are based 
on historical spending for their beneficiaries, controlling the growth 
in spending for those beneficiaries will be essential for ACOs to meet 
their spending targets. There is much less opportunity to achieve 
savings for relatively healthy beneficiaries with low historic 
spending.

    As the ACO programs have unfolded, the Commission has spoken to 
representatives from many ACOs and conducted structured interviews and 
case studies with Pioneer ACOs. Based on these discussions, as well as 
the Commission's own analysis of data on ACO performance, the 
Commission has commented on three issues for ACOs that are particularly 
important in regard to beneficiaries with multiple chronic conditions: 
fully prospective attribution and financial targets, regulatory relief 
for ACOs at two-sided risk,\1\ and reduced beneficiary copays to 
increase beneficiary identification with the ACO.
---------------------------------------------------------------------------
    \1\ Two-sided risk means that an ACO is liable for losses in 
relation to its financial target as well as being able to share in 
savings. Many ACOs are now in one-sided models under which they can 
share savings but are not at risk for losses. Incentives are much 
stronger in a two-sided model.

    The first issue is fully prospective attribution of beneficiaries 
and setting of financial targets. Under current policy, ACOs are an 
attribution model, not an enrollment model. Beneficiaries do not choose 
to be in an ACO; instead they are attributed to the ACO based on their 
claims history. However, under current policy most ACOs do not know 
with certainty in advance which beneficiaries they will be accountable 
for. Although there is preliminary attribution at the beginning of the 
year, final attribution and financial calculations are retrospective. 
According to data from ACOs, both the beneficiaries who are included in 
an ACO's population and its financial targets have often changed 
---------------------------------------------------------------------------
significantly over the course of a year.

    Moving from retrospective to prospective attribution is important 
for the program because it will enable ACOs to know which beneficiaries 
they are accountable for at the beginning of the year. With this 
certainty, ACOs can focus their care coordination efforts on those 
beneficiaries with the knowledge that they will share in the returns 
from those efforts; this should increase their willingness to make the 
investment to improve care coordination. This is particularly important 
for beneficiaries with multiple chronic conditions who have the most to 
benefit from care coordination.

    Second, if its beneficiaries are known with certainty and the ACO 
is in a two-sided risk model, CMS could grant regulatory relief to 
those ACOs to pursue more innovative care management. For example, an 
ACO could allow beneficiaries to be discharged to SNFs without meeting 
the current 3-day inpatient stay requirement or allow ACOs to waive 
certain cost sharing. Other waivers could include allowing billing and 
payment for broader telehealth services and eliminating the homebound 
requirement for the home health benefit. Fully prospective assignment 
is necessary because CMS must know in advance to which beneficiaries 
the relief applies in order to process claims appropriately. The ACO 
must be at two-sided risk because the regulations that are being waived 
were intended to prevent unnecessary use of health care services, and 
only ACOs at two-sided risk have enough of an incentive to offset the 
FFS tendency to increase use of services. It follows, therefore, that 
for the waiver to apply, the beneficiary must be prospectively 
attributed and the provider involved (e.g., the physician ordering 
direct admission to an SNF) must be a participant in an ACO at two-
sided risk.

    A related issue is allowing ACOs to waive some or all cost sharing 
for visits with ACO practitioners. A challenge for ACOs is that because 
beneficiaries are not enrolled, ACOs cannot require beneficiaries to 
seek care from ACO providers. Beneficiaries can go outside of the ACO 
for care, and the ACO is still responsible for any Medicare spending 
they incur. Reduced cost sharing is one way of increasing beneficiary 
identification with the ACO. We have considered in particular 
eliminating or reducing cost sharing for ACO beneficiaries' visits to 
primary care providers who are in the ACO. This would give the 
beneficiaries a reason to want to be attributed to the ACO and 
encourage beneficiaries to stay within the ACO network of providers--
allowing more effective care management. The cost sharing reduction 
would be absorbed by the ACO and would not change Medicare program 
payments. This waiver would be limited to ACOs at two-sided risk for 
the same reasons as above. The greater patient engagement with ACO 
providers could contribute to improved care management and make 
attribution more meaningful.

    Although ACOs have the potential to improve care for beneficiaries 
with multiple chronic conditions, that potential will not be realized 
unless Medicare policies support real change. The goal should be to 
create conditions that will reward efficient ACOs that can create real 
value for the Medicare program, its beneficiaries, and the taxpayers--
not to maximize the number of ACOs or to ensure that every provider can 
join an ACO. In particular, we do not endorse the approach of weakening 
ACO performance standards and accountability simply to create more 
ACOs.

    A strategy to encourage movement from traditional FFS to ACOs that 
is more consistent with the goals we discuss here would reward ACO 
providers both with shared savings from reduced utilization and with 
quality bonus payments when their quality of care exceeds traditional 
FFS in the relevant market. The first method of reward is already 
incorporated in the ACO model. The second method, not currently in the 
ACO model, is to reward providers organized into ACOs that can achieve 
population health outcomes that are better than those produced by 
traditional FFS in their market. This is being done in some manner in 
the MA program now; a redesigned approach could apply to both MA plans 
and ACOs. To be clear, providers who are not in an entity such as an 
ACO or MA plan that can take responsibility for a population of 
Medicare beneficiaries would not be eligible to receive such a bonus. 
The availability of a population quality bonus could make the ACO 
program more attractive to providers relative to traditional FFS 
without weakening performance standards or accountability. 
Beneficiaries may also migrate to ACO providers because of lower cost 
sharing and higher quality, both features that would be of particular 
interest to beneficiaries with multiple chronic conditions. This 
movement of beneficiaries might also further encourage providers to 
join an ACO
                               conclusion
    Improving care for beneficiaries with chronic conditions will 
require policies to improve provider incentives and care coordination 
tools across the three current Medicare payment models. In FFS in 
particular, the incentives to coordinate care and achieve high-quality 
outcomes are lacking. Policies to add or modify fee schedule codes for 
non-face-to-face care activities, establish a per-beneficiary payment 
for primary care practitioners, and expand readmissions policies to the 
post-acute care sector all hold promise for addressing some of the 
shortcomings of the FFS model. However, the Commission believes that in 
the longer run, Medicare must move away from FFS and toward models that 
require plans and providers to take financial responsibility for 
achieving high-quality outcomes while coordinating a beneficiary's full 
spectrum of care. MA plans and ACOs both have potential in this regard, 
although the Commission believes that both could benefit from policies 
to improve their willingness and ability to care for the sickest 
beneficiaries. The Commission looks forward to working with the 
Committee to achieve the goal of better care at lower cost for Medicare 
beneficiaries with chronic conditions.
                               references
    Callen, J., A. Georgiou, J. Li, et al. 2011. The safety 
implications of missed test results for hospitalised patients: A 
systematic review. BMJ Quality and Safety 20, no. 2: 194-9.

    Centers for Medicare and Medicaid Services. Department of Health 
and Human Services. 2012. Chronic Conditions among Medicare 
beneficiaries, Chartbook: 2012 edition. Baltimore, MD: CMS.

    Elhauge, E. 2010. The fragmentation of U.S. health care: Causes and 
solutions. New York, NY: Oxford University Press.

    Kripalani, S., F. LeFevre, C.O. Phillips, et al. 2007. Deficits in 
communication and information transfer between hospital-based and 
primary care physicians: Implications for patient safety and continuity 
of care. Journal of the American Medical Association 297, no. 8 
(February 28): 831-841.

    Pham H., J. Grossman, G. Cohen, et al. 2008. Hospitalists and care 
transitions: The divorce of inpatient and outpatient care. Health 
Affairs 27:1315-1327.

    Pham H., D. Schrag, A.S. O'Malley, et al. 2007. Care patterns in 
Medicare and their implications for pay for performance. New England 
Journal of Medicine 356, no. 11:1130-1139.

    McMillan A., J. Trompeter, D Havrda, et al. 2013. Continuity of 
care between family practice physicians and hospitalist services. 
Journal for Healthcare Quality 35, no. 1 (January-February): 41-49.

    Schoen, C., R. Osborn, P.T. Huynh, et al. 2005. Taking the pulse of 
health care systems: Experiences of patients with health problems in 
six countries. Health Affairs Supplemental Web Exclusives (July-
December): W5-509-525.

    Were, M.C., X. Li, J. Kesterson, et al. 2009. Adequacy of hospital 
discharge summaries in documenting tests with pending results and 
outpatient follow-up providers. Journal of General Internal Medicine 
24, no. 9 (September): 1002-1006.

                                 ______
                                 
          Questions Submitted for the Record to Mark E. Miller
               Questions Submitted by Hon. Orrin G. Hatch
    Question. Dr. Miller, you recommend the creation of a budget-
neutral per-
beneficiary payment for primary care physicians. You estimate this 
payment would result in $3,900 a year in new revenue for eligible 
practitioners. This is an interesting idea, but I am hoping you can 
give us some context to understand your policy intent. Can you 
quantify, in percentage terms, how much of a decrease in Medicare 
physician specialty spending this would be, and how much of an increase 
in spending for primary care physicians? I think this is important 
because if a primary care doctor, for example, made $10,000 per year, 
then a $3,900 payment increase would be a big help. But if the same 
doctor made $200,000 per year, then perhaps a $3,900 payment increase 
may not incentivize him to increase care coordination services?

    Answer. The Commission supports funding the per-beneficiary payment 
at the same level as the current Primary Care Incentive Payment (PCIP), 
with eligible primary care practitioners and primary care services 
defined as they are in the PCIP. In order to fund a budget-neutral per-
beneficiary payment, the Commission would reduce fees for services that 
are not defined as primary care services under the current PCIP 
program. A per-beneficiary payment funded at the same level as the PCIP 
would require fee reductions of 1.4 percent for non-PCIP services.

    For providers receiving the per-beneficiary payment, the increase 
on average would equal the PCIP's increase in program payments for 
primary care services, which in percentage terms is 10 percent.

    The Commission's goal in recommending a per-beneficiary payment for 
primary care is to help rebalance the fee schedule in favor of primary 
care, and send a signal that primary care is valued by the Medicare 
program. The Commission acknowledges that a per-beneficiary payment in 
itself will not guarantee an increase in care coordination activities. 
Nonetheless, the Commission believes a per-beneficiary payment for 
primary care is needed until new and better payment and delivery system 
reforms are established.

