[Federal Register Volume 63, Number 112 (Thursday, June 11, 1998)]
[Notices]
[Pages 32015-32019]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-15509]



[[Page 32015]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration
[HCFA-1104-N]
RIN 0938-AI26


Medicare Program; Notice for the Solicitation for Proposals for a 
Case Management Demonstration Project Focused on Congestive Heart 
Failure or Diabetes Mellitus

AGENCY: Health Care Financing Administration (HCFA), HHS.

ACTION: Notice.

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SUMMARY: This notice announces HCFA's solicitation for proposals for a 
demonstration project that will use existing, innovative case 
management interventions to improve clinical outcomes and quality of 
life for beneficiaries with congestive heart failure or diabetes 
mellitus who are in the Medicare fee-for-service program under Parts A 
and B, and that will provide for Medicare program savings through 
efficient provision and utilization of services and the prevention of 
avoidable, costly medical complications (or consequences) that may 
require hospitalizations. HCFA requires that the proposed savings, at a 
minimum, be sufficient to cover the payments made for the case 
management services. This notice contains critical information for 
interested applicants, including the instructions for timely submission 
of the required letter of intent and the proposal. Interested 
applicants may propose projects focusing on case management of 
congestive heart failure, diabetes mellitus, or both.
    HCFA intends to select a maximum of two proposed projects for this 
demonstration. The selected proposals will be those that best meet the 
evaluation criteria. HCFA intends to operate the demonstration 
project(s) for three years from implementation.

DATES: Letters of intent must be received by the HCFA project officer 
on or before July 13, 1998.
    Proposals (original and 10 copies), each with a copy of the timely 
letter of intent, must be received by the HCFA project officer on or 
before September 9, 1998.

ADDRESSES: Mail letters of intent and proposals to: Department of 
Health and Human Services, Health Care Financing Administration, 
Attention: Catherine Jansto, Project Officer, Center for Health Plans 
and Providers, Mail Stop: C4-17-27, 7500 Security Boulevard, Baltimore, 
Maryland 21244-1850.
    Letters of intent may also be submitted electronically to the 
following E-mail address: [email protected]. Electronically submitted 
letters of intent must be submitted to the referenced E-mail address in 
order to be considered. The complete letter of intent must be 
incorporated in the E-mail messages because we may not be able to 
access attachments. Proposals may not be submitted electronically.
    Only proposals that are received timely, and for which a timely 
letter of intent is received, will be reviewed and considered by the 
technical review panel.

FOR FURTHER INFORMATION CONTACT: Catherine Jansto at (410) 786-7762, or 
CJ[email protected].

SUPPLEMENTARY INFORMATION:

I. Background

A. Problem

    Historically, a small proportion of Medicare beneficiaries have 
accounted for a major proportion of Medicare expenditures. For example, 
in 1993 roughly 10 percent of the Medicare beneficiaries accounted for 
70 percent of the $129.4 billion in total Medicare expenditures. 
Hospital payments accounted for a major proportion of this expense.
    We believe Medicare beneficiaries with congestive heart failure and 
diabetes mellitus are a population for whom innovations in care through 
effective case management interventions may improve clinical outcomes 
and the quality of life for the following reasons:
     Research suggests that some complications related to 
congestive heart failure and diabetes mellitus are avoidable; and
     Control of these diseases requires a complex treatment 
regimen.
    Research also suggests that individuals with congestive heart 
failure or diabetes mellitus may suffer fewer adverse health outcomes 
and that additional more costly care might be avoided if these patients 
adhere to treatment regimens or receive adequate post-hospital care. 
Although neither congestive heart failure nor diabetes mellitus can be 
cured, careful adherence to recommended lifestyle changes and 
medication regimens can control symptoms, reduce complications, and 
improve the quality of life. These lifestyle changes and medication 
regimens may include restrictive diets, weight loss, exercise programs, 
careful self-monitoring of symptoms, and multiple medications that must 
be taken as prescribed, monitored with blood tests, and adjusted if 
indicated. However, both recommended lifestyle changes and medication 
regimens can be difficult for patients to understand and maintain. 
Indeed, among individuals with either congestive heart failure or 
diabetes mellitus, nonadherence to treatment regimens has been 
identified as a major contributor to exacerbations of symptoms and to 
preventable hospitalizations. The Agency for Health Care Policy and 
Research's 1994 clinical practice guidelines for congestive heart 
failure recommend, as a key element of comprehensive care, that ``after 
a diagnosis of heart failure * * * all patients should be counseled 
regarding the nature of heart failure, drug regimens, dietary 
restrictions, symptoms of worsening heart failure, what to do if these 
symptoms occur, and prognosis.'' Similarly, patients diagnosed with 
diabetes mellitus also should be counseled regarding appropriate 
measures for management of their disease. Recognizing the importance of 
patient education as a component of a comprehensive plan of care for 
diabetics, section 4105 of the Balanced Budget Act of 1997 (Pub. L. 
105-33, enacted on August 5, 1997) expanded coverage for diabetes 
outpatient self-management training. Thus, at a minimum, individualized 
patient education and counseling to improve understanding of, and 
adherence to, complex self-care regimens should be basic features of 
case management models for patients with congestive heart failure or 
diabetes mellitus. However, models may be more complex, including 
frequent monitoring of patients' signs and symptoms, adherence to the 
prescribed treatment plan, as well as other sophisticated 
interventions.
    While case management interventions may not result in the same 
level of measurable improvements in all beneficiaries with congestive 
heart failure or diabetes mellitus, properly identified patients have 
the potential to benefit significantly. Beneficiaries who are likely to 
experience avoidable hospitalizations are prime candidates for case 
management interventions that will identify medical problems early, 
improve treatment regimen compliance, and coordinate post-hospital 
care. The expectation is that a case management intervention that 
achieves these improvements will reduce overall costs substantially by 
reducing the frequency of hospital admissions and other costly aspects 
of treatment. The case management intervention is expected to maintain 
or improve the quality of care.
    Based in part on the potential for chronic care case management to

[[Page 32016]]

improve beneficiary health status and to lower costs through reduced 
hospitalizations and disease complications, HCFA sponsored a series of 
case management demonstrations. These demonstrations, mandated by 
section 4207(g) of the Omnibus Budget Reconciliation Act of 1990 (OBRA 
'90), Pub. L. 101-508, included case management approaches aimed at a 
number of chronic illnesses, including congestive heart failure. 
Specifically, the legislation called for demonstrations to ``provide 
case management services to Medicare beneficiaries with selected 
catastrophic illnesses, particularly those with high costs of health 
care services.'' The resulting demonstrations were implemented in three 
sites, AdminaStar Solutions, Iowa Foundation for Medical Care (IFMC), 
and Providence Hospital. The projects began operation in October 1993 
and continued through November 1995.
    Although all three demonstration sites generally focused on 
increased education regarding proper patient monitoring and management 
of the specified chronic condition, the targeted conditions and case 
management protocols differed in each site. The AdminaStar site focused 
exclusively on congestive heart failure, the IFMC project focused on 
congestive heart failure and chronic obstructive pulmonary disease, and 
the Providence Hospital site case management intervention applied to a 
wider range of chronic conditions. None of the projects were aimed 
specifically at diabetes case management. Rather, these projects varied 
in the extent to which management of diabetes as a co-morbid condition 
was addressed. At the start of the project, all three sites anticipated 
sharply reduced hospitalizations and lower medical costs compared to 
the beneficiary control groups.

