[Federal Register Volume 63, Number 52 (Wednesday, March 18, 1998)]
[Notices]
[Pages 13260-13262]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-6940]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration
[HCFA-3000-N]


Medicare Program; Solicitation of Proposals for a Demonstration 
Project for the Use of Informatics, Telemedicine, and Education in the 
Treatment of Diabetes Mellitus in the Rural and Inner-City Medicare 
Populations

AGENCY: Health Care Financing Administration (HCFA).

ACTION: Notice.

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SUMMARY: This notice announces our intent to solicit proposals from 
eligible health care telemedicine networks for a demonstration project 
to use high capacity computing and advanced networks for the 
improvement of primary care and prevention of health care complications 
for Medicare beneficiaries with diabetes mellitus, who are residents of 
medically underserved rural areas or medically underserved inner city 
areas. We are soliciting these proposals under the authority of section 
4207 of the Balanced Budget Act of 1997, section 1875 of the Social 
Security Act, and sections 402(a)(1)(B) and (a)(2) of the Social 
Security Amendments of 1967.
    This notice also describes the requirements for submitting 
proposals and applications for this demonstration project.

DATES: For consideration, letters of intent must be received by April 
17, 1998 and mailed to the following address: Lawrence E. Kucken, 
Health Care Financing Administration, Office of Health Standards and 
Quality, Mailstop C3-24-07, 7500 Security Boulevard, Baltimore, MD 
21244-1850.
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FOR FURTHER INFORMATION CONTACT: Lawrence E. Kucken, (410) 786-6694

SUPPLEMENTARY INFORMATION:

I. Background

A. Diabetes Mellitus in the Medicare Population

    Diabetes is one of the most prevalent and costly diseases in the 
Medicare population. The National Health Interview Survey reported a 
prevalence of 10.4 percent in individuals aged 65 and older, based on 
the American Diabetes Association (ADA) diagnostic criteria of fasting 
blood glucose greater than 140. Medical costs for patients with 
diabetes are two to five times higher than costs for patients without 
diabetes. Cardiovascular disease, stroke, renal disease, and amputation 
occur more frequently in the elderly patient with diabetes than in 
those without diabetes.
    A significant percentage of the morbidity associated with diabetes 
can be reduced or delayed in the Medicare population by appropriate 
diagnosis, preventive strategies, and management. Appropriate foot 
care, eye examinations and treatment of retinopathy, and other 
interventions on the part of the health care team, and involvement of 
the patient in his or her own self-care, such as intense blood glucose 
monitoring for patients on insulin have been shown to significantly 
reduce poor outcomes associated with diabetes.

B. Current HCFA Initiatives in Medicare Diabetes Treatment

    We have undertaken several major initiatives aimed at improving 
quality of life, decreasing morbidity and mortality, and providing the 
most appropriate, cost-effective care for Medicare beneficiaries with 
diabetes. Peer Review Organizations in each State have been charged 
with identification of quality of care issues in their State and

[[Page 13261]]

development of partnerships with hospitals and physicians to improve 
care for persons with diabetes. Projects are underway in all 50 states 
and the District of Columbia. In addition, we have coordinated and 
financed a partnership among key users and developers of performance 
measurement techniques to identify components of quality care for 
persons with diabetes and to develop a set of performance measures to 
assess and improve the care provided to these individuals across all 
health care settings.

C. Development of the Telemedicine Network Demonstration

    In October 1996, we initiated a 3-year, rural outreach 
demonstration of Medicare payment for telemedicine services. The 
demonstration focuses primarily on medical consultations between a 
primary care physician with a patient located at a remote rural site 
(spoke) and a medical specialist (consultant) located at a medical 
center facility (hub). Through this demonstration, we are addressing 
concerns that certain populations, primarily persons in rural or inner-
city areas, have limited access to health care specialists, and that 
recent advances in telecommunications technology can provide low cost 
access to medical specialists.
    The demonstration is designed to examine alternative payment 
methods, including separate payments to providers at each end of the 
telecommunication network, as well as a single ``bundled payment'' to 
cover services of both providers. Provider payments are based on 
predetermined amounts associated with CPT-4 evaluation and management 
codes contained in the Medicare physician fee schedule. In the case of 
the bundled payment option scheduled to begin during the third year of 
the demonstration, sites will determine the relative payment amounts 
received by the consulting specialists and the referring primary care 
physicians. Coincident with the implementation of the bundled payment 
approach, we will negotiate with demonstration participants to develop 
a telemedicine facility fee structure based on telemedicine cost 
centers and billing data accumulated during the demonstration. These 
negotiations will recognize the principle of efficient provider 
pricing, reflecting the optimal use of telemedicine resources and 
prudent buying.
    Through this demonstration, we will obtain information about the 
utilization and costs of telemedicine services, as well as the general 
characteristics and practice patterns of individual telemedicine 
programs. Ultimately, the demonstration should provide insight and 
information to help us determine whether telemedicine coverage is 
warranted and, if so, how to implement cost-effective Medicare 
coverage.

