69–010 

Calendar No. 206 

115TH CONGRESS REPORT " ! SENATE 1st Session 115–146 

THE CREATING HIGH-QUALITY RESULTS AND OUTCOMES 

NECESSARY TO IMPROVE CHRONIC (CHRONIC) CARE 

ACT OF 2017 

AUGUST 3, 2017.—Ordered to be printed 

Mr. HATCH, from the Committee on Finance, 

submitted the following 

R E P O R T 

[To accompany S. 870] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Finance, to which was referred the bill (S. 

870) to amend title XVIII of the Social Security Act to implement 

Medicare payment policies designed to improve management of 

chronic disease, streamline care coordination, and improve quality 

outcomes without adding to the deficit, having considered the 

same, reports favorably thereon with an amendment in the nature 

of a substitute and recommends that the bill, as amended, do pass. 

CONTENTS 

Page 

I. LEGISLATIVE BACKGROUND ..................................................................... 1 

II. EXPLANATION OF THE BILL ...................................................................... 3 

A. Amend title XVIII of the Social Security Act to implement Medicare payment policies designed to improve management of chronic disease, streamline care coordination, and improve quality 

outcomes without adding to the deficit ............................................ 3 

III. BUDGET EFFECTS OF THE BILL ............................................................... 20 

IV. VOTES OF THE COMMITTEE ...................................................................... 28 

V. REGULATORY IMPACT AND OTHER MATTERS ..................................... 28 

VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED 29 

I. LEGISLATIVE BACKGROUND 

The Committee on Finance, having considered S. 870, as modified, a bill that would amend title XVIII of the Social Security Act 

to implement Medicare payment policies designed to improve manVerDate Sep 11 2014 01:19 Aug 05, 2017 Jkt 069010 PO 00000 Frm 00001 Fmt 6659 Sfmt 6602 E:\HR\OC\SR146.XXX SR146
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agement of chronic disease, streamline care coordination, and improve quality outcomes without adding to the deficit, reports favorably thereon that the bill as modified by the Committee and reported with an amendment do pass. 

Background and need for legislative action 

Over the past two years, the Senate Finance Committee has 

prioritized work on a key challenge facing the nation’s health care 

system: how to effectively deliver high quality, coordinated medical 

care to Medicare beneficiaries living with multiple chronic conditions. Chronically ill patients account for a large percentage of 

overall Medicare spending, which is expected to rise as an increasing number of adults with chronic conditions age into the Medicare 

program. If not addressed, this could result in worse health outcomes for those with chronic disease as well as higher costs for 

both beneficiaries and the Medicare program. 

On May 22, 2015, Finance Committee Chairman Orrin Hatch 

(R–UT) and Ranking Member Ron Wyden (D–OR) formed a bipartisan, full committee chronic care working group (CCWG), cochaired by Senator Johnny Isakson (R–GA) and Senator Mark 

Warner (D–VA). The working group was tasked with analyzing current law, discussing alternative policy options, and developing bipartisan legislative solutions. To meet this goal, the working group 

invited all interested stakeholders to submit their best ideas, based 

on real world experience and data-driven evidence, to improve 

health outcomes for Medicare beneficiaries with chronic conditions. 

After reviewing a first round of 530 comments submitted by the 

health care community, and subsequently meeting with 80 individual stakeholder groups, the CCWG produced a comprehensive 

policy options document, which was released on December 18, 

2015. Release of the options document was intended to generate 

further input from Members of Congress and stakeholders as the 

CCWG refined the policies it believed had the greatest potential to 

improve care coordination, increase value, and lower costs in the 

Medicare program without adding to the deficit. 

After soliciting a second round of 327 stakeholder comments, the 

CCWG issued a legislative discussion draft on October 27, 2016. 

Soon after, the Centers for Medicare & Medicaid Services (CMS), 

in its calendar year (CY) 2017 Medicare Physician Fee Schedule 

Rule, finalized four policies proposed in the policy options document. Additionally, two provisions included in the discussion 

draft—one to improve risk adjustment in the Medicare Advantage 

(MA) program and another to ensure access to MA plans for Medicare-eligible individuals with end-stage renal disease (ESRD)— 

were adopted as part of the 21st Century Cures Act (P.L. 114–255), 

which was signed into law on December 13, 2016. 