B. Evaluation and Findings

    The legislation required a formal evaluation of the project. The 
evaluation (Costs and Consequences of Case Management for Medicare 
Beneficiaries, NTIS: PB98-103328), performed by Mathematica Policy 
Research, Inc., found the following:
     The three demonstration projects successfully identified 
and enrolled populations of Medicare beneficiaries who were likely to 
incur much higher than average Medicare reimbursements during the 
demonstration period. In all three sites, beneficiaries with chronic 
illnesses who were identified for the project used far greater 
resources than those in the general Medicare population.
     Each project encountered unexpectedly low levels of 
enthusiasm for the demonstration from beneficiaries and their 
physicians. For all three sites, recruiting volunteer beneficiaries was 
more difficult than anticipated, and refusal rates were sometimes as 
high as 90 percent. Although the project teams engaged in outreach 
activities, participation by and coordination with beneficiaries' 
physicians was difficult.
     The projects failed to improve client self-care or health, 
or to reduce Medicare spending, despite engendering high levels of 
satisfaction among the high cost, chronically ill beneficiaries who 
eventually participated. Comparisons of health status, functional 
status, and expenditures between the control and the intervention 
groups showed no improvements due to the case management intervention.
    The evaluation report suggested the following primary reasons for 
the lack of outcome and cost impacts found in these case management 
demonstrations:
     The clients' physicians were not involved in the 
interventions. The evaluation study found that case managers received 
little or no cooperation from clients' physicians. Despite outreach by 
the case managers, most physicians provided little interaction with the 
case managers, and few opportunities for constructive rapport 
developed. The case managers at all three projects indicated that they 
would have been more effective if their activities had been coordinated 
with the clients' physicians' advice, and if these physicians had 
generally supported the case management efforts.
     The projects did not have sufficiently focused 
interventions. Even at the two demonstration sites that focused 
specifically on congestive heart failure, little guidance was built 
into the interventions regarding the types of activities to be 
emphasized, how often to contact and monitor clients at different 
levels of severity, or the content of the education provided.
     The projects lacked staff with sufficient case management 
expertise and the specific clinical knowledge to generate the desired 
reductions in hospital use. The case managers in these projects, 
virtually all of whom were nurses, received only a few days of initial 
training to review project procedures and clinical topics; however, 
some completed additional in-service training or attended seminars. 
This limited training may have been an inadequate substitute for more 
comprehensive experience or background in the specific target disease 
and in community-based care or case management.
     The projects had no financial incentives to reduce 
Medicare spending. In these projects, the case management intervention 
focused on providing education or arranging services, but had no target 
outcomes (for example, holding hospital readmission rates at or below a 
pre-determined level) upon which manager reimbursement was based. In 
addition, since the clients' physicians played almost no role in these 
interventions, there was no incentive for the providers of care to 
render services efficiently. If payment either for the case management 
services, or to the providers of care had been based in part on 
measurable outcome targets, the projects' personnel might have 
monitored patient outcomes more closely and focused efforts more 
consistently on activities that would increase the likelihood of 
improving outcomes or reducing costs.

C. Issues To Address in Future Studies

    The results of this evaluation indicate that the following issues 
need to be addressed in any future work related to chronic illness case 
management:
     The importance of the involvement of the client's 
physicians;
     The need for focused interventions based upon the etiology 
of the disease, severity of the condition, co-morbid conditions, 
psychosocial factors, and other factors specific to the Medicare 
population;
     The need for staff specifically trained in case 
management; and
     The necessity for some incentives, particularly financial 
incentives, to control costs and improve outcomes. In addition, we 
expect that future studies will benefit from testing whether the added 
costs of modifying and intensifying case management interventions to 
address limitations identified by the prior demonstrations can be 
implemented in a fiscally responsible manner (both in terms of costs 
for the case management services and of the overall financing 
strategy). Specifically, we recommend that future studies clarify 
whether savings from reduced medical costs would be sufficient to cover 
the case management costs in the Medicare fee-for-service environment 
(where beneficiaries are not bound to primary care physicians for 
service approvals). The Mathematica evaluation estimated that the costs 
associated with providing the relatively generic case management 
interventions tested in the AdminaStar congestive heart failure 
demonstration reached about 14 percent of average client medical 
expenditures. Based on the most successful trial to date, if an 
estimate of the possible savings from