    Question. Dr. Miller, you have seen the January 2012 CBO report 
showing, at best, mixed results in previous CMS chronic care 
demonstration program designs. Why do you think the previous 
demonstrations did not work as well as hoped, and what future policy 
changes do you think Congress or CMS could initiate that might produce 
better results to improve outcomes and lower costs?

    Answer. The reasons that previous demonstrations have failed to 
produce significantly improved outcomes or lower costs are not clear. 
That said, at least with respect to ACOs, the Commission believes that 
three principles should be used to guide the development of new models 
going forward. First, providers should be at two-sided risk, meaning 
they have the potential to share in both savings and losses. Two-sided 
risk creates a much stronger incentive for providers to reduce spending 
than one-sided risk. Second, providers should know which beneficiaries 
they are responsible for and what their spending targets are at the 
beginning of the year. With this certainty, providers can focus their 
care coordination efforts on beneficiaries with the knowledge that they 
will share in the returns from those efforts; this should increase 
their willingness to make the investment to improve care coordination. 
Third, if providers are in a two-sided risk model and know their 
attributed beneficiaries with certainty, CMS could grant them 
regulatory relief to pursue more innovative care management. For 
example, providers could be allowed to waive the current 3-day 
inpatient stay eligibility requirement for skilled nursing care or 
waive certain beneficiary cost sharing. Providers must be at two-sided 
risk because the regulations that are being waived were intended to 
prevent unnecessary use of health care services, and only those at two-
sided risk have enough of an incentive to offset the FFS tendency to 
increase use of services.

    Question. Dr. Miller, how concerned are you about potential fraud 
and abuse of the new chronic care management code in the Medicare 
physician fee schedule?

    Answer. It is important to monitor billing patterns for new codes. 
Any time a new code is added to the fee schedule there is a risk of 
spending increases. However, the chronic care management code does have 
some restraints on volume--only one physician may bill the code per 
beneficiary, and the code can only billed once a month.

    Question. Dr. Miller, how would site of service payment neutrality 
impact how providers deliver care to Medicare patients with chronic 
conditions?

    Answer. When payment rates for treating similar patients differ 
across settings, there is a financial incentive to provide care in the 
setting with the higher payment rate. A resulting shift in services 
from a lower cost setting to a higher cost setting can raise costs for 
the beneficiary and the Medicare program. For example, hospitals have 
been purchasing physician offices and converting them into hospital 
outpatient departments. Services that were previously billed under the 
physician fee schedule are then billed under the hospital outpatient 
payment system, which typically has higher payment rates, even though 
care has not changed significantly. Beneficiaries, who pay coinsurance 
equal to a percentage of Medicare's payment rates, will also experience 
higher cost sharing. For beneficiaries with multiple chronic 
conditions, who use health care services at higher rates than 
beneficiaries without chronic conditions, these cost sharing 
differences can add up, particularly in FFS, which does not have a 
catastrophic cap. The goal of the Commission's site-neutral payment 
recommendations is to ensure that beneficiaries have access to high 
quality care in an appropriate setting, at the lowest possible cost to 
the beneficiary and the taxpayer.

                                 ______
                                 
                 Questions Submitted by Hon. Ron Wyden
      alternative payment models in areas with high prevalence of 
              chronic disease and little care coordination
    Question. Many areas of the country have a high prevalence of 
chronic disease with corresponding high health care costs. The current 
fee-or-service system lacks care coordination which is a necessity for 
those living with chronic illness. Increased care coordination can cut 
down on duplicative costs, which Medicare has no way of avoiding in the 
fee-for-service system. Addressing these areas with different payment 
incentives may be helpful.

    Are there areas with a high prevalence of chronic disease that also 
have little enrollment in Medicare Advantage or alternative payment 
models?

    Why haven't these areas of the country moved towards alternative 
payment models?

    What can Congress do to encourage alternative payment models in 
these areas? Are there unique circumstances in these areas that require 
a different type of model?

    Answer. There are areas of the country with high chronic disease 
burdens and limited enrollment in MA or alternative payment models 
(though there are also areas with high rates of chronic conditions that 
have high MA enrollment and/or ACO participation). Such areas may exist 
for numerous reasons. They may not have a strong culture of managed 
care or care coordination, or they may lack entities with the capacity 
or expertise to engage in care management. They may also be areas where 
traditional FFS spending is low, making it difficult for a new model to 
find further efficiencies in care delivery. In its June 2014 report, 
the Commission observed that no one payment model (FFS, ACO, or MA) 
delivers the highest value in every market nationwide. Rather than 
attempting to promote one payment model across markets, the Commission 
discussed creating a payment system that allows the highest quality, 
lowest cost model in each market to flourish. Creating such a system 
requires developing consistent payment rules, quality metrics, and 
risk-
adjustment methods to create a level playing field for all payment 
models. The Commission's discussion about how to synchronize policies 
across payment models is ongoing.
                     targeting the chronically ill
    Question. Chronic diseases are the most costly conditions to treat 
in the healthcare system, accounting for almost all of Medicare 
spending--93%. In the 2014 physician fee schedule, CMS added a new code 
for non-face-to-face chronic care management (CCM) services. The 
beneficiary, however, must have at least 2 chronic conditions to be 
eligible to receive the CCM services. While the implementation of this 
code is a start, more than two-thirds of Medicare beneficiaries are 
living with multiple chronic conditions; those with more than the 
average of 2 conditions require more treatment and care coordination 
and how that is targeted must be addressed.

    As the committee begins the undertaking of chronic care reform, 
what is the best way to identify and target Medicare beneficiaries who 
need help the most?

    How do we identify beneficiaries in which we know better care 
coordination will decrease spending and improve the quality of care 
they receive?

    Do we define the number of conditions like the chronic care 
management codes do? If so, what is the right number of conditions?

    Should we focus on specific diseases? If so which ones?

    Answer. Rather than requiring the Medicare program to define 
populations who would benefit from care management efforts, the 
Commission supports designing payment systems that give providers 
incentives and flexibility to identify such patients and tailor care 
coordination efforts to their needs. Under payment models that require 
providers to take risk and incorporate accurate quality measurement and 
risk-adjustment methods, providers have a strong incentive to manage 
care for high cost patients. For example, in order to share in savings, 
ACOs must keep annual spending for their attributed populations below a 
fixed financial benchmark. In response to this incentive, many ACOs 
have focused care management efforts on individuals with high Medicare 
spending, many of whom have multiple chronic conditions.

    Given its siloed nature, traditional FFS will likely always entail 
some degree of coordination failure. However, implementing coordination 
measures (e.g., readmissions measures) that hold providers accountable 
for the outcomes of poor coordination could incentivize providers to 
focus care coordination efforts on high-risk beneficiaries as well.
 understanding the roles of accountable care organizations (acos) and 
            other alternative payment models in chronic care
    Question. The Affordable Care Act (ACA) created the Medicare Shared 
Savings Program (MSSP), a voluntary program in which the participants 
are ACOs--groups of doctors, hospitals or other providers that work 
together to provide high-quality, coordinated care. ACOs can 
potentially share in the savings they generate for Medicare if they 
also meet quality standards.

    Is there more that Medicare can do to incentivize ACOs to focus on 
chronically ill individuals?

    Should there be ACOs that are specifically focused on the 
chronically ill?

    What other payment models could help further care coordination for 
these fragile patients?

    Answer. Many ACOs are already concentrating their efforts on 
individuals with high Medicare spending; frequently those individuals 
have multiple chronic conditions. In comment letters to CMS in June 
2014 and February 2015, the Commission provided guidance on how ACOs' 
effectiveness could be increased by increasing the power of their 
incentives and care management tools. First, ACOs should be at two-
sided risk, meaning they have the potential to share in both savings 
and losses. Two-sided risk creates a much stronger incentive for 
providers to reduce spending than one-sided risk. Second, ACOs should 
know which beneficiaries they are responsible for and what their 
spending targets are at the beginning of the year (i.e., prospective 
attribution and prospective benchmarks). With this certainty, providers 
can focus their care coordination efforts on beneficiaries with the 
knowledge that they will share in the returns from those efforts; this 
should increase their willingness to make the investment to improve 
care coordination. Third, if providers are in a two-sided risk model 
and know their attributed beneficiaries with certainty, in some 
instances CMS could grant them regulatory relief to pursue more 
innovative care management. For example, providers could be allowed to 
waive the current 3-day inpatient stay eligibility requirement for 
skilled nursing care or waive certain beneficiary cost sharing. 
Finally, beneficiaries should be able to be directly attributed to ACOs 
if they receive care from non-physician providers, including nurse 
practitioners and physician assistants. This change would require 
Congressional action.
                flexibility for medicare advantage plans
    Question. Under current law, a Medicare Advantage plan must offer 
one set benefit package and be available to any eligible beneficiary in 
the plan's service area. Chronic Disease Special Needs Plans (C-SNPs) 
are a subset of MA plans that have special authority provided by 
Congress to target only beneficiaries with chronic diseases. MedPAC has 
recommended that Congress limit the types of chronic disease C-SNPs can 
target to only the most serious (HIV, ESRD, serious mental health) but 
allow general MA plans to vary their benefit packages to tailor to 
specific beneficiaries with specific chronic conditions. Some argue 
this will allow for better care coordination while others will argue 
that this will allow some MA plans a better ability to avoid costly, 
complicated patients to limit the plan's overall risk.

    What types of flexibility did the Commission have in mind and how 
would that translate into better coordinated care?

    Answer. Under the C-SNP option, plans have the flexibility to 
design a benefit package targeted to beneficiaries with a specific 
chronic condition, such as diabetes. Plans can provide a set of 
benefits and a cost-sharing structure that differs from what is offered 
to enrollees of a general MA plan. The Commission recommended granting 
general MA plans this flexibility in its March 2013 report.

