DEPARTMENT OF HEALTH AND HUMAN SERVICES 
Centers for Medicare & Medicaid Services 
7500 Security Boulevard, Mail Stop S2-26-12 
Baltimore, MD 21244-1850 
 
Center for Medicaid, CHIP and Survey & Certification 
 
MMCO - Innovation Center - CMCS Informational Bulletin 
 
  
DATE:  March 23, 2012 
 
FROM:  Melanie Bella, Director 
  Medicare-Medicaid Coordination Office 
 
  Richard Gilfillan, Director 
          Center for Medicare and Medicaid Innovation 
 
       Cindy Mann,  Director 
     Center for Medicaid and CHIP Services 
 
 
SUBJECT:  Initiative to Reduce Avoidable Hospitalizations among Nursing Facility 
Residents 
 
The Centers for Medicare & Medicaid Services (CMS) Medicare-Medicaid Coordination Office 
(MMCO), the Center for Medicare and Medicaid Innovation (Innovation Center), and the Center 
for Medicaid and CHIP Services (CMCS) are issuing this Informational Bulletin to inform States 
about a new CMS opportunity, the Initiative to Reduce Avoidable Hospitalizations among 
Nursing Facility Residents (Initiative). The Initiative will focus on beneficiaries who are 
eligible for both Medicare and Medicaid (often known as dual eligibles or Medicare-Medicaid 
enrollees). States will be critical partners in maximizing the success of the Initiative.  
 
Background 
 
For long-stay nursing facility residents, hospitalizations can be disruptive, disorienting, and 
detrimental to health.  Frequently, hospitalization is avoidable; CMS-funded research on 
Medicare-Medicaid enrollee nursing facility residents in 2005 found that approximately 45 
percent of hospitalizations among beneficiaries receiving Medicare skilled nursing facility 
services or Medicaid nursing facility services were potentially avoidable, accounting for 314,000 
potentially avoidable hospitalizations.1  
                                         
1 Walsh, E., Freiman, M., Haber, S., Bragg, A., Ouslander, J., & Wiener, J. (2010). Cost Drivers for Dually  
Eligible Beneficiaries: Potentially Avoidable Hospitalizations from Nursing Facility, Skilled Nursing Facility, 
and Home and Community Based Services Waiver Programs. Washington, DC: CMS. 
  CMCS Informational Bulletin  Page 2 
This Initiative will test whether providing nursing facility residents with enhanced on-site 
services and supports can reduce avoidable hospitalizations, improve quality of care, and reduce 
costs. CMS is committing up to $128 million to support a diverse portfolio of evidence-based 
interventions through this effort. 
 
While nursing facilities already provide some care coordination in accordance with State and 
Federal participation requirements for long-term care facilities under Medicaid, this Initiative is 
an opportunity to build upon those efforts. Additionally, this initiative supports the goals of two 
other initiatives: the Administrations Partnership for Patients goal of reducing hospital 
readmission rates by 20-percent by the end of 2013 and the Million Hearts Campaign, which is a 
national initiative to prevent one million heart attacks and strokes over the next five years. 
 
Initiative 
 
CMS will implement this Initiative by contracting with qualified independent organizations 
(referred to as enhanced care & coordination providers) to implement evidence-based 
interventions with the objective of reducing avoidable hospitalizations. Organizations eligible to 
participate may include (but are not limited to): 
  Organizations that provide care coordination, case management, or related services; 
  Medical care providers, such as physician practices; 
  Health plans (although this initiative will not be capitated managed care); 
  Public or not-for-profit organizations, such as Aging and Disability Resource Centers, 
Area Agencies on Aging, Behavioral Health Organizations, Centers for Independent 
Living, universities, or others; 
  Integrated delivery networks, if they extend their networks to include unaffiliated nursing 
facilities. 
 
Nursing facilities themselves may not bid to become enhanced care & coordination providers. 
 
