DEPARTMENT OF HEALTH AND HUMAN SERVICES 
Centers for Medicare & Medicaid Services 
7500 Security Boulevard, Mail Stop S2-26-12 
Baltimore, MD 21244-1850 
 
 
 
Informational Bulletin 
  
 
DATE:  December 10, 2010 
     
FROM:  Richard Gilfillan  
  Director  
  Center for Medicare and Medicaid Innovation 
 
  Melanie Bella 
  Director 
  Federal Coordinated Health Care Office 
   
  Cindy Mann 
  Director 
  Center for Medicaid, CHIP and Survey & Certification 
 
SUBJECT:  State Demonstrations to Integrate Care for Dual Eligible Individuals 
 
On November 16th, the Centers for Medicare and Medicaid Services (CMS) formally announced 
the establishment of the Center for Medicare and Medicaid Innovation (Innovation Center). The 
Innovation Center is charged with exploring new health care delivery and payment models that 
will enhance the quality of care for Medicare and Medicaid beneficiaries, improve the health of 
the population, and lower costs through improvement. We are writing to inform you of one of the 
Innovation Centers first initiatives to support State Demonstrations to Integrate Care for Dual 
Eligible Individuals.  
 
There is perhaps no better opportunity to test innovative service delivery and payment models 
than for individuals who are dually eligible for Medicare and Medicaid.  Dual eligibles account 
for 16 to 18 percent of enrollees in Medicare and Medicaid, but roughly 25 to 45 percent of 
spending in these programs respectively. With the vast majority of these nine million individuals 
receiving fragmented care at an estimated cost of over $300 billion in State and federal spending, 
improving care for this population is ripe for innovation.   
 
Through the State Demonstrations to Integrate Care for Dual Eligible Individuals, CMS will 
provide funding for States to support the design of innovative service delivery and payment 
models for dual eligible individuals. We invite States to use this opportunity to test new and 
emerging models (e.g., health homes or accountable care organizations) as well as to build upon 
existing vehicles (e.g., PACE or Special Needs Plans) in order to create new person-centered 
models that align the full range of acute, behavioral health, and long-term supports and services 
and improve the actual care experience and lives of dual eligible beneficiaries. 
 
  Page 2  CMS Informational Bulletin 
 
The overall goal of the State demonstrations is to identify and validate delivery system and 
payment integration models that can be rapidly tested and, upon successful demonstration, 
replicated in other States. CMS will award contracts to up to 15 States of up to $1 million each. 
The primary outcome of the initial design period will be a demonstration proposal that describes 
how the State would structure, implement, and evaluate a model aimed at improving the quality, 
coordination, and cost-effectiveness of care for dual eligible individuals. Pending available 
funding and review of proposals, States that successfully complete the design phase may be 
eligible to receive additional support for the implementation of its proposed model under this 
contract. 
 
The Innovation Center is administering this demonstration. Technical assistance and related tools 
will be provided by the Federal Coordinated Health Care Office, created by Section 2602 of the 
Affordable Care Act, to support the design and implementation efforts. The solicitation for this 
contracting opportunity is available on the Innovation Center website 
(http://innovations.cms.gov/) and at the following link: 
https://www.fbo.gov/index?s=opportunity&mode=form&tab=core&id=7ffe8a7ccbd80dffeccfbb
55d7ae7d62&_cview=0. 
 
The enclosed document provides a summary of the initiative as well as an overview of the 
proposal requirements and selection process for States interested in pursuing this opportunity. 
Proposals are due on February 1, 2011. CMS will be conducting a pre-proposal call to answer 
questions about the demonstration or proposal process. Information about the call will be posted 
on the above-referenced web site.  
 
If you have any questions about this solicitation, please e-mail them to Charles Littleton at 
charles.littleton@cms.hhs.gov. We will attempt to respond fully and completely to questions that 
States submit as they develop their proposals. Both the questions and our response will be posted 
on the websites mentioned previously in this bulletin so that all interested States have access to 
the same information.  
 