    In a general MA plan, plans are not allowed to offer certain 
benefits to only some enrollees. For example, plans are not currently 
allowed to provide a non-emergency transportation benefit only to 
beneficiaries with diabetes--to encourage physician visits to monitor 
the patient's condition--or reduced cost sharing on hypertension 
medication only for diabetics, to encourage the appropriate treatment 
regimen for diabetes. While each of these benefits promotes coordinated 
care for a sub-
population in which the benefits can be very important, current rules 
would require that a non-emergency transportation benefit be provided 
to any patient, and reduced cost sharing would have to be provided to 
anyone taking hypertension medication--not just diabetics. It can be 
argued that such benefits promote coordinated care for any patient; 
however, patients with chronic conditions such as diabetes must have 
more frequent medical visits and generally take multiple medications. 
Thus, they face higher total out-of-pocket costs than the general MA 
population (or enrollees whose only condition is hypertension), and 
these condition-specific higher out-of-pocket costs can lead to a 
beneficiary's skimping on medication or avoiding necessary medical 
visits. Better coordinated care is achieved with a more tailored or 
targeted benefit package.

    Question. Is the Commission worried about potential bad actors who 
would use this new flexibility to establish a benefit package aimed at 
avoiding sick and costly beneficiaries? What protections could be put 
in place to prevent this type of gaming?

    Answer. The Commission does have some concern that this flexibility 
could be abused. However, there is a process in place for CMS to 
monitor MA bids for potential gaming and abuse. A key provision of the 
statute governing the review of MA bids and proposed benefit packages 
is the anti-discrimination provision of section 1852(b)(1)(A) of the 
Social Security Act. This is the authority for the Centers for Medicare 
and Medicaid Services to review and approve benefit packages as 
outlined in the agency's yearly call letters. For example, when plans 
propose value-based insurance design packages that are currently 
permissible--such as differential cost sharing to encourage the use of 
specific providers in a network--CMS will review such proposals to 
ensure that they are not discriminatory. A C-SNP-like option for 
general MA plans, if it were to be authorized, should be subject to a 
similar approval process.
         integrating drug spending into delivery system reform
    Question. Currently, CMS is implementing a number of alternative 
payment models such as ACOs and bundled payments that are attempting to 
coordinate care for a beneficiary in traditional fee-for-service 
Medicare. While these efforts are focusing on the medical side of the 
patient's care, like hospital, physician and nursing home services, 
drug spending is not involved. Under Medicare Advantage, some plans 
have integrated the Medicare drug benefit into the general MA benefit. 
This allows for one organization to coordinate all health under ``one 
roof.''

    Can we do more to integrate the proper use of prescription drugs 
into efforts to better coordinate care for those beneficiaries with 
chronic diseases who are enrolled into traditional Medicare?

    Can CMS integrate more of Part D into these new payment models 
similar to how Medicare Advantage has done?

    Answer. Given its siloed nature, traditional FFS will likely always 
entail some degree of coordination failure. Implementing measures of 
care coordination, such as readmissions measures, into FFS could 
encourage some improvement in care coordination. However, to achieve 
true coordination and care management, Medicare will need to move to 
population-based models such as MA and ACOs where an entity has 
responsibility for a beneficiary's full spectrum of care. MA plans that 
incorporate the Part D benefit could serve as a model for incorporating 
a prescription drug benefit into new payment models.

                                 ______
                                 
               Questions Submitted by Hon. Sherrod Brown
                        community health workers
    Question. Poor care coordination can lead to worse health outcomes, 
increased hospital admissions, and higher cost. Community Health 
Workers (CHWs) play an integral role in public health, prevention, cost 
containment, and care coordination.

    In Ohio, we have seen how CHWs help patients--including high-cost 
patients--understand and navigate our nation's complex health care 
system, teach healthy behaviors that can prevent disease before it 
starts, and help patients manage chronic disease by coordinating their 
care among many providers and reminding them to take their medicine, do 
their exercises, and stay on track with their other self-
treatment tasks.

    The Affordable Care Act (ACA) has helped expand opportunities for 
CHWs to contribute to increased value and care coordination, however 
the health reform law offered no direct new funding for the employment 
of CHWs within the dominant fee-for-service (FFS) delivery system.

    Dr. Miller--to follow up on the question I asked during the 
hearing, can you both talk about the role of CHWs in care coordination 
and the value of integrating CHWs with other health care professionals 
into care teams?

    Dr. Miller--would MedPAC be willing to look into the role of CHWs 
as it relates to Medicare care coordination? Has the Commission done 
any relatable research on carecoordinators that could be helpful in 
determining the potential success of CHWs on care teams?

    Answer. In its June 2012 report, the Commission examined team-based 
primary care models, in which a care coordinator works with a team of 
medical and social service providers involved in the beneficiary's 
care. In some of the models, the structure of the team is explicitly 
prescribed. In others, the team is more fluid and centers on a care 
manager who coordinates with medical professionals, social service 
providers, patient coaches, nutritionists, pharmacists, home care 
workers, and other parties as needed. These team-based models can 
include elements such as palliative care and social service supports. 
One example of a team-based model is the patient-centered medical home. 
To date, the outcomes from medical home demonstrations have been mixed. 
Some studies have shown reductions in hospitalizations. Others have 
shown very little change in utilization and spending. And the evidence 
on medical homes is markedly more positive in integrated delivery 
systems than it is in traditional FFS.

    Rather than developing models that explicitly define appropriate 
care providers, the Commission supports implementing payment systems 
that give providers the incentives and flexibility to experiment with 
new care delivery models. Providers could use this flexibility to 
develop team-based care models that incorporate community health 
workers if they find that CHWs improve patient care. For example, the 
Commission has provided extensive guidance on improving ACOs and 
increasing flexibility for MA plans (see June 2014 and February 2015 
ACO comment letters, March 2013 MA recommendations).
                    prevention and population health
    Question. For a lot of the most important delivery system reform 
work, states are in the driver's seat. A great example of this is the 
State Innovation Model (SIM) grant program being administered through 
the Innovation Center.

    Ohio is one of 17 states that is currently implementing a 
comprehensive, state-wide health transformation plan through the SIM 
Initiative. Ohio is using the SIM grant to develop a plan to develop 
and expand the utilization of patient-centered medical homes (PCMH) to 
the majority of Ohioans covered under Medicaid, Medicare, and 
commercial health plans. These PCMHs are designed to integrate physical 
health with behavioral health and improve care coordination, thereby 
lowering costs.

    Dr. Miller--has MedPAC given any deliberation or made any 
recommendations on what can be done within the Medicare program to 
invest more in population health?

    Answer. The Commission has discussed using population-based quality 
measures and moving to payment models that provide the incentives and 
flexibility for providers to focus on population health initiatives. In 
its June 2014 report, the Commission expressed concern that Medicare's 
current quality measurement programs are becoming overbuilt, burdensome 
to providers, and too focused on process measures, which are not well 
correlated with patient outcomes. The report discussed an alternative 
quality measurement system based on a small set of population-based 
outcome measures (e.g., rates of potentially preventable emergency 
department visits in a given area). Measuring quality at the population 
level could incentivize providers to develop innovative population 
health management strategies, without being overly prescriptive about 
specific activities that providers are required to perform. In 
contrast, current process-oriented measures may encourage ``teaching to 
the test,'' with providers focusing their quality improvement efforts 
solely on activities that are measured, but which may not lead to 
better outcomes (e.g., measuring rates of flu vaccinations among 
healthcare providers). A population-based approach could also be useful 
for comparing quality across FFS, ACOs, and MA, and for making payment 
adjustments within the MA and ACO models. The Commission notes that a 
population-based outcomes approach may not be appropriate for adjusting 
FFS Medicare payments in an area because FFS providers have not 
explicitly agreed to be responsible for a population of beneficiaries.

    The ACO model, and any similar payment model that requires 
providers to take responsibility for the full spectrum of a 
beneficiary's care, contain strong incentives to focus on population 
health. The Commission has made several suggestions for enhancing ACOs' 
effectiveness, including increasing the power of ACOs' incentives 
(e.g., higher share of savings, two-sided risk models, not reducing 
benchmarks for already efficient ACOs) and regulatory relief to 
increase beneficiary engagement (e.g., waiving copays for primary care 
visits with ACO providers) for ACOs in two-sided risk arrangements.
                   primary care and care coordination
    Question. Dr. Miller, in your testimony you say that ``primary care 
is an essential part of comprehensive, holistic, and ongoing care for 
patients'' and that ``primary care is essential for creating a 
coordinated health delivery system, but the Medicare fee schedule 
undervalues it relative to specialty care.''

    We know that primary care is essential for creating a coordinated 
health care delivery system. I share the Commission's concern that 
disparities in compensation could deter future generations of health 
care professionals from choosing primary care as their area of 
practice.

    The ACA included a primary care bonus program for Medicare 
providers, which expires at the end of this year. It also included a 
primary care parity provision for Medicaid providers, which expired at 
the end of last year.

    Dr. Miller--can you talk a little bit about how these programs 
helped increase access to care and improve care coordination among the 
Medicaid and Medicare populations?

    Answer. There is currently little data to show whether the Primary 
Care Incentive Payment program increased access or improved care 
coordination for the Medicare population. Moreover, because it is a 
temporary program, any impact it could have had on the physician 
pipeline would be dampened. The Commission's rationale for recommending 
a per-beneficiary payment for primary care was not necessarily to 
increase care coordination, which may not be realistic at the current 
Medicare bonus funding levels. Rather, the Commission's goal is to 
correct the undervaluation of primary care services in the physician 
fee schedule. A per-beneficiary payment could also be a first step in 
moving Medicare's payment for primary care from a service-oriented fee-
for-service payment approach and toward a beneficiary-centered payment 
approach.

    Question. What are your suggestions for ensuring the future of 
primary care as Congress works to develop and implement policies to 
streamline care coordination, improve quality, and reduce costs?

    Answer. First, the Primary Care Incentive Payment program expires 
this year. The Commission recommends that the Congress work quickly to 
replace it with a per-beneficiary payment.

    Second, the Medicare fee schedule for physicians and other health 
professionals undervalues primary care relative to procedurally based 
care. To rebalance the fee schedule, the Commission has proposed 
identifying overpriced services and pricing them appropriately.