The Creating High-Quality Results and Outcomes Necessary to 

Improve Chronic (CHRONIC) Care Act (S. 870), as modified, offers 

additional solutions to improve health outcomes through policies 

targeting traditional fee-for-service (FFS), Medicare Advantage 

(MA), and Accountable Care Organizations (ACOs). The CHRONIC 

Care Act includes: 

• Expansion and extension of the successful Independence at 

Home (IAH) program, expansion of telehealth services available to home dialysis patients, and greater availability of teleVerDate Sep 11 2014 07:47 Aug 04, 2017 Jkt 069010 PO 00000 Frm 00002 Fmt 6659 Sfmt 6602 E:\HR\OC\SR146.XXX SR146
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health services to help ensure individuals presenting with 

stroke symptoms receive the best course of treatment; 

• Improved flexibility and predictability for MA plans to better serve chronically ill beneficiaries through increased access 

to value-based insurance design, permanent authorization of 

special needs plans (SNPs), greater incentives to offer telehealth services, and an expansion of supplemental benefits; 

and 

• Greater flexibility for certain ACOs to provide telehealth 

services, the option for certain ACOs to provide incentive payments to help patients afford primary care services, and the 

choice to have beneficiaries assigned to an ACO prospectively 

instead of retrospectively. 

II. EXPLANATION OF THE BILL 

A. AMENDS TITLE XVIII OF THE SOCIAL SECURITY ACT TO IMPLEMENT MEDICARE PAYMENT POLICIES DESIGNED TO IMPROVE MANAGEMENT OF CHRONIC DISEASE, STREAMLINE CARE COORDINATION, AND IMPROVE QUALITY OUTCOMES WITHOUT ADDING TO THE

DEFICIT

TITLE I—RECEIVING HIGH-QUALITY CARE IN THE HOME 

Section 101. Extending the Independence at Home Demonstration 

Program 

PRESENT LAW

The Patient Protection and Affordable Care Act (ACA, P.L. 111– 

148) created the Independence at Home (IAH) demonstration under 

the Medicare program (Section 1866E of the Social Security Act 

(SSA), 42 U.S.C. 1395cc–5) to test a payment incentive and service 

delivery model that uses physician- and nurse practitioner-directed 

home-based primary care teams designed to reduce expenditures 

and improve health outcomes in the provision of items and services 

to certain chronically ill Medicare beneficiaries. Qualifying IAH 

medical practices are physician or nurse practitioner-led legal entities that may also include physician assistants, pharmacists, and 

other health and social services staff. Such practice staff are to 

have experience providing home-based primary care services to applicable beneficiaries. Practice staff are required to make in-home 

visits and to be available 24 hours per day, 7 days per week to implement care plans tailored to the individual beneficiary’s chronic 

conditions. Qualifying medical practices are eligible to receive incentive payments, subject to meeting an expenditure target and 

performance standards on quality measures. The Centers for Medicare & Medicaid Services (CMS) Innovation Center (CMMI) initially selected a total of 15 individual practices, later supplemented 

by three consortia, to participate in the IAH demonstration. The 

demonstration began on June 1, 2012, and is to end on September 

30, 2017. 

EXPLANATION OF PROVISION

The reported bill makes modifications that would extend and expand the IAH demonstration: (1) the maximum length of an agreeVerDate Sep 11 2014 07:47 Aug 04, 2017 Jkt 069010 PO 00000 Frm 00003 Fmt 6659 Sfmt 6602 E:\HR\OC\SR146.XXX SR146
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ment with an IAH medical practice under the demonstration program would increase from 5 to 7 years, effectively extending the 

demonstration by 2 years; (2) the limit on the total number of beneficiaries across all selected IAH medical practices participating in 

the demonstration would be increased from 10,000 to 15,000; and 

(3) the mandatory termination provision is modified so that it 

would apply only to practices that fail to generate savings against 

their spending targets for three consecutive years. Currently, a 

practice is to be terminated if it does not receive an incentive payment for spending at least 5 percent less than its target for two 

consecutive years. The reported bill also clarifies that the required 

independent evaluation of the IAH demonstration would include an 

assessment of IAH medical practice use of electronic health information systems, including remote monitoring, to the extent information is available. 

Section 102. Expanding Access to Home Dialysis Therapy 

PRESENT LAW

Medicare regulations require that beneficiaries with End Stage 

Renal Disease (ESRD) undergoing home-based dialysis treatment 

receive monthly face-to-face assessments from a qualified physician 

or practitioner. ESRD beneficiaries may receive the required 

monthly assessment via approved telehealth services only if (1) the 

telehealth assessment occurs in a Medicare-authorized originating 

site (such as a physician’s office or hospital-based dialysis facility), 

and (2) the site is located in a rural Health Professional Shortage 

Area (HPSA) or a county not included in a Metropolitan Statistical 

Area (MSA). 

Telehealth is the use of electronic information and telecommunications technologies to support remote clinical health care, patient 

and professional health-related education, and other health care 

delivery functions. While Medicare beneficiaries may receive telehealth services in a variety of settings, under current law (SSA 

Section 1834(m)), the Medicare program recognizes and pays for 

only certain Part B telehealth services. The services must be either 

(1) remote patient and physician or practitioner face-to-face services delivered via a telecommunciations system, or (2) non face-toface services conducted through live video conferencing (or via store 

and forward telecommunication services in the case of any Federal 

telemedicine demonstration program in Alaska or Hawaii). Typically, Medicare coverage for remote face-to-face services includes 

payments (1) to physicians or other professionals (at the distant 

site) for the telehealth consultation, and (2) to the facility where 

the patient is located (the originating site).The originating site 

must be in a rural HPSA, a county not included in a MSA, or from 

an entity that participates in a Federal telemedicine demonstration 

project. Qualifying originating sites include an office of a physician 

or practitioner, a critical access hospital (CAH), a rural health clinic, a Federally qualified health center, a hospital, a hospital- or 

CAH-based renal dialysis center, a skilled nursing facility, or a 

community mental health center. 