[[Page 32017]]

focused congestive heart failure interventions is about 23 percent of 
client medical expenditures, then the potential net savings could be up 
to 9 percent (23 percent minus 14 percent). Whether the cost of more 
focused case management interventions would be less than the savings 
provided by the interventions, and whether these interventions could 
lead to measurable improvement in beneficiary outcomes are unknown.
    Another consideration for future studies is that HCFA's experience 
with case management demonstration projects has established, as a key 
element for success, the need for creative incentive arrangements that 
promote interdisciplinary collaboration to affect appropriate provision 
and substitution of services. In essence, development of a financing 
strategy that supports the goals of a Medicare fee-for-service case 
management demonstration is as important to the potential success of 
the project as is the design of the delivery model and specific 
interventions. However, given the nature of the Medicare fee-for-
service program, HCFA recognizes that the feasibility of implementing a 
case management delivery model in the program may be complicated. 
Particularly challenging is that Medicare fee-for-service beneficiaries 
are able to seek services from any qualified provider (there are no 
lock-in provisions), the program does not offer an oral medication 
benefit, and that separate payment for non-face-to-face interventions 
is typically not allowed. Further, because Medicare fee-for-service 
providers receive payment for discrete units of service, physicians and 
other providers face direct incentives to increase volume and intensity 
of their services and to avoid the marginal costs of providing services 
that are not directly reimbursed.
    In addition, there are other system-wide challenges to case 
management implementation in a fee-for-service environment. For 
example, a large proportion of Medicare beneficiaries have supplemental 
insurance that typically covers co-payments and deductibles, thereby 
leaving them little incentive to use the health care delivery system 
efficiently.
    Despite these challenges, in the Medicare fee-for-service program, 
and in its payment demonstrations, there are numerous examples of 
alternative financing methodologies that have been developed and 
implemented successfully (such as the hospital prospective payment 
system). However, these experiences have indicated that careful 
attention to the efficient pricing of services, incentive and 
administrative arrangements, and the interaction between the provision 
of discrete services and the broader service delivery system is 
required. Therefore, a successful demonstration project to implement a 
case management delivery model in the Medicare fee-for-service program 
must efficiently provide and oversee well-integrated case management 
services, use a fiscally responsible financing strategy that involves 
appropriate, carefully crafted incentive arrangements, and address the 
challenges presented by the nature of the fee-for-service program.

D. Demonstration Authority

    Our authority to engage in this proposed demonstration project is 
based upon section 402 of the Social Security Amendments of 1967, as 
amended (42 U.S.C. 1395b-1). Specifically, section 402(a)(1) of the 
Social Security Amendments of 1967, as amended (42 U.S.C. 1395b-1), 
authorizes the Secretary ``either directly or through grants to public 
or nonprofit private agencies, institutions and organizations or 
contracts with public or private agencies, institutions, and 
organizations, to develop and engage in experiments and demonstration 
projects'' for one of eleven specified purposes. Of these specific 
purposes, we believe that the most appropriate category for the 
demonstration announced in this notice is section 402(a)(1)(B). 
Specifically, the purpose given in section 402(a)(1)(B) is:

to determine whether payments for services other than those for 
which payment may be made under such programs (and which are 
incidental to services for which payment may be made under such 
programs) would, in the judgement of the Secretary, result in more 
economical provision and more effective utilization of [Medicare 
covered services] where such services are furnished by organizations 
and institutions which have the capability of providing--
    (i) comprehensive health care services,
    (ii) mental health care services (as defined by section 2691(c) 
of [title 42],
    (iii) ambulatory health care services (including surgical 
services provided on an outpatient basis), or
    (iv) institutional services which may substitute, at lower cost, 
for hospital care.

Thus, for consideration, proposals must provide evidence that the 
applicant and the proposed project fall within the parameters of the 
demonstration authority of section 402(a)(1)(B).