    Third, our nation's system of graduate medical education (GME) is 
not aligned with the delivery system reforms essential for increasing 
the value of health care in the United States. To address this 
inadequacy, the Commission has proposed reforming Medicare's funding of 
GME to support education and training in skills needed for improving 
the value of our health care delivery system--including 
evidence-based medicine, team-based care, care coordination, and shared 
decision-
making.
                            risk adjustment
    Question. MedPAC research shows that the Medicare Advantage HCC 
risk-
adjustment model--which is used for Dual Eligible Special Needs Plans 
(D-SNPs) and the Medicare-Medicaid Plans (MMPs) in financial alignment 
demonstrations--often underpays for high-cost beneficiaries, and does 
not always accurately pay the cost of full-benefit duals. Some D-SNPs 
and MMPs--including those in Ohio, exclusively enroll high-cost duals 
because they are integrating these individual's Medicare and Medicaid 
benefits as Congress intended. Yet CMS's risk-adjustment model 
undermines the sustainability of these programs. Dr. Miller--what are 
the solutions MedPAC has identified to improve the risk-adjustment 
model for duals and other high-cost beneficiaries?

    Answer. The Commission has found that the current risk-adjustment 
system overpays for beneficiaries who have very low costs and underpays 
for beneficiaries who have very high costs. This inequity could 
encourage plans to avoid high-cost beneficiaries, who are more likely 
to be the chronically ill. The Commission has suggested three 
refinements to the risk-adjustment system that would likely lead to 
more accurate payments to MA plans caring for beneficiaries with 
chronic conditions: using 2 years of diagnosis data to determine a 
person's risk profile, using the number of conditions a person has as a 
risk-adjustment factor, and introducing a distinction in the risk-
adjustment system between ``full'' and ``partial'' Medicare and 
Medicaid dually eligible beneficiaries (June 2012 report, March 2015 
report). Beneficiaries with full Medicaid coverage (``full duals'') 
have higher expenditures than ``partial duals.'' To the extent that the 
higher expenditures found among ``full duals'' is due to the greater 
prevalence of chronic conditions in this population, the suggested 
change may have the effect of increasing plan payments for a subset of 
beneficiaries with chronic conditions.
                     cancer as a chronic condition
    Question. For many Medicare beneficiaries, cancer is not a one-time 
disease, but can be a reoccurring condition and even a chronic disease 
that never entirely goes away. The occurrence of cancer, like many 
other chronic conditions, becomes more common with age. By doing more 
to detect, prevent, and treat cancer, we can help control costs and 
prevent some chronic conditions from occurring.

    Colorectal cancer is a great example. Despite being the second 
leading cause of cancer death in the United States, colorectal cancer 
is largely preventable. Providers have the tools to both prevent 
colorectal cancer and detect it during early stages, when treatment is 
most successful. The most effective preventive action for this disease 
is a screening colonoscopy, which allows for the early detection and 
removal of tissue that could become cancerous.

    Under current law, seniors covered by Medicare are eligible for 
colorectal cancer screenings without cost sharing. However, if a 
physician takes a further preventive action--like removing a polyp--
during the screening, the procedure is billed as a ``treatment'' rather 
than a ``screening,'' and the cost is passed on to the patient. Because 
it is impossible to know in advance if a polyp will be removed during a 
screening colonoscopy, Medicare beneficiaries do not know whether or 
not their screening will be fully covered until the procedure is over. 
The financial barrier that coinsurance creates (approximately $100-300 
depending on site of service) may lead to Medicare beneficiaries not 
choosing this highly effective method of colorectal cancer prevention.

    Medicare-aged individuals account for two-thirds of colorectal 
cancer diagnoses. The current co-pay policy seems to be counter to the 
intent of the law and a poor way of preventing a chronic condition from 
occurring.

    Ultimately, it seems that we are actually creating new costs for 
the program if folks aren't getting screened because of the potential 
out-of-pocket charge. If we decrease the disincentives for screenings, 
we can improve health outcomes and save money for both seniors and 
taxpayers.

    Dr. Miller--the Removing Barriers to Colorectal Cancer Screening 
Act (S. 624) would fix this discrepancy by waiving Medicare's cost-
sharing requirement for preventive colonoscopies, even if a polyp or 
tissue is removed. Do you support eliminating this barrier to care? By 
increasing access to these screenings, is it possible to help prevent 
the occurrence of colorectal cancer and the associated costs to the 
Medicare program?

    What other regulatory or legislative fixes would help ensure 
seniors have access to cancer screening services and high-quality 
treatment options before their diseases become chronic?

    Answer. The Commission has not specifically looked into this issue, 
and does not take positions on draft legislation. In general, 
preventive services are an important piece of the care continuum, and 
the effective delivery of preventive care can lead to better outcomes 
for beneficiaries and lower costs for the Medicare program. A strong 
primary care system is crucial for preventive care, as many preventive 
services are often delivered by a primary care provider. The Commission 
has made recommendations to support primary care, as described in 
question #2 about prevention and population health.

                                 ______
                                 
            Question Submitted by Hon. Robert P. Casey, Jr.
   factors to consider in the medicare advantage star rating program
    Question. The National Quality Forum (NQF) and other peer-reviewed 
journals, have concluded that the current star rating system for 
Medicare Advantage should include measures related to social 
determinants of health, such as socioeconomic status, education or 
ethnicity because many of the quality performance criteria measured by 
the star rating program (i.e., medication adherence rates) are directly 
correlated to member socioeconomic characteristics. So in the ongoing 
effort to drive high standards and high quality care for all MA 
beneficiaries, including dual eligible and some of the more vulnerable 
beneficiaries, how can CMS better measure the impact of clinical risk 
factors, low-income status and other sociodemographic factors in the 
star rating program?

    Answer. The Centers for Medicare and Medicaid Services acknowledges 
an association between low-income status and performance in the quality 
measures that determine a plan's star rating, and thus the plan's 
eligibility for a quality bonus payment. The agency's initial proposal 
to address the concern (by reducing the weighting of certain measures) 
was not implemented, and the agency continues to examine the issue. The 
Commission has found an association between disability status and 
performance on quality measures in that plans with a high share of 
Medicare beneficiaries under the age of 65 tend to have lower star 
ratings.

    The issue of how to adjust for such differences is something the 
Commission has addressed in looking at Medicare's hospital readmission 
penalties. Hospitals with higher shares of low-income patients are more 
likely to have penalties because of their higher readmission rates. The 
Commission has suggested using an approach whereby hospitals are 
grouped into categories (deciles) by their share of low-income 
patients. The target performance will be determined for each category, 
with penalties applied when a hospital does not meet the target for its 
category of hospitals (e.g., a grouping consisting of hospitals with 
over 50 percent of patients being low income). Though penalties will be 
adjusted for hospitals with high shares of low-
income patients, the reported readmission rate will not be adjusted, 
because the Commission is concerned that reporting an adjusted rate 
could mask care disparities for low-income beneficiaries. A similar 
approach could be used for determining the bonus status of MA plans. 
However, the mechanics of how that would work are more complicated in 
that many measures, not just a single measure, are used to determine 
the overall star rating of a plan, and not all measures show a low-
income or disability effect.

    Plans are concerned about risk adjustment in the star rating system 
in part because of the financial impact of failing to qualify for 
quality bonus payments. Related to this issue, the Commission's 
suggestions for improving risk adjustment are intended to pay plans 
that care for certain Medicare-Medicaid dually eligible beneficiaries 
and enrollees with multiple chronic conditions more fairly. The 
Commission has suggested using 2 years of diagnosis data to determine a 
person's risk profile, using the number of conditions a person has as a 
risk-adjustment factor, and introducing a distinction in the risk-
adjustment system between ``full'' and ``partial'' Medicare and 
Medicaid dually eligible beneficiaries.

                                 ______
                                 
               Questions Submitted by Hon. Johnny Isakson
    Question. Earlier this year, CMS announced a target of tying 50 
percent of Medicare payments to alternative, value-based payment models 
by 2018. That's an admirable goal, but I think it's worth noting that 
30 percent of Medicare beneficiaries are already enrolled in Medicare 
Advantage plans that receive capitated payments. I'm concerned that CMS 
policies continue to discourage plans from signing up seniors with 
multiple chronic conditions who would benefit the most from care 
coordination. MedPAC has estimated that Medicare's risk-adjustment 
model already underpays by 29 percent for the sickest beneficiaries, 
yet CMS proposes additional cuts to Medicare Advantage risk adjustment.

    Could you elaborate further on the recommendations MedPAC has made 
to improve the risk-adjustment model in Medicare Advantage, 
particularly the recommendation to pay more to care for beneficiaries 
based on the number of chronic conditions they have? What feedback has 
MedPAC received since making this recommendation?

    Answer. The Commission has discussed three refinements to the risk-
adjustment system that would likely lead to more accurate payments to 
MA plans caring for beneficiaries with chronic conditions: using 2 
years of diagnosis data to determine a person's risk profile, using the 
number of conditions a person has as a risk-
adjustment factor, and introducing a distinction in the risk-adjustment 
system between ``full'' and ``partial'' Medicare and Medicaid dually 
eligible beneficiaries. Beneficiaries with full Medicaid coverage 
(``full duals'') have higher expenditures than ``partial duals.''

    To evaluate whether adding a chronic condition count to the risk-
adjustment model would improve accuracy, we calibrated two versions of 
CMS's current risk-
adjustment model. One version was the standard model that CMS uses in 
the MA program. The other is the conditions model, which adds six 
indicators for how many conditions each beneficiary has to the standard 
model: zero, one, two, three, four, and five or more conditions. We 
found that the standard model underpredicts for beneficiaries who have 
zero conditions, five or more conditions, and eight or more conditions 
and overpredicts for one, two, three, and four conditions. In contrast, 
the conditions model predicts quite accurately for each of those 
groups. Because the conditions model predicts accurately for the 
sickest beneficiaries (those who have many conditions), it may be 
beneficial for plans that care for these beneficiaries.

    CMS stated at the May 14th hearing that it was investigating 
MedPAC's risk-
adjustment ideas, including adding a chronic condition count to the 
risk-adjustment model. Certain plans who serve large shares of low-
income beneficiaries have also expressed support for this policy.

    Question. The chronically ill comprise 15% of Medicare 
beneficiaries--yet they account for 75% of costs. More than two decades 
ago, CareMore began to address this disparity with a new model of care 
based on three key pillars: chronic care management, acute care 
management, and predictive modeling and early intervention. These plans 
diagnose conditions early by providing beneficiaries access to disease 
management and care coordination programs that are demonstrating 
improvements in quality compared to FFS Medicare with 67% fewer 
hospitals days and 50% fewer admissions. What strategies should be 
employed to encourage MA plan programs that focus on prevention and 
early detection of health conditions?