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EXPLANATION OF PROVISION

The reported bill would allow Medicare ESRD beneficiaries undergoing home dialysis to receive required monthly clinical assessments by physicians or practitioners using telehealth services, beginning on January 1, 2019, so long as the individual receives a 

face-to-face clinical assessment, without the use of telehealth, at 

least once every three consecutive months. The section would expand the current list of allowable originating sites for a telehealth 

assessment to include freestanding renal dialysis facilities and beneficiary homes. The provision would also eliminate geographic limits that now require an originating site to be located in a HPSA 

or a county not included in an MSA. A separate facility fee would 

not be provided if the originating site is the beneficiary’s home. 

TITLE II—ADVANCING TEAM-BASED CARE 

Section 201. Providing Continued Access to Medicare Advantage 

Special Needs Plans for Vulnerable Populations 

PRESENT LAW

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA, P.L. 108–173) established a new type of 

Medicare Advantage (MA) coordinated care plan to focus on individuals with special needs. Special needs plans (SNPs) are allowed 

to target enrollment to one or more types of special needs individuals including (1) institutionalized (I–SNPs), (2) dually eligible— 

low-income Medicare beneficiaries who also are eligible for Medicaid—(D–SNPs), and/or (3) individuals with severe or disabling 

chronic conditions (C–SNPs). 

In general, SNPs are required to meet all applicable statutory 

and regulatory requirements that apply to MA plans, including: 

state licensure as a risk-bearing entity, MA reporting requirements 

that are applicable depending on plan size, and Part D prescription 

drug benefit requirements. SNPs prepare and submit bids to CMS 

like other MA plans and are paid using the same methodology as 

for other MA plans, based on the plan’s enrollment after risk adjusting payments for beneficiary characteristics. 

Among other changes, the Medicare Improvements for Patients 

and Providers Act of 2010 (MIPPA, P.L. 110–275) required that all 

SNPs have evidenced-based models of care (MOC). MIPPA required 

Medicare advantage organizations offering SNPs to tailor separate 

MOCs to meet the special needs of SNP target populations. MOCs 

must have goals and objectives for the targeted population, a specialized provider network, use nationally-recognized clinical practice guidelines, conduct health risk assessments to identify the special needs of beneficiaries, and add services for the most vulnerable 

beneficiaries including those beneficiaries who are frail, disabled, 

or near the end-of-life. 

The ACA extended SNP authority through December 31, 2013. 

Since ACA enactment, SNPs have been extended a number of 

times, most recently through December 31, 2018 by the Medicare 

Access and CHIP Reauthorization Act of 2015 (MACRA, P.L. 114– 

10). ACA also expanded the D–SNP category by authorizing fullyintegrated dual-eligible SNPs (FIDE–SNPs). FIDE–SNPs are a 

subset of D–SNPs that meet additional requirements such as fully 

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integrating Medicare and Medicaid benefits under a single managed care entity; having an approved risk-based Medicaid contract; 

coordinating care, including long-term care services; using a specialty care network for high-risk beneficiaries; and employing approved policies and procedures to coordinate or integrate enrollment, member materials, communications, grievances and appeals, 

and quality improvement activities. Other SNP-related ACA provisions made the following changes: • Required all SNPs to comply with an approval process based 

on CMS standards and executed by the National Committee for 

Quality Assurance (NCQA) beginning January 1, 2012. • Authorized CMS to make a frailty adjustment payment to 

FIDE–SNPs. • Required CMS to implement new quality-based payment procedures for all MA plans by 2012. • Required the Secretary to establish the Federal Office of (Medicare and Medicaid) Coordinated Health Care (MMCO) within CMS 

to facilitate Medicare and Medicaid coordination, dual eligible beneficiary care, and other activities. 

CMS’s monthly enrollment data shows that SNP enrollment has 

increased from 670,500, in May 2007 to approximately 2.36 million 

in April 2017. SNP enrollment is concentrated in D–SNPs, which 

account for approximately 83% of the total 2.36 million April 2017 

enrollment (D–SNPs, 1.96 million, C–SNPs, 335,000, and I–SNPs, 

63,500). Moreover, SNP enrollment also is concentrated geographically, with 9 states and Puerto Rico accounting for approximately 

79% of January 2015 enrollment. In April 2015, there were 37 

FIDE–SNPs operating in 9 states with total enrollment of approximately 107,800. Approximately 65% of that January 2015 FIDE– 

SNP enrollment (about 70,000) was in Massachusetts and Minnesota. 