II. Provisions of This Notice

A. Purpose

    This notice announces HCFA's solicitation for proposals for 
demonstration projects that will use existing, innovative case 
management interventions to improve clinical outcomes and quality of 
life for beneficiaries diagnosed with congestive heart failure or 
diabetes mellitus who are in the Medicare fee-for-service program under 
Parts A and B, and that will provide savings to the Medicare program at 
least sufficient to cover the payment made for the case management 
services. These savings are to result from more efficient provision and 
utilization of services and the prevention of avoidable, costly medical 
complications. Under the demonstration, using a fiscally responsible 
payment methodology that, at a minimum, is budget neutral, HCFA will 
make payment for the proposed case management services. Thus, over the 
course of the project, the aggregate Medicare payment for the case 
management services may be no greater than the total expected program 
savings from the case management interventions.
    Applicants must propose an all-inclusive payment amount (for 
example, per service, case rate, monthly fee, per diem) for their 
proposed unit of case management services. No separate payment will be 
made for capital investments, administrative, implementation, 
operating, data collection, research, evaluation, or any other costs 
incurred by the demonstration selectee(s) in the provision of the 
proposed case management services. The selectee(s) will be required to 
cooperate in a formal evaluation of the demonstration. No additional 
funding will be provided for this cooperation.
    HCFA intends to award a maximum of two proposed projects that best 
meet the evaluation criteria, and plans to operate the demonstration 
project(s) for three years from implementation. The selected 
projects(s) will test congestive heart failure case management, 
diabetes case management, or both.

B. Requirements for Submissions

1. Innovative Proposals
    In this solicitation, HCFA seeks innovative proposals that test 
whether case management interventions improve clinical outcomes and 
quality of life for Medicare fee-for-service beneficiaries with 
congestive heart failure or diabetes mellitus, while providing savings 
to the Medicare program at least sufficient to cover the expenditures 
for these services. HCFA is interested in case management models that 
are specifically targeted to the Medicare population and that take into 
account

[[Page 32018]]