    Answer. The Commission has a long history of supporting managed 
care options in Medicare because the financial incentives of the 
capitated MA payment system encourage plans to innovate and use 
approaches, such as care management techniques, that are not possible 
in traditional fee-for-service Medicare. In other words, the design of 
the MA program is intended to give plans strong incentives to focus on 
prevention and early detection. How each plan responds to these 
incentives is up to the plan, but the kinds of activities cited in the 
question can be viewed as an example of ``best practices'' that can 
result in improved health while also promoting the efficient delivery 
of care, as high-cost care is avoided through prevention and early 
detection.

    Question. In January, we saw the implantation of the new payment 
code for managing Medicare patients with multiple chronic conditions. 
This is a great step towards complex care management and improving 
transitions of care. As part of the code's utilization requirement, I 
am pleased to see the requirement of creating a 
patient-centered care plan and providing a copy of the plan to the 
patient. Although the code is just in the beginning stages of 
implementation, has CMS seen any positive results from providers in 
improving patients' care while they navigate the health care system?

    Answer. It is too soon to assess whether the new code has had any 
effect on improving patients' care, although billing of the code in the 
first quarter of 2015 does appear to be quite low.

                                 ______
                                 
                  Question Submitted by Hon. Tim Scott
    Question. One of the reasons I've fought so hard to preserve choice 
for our seniors through the preservation of strong Medicare Advantage 
plans is the simple fact that we know these plans work. We know they 
work, especially in the area of care coordination. These plans are 
incentivized and rewarded for making and keeping people healthy and, 
more importantly, seniors are happy with their plans. Unfortunately, 
each year Medicare Advantage plans face cuts by CMS. My biggest concern 
is for the low income beneficiaries who often benefit the most from 
these plans. Dr. Miller, can you discuss the impact of continued 
Medicare Advantage cuts on rural, low income beneficiaries? In 
particular, the impact of the loss of focused care coordination?

    Answer. The Commission has long supported payment neutrality 
between FFS and MA. Changes in payment policy have brought MA 
benchmarks closer to FFS expenditures and have increased the financial 
pressure on MA plans. As a result, plans have become more efficient, as 
we can judge from the trend that we see in MA plan bids. In 2015, MA 
plans on average are able to provide the Medicare benefit at a cost 
that is lower than the Medicare FFS program, although there are a 
significant number of plans that do not bid below FFS. The average 
value of extra benefits offered through non-specialized plans actually 
increased slightly between 2014 and 2015 (to $75 per person per month 
from $74). MA enrollment has also continued to grow. Between November 
2013 and November 2014, enrollment in MA plans grew by about 9 
percent--or 1.3 million enrollees--to 15.8 million enrollees (compared 
with growth of about 3 percent in the same period for the total 
Medicare population). About 30 percent of all Medicare beneficiaries 
were enrolled in MA plans in 2014, up from 28 percent in 2013.

    With regard to rural areas, the share of beneficiaries living in 
rural areas who are enrolled in MA is below that of urban areas, but 
that share grew from 18 percent in 2013 to 20 percent in 2014. MA 
enrollment is growing more quickly in rural areas than in urban areas.

                                 ______
                                 
             Questions Submitted by Hon. Patrick J. Toomey
    Question. Medicare beneficiaries with multiple chronic conditions 
are the largest users of health care services. For example, the 14 
percent of beneficiaries with six or more chronic conditions, such as 
chronic kidney disease, heart failure, and chronic obstructive 
pulmonary disorder (COPD), accounted for 55% of total Medicare spending 
on hospitalizations. What models, including coordinated care models, 
currently exist that could be translated to improve quality and reduce 
Medicare costs for those with ESRD and/or multiple chronic conditions?

    Answer. MA plans and ACOs could both be effective care models for 
beneficiaries with ESRD and/or multiple chronic conditions. The 
Commission has recommended allowing beneficiaries with ESRD to enroll 
in MA plans (they cannot currently join MA). To allow general MA plans 
to better care for beneficiaries with common chronic conditions, the 
Commission has recommended allowing plans the flexibility to tailor 
benefits for enrollees with specific chronic conditions or sets of 
conditions (March 2013 report). For example, under the Commission's 
recommendation, plans would be allowed to provide non-emergency 
transport services exclusively for beneficiaries with ESRD, or any 
other population that the plan deems likely to benefit from these 
services.

    The ACO program incentivizes providers to focus care coordination 
efforts on patients with high Medicare spending, who are likely to 
suffer from multiple chronic conditions. MedPAC's interviews with ACOs 
suggest that they are already concentrating on this population. The 
Commission has made several suggestions for enhancing ACOs' 
effectiveness, including increasing the power of ACOs' incentives 
(e.g., higher share of savings, two-sided risk models, not reducing 
benchmarks for already efficient ACOs) and regulatory relief to 
increase beneficiary engagement (e.g., waiving copays for primary care 
visits with ACO providers) for ACOs in two-sided risk arrangements 
(June 2014 and February 2015 comment letters).

    Question. Some estimates show that one in five Medicare dollars are 
currently spent on an individual diagnosed with dementia, and are on 
pace to grow to one in three dollars by 2050 unless there is the 
development of a new meaningful therapy or treatment. Has MedPAC 
considered ways CMS might address the currently high spending 
attributable to beneficiaries with Alzheimer's disease and other 
dementias?

    Answer. MedPAC has not directly considered ways to address high 
spending attributable to beneficiaries with Alzheimer's disease and 
other forms of dementia. However, the Commission's recommendation to 
allow general MA plans the flexibility to tailor benefits to specific 
beneficiary populations would allow MA plans to design benefit packages 
for beneficiaries with dementia.

                                 ______
                                 
                 Prepared Statement of Hon. Ron Wyden, 
                       a U.S. Senator From Oregon
    I would first like to thank Chairman Hatch for his leadership on 
this critical issue. Ten months ago, the Finance Committee came 
together to discuss one of the premier challenges of our time--
addressing the chronic illnesses that dominate America's flagship 
health program, Medicare. Chronic illnesses--heart disease, diabetes, 
and cancer, among others--now account for almost 93% of Medicare 
spending.

    That certainly wasn't the case when the program began in 1965. Back 
when Medicare first started, its primary purpose was to help people 
with catastrophic health events that put them in the hospital. That 
picture has turned upside down. Though it's hard to get the numbers 
from that era, we know this much: in 1970, according to the Centers for 
Medicare and Medicaid Services, 64 percent of total Medicare spending 
was devoted to care provided to patients in the hospital. By 2010, that 
number dropped to 26 percent.

    Today, the vast majority of Medicare dollars are spent caring for 
patients living with multiple persistent, chronic health conditions 
that require a variety of services. Although it's a good thing that 
care is being provided outside the hospital, but this care is--more 
often than not--uncoordinated and costly.With a trend this clear, it's 
time for both parties to tackle this issue head on, and I commend 
Chairman Hatch for making it a priority for the Committee.

    I also want to point out that last month, Congress took the 
important step of ending the broken Sustainable Growth Rate formula. 
Throwing SGR in the junk bin accomplished two big things. First, it 
engraved in stone the principle of rewarding medical care that provides 
quality care over quantity. And second, it cleared the legislative 
logjam that has blocked Congress from taking a close look at how 
Medicare can be tuned to work better for patients and encourage 
providers to improve the care they are delivering. So it is going to be 
critical to build off that progress as the Finance Committee moves 
forward to address the challenge of treating chronic illnesses.

    Since our hearing last July, I've held a number of roundtables in 
Oregon to hear what the Committee can do to make Medicare work better 
when it comes to chronic care. I received a lot of crucial insights 
along the way and I'm going to take some time to offer what, in my 
view, are several key principles that should be a part of any attempt 
to more effectively care for patients with multiple chronic conditions.

    First, Medicare needs to encourage teams of providers to coordinate 
care for their patients with chronic conditions. People dealing with 
multiple chronic illnesses often have half a dozen doctors, but those 
doctors may not communicate to provide the most efficient care. This 
situation needs to be turned on its head in favor of a holistic 
approach that encourages providers to work together to make our 
patients healthy.

    Working with multiple doctors is especially challenging for people 
living in rural communities. Treating multiple chronic conditions is 
hard to do anywhere, but it's even more difficult when doctors and 
specialists are eighty miles apart. Families that face chronic health 
issues shouldn't have to add a whistle-stop tour of doctor's offices to 
their list of challenges.

    Second, Congress needs to make life easier for providers who want 
to coordinate care, whether that's more information about patients, 
improved access to innovative technology, or other measures that 
promote flexibility. At the same time, accountability is critical to 
ensure providers are successfully treating patients while also 
producing savings from coordinating care. And if something doesn't 
work, health innovators should explore other options.

    I've been passionate about this issue for a while now, but with the 
input and efforts of the whole Finance Committee I am confident we can 
craft a solution that really gets at the heart of the challenges posed 
by chronic illnesses, and do so in a way that brings members together 
on a bipartisan basis.

    I'm especially pleased to be teaming up with Chairman Hatch on a 
plan that begins with a working group and ends with legislation passing 
out of this committee. This working group will develop policy options 
to address how Medicare can work better for Americans with chronic 
illnesses, and it will be co-chaired by Senators Isakson and Warner.

    Senator Isakson has been as dogged as anyone on this issue, and I 
had the privilege of working with him last year to propose some of our 
own ideas. Senator Warner will also be a chair, and since joining the 
committee last year he has already demonstrated an unshakeable 
commitment to seeking workable solutions on big, important issues, and 
doing so in a bipartisan way. I look forward to seeing the results from 
this working group, especially given the interest of Members like 
Senator Bennet and others, who have demonstrated an eagerness to dig 
into this issue and come up with real, meaningful reforms.

    The Committee has already received some vital feedback from 
patients, providers and others, including a woman named Stephanie 
Dempsey, who was a witness at our hearing last July. Ms. Dempsey was 
dealing with heart disease, lupus, arthritis and a seizure disorder, 
and I'm sorry to say she passed away in December due to those 
conditions. At the hearing she said to us: ``I am confident that you 
will not forget me and countless other people when you develop policies 
that will help all of us. Our goals are all the same: to live long, 
healthy, and productive lives.''