EXPLANATION OF PROVISION

The reported bill would permanently authorize SNPs if certain 

additional policy requirements are met. Rather than expiring under 

current law on December 31, 2018, SNPs could continue to enroll 

qualifying Medicare beneficiaries so long as they adopt the requirements outlined in the bill into D–SNPs, C–SNPs, and I–SNPs, and 

new SNPs could be established. 

The Secretary of HHS (‘‘the Secretary’’) would be required to increase D–SNP integration of Medicare and Medicaid by designating 

MMCO as the dedicated CMS contact point to assist states in addressing D–SNP Medicare-Medicaid misalignments. In this role, 

MMCO would be required to establish a uniform process for disseminating Medicare contract information to state Medicaid agencies as well as to D–SNPs and to establish basic resources for 

states interested in exploring D–SNPs as a platform for integrating 

Medicare-Medicaid services for dual eligible beneficiaries. 

The Secretary, to the extent feasible, would be required to establish procedures by April 1, 2020 that would unify the Medicare and 

Medicaid fee-for-service (FFS) and managed care grievance and appeals procedures applicable to D–SNPs. In establishing unified 

Medicare-Medicaid grievance and appeals procedures, the Secretary would be required to solicit comments from states, plans, 

beneficiary representatives, and other relevant stakeholders. In adVerDate Sep 11 2014 07:47 Aug 04, 2017 Jkt 069010 PO 00000 Frm 00006 Fmt 6659 Sfmt 6602 E:\HR\OC\SR146.XXX SR146
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dition, the Secretary would be required to ensure that unified 

grievance and appeals procedures would be included in D–SNP contracts and would: • adopt current law provisions that would be most protective 

of D–SNP enrollees and also would be most compatible with 

Medicare and Medicaid unified timeframes and consolidated 

access to external review under an integrated process, as determined by the Secretary; • take into account Medicaid state plan differences; • be easily navigable by D–SNP enrollees; and • include, if applicable, the following elements: 

Æ a single written notification of all applicable Medicare and 

Medicaid grievance and appeal rights (the Secretary would be 

authorized to waive certain notification requirements when an 

item or service was covered by Medicare or Medicaid); 

Æ single pathway for resolution or appeal related to a particular item or service covered by a D–SNP or Medicaid; 

Æ procedures written in plain language and available in a 

language and format that is accessible to enrollees, including 

non-English languages prevalent in the D–SNP service area; 

Æ unified Medicare and Medicaid timeframes for grievance 

and appeal processes such as the enrollee’s filing of appeals or 

grievances, plan acknowledgement, resolution of a grievance or 

appeal, and notification of appeal or grievance decisions; and 

Æ requirements for how D–SNP plans process, track, and resolve appeals and grievances to ensure timely beneficiary notification of decisions made throughout the appeal and grievance 

process and for which the appeal and grievance status would 

be easy to determine. 

The reported bill also would require that the unified grievance 

and appeals procedures for Medicare and Medicaid services established by the Secretary incorporate provisions under current law 

and further require the implementation of regulations that would 

continue enrollee benefits pending a grievance or appeal process. 

Beginning January 1, 2021 and for subsequent years, D–SNP plan 

contracts with state Medicaid agencies would be required to use 

the new unified Medicare-Medicaid grievance and appeals procedures. 

D–SNP contracts with state Medicaid agencies in effect on or 

after January 1, 2021, would be required to meet one or more of 

the following requirements for integration of Medicare and Medicaid benefits, to the extent permitted under state law: 

• Enter into a contract with a state Medicaid agency and coordinate long-term services and supports (LTSS), behavioral 

health services, or both by meeting an additional minimum set 

of requirements determined by the Secretary through the 

MMCO and based on input from stakeholders. These requirements could include the following and would have to be included in the D–SNP contract with the state Medicaid agency: 

Æ D–SNP notification for the state in a timely manner of 

hospitalizations, emergency room visits, and hospital or nursing home discharges of enrollees; 

Æ assigning one primary care provider for each enrollee; or 

Æ sharing data that would benefit the coordination of Medicare and Medicaid items and services. 

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• Satisfy the requirements of a FIDE–SNP, except the requirement that the D–SNP have similar average levels of frailty as the Program for All-inclusive Care for the Elderly (PACE) 

or enter into a capitated contract with the state Medicaid agency to provide LTSS, behavioral health, or both LTSS and behavioral health. • The parent organization must assume clinical and financial responsibility for the Medicare and Medicaid benefits provided to individuals who are enrolled in a D–SNP and a Medicaid managed care organization that provides LTSS or behavioral health services, with the same parent organization. 

MMCO would be responsible for the following: • the designated contact for state Medicaid agencies in the 

integration of D–SNPs; and • the development of regulations and guidance to implement 

a unified grievance and appeals process. 

