[Federal Register Volume 67, Number 36 (Friday, February 22, 2002)]
[Notices]
[Pages 8267-8270]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-4355]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-4030-N]


Medicare Program; Solicitation for Proposals for the 
Demonstration Project for Disease Management for Severely Chronically 
Ill Medicare Beneficiaries With Congestive Heart Failure, Diabetes, and 
Coronary Heart Disease

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Notice for solicitation of proposals.

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SUMMARY: This notice informs interested parties of an opportunity to 
apply for a cooperative agreement for the Medicare Disease Management 
Demonstration. This demonstration uses disease management interventions 
to (1) improve the quality of services furnished to specific 
beneficiaries, (2) introduce full prescription drug coverage to 
encourage compliance with medical instructions and requirements, and 
(3) manage expenditures under Parts A and B of the Medicare program. We 
are interested in testing models aimed at beneficiaries who have one or 
more chronic conditions that are related to high costs to the Medicare 
program, namely, congestive heart failure, diabetes, or coronary heart 
disease. We intend to use a competitive application process to select 
up to three existing disease management organizations to participate in 
this demonstration.
    Potentially qualified applicants are existing providers of disease 
management services applicable to the Medicare population specific to 
the three targeted chronic conditions.

DATES: Applications will be considered timely if we receive them on or 
before May 23, 2002.

ADDRESSES: Applications should be mailed to the following address: 
Department of Health and Human Services, Centers for Medicare & 
Medicaid Services, Attention: Tamara Jackson-Douglas, Project Officer, 
Center for Beneficiary Choices, Mail Stop: C4-17-27, 7500 Security 
Boulevard, Baltimore, Maryland 21244.
    Please refer to the file code CMS-4030-N on the application. 
Because of staffing and resource limitations, we cannot accept 
applications by facsimile (FAX) transmission. Applications postmarked 
after the closing date, or postmarked on or before the closing date but 
not received in time for panel review, will be considered late 
applications.

FOR FURTHER INFORMATION CONTACT: Tamara Jackson-Douglas at (410) 786-
9417, or by e-mail at [email protected].

SUPPLEMENTARY INFORMATION: Our Disease Management Demonstration website 
(www.hcfa.gov/research/dmdemo.htm) contains additional information 
about these demonstrations and specific submission requirements for 
applications.

I. Background

A. Statutory Requirements

    Section 121 of the Medicare, Medicaid, and State Child Health 
Insurance Program Benefits Improvement and Protection Act of 2000 
(BIPA) requires the Secretary of Health and Human Services (the 
Secretary) to conduct a demonstration project for the Medicare fee-for-
service population to demonstrate the impact on costs and health 
outcomes of applying disease management services, supplemented with 
coverage for prescription drugs, to specific Medicare beneficiaries 
with diagnosed, advanced-stage congestive heart failure, diabetes, or 
coronary heart disease. This demonstration project should result in a 
net reduction in aggregate Medicare expenditures. This project may 
include up to three organizations and cover up to 30,000 beneficiaries 
at a time. The project will last for 3 years.