Thank you for your interest in this exciting new initiative. 
 
 
Enclosure 
   
  Page 3  CMS Informational Bulletin 
 
State Demonstrations to Integrate Care for Dual Eligible Individuals 
Statement of Work 
 
 
Background   
Created by the Affordable Care Act, the Center for Medicare and Medicaid Innovation 
(Innovation Center) aims to explore innovations in health care delivery and payment that will 
enhance the quality of care for Medicare and Medicaid beneficiaries, improve the health of the 
population, and lower costs through improvement. There is perhaps no better opportunity to test 
innovative service delivery and payment models than for individuals who are eligible for both 
Medicare and Medicaid (the dual eligibles). Dual eligibles account for 16 to 18 percent of 
enrollees in Medicare and Medicaid, but roughly 25 to 45 percent of spending in these programs 
respectively. With the vast majority of these nine million individuals still receiving care through 
fragmented care at an estimated cost of over $300 billion in State and federal spending, 
improving care for this population is ripe for innovation.  
 
Purpose 
The Innovation Center is fostering interaction with a diverse group of stakeholders, including 
hospitals, doctors, consumers, payers, states, employers, advocates, relevant federal agencies and 
others to obtain direct input and build partnerships for its upcoming work. Given the partnership 
that exists between federal and state governments with respect to dual eligible individuals, the 
Centers for Medicare and Medicaid Services (CMS), through the Innovation Center, will provide 
funding for states to support the design of innovative service delivery and payment models that 
integrate care for this population. CMS is interested in identifying, supporting, and evaluating 
person-centered models that integrate the full range of acute, behavioral health, and long-term 
supports and services for dual eligible individuals.1  
 
Under this solicitation CMS may award up to 15 (fifteen) contracts for up to $1 million each to 
support the design of State demonstration models.  The primary deliverable of the initial design 
period is a demonstration proposal that describes how the State would structure, implement, and 
evaluate an intervention aimed at improving the quality, coordination, and cost-effectiveness of 
care for dual eligible individuals. Only States receiving the initial contract award may be eligible 
to move into the implementation phase of this contract, pending the approval of the States 
demonstration design and the availability of funds. Technical assistance and related tools will be 
provided by the Federal Coordinated Health Care Office (FCHCO), created by Section 2602 of 
the Affordable Care Act, to support both the design and implementation efforts. It should be 
noted that receipt of the initial contract does not guarantee that those States will be eligible to 
move into the implementation phase of this contract. Under this solicitation, CMS shall not be 
obligated for reimbursement of any design costs beyond the Fixed-Price contract amount. 
 
 
                                         
1 Potential models could include those that enhance existing integration vehicles such as the Program for All-
Inclusive Care for the Elderly (PACE) and Medicare Advantage Special Needs Plans (SNPs) as well as those that 
test new/emerging models such as health homes or accountable care organizations (ACOs). 
 
   
Page 4  CMS Informational Bulletin 
 
Deliverables 
Over the course of the contract, the following deliverables will be required: 
 
  Monthly Conference Calls. States shall participate in monthly conference calls with the 
CMS project officer and other CMS staff.  These calls shall be used as a mechanism for 
discussing and managing administrative and project issues as they arise.   
 
  Progress Reports. States will be responsible for submitting interim and final progress 
reports that document the development process and lessons learned as part of the design 
contract.  
 
  Innovation Demonstration Model. The main deliverable of the design contract will be 
a demonstration proposal that describes how the state would structure, implement, and 
evaluate an integrated delivery system and payment model aimed at improving the 
quality, coordination, and cost-effectiveness of care for dual eligibles. CMS will provide 
States with the exact requirements in the Demonstration Proposal Instructions at the time 
of contract award; however, the demonstration proposal will be expected to contain at a 
minimum: 
 
  Explanation of how the proposed demonstration will achieve the overall goals of 
o
better health, better care, and lower costs through improvement.  
 