Effective for SNP contracts beginning January 1, 2020 and in 

subsequent years, the Secretary would add the following C–SNP 

care management plan requirements: • C–SNP interdisciplinary provider teams would include providers with demonstrated expertise, including training in an 

applicable specialty, in treating individuals similar to the C– 

SNP targeted population; • enrolled individuals would receive face-to-face encounters 

with the C–SNP at least annually; • the MOC would include the results of the initial assessment as well as each annual reassessment, and the results of 

those assessments would be addressed in the enrollee’s individualized care plan; • the annual MOC evaluation and approval would take into 

account whether or not the plan fulfilled the goals identified in 

the previous year’s MOC goals; and • a C–SNPs MOC would only be approved if the C–SNP 

achieved established minimum benchmarks for each MOC element. 

Effective for C–SNP contracts beginning on or after January 1, 

2022, Section 201 would revise the definition of individuals eligible 

for C–SNPs to include Medicare beneficiaries who (i) have one or 

more comorbid and medically complex chronic conditions that is life 

threatening or that significantly limits overall health or function, 

(ii) have a high-risk of hospitalization or other adverse health outcome, (iii) require intensive care coordination, and (iv) is identified 

on the list of conditions approved by the panel of clinical advisors 

described below. The Secretary would be required to convene a clinical advisor panel to identify C–SNP conditions by December 31, 

2020, and every five years thereafter. The C–SNP condition clinical 

advisory panel would establish and update the list of severe or disabling chronic conditions that met the following criteria: 

• Conditions that require prescription drugs, providers, and 

models of care that are unique to the specific population of enrollees of a C–SNP on or after December 1, 2020 and: 

Æ as a result of access to, and enrollment in, such a specialized MA plan for special needs individuals, individuals with 

such condition would have a reasonable expectation of slowing 

or halting the progression of the disease, improving health outVerDate Sep 11 2014 07:47 Aug 04, 2017 Jkt 069010 PO 00000 Frm 00008 Fmt 6659 Sfmt 6602 E:\HR\OC\SR146.XXX SR146
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comes and decreasing overall costs for individuals diagnosed 

with such condition compared to available options of care other 

than through such a specialized MA plan for special needs individuals; or 

Æ Conditions that have a low prevalence in the general population of Medicare beneficiaries or a disproportionally high 

per-beneficiary cost. 

In establishing and updating the C–SNP condition list, the clinical advisory panel would be required to take into account the 

availability of varied benefits, cost-sharing, and supplemental benefits described in Section 301 of the reported bill. 

The Secretary could require quality data reporting and apply 

those ratings to SNPs at the plan level instead of the contract 

level. Prior to applying quality measurement at the plan level, the 

Secretary would be required to: • consider the minimum number of SNP enrollees to determine if a statistically significant or valid measurement of quality at the plan level would be possible; • consider the impact of such a change on MA plans that 

serve a disproportionate number of dually-eligible beneficiaries; • ensure that if plan level quality measures are reported, 

that MA plans would not be required to report duplicative information; and • ensure that plan level quality reporting would not interfere with the collection of encounter data submitted by MA organizations or the administration of any changes to the program as a result of the plan level data collection. 

If the Secretary applies quality measurement at the plan level, 

the specific quality measurement could include measures from the 

Medicare Health Outcomes Survey (HOS), the Healthcare Effectiveness Data Information Set (HEDIS), and the Consumer Assessment of Healthcare Providers and Systems (CAHPS) as well as 

quality measures under Medicare Part D. The Secretary would determine the feasibility of requiring all MA plans to report quality 

measures at the plan level and would consider applying this requirement following this assessment. 

The Comptroller General would conduct a study on state-level integration between SNPs and Medicaid that would include analyses 

of the following: 

• the characteristics of states where the state Medicaid 

agency has a contract with D–SNPs that delivers LTSS 

through a managed care program, including state plan LTSS 

requirements; 

• the various types of SNPs, which may include the following: (1) a FIDE–SNP; (2) a D–SNP that has a contract with 

a state Medicaid agency, which may include LTSS; and (3) a 

D–SNP that has a contract with a state Medicaid agency that 

meets additional requirements established by the state; 

• the characteristics of individuals enrolled in D–SNPs; 

• as practicable, the following with respect to state programs 

for the delivery of LTSS through Medicaid managed care plans: 

Æ the populations eligible to receive LTSS, and 

Æ the SNPs where LTSS are provided on a capitated basis 

or, where LTSS are carved out and provided through FFS Medicaid, if any; and 

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• the integration arrangements of D–SNPs offered across 

states and how their availability and variation affect expenditures, service delivery options, access to community care, and 

the utilization of care; and • the efforts of state Medicaid programs to transition duallyeligible beneficiaries receiving LTSS from institutional settings 

to home and community based settings and related financial 

impacts of these transitions. 

The Comptroller General would submit the report to Congress 

within two years of the date of enactment, including recommendations for legislation and administrative action as determined appropriate. 