II. Provisions of This Notice

A. Purpose

    The purpose of this demonstration is to determine and evaluate the 
advantage of informatics and telemedicine for improving access to 
needed services, reducing the cost of such services, and improving the 
quality of life for affected Medicare beneficiaries. In this notice, 
``medical informatics'' means the storage, retrieval, and use of 
biomedical and related information for problemsolving and 
decisionmaking through computing and communications technologies, and 
``telemedicine'' means the use of telecommunications technologies for 
diagnostic, monitoring and medical education purposes.
    We are soliciting innovative proposals that will use medical 
informatics, including telemedicine, to improve primary care for 
Medicare beneficiaries who live in medically underserved rural and 
inner-city areas and who suffer from diabetes. Proposals should 
describe existing protocols for the application or demonstration of 
telecommunications or informatics, that, at a minimum, have been pilot-
tested by the applicant, thus precluding the need for long 
developmental timeframes.
    Those protocols that have been developed for the general population 
must be modified, as necessary, to meet the special needs of the 
Medicare elderly, disabled, and end-stage renal disease populations, 
and should be replicable for the general Medicare underserved 
population. They should address developmental issues through 
descriptions of end products, for example, a curriculum to train health 
care professionals, and related strategies and workplans. They should 
also contain available cost effectiveness data related to the described 
protocols and developmental components.
    Proposals must specifically address the following issues:
     The application of telecommunications for the purpose of 
providing Medicare beneficiaries diagnosed with diabetes, access to, 
and compliance with, appropriate care guidelines;
     The development of a curriculum to train health care 
professionals in the use of medical informatics and telecommunications;
     The demonstration of the application of advanced 
technologies, such as video-conferencing from a patient's home, remote 
monitoring of a patient's medical condition, interventional 
informatics, and the application of individualized, automated care 
guidelines, to assist primary care providers in assisting patients with 
diabetes in a home setting;
     The application of medical informatics to residents with 
limited English language skills;
     The development of standards in the application of 
telemedicine and medical informatics; and
     The development of a model for the cost effective delivery 
of primary and related care both in a managed care and fee-for-service 
environment.

B. Minimal Qualifications of Health Care Providers

    We are interested in proposals from eligible health care provider 
telemedicine networks. An eligible health care provider network must be 
a consortium that is comprised of:
     At least one tertiary care hospital, but no more than 2 
such hospitals;
     At least one medical school;
     No more than four facilities in rural or urban areas; and
     At least one regional telecommunications provider.
    The consortium must be located in an area with a high concentration 
of medical schools and tertiary care facilities in the United States 
and have appropriate arrangements (within or outside the consortium) 
with such schools and facilities, universities, and telecommunications 
providers, in order to conduct the project. We interpret ``minimal 
concentration'' as an area with at least three medical schools and 
three tertiary care facilities, physically located within a recognized 
area, such as a Standard Metropolitan Statistical Area, county or city. 
Additionally, eligible applicants must guarantee that they will be 
responsible for payment of all costs of the project that are not paid 
by Federal funds and that the maximum amount of Federal funds to be 
made to the consortium shall not exceed the limitation specified below 
under ``payment provisions.''