    Her death should clearly signal the seriousness of chronic illness 
and the urgency needed by this Committee to adopt a lasting, robust 
solution to address how Medicare treats it. It's critical for us to 
keep in mind who we're working to help.

                                 ______
                                 

                             Communications

                              ----------                              


 Statement of the American College of Clinical Pharmacy (ACCP) and the 
        College of Psychiatric and Neurologic Pharmacists (CPNP)
   ``a pathway to improving care for medicare patients with chronic 
                              conditions''

                              May 14, 2015

The American College of Clinical Pharmacy (ACCP) and the College of 
Psychiatric and Neurologic Pharmacists (CPNP) appreciate the 
opportunity to provide the following statement for the Senate Finance 
Committee related to the May 14, 2015, hearing entitled ``A Pathway to 
Improving Care for Medicare Patients with Chronic Conditions.''

ACCP is a professional and scientific society that provides leadership, 
education, advocacy, and resources enabling clinical pharmacists to 
achieve excellence in patient care practice and research. ACCP's 
membership is composed of over 16,000 clinical pharmacists, residents, 
fellows, students, scientists, educators and others who are committed 
to excellence in clinical pharmacy practice and evidence-based 
pharmacotherapy.

The College of Psychiatric and Neurologic Pharmacists is an association 
of specialty pharmacists who work to improve the minds and lives of 
those affected by psychiatric and neurologic disorders. These 
professionals apply their clinical knowledge in a variety of healthcare 
settings and positions ranging from education to research with the goal 
to apply evidence-based, cost efficient best practices in achieving 
patient recovery and improving quality of life.

Currently, millions of complex, chronically ill Medicare beneficiaries 
receive care in a delivery system that is fragmented and insufficiently 
focused on quality and outcomes. We applaud the leadership of the 
Committee in holding this hearing to examine a program deficiency that 
not only fails to adequately meet patient needs but threatens the long-
term structural and financial viability of the Medicare program.

The burden of chronic physical and mental health conditions has far 
reaching implications for the Medicare program. Over 68% of Medicare 
beneficiaries have two or more chronic conditions and over 36% have 
four or more chronic conditions. In terms of Medicare spending, 
beneficiaries with two or more chronic conditions account for 93% of 
Medicare spending, and those with four or more chronic conditions 
account for almost 75% of Medicare spending.\1\
---------------------------------------------------------------------------
    \1\ CDC Report--Prevalence of Multiple Chronic Conditions Among 
Medicare Beneficiaries, United States, 2010. Available at: http://
www.cdc.gov/pcd/issues/2013/12_0137.htm. Accessed May 11, 2015.

Irresistible demographic trends in the U.S. mean that the number of 
Americans who depend on the Medicare program for their health care will 
increase significantly in the corning decades. Some estimates suggest 
that Medicare, in its current form, will become insolvent by as early 
as 2027. It is clear that in order to protect the integrity of the 
program for today's seniors and ensure its sustainability for future 
generations the structure of Medicare's current benefit design must be 
---------------------------------------------------------------------------
improved and modernized.

As the committee continues its effort to examine ways to improve how 
care for chronically ill Medicare beneficiaries is delivered and paid 
for, ACCP and CPNP urge you to focus on models that promote and 
incentivize a truly patient-centered and inter professional approach to 
medication related clinical care and medication safety. Medications are 
the fundamental treatment intervention in each of the eight most 
prevalent chronic conditions in Medicare patients based on the most 
recent data from the Centers for Medicare and Medicaid Services (CMS). 
The typical Medicare beneficiary sees two primary care providers and 
five medical specialists in any given year. Four of every five medical 
encounters result in a prescription order (new or refill); 60% of 
seniors are taking 3 or more discrete prescription or non-prescription 
medications at any point in time.

More specifically, we urge you to include reforms to the Medicare Part 
B program that provide for coverage of comprehensive medication 
management (CMM) services provided by qualified clinical pharmacists as 
members of the patient's health care team. This team-based service of 
CMM is supported by the Patient Centered Primary Care Collaborative, 
(PCPCC), in which ACCP as well as the major primary care medical 
organizations are actively involved. CMM helps ensure that seniors' 
medication use is effectively coordinated, and in doing so enhances 
seniors' health care outcomes, contributing directly to Medicare's 
goals for quality and affordability. CMM can ``get the medications 
right'' as part of an overall effort to improve the quality and 
affordability of the services provided to Medicare beneficiaries.

In ``getting the medications right,'' CMM also contributes to enhanced 
productivity for the entire health care team, allowing other team 
members to be more efficient in their own particular patient care 
responsibilities. Physicians and other team members are freed up to 
practice at the highest level of their own scopes of practice by fully 
utilizing the qualified clinical pharmacist's skills and training to 
coordinate the medication useprocess as a full team member.

In order to enhance access to high-quality care and to ensure the 
sustainability of the Medicare program as a whole, it is essential that 
progressive payment and delivery system improvements that have emerged 
and are being actively utilized in both public and private-sector 
integrated care delivery systems be facilitated and aggressively 
promoted--especially those that measure and pay for quality and value, 
not simply volume of services, and that fully incentivize care that is 
patient centered and team based.

ACCP and CPNP are dedicated to advancing a quality-focused, patient-
centered, team-based approach to health care delivery that helps assure 
the safety of medication use by patients and that achieves medication-
related outcomes that are aligned with patients' overall care plans and 
goals of therapy through the provision of CMM. Clinical pharmacists, 
working collaboratively with physicians and other members of the 
patient's health care team, utilize a consistent process of direct 
patient care that enhances quality and safety, improves clinical 
outcomes and lowers overall health care costs.

In summary, as part of the process of reforming the Medicare payment 
system, Congress should enact reforms to the Medicare Part B program 
that provide for coverage of CMM services provided by qualified 
clinical pharmacists as members of the patient's health care team 
within its broader payment reform efforts. We would welcome the 
opportunity to provide further information, data, and connections with 
successful practices that provide CMM services to help further inform 
the committee about this service in the context of Medicare payment and 
delivery system improvements that will modernize and sustain the 
program for the future.

American College of Clinical Pharmacy (ACCP)
Office of Government and Professional Affairs
1455 Pennsylvania Ave., NW, Suite 400
Washington, DC 20004
(202) 621-1820
www.accp.com

College of Psychiatric and Neurologic Pharmacists (CPNP)
8055 O Street
Suite S113
Lincoln, NE 68510
(402) 476-1677
www.cpnp.org
                                 ______
                                 

           Association for Community Affiliated Plans (ACAP)

         1015 15th Street, NW, Suite 950  Washington, DC 20005

     Tel. 202-204-7508  Fax 202-204-7517  www.communityplans.net

 John Lovelace, Chairman  Margaret A. Murray, Chief Executive Officer

      Statement of the Association for Community Affiliated Plans

            For the Hearing in the Senate Finance Committee

   ``A Pathway to Improving Care for Medicare Patients with Chronic 
                              Conditions''

                              May 14, 2015

The Honorable Orrin Hatch, Chairman
U.S. Senate Committee on Finance
United States Senate
Washington, DC 20510

The Honorable Ron Wyden, Ranking Member
U.S. Senate Committee on Finance
United States Senate
Washington, DC 20510

Chairman Hatch, Ranking Member Wyden, and Members of the Committee:

Thank you for holding your hearing on May 14th entitled, ``A Pathway to 
Improving Care for Medicare Patients with Chronic Conditions.'' ACAP 
represents not-for-
profit, community-based, safety-net health plans (SNHPs): 17 of our 59 
SNHP members operate Special Needs Plans (SNPs) and 14 operate 
Medicare-Medicaid Plans (MMPs) in the Financial Alignment 
Demonstration. ACAP's 14 MMPs collectively enroll over 30 percent of 
all beneficiaries in the Financial Alignment Demonstration. SNHPs 
understand the challenges of managing and improving care for 
chronically ill Medicare beneficiaries:

    Sixty-four percent of ACAP's D-SNP enrollees are age 65 and older, 
        and 36 percent are under age 65 and disabled; 48 percent of 
        ACAP's MMP enrollees are age 65 and older and 52 percent are 
        under age 65 and disabled.

    Twenty-seven percent of ACAP's D-SNP enrollees and 28 percent of 
        ACAP's MMP enrollees receive community-based long-term care 
        services and supports (LTSS).

    Eight percent of ACAP's D-SNP enrollees and 13 percent of ACAP's 
        MMP enrollees utilize institutional LTSS.

    Thirty percent of ACAP's D-SNP enrollees and 44 percent of ACAP's 
        MMP enrollees have a mental health condition.

To help you better understand the challenges of caring for a population 
with complex chronic illnesses, we wanted to offer you some examples of 
how our member plans address these challenges. Below is an example of 
how one SNHP improves care coordination for Medicare beneficiaries:

        CareSource. CareSource enrolls nearly 16,000 dual-eligible 
        beneficiaries in Ohio's Financial Alignment Demonstration. 
        CareSource has developed a Trans-Disciplinary Care Team (TDCT) 
        to provide members with an integrated, comprehensive approach 
        to care. The TDCT includes the member, care manager, the 
        member's primary physician and other health care providers, as 
        well as the member's family and caregivers. An assigned care 
        manager visits in person to monitor the care needs of the 
        member and the TDCT, and ensures ongoing communication between 
        the member and all health care providers to chart a course of 
        action when necessary. Led by the care manager, the TDCT can be 
        instrumental in aiding members returning to their homes after 
        long stays in nursing facilities. A Community Waiver Care 
        Manager, who aids with that transition, meets with the TDCT to 
        ensure effective care management of the home and that 
        community-based services are available to the member.