B. Problem

    Historically, a small proportion of Medicare beneficiaries has 
accounted for a major proportion of Medicare expenditures. For example, 
in 1996, 12.1 percent of all Medicare enrollees accounted for 75.5 
percent ($126.1 billion) of all Medicare fee-for-service program 
payments. Many of these high-cost beneficiaries are chronically ill 
with certain common diagnoses, and most of the Medicare expenditures 
for their care are for repeated hospitalizations. During the next 30 
years, as the population ages, the number of individuals and estimated 
cost of care for high-cost beneficiaries is expected to grow 
dramatically.
    In the fee-for-service environment, health care for individuals 
with chronic illness has often been fragmented and poorly coordinated 
across multiple health care providers and multiple sites of care. 
Evidence-based practice guidelines have not always been followed, nor 
have patients always been taught how best to care for themselves. These 
shortcomings are particularly true for patients served under 
reimbursement systems in which providers lack incentives for 
controlling the frequency, mix, and intensity of services, and in which 
providers have limited accountability for the outcomes of care.
    The vast majority of disease management patients' issues center 
around a single disease or condition and fall into fundamental problems 
with their own behavior, access to appropriate prescription drugs, or 
the disease-specific care they receive. Patient behavior-based problems 
include poor medication compliance, lack of self-care skills, and lack 
of adherence to recommended lifestyle changes. Patients' general 
reluctance to make major adjustments to their ways of life tends to be 
reinforced when patients are unable to see the direct or immediate 
benefits resulting from these changes.
    Further compounding this problem for Medicare beneficiaries is the 
fact that Medicare generally does not cover outpatient prescription 
drugs. Beneficiaries wanting drug benefits have to purchase 
supplemental insurance, or join a Medicare+Choice plan if they are not 
already covered under an employer-sponsored retirement plan or a 
publicly-funded program, such as Medicaid or the Department of Veterans 
Affairs. Our research shows that, as of 1998, a majority (73 percent) 
of Medicare beneficiaries had some drug coverage at one point or 
another within a given year, and that fewer than half have had 
uninterrupted coverage for 2 consecutive years. Furthermore, questions 
remain regarding extent, quality, and comparability of coverage across 
different programs. Appropriate, effective pharmaceuticals are a key 
part of a comprehensive treatment program, and effective disease 
management must include access to appropriate medications.
    Provider-related problems include failure to prescribe the most 
effective medications, poor coordination of care across providers and 
settings, lack of adherence to disease-specific guidelines based on 
evidence or expert panels, and inadequate follow-up and monitoring.

[[Page 8268]]

C. Disease Management

    The level of interest in, and knowledge about, disease management 
is growing dramatically. The Institute of Medicine's report, entitled 
Crossing the Quality Chasm: A New Health System for the 21st Century 
(published by Health Care Services, National Academy Press in 2001), 
highlights the challenge of managing chronic conditions within a system 
that was designed to treat acute illness. Major national organizations, 
such as the National Disease Management Association (NDMA), have been 
formed to advance the practice of disease management, and the National 
Committee for Quality Assurance (NCQA) has just released draft 
standards for disease management programs for public comment.
    Early efforts at disease management occurred mainly in managed care 
settings, because the plan and the providers had clear incentives to 
manage care, and the patients were enrolled and ``locked into'' a 
delivery system. More recently, a variety of health care organizations, 
including physician group practices, private insurers, commercial 
firms, and academic medical centers, have developed programs designed 
to address the challenges inherent in managing chronic illnesses within 
the context of a fee-for-service system.
    The NDMA, NCQA, and other organizations, such as the National 
Pharmaceutical Council, have put forward definitions of disease 
management that contain certain common elements. These definitions view 
disease management as an approach to delivering health care to persons 
with chronic illnesses that aims to improve patient outcomes while 
containing health care costs. These definitions generally focus on 
persons whose primary health problem is a specific disease, although 
certain co-morbid conditions are usually addressed as well. Patients 
with a similar level of severity of the disease tend to face similar 
problems and therefore receive similar treatment plans. These disease 
management interventions tend to be highly structured and emphasize the 
use of standard protocols and clinical guidelines.
    There are certain common features in all of these definitions:
     Identification of patients and matching the intervention 
with need.
     Use of evidence-based practice guidelines.
     Supporting adherence to the plan of care.
     Supporting adherence to evidence-based medical practice 
guidelines by providing medical treatment guidelines to physicians and 
other providers, reporting on the patient's progress in compliance with 
protocols, and providing support services to assist the physician in 
monitoring the patient.
     Services designed to enhance patient self-management and 
adherence to his or her treatment plan. Examples of those services are 
patient education, monitoring and reminders, and behavior modification 
programs aimed at encouraging lifestyle changes.
     Routine reporting/feedback loop (may include communication 
with patient, physician, health plan and ancillary providers, and 
practice profiling).
     Communication and collaboration among providers and 
between the patient and his or her providers. Related services include 
team conferences, collaborative practice patterns, and routine 
reporting and feedback loops. In addition, care managers are often used 
to relay communication and to coordinate care across providers and by 
face-to-face encounters with chronically ill patients. Programs that 
address co-morbid conditions extend their communication efforts to 
include all of the patient's providers and the entire spectrum of care.
     Collection and analysis of process and outcomes measures.
    In addition to these standard features, programs may include use of 
information technology, for example, specialized software, data 
registries, automated decision support tools, and call-back systems. 
Although disease management services usually do not include actual 
treatment of the patient's condition, many disease management programs 
augment the services provided in the traditional fee-for-service system 
by adding such services as comprehensive geriatric assessment, social 
services, preventive services, transportation, including prevention 
services and necessary prescription drugs and outpatient medications. 
The interventions provided go beyond those services generally covered 
under the Medicare fee-for-service program.
    In our recent study (Best Practices in Coordinated Care, Chen et 
al., March 22, 2000) aimed at investigating and benchmarking case 
management and disease management efforts, we suggested that case and 
disease management organizations provide services aimed at addressing 
one or more of the following goals:
     Improving patient self-care through such means as patient 
education, monitoring, and communication.
     Improving physician performance through feedback and/or 
reports on the patient's progress in compliance with protocols.
     Improving communication and coordination of services 
between patient, physician, disease management organization, and other 
providers.
     Improving access to services, including prevention 
services and necessary prescription drugs.
    Programs vary in their relative focus on these areas. Some disease 
management programs may emphasize improving physician use of 
recommended clinical guidelines; others may focus on providing case 
managers to support and educate the patient and enhance communication; 
and still others may emphasize access to additional services.