TITLE III—EXPANDING INNOVATION AND TECHNOLOGY 

Section 301. Adapting Benefits to Meet the Needs of Chronically Ill 

Medicare Advantage Enrollees 

PRESENT LAW

Under Medicare Advantage, private health plans are paid a per 

person monthly amount to provide all Medicare-covered benefits 

(except hospice) to beneficiareis who enroll, regardless of how many 

or how few services a beneficiary actually uses. The plan is at-risk 

if aggregate costs for its enrollees exceed program payments and 

beneficiary cost sharing. Conversely, in general, the plan can retain 

savings if aggregate enrollee costs are less than program payments 

and cost sharing. Currently, an MA plan must offer the same benefit package to all of its enrollees. CMMI is currently testing a 

model to allow greater flexibility for an MA plan to meet the needs 

of chronically ill enrollees. Under the model, plans are allowed to 

propose and design offerings that vary the benefits, cost-sharing, 

and supplemental benefits offered to enrollees with specific conditions. The first year of the model, which began January 1, 2017, 

is being conducted in seven states. The second year of the model, 

beginning January 1, 2018, will add three additional states. 

EXPLANATION OF PROVISION

The reported bill would expand the testing of the CMMI ValueBased Insurance Design (VBID) Model to allow an MA plan in any 

state to participate in the model by 2020. The section would delay 

until January 1, 2022 the authority for the Secretary to terminate 

or modify the model. The model would be permitted to continue 

after January 1, 2022 if it can be shown that the model is expected 

to (a) improve quality of care without increasing spending, (b) reduce spending without reducing quality of care, or (c) improve the 

quality of care and reduce spendig. Funding for the desgn, implementation, and evaluation of the expanded model is to be allocated 

by the Secretary from appropriations applied to CMMI. 

Section 302. Expanding Supplemental Benefits to Meet the Needs 

of Chronically Ill Medicare Advantage Enrollees 

PRESENT LAW

All MA plans must offer required Medicare benefits (except hospice) and may offer additional or supplemental benefits. Mandatory 

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supplemental benefits are covered by the MA plan for every person 

enrolled in the plan and are paid for either through plan rebates, 

a beneficiary premium, or beneficiary cost sharing. Optional supplemental benefits must be offered to all plan enrollees, but the enrollees may choose whether to pay an additional amount to receive 

coverage of the optional benefit. Optional benefits cannot be financed through plan rebates. 

An MA plan must adhere to specific rules regarding the 

supplemntal benefits that it can offer. First, the MA plan cannot 

design a benefit plan that is likely to substantially discourage enrollment by certain MA-eligible individuals. Further, supplemental 

benefits (a) may not be Part A or Part B required services, (b) must 

be primarily health related with the primary purpose to prevent, 

cure, or diminish an illness or injury, and (c) the plan must incur 

a cost when providing the benefit. Items that are primarily for comfort or are considered social services would not qualify as supplemental benefits. Examples of supplemental benefits include the following: 

1. Additional inpatient hospital days in an acute care or psychiatric facility, 

2. Acupuncture or alternative therapies, 

3. Counseling services, 

4. Fitness benefit, 

5. Enhanced disease management, and 

6. Remote Access Technologies (including Web/Phone based 

technologies). 

EXPLANATION OF PROVISION

The reported bill would allow an MA plan to offer a wider array 

of supplemental benefits to chronically ill enrollees beginning in 

2020. These supplemental benefits would be defined as those that 

have a reasonable expectation of improving or maintaining the 

health or overall function of the chronically ill enrollee and would 

not be limited to primarily health-related services. For purposes of 

this section, a chroniclly ill enrollee would be defined as those who 

have one or more comorbid and medically complex chronic conditions that are life threatening or significantly limit the overall 

health or functioning of the enrollee, have a high risk of hospitalization or other adverse health outcomes, and require intensive care coordination. The section would allow an MA plan the 

flexibility to provide targeted supplemental benefits to specific 

chronically ill enrollees. 

The reported bill would require the Comptroller General to conduct a study on the supplemental benefits provided by MA plans. 

The study, to the extent data are available, would be required to 

include specified analyses on topics including the availability, utilization, and cost of the supplemental benefits, the impact on quality, health, utilization of other services, and the savings resulting 

from the supplemental benefits. The study would include recommendations for legislative and administrative actions as the 

Comptroller sees fit. The Comptroller General would submit the report to Congress not later than five years after the date of enactment. 

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Section 303. Increasing Convenience for Medicare Advantage 

Enrollees Through Telehealth 

PRESENT LAW

MA plans are paid a per person monthly amount. The Secretary 

determines a plan’s payment by comparing its bid to a benchmark. 