C. Payment Provisions

    Under this demonstration, services related to the treatment or 
management of (including prevention of complications from) diabetes for 
Medicare beneficiaries furnished under the project shall be considered 
to be services covered under Part B of Title XVIII of the Social 
Security Act. Subject to the limitations described below,

[[Page 13262]]

payment for these services will be made at a rate of 50 percent of the 
costs that are reasonable and necessary and related to the provision of 
such services.
    Costs that may be included under these payments are as follows:
     Acquisition of telemedicine equipment for use in patients' 
homes (but only for patients located in medically undeserved areas);
     Curriculum development and training of health 
professionals in medical informatics and telemedicine;
     Payment of telecommunications costs (including salaries 
and maintenance of equipment), including telecommunications between 
patients' homes and the eligible network and between the network and 
other entities in the consortium; and
     Payments to practitioners and providers under the Medicare 
programs.
    The following costs are not covered or payable under this 
demonstration:
     The purchase or installation of transmission equipment 
(other than such used by health professionals to deliver medical 
informatics services under the project);
     The establishment or operation of a telecommunications 
common carrier network; or
     The establishment, acquisition, or building of real 
property, except for minor renovations related to the installation of 
reimbursable equipment costs.

D. Limitation

    The total amount of payments that may be made for this project will 
not exceed $30,000,000 for the 4-year period of the demonstration.

E. Limitation on Cost Sharing

    The project may not impose cost sharing on a Medicare beneficiary 
for the receipt of services under the project in excess of 20 percent 
of the costs that are reasonable and related to the provision of such 
services.

F. Evaluation

    Proposals submitted for this demonstration must contain provisions 
for an independent evaluation of the cost effectiveness of the services 
provided. The evaluation must be performed by an independent contractor 
competitively chosen according to bidding procedures approved by the 
our project officer. Proposals should address the elements to be 
incorporated into a request for proposal (RFP) to be used in the 
procurement of an evaluation contractor.

G. Length of Demonstration

    This demonstration project will cover a period of 4 years.

III. Application Procedures

    The application procedure is two-step process involving submission 
of letters of intent and formal proposals.

A. Step 1--Letters of Intent

    A potential applicant is required to submit letters of intent 
containing brief descriptions of the applicant's ability to meet each 
of the provisions of this notice, including the following specific 
items:
     Protocols and plans related to the purpose of the project 
(Section II);
     Work plans describing the methods to be used in completing 
the project within the prescribed period of performance; minimal 
organizational characteristics and location requirements (Section II. 
B); and cost and payment guarantees (Section II. C);
     Descriptions of the use of Federal funds received under 
the project and the source and amount of non-Federal funds used in the 
project (Sections II. D and E);
     An evaluation strategy and design (Section II. F); and
     Length of the demonstration (Section II. G).
    In addition, letters of intent should indicate acceptance of the 
payment provisions set forth in this notice, should not exceed six 
single spaced pages in length (including attachments), and must be 
signed by an appropriate official of the proposing entity.
    For consideration, letters of intent must be received within 30 
days from the publication of this notice and mailed to the following 
address:
Lawrence E. Kucken, Mailstop C3-24-07, Health Care Financing 
Administration, Office of Health Standards and Quality, 7500 Security 
Boulevard, Baltimore, Maryland 21244-1850

    Letters of intent will be screened against criteria based on 
provisions of this notice and period of performance requirements. 
Application kits, in turn, will be sent promptly to applicants whose 
letters of intent meet each these criteria.

B. Step 2--Formal Proposals

    Detailed instructions for the preparation of formal proposals will 
be contained in application kits and will address criteria for 
screening proposals, evaluation criteria and associated weights, and 
procedural considerations. We may consider verbal presentations in lieu 
of written proposals. In addition, application kits will contain 
guidelines to be used by the applicant for preparation of the 
demonstration proposal cost estimate. This cost estimate will be used 
by the OMB in the final approval of Medicare waiver status for the 
project.
    In accordance with the provisions of Executive Order 12866, this 
notice was not reviewed by the Office of Management and Budget.

    Authority: Sec. 1875 of the Social Security Act (42 U.S.C. 
139511); sections 402(a)(1)(B) and (a)(2) of the Social Security 
Amendments of 1967, as amended (42 U.S.C. 1395b-1(a)(1)(B) and 
(a)(2)); and Section 4207(a), (b), (c), and (d) of the Balanced 
Budget Act of 1997 (P.L. 105-33) (Catalog of Federal Domestic 
Assistance Program No 93.779 Health Financing Demonstrations, and 
Experiments)

    Dated: February 25, 1998.
Nancy Ann-Min DeParle,
Administrator, Health Care Financing Administration.
    Dated: March 10, 1998.
Donna E. Shalala,
Secretary.
[FR Doc. 98-6940 Filed 3-17-98; 8:45 am]
BILLING CODE 4120-01-P