Applicants to become enhanced care & coordination providers may propose their own evidence-
based intervention. All interventions must include the following activities: 
 
  Hire staff who maintain a physical presence at nursing facilities and partner with nursing 
facility staff to implement preventive services;  
  Work in cooperation with existing providers; 
  Facilitate residents transitions to and from inpatient hospitals and nursing facilities; 
  Provide support for improved communication and coordination among existing 
providers; and  
  Coordinate and improve management and monitoring of prescription drugs, including 
psychotropic drugs.   
 
Each enhanced care & coordination provider will be expected to implement its intervention in at 
least 15 Medicare- and Medicaid-certified nursing facilities in the same State.  The application to 
participate in the Initiative requires enhanced care & coordination providers to submit letters of 
intent from facilities agreeing to participate in the proposed intervention. 
 
  CMCS Informational Bulletin  Page 3 
CMS will give preference to initiatives in locations where there are high Medicare costs, 
facilities with high hospital readmission rates, and where Medicare-Medicaid enrollees account 
for a high percentage of nursing facility residents.  (For State-by-State rates of avoidable 
hospitalization, see https://www.cms.gov/Insight-Briefs/downloads/PAHInsightBrief.pdf. 
 
This Initiative is expected to last four years. CMS will contract with an independent evaluator to 
assess the Initiatives impact on quality of care and total costs.  CMS will also engage an 
operations support contractor to assist with operations and monitoring of the Initiative.  
 
State Role  
 
States, through Medicaid, are the primary payers for nursing facility services, and Medicaid 
payment policy has been shown to significantly affect hospitalization rates for nursing facility 
residents.2  States also play an important role in monitoring the quality of care in nursing 
facilities. Thus, States are critical partners in achieving the objectives of this Initiative and in 
sustaining its successes in the future.  CMS expects this Initiative to improve the quality of care 
for Medicare-Medicaid enrollees in States where the Initiative is implemented.  
 
CMS is requiring that enhanced care & coordination providers demonstrate that they would 
complement  rather than compete with  any existing payment or delivery reform initiatives 
within a State.   
 
CMS is only interested in initiating this Initiative where States will be willing partners. 
Therefore, CMS is requiring that all enhanced care & coordination provider applicants include 
letters from: (a) the State Medicaid director; and (b) the State survey and certification director 
expressing support for the proposal and agreeing to engage in a memorandum of understanding 
(MOU) process upon selection. (A single letter signed by both agencies is also acceptable.) State 
agencies may choose to provide letters of support to multiple applicants or none at all. It will be 
the applicants responsibility to obtain and submit the letter(s) of support. 
 
In each State where this Initiative moves forward, CMS will solidify the commitments initiated 
with the letter of support by executing a MOU with the State. State responsibilities under this 
MOU include providing Medicaid claims data to CMS and its contractors to support monitoring 
and evaluation of the Initiative. CMS will keep the State closely informed on the implementation 
and evaluation of the Initiative, such as through sharing interim findings and including the State 
in learning and diffusion activities.  CMS will also consult with the State as appropriate, 
including working with States that may wish to develop policy changes that complement the 
goals of the Initiative. Participating in the Initiative will give States an opportunity to improve 
the quality of care for some of their most vulnerable beneficiaries.   
 
                                         
2 Intrator, O., Grabowski, D. C., Zinn, J., Schleintiz, M., Feng, Z., Miller, S., & Mor, V. (2007). Hospitalization of 
Nursing Home Residents: The Effects of States Medicaid Payment and Bed-Hold Policies. Health Services 
Research, 42(4), 1651-71. 
 
  CMCS Informational Bulletin  Page 4 
 
 
Additional Information 
 
Organizations interested in applying to participate in this Initiative must submit a proposal to 
CMS by June 14, 2012. CMS is requiring interested organizations to submit a non-binding 
Notice of Intent to Apply by April 30, 2012. The Request for Applications is available by 
searching for CFDA 93.621 at: www.grants.gov. 
 
CMS will host a webinar to discuss the Initiative.  More information will be available at: 
https://www.cms.gov/medicare-medicaid-
coordination/09_ReducingAvoidableHospitalizationsAmongNursingFacilityResidents.asp#TopO
fPage.  
 
For further information or clarification on this Informational Bulletin letter, please contact 
Melissa Seeley Melissa.Seeley@cms.hhs.gov.