D. Other CMS Demonstrations for Management of Chronic Diseases

    In the past, we have conducted several demonstrations for case 
management of chronic illnesses, including the National Long-Term Care 
Demonstration (Final Report by Kemper et al., May 1966. NTIS Accession 
No. PB86-229119/AS) and the Medicare Alzheimer's Disease Demonstration 
Evaluation (Final Report October 1998). The evaluations of these 
demonstrations found that none of the demonstrations provided 
sufficient savings to cover the additional costs of case management.
    There are several possible reasons for the lack of positive 
results. First, the most appropriate individuals were not always 
targeted and enrolled in the demonstration. In many cases, the sites 
enrolled patients with less severe, and therefore less costly, 
conditions, making it more difficult to achieve cost savings by 
avoiding normal utilization patterns of acute or long-term medical 
care. (See the Disease Management Demonstration website address at the 
beginning of the SUPPLEMENTARY INFORMATION section for additional 
information.)
    We are currently conducting other demonstrations that test either 
case or disease management, both of which are designed for a smaller 
number of participants than Medicare's Disease Management Demonstration 
project. In one ongoing demonstration, Lovelace Health Systems, in 
Albuquerque, New Mexico, was chosen to operate demonstrations of 
intensive case management services for high-risk patients with 
congestive heart failure and diabetes to improve the clinical outcomes, 
quality of life, and satisfaction with services. The other is a larger 
scale demonstration authorized by section 4016 of the Balanced Budget 
Act of 1997 (BBA) to evaluate methods, for example, case management and 
disease management, that improve the

[[Page 8269]]

quality of care for beneficiaries with a chronic illness. The 
``Coordinated Care'' demonstration was designed based on the findings 
of a review of best practices for coordinating care in the private 
sector. (See the Disease Management Demonstration website address at 
the beginning of the SUPPLEMENTARY INFORMATION section for additional 
information.)

E. This Disease Management Demonstration

    In developing this demonstration, we reviewed the work and 
recommendations of organizations such as the NDMA and NCQA, and 
examined our prior and current experience with similar demonstrations.
    This demonstration differs significantly from its predecessors in 
that the legislation stipulates that the demonstration must cover all 
prescription drugs, even those drugs not related to the beneficiary's 
targeted condition. The legislation also requires each demonstration 
organization to accept risk or have another entity agree to accept risk 
if certain Medicare budget provisions are not met, specifically if the 
demonstration does not reduce aggregate Medicare program expenditures. 
In addition, this solicitation highlights the need to target the severe 
and high-cost cases, and to match the intervention to the patient.
    For the purpose of this demonstration, disease management is 
defined as a systematic approach to managing health care that aims to 
improve patient self-care, physicians' prescribing and treatment 
practices, communication and coordination of services between the 
patient, physician, disease management organization, and other 
providers, and access to needed services, and incorporates the 
following features:
     Patient identification, assessment, and enrollment.
     Patient instruction and empowerment regarding self-care.
     Implementation of an appropriate treatment plan based on 
clinical guidelines.
     Monitoring, feedback, and communication concerning the 
patient's condition.
     Arranging for and/or providing needed services, including 
prescription drugs and preventive services.
    Disease management programs may also include additional services, 
such as nurse visits, access to special equipment, and coordination 
with specialty clinics.