        Specifically, upon returning to his home after a stay at a 
        long-term care facility, a CareSource member received a check-
        in phone call from his care manager. On the call, the 
        CareSource manager learned that the member's wife and primary 
        caregiver had fallen and sustained a hip fracture and was 
        recovering in a local rehabilitation facility. His daughter had 
        moved back into the house to care for her father, but the care 
        manager still decided to reach out to his wife and visit her in 
        the rehabilitation facility, even though she was not a 
        CareSource member. The member's wife, feeling understandably 
        overwhelmed by her own injury and caretaking responsibilities 
        for her husband, admitted that she was struggling to understand 
        the mountains of documents and bills piling up in her mailbox. 
        She produced a freezer bag stuffed with mail, some of which was 
        relevant to her injury and some for her husband's ongoing 
        recovery. The Caresource care manager went through each and 
        every item in the bag, writing explanatory notes on each and 
        highlighting those which required immediate attention. The 
        member's wife was relieved to have the stress of interpreting 
        and following up on the paperwork lifted. She asked the care 
        manager to help take her picture to email to her husband, to 
        assure him that her recovery was progressing well.

SNHPs also understand the complexities of managing care for low-income 
elderly and disabled beneficiaries whose health status and access to 
care is challenged by socio-economic barriers. The majority of ACAP's 
D-SNP enrollees have incomes low enough to quality for full Medicaid 
benefits.\1\ Many of ACAP's D-SNP enrollees were first Medicaid 
beneficiaries before gaining Medicare eligibility. Not-for-profit SNHPs 
are well positioned to draw on their strong community relationships to 
integrate physical, mental, and behavioral health services for their 
members and to provide Medicare beneficiaries with necessary services 
that they may not receive through traditional Medicare.
---------------------------------------------------------------------------
    \1\ Only full-benefit dual eligibles can enroll in the financial 
alignment demonstration, therefore all of ACAP's MMP enrollees are also 
eligible for full-Medicaid benefits.

        Amida Care. Amida Care is a Medicaid and special needs health 
        plan based in New York City focused on serving HIV-positive 
        beneficiaries. Amida Care believes that employment can play a 
        major role in strengthening the physical and behavioral health 
        status of its enrollee population. To this end, Amida Care has 
        hired, trained and employed more than 250 of its enrollees to 
        serve in a variety of community-support roles. This does not 
        preclude the individual from seeking/obtaining full-time 
        employment and private health coverage, but rather affords 
---------------------------------------------------------------------------
        experience that can lead to attainment of full-time employment.

        Commonwealth Care Alliance (CCA). CCA enrolls more than 10,000 
        dual-eligible beneficiaries in the Massachusetts Financial 
        Alignment Demonstration. CCA opened regional care centers 
        staffed with primary care physicians and nurse practitioners 
        for members that lacked a regular or meaningful relationship 
        with a primary care physician before they were enrolled in the 
        demonstration. This capacity was necessary to accommodate 
        subsets of the dual eligible population who were poorly served 
        in Medicare fee-for-service. An increased commitment to 
        coordinated care has made a significant difference for many 
        high-cost individuals, who are newly engaged in the health care 
        system after years of experiencing fragmented health care in an 
        uncoordinated system.

We hope these examples of how SNHPs provide enhanced care management 
and benefits to chronically ill Medicare beneficiaries are useful to 
the Committee as it works to identify ways to improve care for 
chronically ill Medicare beneficiaries. We have documented additional 
examples of how SNHPs provide enhanced care coordination and benefits 
to dual-eligible beneficiaries enrolled in the Financial Alignment 
Demonstration in a fact sheet titled, ``ACAP Plans and the Duals 
Demonstration: Early Progress, Innovations, and Challenges.''

ACAP is prepared to assist with additional information, if needed. If 
you have any additional questions please do not hesitate to contact 
Christine Aguiar at (202) 204-7519 or [email protected].

Sincerely,

Margaret A. Murray
Chief Executive Officer
Cc:  The Honorable Sherrod Brown
     The Honorable Rob Portman
     The Honorable Charles Schumer
     Members, Senate Finance Committee

                                 ______
                                 

                National Kidney FoundationTM

                           30 E. 33rd Street

                           New York, NY 10016

                            Tel 212-889-2210

                            Fax 212-689-9261

                             www.kidney.org

          National Kidney Foundation Statement for the Record

   ``A Pathway to Improving Care for Medicare Patients with Chronic 
                              Conditions''

                              May 14, 2015

The National Kidney Foundation (NKF) commends the Senate Finance 
Committee for developing a new working group to consider policy options 
for lowering healthcare costs and improving chronic care in the 
Medicare program. This initiative is desperately needed and NKF looks 
forward to working with the committee on this endeavor.

NKF is America's largest and long-established health organization 
dedicated to the awareness, prevention, and treatment of kidney disease 
for hundreds of thousands of healthcare professionals, millions of 
patients and their families, and tens of millions of people at risk. In 
addition, NKF has provided evidence-based clinical practice guidelines 
for all stages of chronic kidney disease (CKD), including 
transplantation since 1997 through the NKF Kidney Disease Outcomes 
Quality Initiative (NKF KDOQI).

As you know, Medicare spends $87 billion annually to care for patients 
with kidney disease, including nearly $29 billion for most of the 
636,000 individuals with ESRD.\1\ As CKD advances from stage 1-4, costs 
nearly double from one stage to the next.\2\ Over 26 million people are 
living with CKD, yet only 10% are aware they have it \3\ and another 73 
million are at risk. Risk factors for kidney disease include diabetes, 
hypertension, age over 60, and a family history of kidney failure. A 
recent study published by researchers leading the Centers for Disease 
Control and Prevention's (CDC) CKD surveillance program show that the 
burden of CKD is increasing and that over half of U.S. adults age 30-64 
are likely to develop CKD.\4\ Minority populations, particularly 
African Americans, are disproportionately affected. African Americans 
are three times more likely than whites to progress to ESRD and start 
dialysis at a younger age, thus spending more of their lifetime on 
dialysis.\5\ Mortality in earlier stage CKD among African Americans 
under age 65 is also higher compared to European Americans.\6\ 
Additionally, CKD is a disease multiplier that leads to cardiovascular 
disease, bone disease and other chronic conditions. Intervention at the 
earliest stage is vital to improving outcomes, lowering health care 
costs, and improving patient experience.
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    \1\ United States Renal Data System, 2014 Annual Data Report: 
Epidemiology of Kidney Disease in the United States. National 
Institutes of Health, National Institute of Diabetes and Digestive and 
Kidney Diseases, Bethesda, MD, 2014.
    \2\ Honeycutt AA, Segel JE, Zhuo XH, Hoerger TJ, Imai K, Williams 
D: Medical Costs of CKD in the Medicare Population. J Am Soc Nephrol 
2013. 24.
    \3\ Tuot DS, Plantinga LC, Hsu CY, et al. Chronic kidney disease 
awareness among individuals with clinical markers of kidney 
dysfunction. Clin J Am Soc Nephrol. Aug 2011;6(8):1838-1844.
    \4\ Hoeger, Thomas, et al. The Future Burden of CKD in the United 
States: A Simulation Model for the CDC CKD Initiative, Am J Kidney Dis. 
2015;65(3):403-411.
    \5\ Centers for Disease Control and Prevention, National Chronic 
Kidney Disease Fact Sheet 2014, http://www.cdc.gov/diabetes/pubs/pdf/
kidney_Factsheet.pdf.
    \6\ Mehrotra, Rajnish et al., Racial Differences in Mortality Among 
Those with CKD, J Am Soc Nephrol. 2008 Jul; 19(7): 1403-1410.

Earlier this year, NKF submitted a letter to the Committee expressing 
our concern that changes in the Medicare Advantage (MA) risk-adjustment 
model removed the only incentive in the Medicare program to detect and 
manage CKD in its earliest stages. Unfortunately, the Centers for 
Medicare and Medicaid Services (CMS) proceeded with the new risk-
adjustment model. NKF has continued to recommend and advocate for 
improved strategies to incentivize earlier detection and care 
coordination for CKD in the Medicare program, which could save lives, 
kidneys and lower costs. NKF has even established its own national 
initiative, CKD Intercept, to improve early detect ion and management 
in those with and at risk for kidney disease. However, our efforts 
alone will not be enough to move this country in the direction of 
treating of CKD early, before it ends in death or kidney failure. 
Therefore, we request the Committee's support in making CKD detect ion 
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and management a national priority.

In a recent clinical study, only 12% of primary care practitioners 
(PCPs) were properly diagnosing CKD in their patients with diabetes who 
are at the highest risk of kidney disease. In addition, the study found 
that PCPs conducted a urine albumin to creatinine ratio and a serum 
creatinine to estimate kidney function (two simple tests) in only about 
half of their diabetic patients.\7\ Earlier detection allows the 
introduction of patient education and medical management that can slow 
the progression of the kidney disease and reduce the associated co-
morbidities, such as cardiovascular events, and drug toxicity for many 
individuals. PCPs acknowledge that kidney disease is under recognized 
and that patient outcomes could be improved with increased recognition, 
earlier treatment of CKD, and improved collaboration with 
nephrologists,\8\ however, the gap in appropriate diagnosis remains.
---------------------------------------------------------------------------
    \7\ Szczech LA, et al. Primary Care Detection of Chronic Kidney 
Disease in Adults with Type-2 Diabetes: The ADD-CKD Study (Awareness, 
Detection and Drug Therapy in Type 2 Diabetes and Chronic Kidney 
Disease), PLOS One November 26, 2014.
    \8\ Allen AS, Forman JP, Orav EJ, Bates DW, Denker BM , Sequist TD. 
Primary care management of chronic kidney disease. J Gen Intern Med. 
Apr 2011;26(4):386-392.

Diagnosis of CKD is associated with patient awareness (of CKD) leading 
to improved opportunities for patient engagement \9\--a key component 
of the National Quality Strategy and Healthy People 2020. In addition, 
conversations and surveys of patients with kidney disease have shown 
that those with kidney failure would have welcomed the opportunity to 
modify their lifestyle had they understood they had kidney disease and 
known its risks prior. I can also personally attest to this. I am a 
kidney transplant recipient. Through my personal experience, I know 
first-hand how early detection and preventative actions can actually 
slow (and in many cases) prevent the progression of kidney disease. My 
CKD was caught early and as a result I was able to postpone the need 
for dialysis and transplantation for almost 4 years.
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    \9\ Szczech LA, et al. Primary Care Detection of Chronic Kidney 
Disease in Adults with Type-2 Diabetes: The ADD-CKD Study (Awareness, 
Detection and Drug Therapy in Type 2 Diabetes and Chronic Kidney 
Disease), PLOS One November 26, 2014.