  Problem statement describing how or why changes to current policy would lead to 
o
improvements in access, quality, and reductions in Medicare and Medicaid 
expenditures over time. 
 
  Discussion of how the proposed model will improve the actual care experience 
o
and lives of eligible beneficiaries, including findings from any beneficiary focus 
groups the state conducted to inform its proposed design. 
 
  Detailed description of the dual eligible population, including key subpopulations 
o
(e.g., individuals with nursing facility level of care, serious mental illness, 
Alzheimers/dementia, multi-morbidities, etc.); utilization patterns; service 
settings; costs; etc.   
 
  Description of proposed delivery system/programmatic elements, including: 
o
benefit design; geographic service area; enrollment method; and provider 
network/capacity. 
 
  Description of plans to expand to other populations and/or service areas if the 
o
model is focused on a subset of dual eligibles or is less than Statewide. 
 
  Description of proposed payment reform, including payment type (e.g., full-risk 
o
capitation, partial cap, administrative PMPM); methodology for blending 
Medicaid and Medicare funding; financial incentives; risk sharing arrangements; 
etc. 
   
Page 5  CMS Informational Bulletin 
 
  Discussion of the expected impact of the proposed demonstration on Medicare 
o
and Medicaid costs, including specific mention of any effect on cost-shifting 
occurring today between the two programs. 
 
  Description of State infrastructure/capacity to implement and monitor the 
o
demonstration proposal. 
 
  Identification of key performance metrics, including how these data will be used 
o
to continuously improve access, quality, satisfaction, and efficiency as well as 
how they will fit within existing Medicaid and Medicare performance and quality 
measures.   
 
  Plan for engaging internal and external stakeholders, including a process for 
o
gathering and incorporating feedback on an ongoing basis. 
 
  If applicable, description of how the proposed model fits with: (a) current 
o
Medicaid waivers and/or state plan services available to this population; (b) 
existing managed long-term care programs; (c) existing integrated programs via 
Medicare Advantage Special Need Plans (SNPs) or PACE programs; and (d) 
other health reform efforts underway in the State (e.g., accountable care 
organizations, bundled payments, multi-payer initiatives, etc.).  
 
  Discussion of the scalability of the proposed model and its replicability in other 
o
settings/States.  
 
  Description of proposed evaluation design, including key metrics that could be 
o
used to examine the models quality and cost outcomes for the target population, 
beneficiary experience, access to care, etc. 
 
  Description of the overall implementation strategy and anticipated timeline, 
o
including: a) the activities associated with building the infrastructure necessary to 
implement proposed demonstration (e.g., staffing needs, actuarial support, etc); 
and b) any funds needed to support the development of such infrastructure (e.g., 
systems change costs at the State level for testing a new payment approach, 
development of a more efficient data exchange feed for near real-time tracking of 
claims, etc.). 
 
Schedule of Deliverables 
 
  Deliverable        Due Date                                            
  Monthly Conference Calls    Ongoing 
   
  Progress Report      Interim: 6 months from award date 
            Final:  Within 30 days of submission  
            Of demonstration proposal 
  Demonstration Proposal    Within 12 months from award date 
   
 
Page 6  CMS Informational Bulletin 
 
Proposal Instructions 
To be considered for a design contract, states are asked to provide the following information (not 
to exceed eight to ten (8-10) pages): 
 
1.  High level description of the states proposed approach to integrating care.  In 
addition to information on the target  population, covered benefits, and proposed service 
delivery system, the description should also contain an explicit problem statement that 
describes the current coverage and payment policy, and how or why changes to current 
policy would lead to improvements in access and quality as well reductions in Medicare 
and Medicaid expenditures over time.  It should also describe the policy rationale for the 
proposal, who will benefit and why, and any previous experience with the 
intervention/model proposed in the demonstration.   
 