II. Provisions of This Notice

A. Purpose

    This notice solicits applications for demonstration projects that 
use disease management, along with coverage of prescription drugs, to 
improve the quality of services furnished to specific beneficiaries and 
to manage expenditures under Parts A and B of the Medicare program. The 
demonstration anticipates savings from more efficient provision and 
utilization of Medicare-covered services and the prevention of 
avoidable, costly medical complications. Applicants may propose to 
manage one, two, or all three of the advanced-stage, chronic conditions 
named in section 121 of BIPA (congestive heart failure, diabetes, and 
coronary heart disease). Even if the applicant focuses on one 
condition, the others should be treated as they relate to the targeted 
chronic condition. Beneficiaries may be subject to a modest cost-
sharing arrangement pertaining to their prescription drug coverage. 
Applicants who offer demonstration services beyond the scope of 
traditional Medicare benefits are not to hold beneficiaries financially 
liable for demonstration services typically not covered by Medicare. 
Beneficiaries will continue to be subject to the same co-pays/
coinsurance of the traditional Medicare fee-for-service program.

B. Randomization

    The demonstration project must provide for voluntary participation 
for targeted Medicare beneficiaries. Preference will be given to 
proposals that make use of a randomized experimental design (for 
example, a concurrent treatment group that receives disease management 
services and a control group that receives usual care with patient 
assignment occurring after agreement to participate in the 
demonstration is established). Applicants must submit evidence of their 
ability to recruit and serve a study population of at least 5,000 
Medicare beneficiaries who will be randomly assigned to applicable 
treatment and control groups.
    When characteristics of the proposed intervention or the population 
under study renders a randomized design infeasible, applicants must 
provide a justification for that conclusion, and must fully describe 
how the proposed treatment and comparison groups would be identified so 
that the selection bias usually avoided by randomization would be 
minimized. Details of the applicant's proposed experimental design must 
be specified in its proposal, including the expected number of eligible 
Medicare beneficiaries in the geographic area the program intends to 
serve and the proportion expected to volunteer for the demonstration. 
Applicants must either--
    (1) Allow us or our contractor(s) to assign beneficiaries to the 
experimental and/or control groups; or
    (2) Have their proposed procedures for assignment approved and 
monitored by us.
    Beneficiaries who are already being served by an awardee's program 
(that is, beneficiaries who are participants at the time an award is 
made to the disease management organization) may not be recruited by 
that awardee for participation in the demonstration.

C. Evaluation

    Through this solicitation, project awards will be made to up to 
three disease management organizations. An organization may propose one 
or multiple sites for any of its targeted diseases or for multiple 
diseases. The demonstration projects will operate for up to 3 years 
from implementation during which time a formal independent evaluation 
will be conducted. Each awardee is expected to fully cooperate in all 
phases of the evaluation. Our project officer will be assigned to each 
selected project. That project officer will serve as the point of 
contact with the demonstration project staff and will provide technical 
consultation regarding cooperative agreement procedures, monitor 
demonstration site activities, and forward feedback to the 
demonstration project's staff.

D. Requirements for Models

    We are seeking innovative proposals from organizations that can 
test whether models of disease management improve clinical outcomes and 
appropriate use of Medicare-covered services for targeted Medicare fee-
for-service beneficiaries, while managing Medicare expenditures under 
parts A and B to achieve reduced aggregate Medicare expenditures.
    Models that are targeted specifically at the Medicare population 
and that take into account the beneficiaries' relative health and 
functional status, age, mental functioning, and other relevant factors, 
are of particular interest. Preference will be given to proposals that 
focus on beneficiaries most likely to benefit from disease management 
interventions and that take patient co-morbidities into account in the 
services provided. In selecting applicants for this demonstration 
project, we will also consider whether the applicant will serve the 
Medicare ethnic patient

[[Page 8270]]

populations disproportionately affected by the targeted diseases.
    An organization that wishes to apply to participate in the 
demonstration should refer to the specific submission requirements at 
our Web site (listed in the SUPPLEMENTARY INFORMATION section of this 
notice).

