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Can Traditional Medicare Improve Care of the Chronically Ill?

February 4, 2008 -- Many politicians and policy analysts see better management of chronically ill patients as key to controlling spending in Medicare and other health care programs. However, critics of traditional Medicare argue that care is too disorganized in the program to allow for more effective treatment of diabetes, chronic heart failure and other chronic conditions.

Medicare is conducting various pilot programs testing approaches that might prove those critics wrong—but the largest of those programs isn't going well, according to documents recently posted by the Centers for Medicare and Medicaid Services (CMS) on its Web site.

Although CMS isn't officially pulling the plug on the pilot, ordered by the 2003 Medicare overhaul law (PL 108-173), its decision may amount to much the same thing. A CMS "fact sheet" on the pilot, known as the "Medicare Health Support" program, says that preliminary findings show that the first phase of the program "is not meeting the statutory requirements of improved clinical quality outcomes, improved beneficiary satisfaction, and the achievement of financial savings targets." As a result, services provided under the Medicare Health Support program to 68,000 beneficiaries with diabetes or chronic heart failure will run out this year.

Technically that doesn't mean the pilot will end because a decision on whether to move into a second phase of the program hinges on the findings of an independent evaluation of the program. But that evaluation won't be completed until 2011 or 2012, said CMS Spokesman Peter Ashkenaz.

If the five health care organizations now in the pilot wanted to resume participation should the program restart a few years from now, they'd bear heavy new costs recruiting doctors and reestablishing "call centers" to call enrollees regularly to make sure they are taking their medications, getting proper nutrition, and taking other steps to manage their conditions, said Tracey Moorhead, president of DMAA: The Care Continuum Alliance, an association representing companies offering services to manage care of the chronically ill.

Moorhead said her organization is trying to get Congress to intervene to keep the project from stopping completely by the end of the year.

CMS originally described the pilot, which began in 2005, in glowing terms. Contracts awarded to carry out Medicare Health Support, formerly known as the Chronic Care Improvement Program, "mark a major milestone in the shift toward prevention and quality improvement for chronically ill beneficiaries under [the] Medicare fee for service" program, says a CMS Web site especially devoted to the pilot. "This initiative is an important component of modernizing and strengthening Medicare."

"Fragmentation of care is a serious problem, especially for Medicare beneficiaries," the site notes. "On average, they see seven different physicians and have 20 prescriptions each year."

Brochures advertising the program tell beneficiaries it "helps you follow your doctor's advice. Your Medicare Health Support nurse will be familiar with your specific health needs. Your nurse will take time to answer your questions. You will receive regular calls" to "remind you about certain tests that you need, like regular blood tests or eye exams; answer your questions about how the different medicines you take work together;" and "answer your questions about test results or instructions you receive from the different doctors you see."

CMS said the program is intended to "reduce health risks, improve quality of life, and provide savings to the Medicare program," or at a minimum to be budget-neutral. The original CMS contracts with the five health care organizations called for savings of five percent after subtracting their fees for the program. Late last year, CMS approved a request that the savings target be reduced to budget neutrality.

But CMS says that "to date there has been nominal impact on Medicare claims costs" as a result of the program. To achieve budget neutrality, the five organizations "need to reduce Medicare claims costs by between $300 and $800 per participant per month for the remaining months of the pilot program. This represents a 20 to 40 percent reduction in claims costs from the current levels that are being billed."

The agency noted that Medicare fees paid to the organizations total $360 million to date—"an increase of 5 to 11 percent in Medicare costs for participating beneficiaries. Total operational costs to date to CMS are estimated at approximately $27 million," it added.

Moorhead said the CMS decision is not supported by the findings of an interim evaluation released in July of 2007 by Washington-based RTI International, which is under contract with CMS to evaluate the pilot.

"The CMS position that Phase I failed to meet statutory requirements is not supported by last year's interim report, which found insufficient evidence for any firm conclusion about the pilot's performance and noted significant disparities between the control and intervention groups and other critical flaws," Moorhead said.

That report said "this initial evaluation reflects considerably less than six months of active care management. We therefore refrain from drawing any early conclusions with respect to the pilot programs' impact on quality of care of health outcomes." With respect to financial performance, the report said, "fees paid to date far exceed any savings produced."

Moorhead didn't elaborate on her association's plans for seeking congressional intervention.

If the pilot effectively dies, does that mean the end of "disease management" programs in traditional Medicare to better organize care for the chronically ill? CMS Spokesman Ashkenaz said no, noting that his agency is getting ready to launch a "medical home demonstration" in which doctors will be paid directly to better coordinate care of the chronically ill, rather than paying health care management firms to do so as is the case in the Medicare Health Support program.

But Moorhead said that while there are other programs to test improved coordination of care in traditional Medicare, they are far smaller than Medicare Health Support. "This is the most comprehensive population management program in traditional Medicare," she said.

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