the beneficiaries' relative health status, age, and other factors, 
rather than the application of generic clinical case management 
delivery system models. Of particular importance is the fact that many 
Medicare beneficiaries have multiple medical conditions. Case 
management interventions that focus exclusively on one condition may 
fail to address the interaction of various disease states. While a 
diagnosis of congestive heart failure or diabetes mellitus is a basic 
condition for beneficiary participation in the demonstration, HCFA is 
interested in and will give preference to proposals that focus on 
beneficiaries most likely to benefit from case management interventions 
that take patient co-morbidities into account in the case management 
interventions provided.
    HCFA seeks to test existing case management delivery protocols and 
interventions that, at a minimum, have been pilot tested, thus, 
preventing the need for a long developmental time frame. Proposals must 
build upon lessons learned in HCFA's previous case management 
demonstrations and must address specifically the following issues in 
the context of the Medicare fee-for-service program under Parts A and 
B:
     Integration and involvement of the client's physicians in 
case management activities;
     Well-defined clinical case management delivery model 
protocols that focus on congestive heart failure or diabetes mellitus, 
and that demonstrate an individualized approach to patient education, 
counseling, and other services;
     Focused training and experience of the case management 
staff; and
     Budget neutral payment methodology and incentive 
arrangements that are administratively feasible, and that support 
measurable outcome targets, such as reduced medical spending and 
improved beneficiary clinical outcomes or health status.
    Proposals must show clearly that the demonstration design 
incorporates the four issues described above. In addition, applicants 
must provide a scientific, clinically-based rationale for their design. 
We recommend that, at a minimum, the applicant include a detailed 
discussion of the following project elements:
     Process for a beneficiary participant's identification, 
selection, and discharge from the program;
     Definition and scope of services to be provided;
     Process for ensuring adequate post-hospital care and flow 
of patient information from setting to setting;
     Process for payment allocation across the proposed 
providers;
     Details of any risk or risk sharing arrangements;
     Existing quality improvement processes and study results;
     Description of the pertinent research questions related to 
cost and health outcomes;
     Proposed data elements that will be collected to support 
the measurement of these outcomes;
     Data system capabilities;
     Qualifications of staff and management;
     Scope of the project, including the number of 
beneficiaries, number and types of providers, location, and period of 
performance; and
     Implementation plan.
    Proposals for models that rely on medication management regimens 
must address issues related to the cost of the medications, 
beneficiaries' ability to afford the medications, and implications for 
the applicant's protocols, and other pertinent information. In 
addition, applicants must provide clear evidence of actual net cost 
savings and outcomes achieved during prior pilot testing or 
implementation. Preference will be given to proposals that include the 
following:
     Evidence of cost effective clinical case management 
delivery model protocols, specific to the Medicare population;
     Clinically-based approach to identify patients with 
congestive heart failure or diabetes mellitus who are most likely to 
benefit from case management;
     Use of focused interventions and appropriateness 
screening, based upon the etiology of the disease, severity of the 
condition, and other relevant factors; and
     Protocols that have been tested specifically with a 
Medicare population diagnosed with congestive heart failure or diabetes 
mellitus.
2. Experimental Design and Implementation Plan
    Many of the design elements of the proposed demonstration project 
will depend on the protocol offered by the applicant. At a minimum, for 
consideration, the proposed demonstration project must provide for 
voluntary participation for Medicare beneficiaries, a randomized 
experimental design, and budget neutrality (that is, no expected 
increase in Medicare program costs).
    Proposals that include existing case management delivery protocols 
and interventions that have never been implemented on a Medicare 
population must detail the modifications to the protocols for 
application to the Medicare fee-for-service population. Proposals must 
include a detailed implementation strategy and plan, and provide 
evidence of how the plan supports the project's goals. In addition, 
proposals must include evidence of the feasibility of implementing the 
proposed payment model in a fee-for-service environment.
3. Replication of Models
    HCFA's purpose in this solicitation is to identify clinical case 
management delivery system models for congestive heart failure or 
diabetes mellitus that, if evaluated as successful, could be replicated 
throughout the Medicare fee-for-service program under Parts A and B. 
Accordingly, the protocols tested in this demonstration cannot be 
proprietary in nature to the extent that the application of the 
intervention beyond the demonstration will require HCFA to contract 
only with the demonstration selectee.
4. Eligible Organizations and General Policy Considerations
    HCFA is interested in proposals from a variety of qualified 
organizations. However, to be considered responsive, the applicant must 
satisfy all of the requirements described in sections I.D., II.A., and 
II.B. of this notice. Organizations that believe they meet these 
requirements may submit a letter of intent to submit a complete 
proposal.
5. Letter of Intent
    A signed letter of intent must be received by the HCFA project 
officer as indicated in the DATES and ADDRESSES sections of this 
notice. The letter of intent must indicate the applicant's intention to 
submit a completed proposal for congestive heart failure case 
management, diabetes case management, or both. By submitting a letter 
of intent, the applicant is not obligated to submit a proposal. The 
letter must be signed by a duly authorized official and include the 
applicant's name, address, contact person, business telephone number, 
and all existing HCFA provider number(s) and an Employer Identification 
Number (EIN) for basic identification purposes.
    For each timely submitted letter of intent, the HCFA project 
officer, or designee, will contact the specified representative 
(contact person) to discuss the application process. Organizations that 
submit a timely letter of intent may submit a completed proposal and 10 
copies (along with a copy of the previously timely submitted letter of 
intent) to the HCFA project

[[Page 32019]]

officer as indicated in the DATES and ADDRESSES sections of this 
notice. Applicants submitting proposals for both congestive heart 
failure case management and diabetes case management should submit 2 
completed proposals (one for congestive heart failure and one for 
diabetes) along with 10 copies of each proposal and a copy of the 
previously timely submitted letter of intent.
    This notice is not covered by the Paperwork Reduction Act of 1995 
and accordingly will not be reviewed by the Office of Management and 
Budget.

    Authority: Sections 402(a)(1) and 402(a)(1)(B) of the Social 
Security Amendments of 1967, as amended (42 U.S.C. 1395b-1).

(Catalog of Federal Domestic Assistance Program No. 93.779; Health 
Financing, Demonstrations, and Experiments)

    Dated: May 13, 1998.
Nancy-Ann Min DeParle,
Administrator, Health Care Financing Administration.
[FR Doc. 98-15509 Filed 6-10-98; 8:45 am]
BILLING CODE 4120-01-P