E. Submission of Applications

    Applications (an unbound original and 10 copies) must be received 
by us as indicated in the DATES and ADDRESSES sections of this notice. 
Only proposals that are considered ``on time'' will be reviewed and 
considered by the technical review panel. Applications must be typed 
for clarity and should not exceed 40 double-spaced pages, exclusive of 
the cover letter, executive summary, resumes, forms, and documentation 
supporting the cost proposal. That is, sections 4, 5, 6, 7, 8, and 9 
below must be presented in 40 double-spaced typewritten pages. These 
sections make up the body of the proposal and must fully describe the 
proposed project.

Application Contents Outline

    To facilitate the review process, the application should include 
the following contents in the following order:

1. Cover Letter

    Must include a brief description of the proposed project and 
indicate the target population, and urban site or rural site, and 
identify any and all CMS provider numbers assigned to the applicant, a 
contact person, and contact information.

2. ``Application for Federal Assistance''--Standard Form 424

    Must include SF-424a ``Budget Information'' and SF-424b 
``Assurances'' available on our Web site (www.hcfa.gov/research/dmdemo.htm).

3. Executive Summary

    Must include a summary of the project, disease management 
experience, existence of adequate information systems, and willingness 
to share protocols for disease management.
    4. Statement of the Problem
    5. Targeting the Appropriate Population
    6. Description of Disease Management Intervention Services
    7. Organizational Capabilities
    8. Effectiveness of Intervention(s): Quality
    9. Payment for Disease Management Services, Reduction of Medicare 
Expenditures, and Reinsurance
    10. Related Supplemental Materials

III. Evaluation Process and Criteria

    A panel of experts will conduct a review of responsive proposals. 
This technical review panel will convene in the months following the 
due date for submission of proposals. The panelists' recommendations 
will contain numerical ratings based on the evaluation criteria, the 
ranking of all responsive proposals, and a written assessment of each 
applicant. In addition, we will conduct a financial analysis of the 
recommended proposals and evaluate the proposed projects to ensure that 
aggregate Medicare program expenditures are reduced.
    Our Administrator will make the final selection of projects for the 
demonstration from among the most highly qualified applicants, taking 
into consideration a number of factors, including operational 
feasibility, geographic location, and program priorities (for example, 
testing a variety of approaches for delivering services, targeting 
beneficiaries, and payment). Applicants should be aware that proposals 
may be accepted in whole or in part. In evaluating applications, we 
rely on our past experience with successful and unsuccessful 
demonstrations. We reserve the right to conduct one or more site visits 
before making awards. We expect to make the awards in 2002.

IV. Collection of Information Requirements

    As this demonstration requires existing disease management 
organizations to (1) supplement their offerings with full prescription 
drug coverage, (2) provide reinsurance to guarantee reduced aggregate 
Medicare program expenditures, and (3) recruit and serve at least 5,000 
appropriately-targeted Medicare beneficiaries, it is unlikely that many 
disease management organizations would be eligible to participate in 
this project. We expect fewer than 10 organizations to submit 
proposals. Therefore, the collection requirements referenced in this 
notice are not subject to the Paperwork Reduction Act of 1995 (44 
U.S.C. 3501-3520), as defined under 5 CFR 1320.3(c).

    Authority: Section 121 of the Medicare, Medicaid, and State 
Child Health Insurance Program Benefits Improvement and Protection 
Act of 2000 (BIPA).

(Catalog of Federal Domestic Assistance Program No. 93.779, Health 
Care Financing Research, Demonstrations and Evaluations)

    Dated: February 5, 2002.
Thomas A. Scully,
Administrator, Centers for Medicare & Medicaid Services.
[FR Doc. 02-4355 Filed 2-21-02; 8:45 am]
BILLING CODE 4120-01-P