A bid is the plan’s estimated cost of providing Medicare-covered 

services (excluding hospice but including the cost of medical services, administration, and profit). In general, the Secretary has the 

authority to review and negotiate plan bids to ensure that they reflect revenue requirements. A benchmark is the maximum amount 

the federal government will pay for providing those services in the 

plan’s service area. If a plan’s bid is less than the benchmark, the 

plan’s payment equals its bid plus a rebate. The rebate must be returned to enrollees in the form of additional benefits, reduced cost 

sharing, reduced Medicare Part B or Part D premiums, or some 

combination of these options. 

An MA plan may provide basic telehealth benefits as part of the 

standard benefit. For example, telemonitoring and web-based and 

phone technologies can be used to provide telehealth services. 

Medicare Advantage Prescription Drug (MAPD) plans may choose 

to include telehealth services as part of their plan benefits, for instance, in providing medication therapy management (MTM). However, MA plans that want to provide telemedicine or other technologies that they believe promote efficiences beyond what is covered in the traditional Medicare program must receive approval to 

provide them as a supplemental benefit, and must use their rebate 

dollars to pay for those services. 

EXPLANATION OF PROVISION

The reported bill would allow an MA plan to offer additional, 

clinically appropriate, telehealth benefits in its annual bid amount 

beyond the services that currently receive payment under Part B 

beginning in 2020. The Secretary would be required, no later than 

November 30, 2018, to solicit comments on what types of items and 

services (including those provided through supplemental health 

care benefits) should be considered to be additional telehealth benefits and the requirements for the provision or furnishing of such 

benefits (such as licensure, training, and coordination requirements). The costs of telehealth benefits included in the bid would 

not include capital and infrastructure related costs or investments. 

If an MA plan provides a service as an additiontal telehealth service, the MA plan must also provide access to the service through 

an in-person visit (and not only as an additional telehealth visit), 

and the beneficiary would have the ability to decide whether or not 

to receive the services via telehealth. This section would not affect 

the requirement that MA plans must provide enrollees with all 

benefits under Parts A and B of Medicare (except hospice). 

Section 304. Providing Accountable Care Organizations the Ability 

to Expand the Use of Telehealth 

PRESENT LAW

While Medicare beneficiaries may receive telehealth services in 

a variety of settings, under current law (SSA Section 1834(m)), the 

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Medicare program restricts telehealth payments by the type of 

services provided, the geographic location where the services are 

delivered, the type of institution delivering the services, and the 

type of health provider. In order to be eligible for Medicare payment, telehealth services must be provided at a qualifying site in 

a rural health professional shortage area (HPSA), a county not included in a Metropolitan Statistical Area (MSA), or from an entity 

that participates in a Federal telemedicine demonstration project. 

Qualifying ‘‘originating sites’’ include an office of a physician or 

practitioner, a critical access hospital (CAH), a rural health clinic, 

a Federally qualified health center, a hospital, a hospital- or CAHbased renal dialysis center, a skilled nursing facility, or a community mental health center. 

Medicare accountable care organizations (ACOs) were authorized 

in the Affordable Care Act, and initial models included the fee-forservice based Medicare Shared Savings Program (MSSP) and the 

Pioneer ACOs, which received population-based payments or capitation. While current laws and rules do not preclude ACOs from 

providing telemedicine or other technologies that they believe promote efficiencies to their patients, ACOs do not receive additional 

Medicare payment for furnishing those services and technologies. 

In December 2016, CMS announced the Next Generation ACO 

Model, with modified benchmarking methods, additional payment 

mechanisms (including capitation), and various ‘‘benefit enhancements,’’ including better access to (and payment consideration for) 

telehealth services. 

EXPLANATION OF PROVISION

The reported bill would expand the ability of certain MSSP ACOs 

and ACOs tested or expanded through the CMS Center for Medicare and Medicaid Innovation (CMMI) to furnish and receive payments for telehealth services by applying the Next Generation ACO 

telehealth waiver, beginning January 1, 2020. As a result, the reported bill would (1) eliminate the geographic component of the 

originating site requirement, (2) allow beneficiaries assigned to the 

approved MSSP and ACO programs to receive currently allowable 

telehealth services in the home, and (3) ensure that MSSP and 

ACO providers are only allowed to furnish telehealth services as 

currently specified under Medicare’s physician fee schedule, with 

limited exceptions. 

In order for an ACO to be eligible to receive these telehealth payments, it must also be an ACO to which beneficiaries are prospectively assigned and it must accept two-sided risk for both bonuses 

rewarded for realized savings as well as penalties associated with 

some cost overages. When the home of a beneficiary receiving the 

services is the originating site, then no facility fee would be paid. 

There would also be no payment for services that are inappropriate 

for the home setting, such as those typically furnished to hospital 

inpatients. 

No later than January 1, 2026, the Secretary would submit a report to Congress on the implementation of this section that would 

include an analysis of the utilization of, and expenditures for, telehealth services provided by ACOs, together with recommendations 

for legislation and administration action as the Secretary determines appropriate. 