It is critical to provide education and other ``motivators'' to promote 
appropriate guideline driven care in those identified with CKD.\10\ 
Given the widespread under-diagnosis of CKD, the lack of both 
practitioner and patient awareness, and the absence of appropriate 
quality measures there is a critical need for improvement in CKD care. 
The KDIGO clinical practice guidelines provide practitioners with a 
road map on detection and diagnosis of CKD. Given this, early stage CKD 
is particularly well positioned for alternative care and payment 
models. CMS has created an alternate payment model for ESRD, which has 
the potential to improve care for those Medicare beneficiaries, but we 
desperately need for Medicare to also begin looking upstream to improve 
care for the many millions who have earlier stage CKD. We look forward 
to further details about the working group and to partnering with the 
Committee as it considers policy options for lowering healthcare costs 
and improving care for those living with chronic disease.
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    \10\ Tuot OS, Plantinga LC, Hsu CY, Powe NR. Is awareness of 
chronic kidney disease associated with evidence-based guideline-
concordant outcomes? Am J Nephrol. 2012;35(2):191-197.

Please contact Tonya Saffer, Senior Health Policy Director at 202-244-
7900 extension 717 or by email at [email protected] with any 
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questions.

                                 ______
                                 
WESLEY ENHANCED LIVING
928 JAYMOR ROAD
SOUTHAMPTON, PA 18966

JEFF A. PETTY
PRESIDENT AND CEO

May 15, 2015

Senate Committee on Finance
Rm. SD-219
Dirksen Senate Office Bldg.
Washington, DC 20510-6200

Attn. Editorial and Document Section COMMENTS ON CHRONIC CARE HEARING

Dear Members of the Committee:

Because Pub. L. 114-10 requires half of Medicare beneficiaries to be 
served in care coordination networks by 2018, the Congress must explore 
new models of care coordination in various settings. Senior living 
communities offer one of the easiest opportunities to provide care 
coordination because of the proximity of providers to patients, and the 
frequency of their interaction.

We urge the Committee to move quickly to test promising new models of 
care coordination, including those in a senior living community (known 
as Continuing Care Retirement Communities, or CCRCs) where seniors have 
the ability to ``age in place.'' For the vast majority of seniors, 
residential care coordination could reduce the cost of Medicare by 30% 
and Medicaid by 20%, promote personal responsibility and provide 
lifetime health and housing security.

As you know, CCRCs are an extremely popular housing solution for 
seniors, with more than 2,000 operating around the country. While 
seniors normally enter the CCRC in the independent setting, the CCRC 
model provides assisted living, skilled nursing, and memory care 
services for residents on an ``as needed'' basis at no additional cost. 
The ability to offer needed care in a residential setting (without the 
expense of providing ``room and board'') makes CCRCs the optimal 
setting for patients, providers and payers.

Because of outmoded geographic restrictions on Medicare Advantage 
plans; currently these senior communities are unable to offer a 
coordinated, comprehensive medical home model for their Medicare 
residents. Instead of requiring each CCRC resident to manage and 
navigate their own health care issues, CCRCs should be allowed to 
provide on-site primary care in a payment system that reduces cost and 
improves outcomes by assisting Medicare beneficiaries to get the right 
care, rather than the most care.

The SHIFT model would provide primary and non-acute services onsite, 
and coordinate and pay for acute and specialist care offsite as 
needed--promoting care coordination and disease management services to 
avoid hospitalizations and lower the total cost of care for seniors. 
Recent studies show that a residential care setting such as a CCRC is 
the ideal setting to integrate all of these cost containment strategies 
for Medicare seniors because of the near-constant interaction between 
staff and residents. This model offers the best chance of actually 
delivering comprehensive and coordinated healthcare.

Operationally, the SHIFT community would bear the risk and 
responsibility for providing comprehensive senior health and housing 
services to its residents in exchange for a reasonable entrance fee and 
a moderate monthly fee--affordable to the vast majority of America's 
seniors. The SHIFT community would utilize an interdisciplinary health 
care team led by salaried primary care physicians and advanced practice 
nurses to administer and coordinate comprehensive health care services 
for all SHIFT residents under a capitated, risk-adjusted Medicare 
payment.

The attached actual Medicare cost data show that Medicare would save 
more than 30% for every SHIFT resident. The reason is simple: the costs 
of primary care, skilled nursing care, long term care hospitals, home 
health, rehabilitation, medical transport and hospice represent about 
30% of Medicare expenses for eligible seniors in a CCRC. The attached 
chart demonstrates that these silos of Medicare costs are already paid 
for in the underlying CCRC cost structure of the SHIFT campus. Although 
further savings are also likely to come from better health and better 
healthcare--these are not included in the 30% savings claimed. 
Additionally, a 2009 study by Avalere Health showed that the SHIFT plan 
could result in Medicaid savings of 20%. Medicaid payments for SHIFT 
residents who ``spend down'' into Medicaid would be much less than 
current nursing care costs, and residents will be able to stay in their 
CCRC home, and reducing state's burgeoning Medicaid expenses for 
custodial nursing care.

A growing body of clinical evidence suggests that these savings 
forecasts are not only achievable, but are likely understated. Recent 
data from the U.S. Agency for Health Research and Quality shows that 
60% of hospital admissions from all U.S. nursing homes are 
``potentially avoidable,'' and should be managed by a doctor onsite--as 
proposed in SHIFT. Additionally, multiple studies point to various 
care-
coordination practices resulting in savings to Medicare and Medicaid. 
Also, recent Commonwealth Fund reports point to care coordination 
savings in ``low-value health care practices'' and ``overutilization of 
technology'' which could be implemented quickly and easily in the 
residential care setting:

   http://www.commonwealthfund.org/publications/in-brief/2015/mar/too-
        much-technology

   http://www.commonwealthfund.org/publications/in-brief/2013/jan/
        over-150-potentially-low-value-health-care-practices

Congress should move to provide seniors with better care at lower cost 
by demonstrating such reform models as soon as possible. S. 395/H.R. 
837 gives CMS explicit authority to test up to 5 different state 
projects for care coordination in a residential care setting, and 
immediately reduces Medicare payments by 10% for the providers who 
serve Medicare patients who volunteer for the demonstrations.

We look forward to working with you to achieve the goals of Pub. L. 
144-10. Thanks for your interest in improving and sustaining our system 
of senior care.

Sincerely,

Jeff A. Petty
President

                                 ______
                                 

                 Residential Care Coordination Program

The Secretary shall create a Residential Care Coordination Program 
(RCCP) coordinating Medicare and Medicaid payment to foster development 
of on-site primary care medical homes providing comprehensive, care-
coordination in congregate residential care settings (such as 
continuing care retirement communities). The RCCP shall:

A. Provide and/or coordinate all covered Medicare items and services, 
as well as provide any other non-covered services (such as care 
coordination and disease management) necessary to optimize the well-
being of the enrolled beneficiaries.
1. Negotiated Agreement: As part of an application process, CMS shall 
        negotiate appropriate terms of participation (including 
        outcomes measurements to ensure high quality) with providers 
        and states to assume full risk for the full cost of all items 
        and services furnished to beneficiaries under the program in 
        exchange for a capitated payment.
2. 10% Cost Reduction: The risk-adjusted capitated payment amount 
        derived by the Secretary constitutes a 10% reduction from 
        expected risk-adjusted fee-for-service Medicare costs for 
        enrolled beneficiaries.
3. No Net Cost to Government Accounts: In no event will the Medicare 
        costs of the RCCP exceed the expected risk-adjusted cost of 
        providing all necessary items and services to beneficiaries 
        under Medicare Fee-For-Service.
4. Freedom of Choice: Allows individuals to disenroll from the RCCP and 
        return to Fee For-Service Medicare while continuing to live in 
        the residential care facility if they choose.

B. Coordinate Medicaid assistance for those individuals who become 
financially eligible for Medicaid while participating in the RCCP:
1. Negotiated Agreement: As part of the negotiated agreement with 
        states and approved providers described above, CMS shall allow 
        every individual in the RCCP who financially qualifies for 
        Medicaid to remain in their residential care home if they so 
        choose while continuing to receive all health care services 
        under the capitated arrangement described above.
2. Cost Reduction: Caps Medicaid payments for RCCP enrolled 
        beneficiaries at an amount equal to the portion of the enrolled 
        beneficiary's monthly residential care living costs (up to 
        $2000/month) which they can no longer afford to pay.
3. No Net Cost to Government Accounts: In no event will the Medicaid 
        costs of the RCCP exceed one-half of the expected costs of 
        providing all necessary nursing care services for participating 
        individuals who qualify for Medicaid.

  [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
        

                                 ______
                                 

         The Medicare Residential Care Coordination Act of 2015

Directs the Secretary of Health and Human Services to establish and 
implement a demonstration project under titles XVIII (Medicare) and XIX 
(Medicaid) of the Social Security Act to evaluate the use of capitated 
payments made to eligible continuing care retirement communities for 
residential care coordination programs in up to 5 states. Fully at-risk 
capitated payment is 90% of expected Medicare fee for service cost of 
beneficiaries enrolled in the program.

S. 395 introduced 2/5/2015

Original Cosponsors:
Senator Chuck Grassley [R-IA]
Senator Robert Casey [D-PA]
Senator Bill Cassidy, M.D. [R-LA]

H.R. 837 introduced 2/10/2015

Original Cosponsors:                              Cosponsors:
Rep. Mike Fitzpatrick [R-PA-8]                   Rep. Meehan, Patrick 
[R-PA-7]
Rep. Jenkins, Lynn [R-KS-2]                     Rep. Scott Tipton [R-
CO-3]
Rep. Barton, Joe [R-TX-6]
Rep. Buchanan, Vern [R-FL-16]
Rep. Kelly, Mike [R-PA-3]
Rep. Cartwright, Matt [D-PA-17]
Rep. Rothfus, Keith J. [R-PA-12]
Rep. Boyle, Brendan F. [D-PA-13]
Rep. Doyle, Michael F. [D-PA-14]
Rep. Brady, Robert A. [D-PA-1]
Rep. Fattah, Chaka [D-PA-2]

                                   [all]