2.    Overview of state capacity and infrastructure to design, develop and implement the 
proposed model.  The overview should include key state staff by area and the expected use of 
any external consultants/contractors. 
 
3.    Description of current analytic capacity.  The description should include whether the 
state has access to Medicare data and, if so, whether the Medicare and Medicaid data are 
linked and have been analyzed.  If the state does not currently have access to Medicare data, 
the description should include plans to access, link and analyze the linked data set.  In 
addition, states with managed care programs should address how encounter claims data are or 
are not being included in the linked data set and resulting analysis. 
 
4.    Summary of stakeholder environment.  The summary should include any current or 
planned stakeholder engagement efforts and/or discussions with potential provider, health 
plan, PACE, or other delivery system partners. 
 
5.   Timeframe.  States should provide expected target implementation date, including 
whether any legislative authority is required.  \ 
 
6.   Budget and use of funds.  Please provide a budget outlining the requested amount (up to 
$1 million) and use of funding to support the design costs (e.g., staffing, travel, analytic or 
actuarial support, etc.) associated with designing the demonstration model.   
  
Proposals are due to CMS by February 1, 2011. CMS reserves the right to conduct a second 
solicitation if it does not award 15 contracts as part of the initial solicitation period. 
 
   
  Page 7  CMS Informational Bulletin 
 
Selection Process 
In deciding whether to apply for a contract, states should assess their level of readiness with 
respect to moving forward with a duals demonstration model:  
 
  Low: state has done little or no thinking to date with respect to duals integration; 
  Medium: duals are not yet a high priority but the state has done some preliminary 
analysis/assessment regarding how it might improve the access, quality, beneficiary 
experience and costs of care for its dual eligibles; or  
  High: state has previous experience in developing care interventions targeting the duals 
and/or has done considerable work to understand the population and identify 
opportunities for delivery system and/or payment reforms. 
 
The overall goal of the state demonstrations is to identify and validate delivery system and 
payment integration models that can be rapidly tested and, upon successful demonstration, 
replicated in other states. As a result, the state design contracts are targeted at states displaying a 
medium to high level of readiness and that will be able to develop a demonstration model ready 
for implementation in 2012.  CMS and the FCHCO have plans to provide separate technical 
assistance activities for states early on in the process with the idea that those states may be able 
to move toward greater integration at a later date.   
 
States will be evaluated based on the degree to which their applications are consistent with the 
above goals as well as on their ability to adequately meet the following criteria: 
 
1.  Overall Approach to Integrating Care  
The State demonstrates a thorough understanding of the target population and the current 
environment through which they receive care. It must also offer a plausible policy rationale 
for how the proposed approach to integrating care will significantly improve the quality, 
cost-effectiveness, and experience of care for dual eligible individuals.  
 
2.  State Capacity and Infrastructure  
The State has the necessary personnel and related resources needed to support the design of 
the integrated demonstration proposal. If there are gaps in the states current capacity, the 
proposal should describe how the state will use funds made available through the design 
contract to obtain resources/build the capacity within the given timeframe. 
 
3.  Analytic Capacity  
The State has experience analyzing fee-for-service and/or managed care encounter claims 
data (as applicable). The state has access to both Medicaid and Medicare data or has a plan 
for obtaining and linking both sets of data in order to conduct duals specific analyses.  
 
4.  Stakeholder Engagement  
The State demonstrates an understanding of or is in the process of assessing its current 
stakeholder environment (including beneficiaries, advocates, providers, plans, etc.). It also 
has a plan for engaging such stakeholders during the development of its integrated care 
demonstration proposal. 
   
  Page 8  CMS Informational Bulletin 
 
5.  Timeframe 
Proposed timeframe is reasonable and consistent with the 2012 implementation objective.  
 
6.  Budget 
Requested amount is reasonable and proposed use of funding is appropriate for undertaking 
the activities of the contract.