14 

Section 305. Expanding the Use of Telehealth for Individuals with 

Stroke 

PRESENT LAW

Patients who have stroke symptoms or have had a stroke may 

receive care in a number of sites and across different providers. In 

addition to physician services, stroke patients may require care at 

an acute care hospital (inpatient and/or outpatient), inpatient rehabilitation facility (IRF), or skilled nursing facility (SNF). For covered Medicare services provided to stroke patients, physicians are 

paid according to the Medicare Physician Fee Schedule (MPFS), 

hospitals according to the inpatient prospective payment system 

(IPPS) or outpatient prospective payment system (OPPS), IRFs 

under the IRF PPS, and SNFs under the SNF PPS. Under current 

law, telehealth restrictions (due to SSA Section 1834(m)) apply to 

all such services. In the case of telehealth services for the evaluation of acute stroke, the originating site hospital must be in a rural 

health professional shortage area (HPSA), a county not included in 

a Metropolitan Statistical Area (MSA), or an entity that participates in a Federal telemedicine demonstration project. 

EXPLANATION OF PROVISION

The reported bill would eliminate the originating site geographic 

restrictions for telehealth services furnished for the purpose of 

evaluating an acute stroke (as determined by the Secretary), beginning January 1, 2021. Removing this restriction would provide payment to the distant consulting physician regardless of the originating site hospital’s location. In the case where a hospital is newly 

eligible to serve as an originating site, that hospital would not receive an originating site telehealth facility fee. 

TITLE IV—IDENTIFYING THE CHRONICALLY ILL 

POPULATION 

Section 401. Providing Flexibility for Beneficiaries to Be Part of an 

Accountable Care Organization 

PRESENT LAW

Initially, Medicare fee-for-service beneficiaries were assigned to 

an ACO based on their utilization of primary care services provided 

by a physician who participated in an ACO. Under these original 

models, beneficiaries do not have the option of choosing to participate directly in an ACO (aside from seeking care from a particular 

provider) but are notified if their primary care provider is an ACO 

participant. Beneficiaries who receive at least one primary care 

service from a primary care physician within the ACO are assigned 

to that ACO if the beneficiary receives the plurality of his or her 

primary care services from primary care physicians within the 

ACO. Primary care physicians are defined as those with one of four 

specialty designations: internal medicine, general practice, family 

practice, and geriatric medicine or for services furnished in a federally qualified health center (FQHC) or rural health clinic (RHC), a 

physician included in the attestation provided by the ACO as part 

of its application. Beneficiaries who have not had a primary care 

service furnished by any primary care physician either inside or 

15 

outside the ACO but who receive at least one primary care service 

from any physician within the ACO are assigned to that ACO if the 

beneficiary receives a plurality of his or her primary care services 

from specialist physicians and certain non-physician practitioners 

(nurse practitioners, clinical nurse specialists, and physician assistants) within the ACO. Medicare beneficiaries enrolled in a Medicare Advantage plan cannot be enrolled in an ACO. 

The manner in which Medicare fee-for-service beneficiaries are 

assigned to an ACO affects how the ACO can tailor care for its 

beneficiaries and how the ACO is evaluated. Under current CMS 

rules, Medicare determines the method of beneficiary attribution, 

rather than giving ACOs the option to choose the assignment methodology that best fits their model of care. Medicare fee-for-service 

beneficiaries can be assigned to an ACO either retrospectively or 

prospectively depending on the ACO’s track. The initial implementation of MSSP ACOs (Tracks 1 and 2) retrospectively assigned 

beneficiaries to ACOs. Retrospective assignment ensures that 

ACOs are held accountable for the spending only of those beneficiaries who receive most of their primary care services from ACO 

providers, but they may not know who those beneficiaries are until 

the end of the year. The introduction of Track 3 MSSP ACOs allows prospective beneficiary assignment (along with other changes 

in the assumption of risk and rewards). Prospective assignment allows ACOs to identify beneficiaries for whom they will be held accountable and proactively take steps to connect these beneficiaries 

to appropriate care, but also holds ACOs accountable for the spending for these beneficiaries even if the ACO providers do not provide 

the care. 

EXPLANATION OF PROVISION

The reported bill would allow MSSP ACOs the choice of prospective assignment, beginning with agreements entered into or renewed on or after January 1, 2020. In addition, beneficiaries would 

be able to voluntarily identify an ACO professional as their primary care provider and be assigned to that ACO beginning with 

the 2018 performance year. The Secretary would establish a process to notify Medicare beneficiaries of their ability to make such a 

voluntary identification, and how to make or change this designation. The beneficiary’s voluntary identification would supersede any 

other claims-based assignment to an ACO. 

TITLE V—EMPOWERING INDIVIDUALS AND CAREGIVERS IN 

CARE DELIVERY 

Section 501. Eliminating Barriers to Care Coordination under 

Accountable Care Organizations 

PRESENT LAW

ACOs were conceived as collaborations that integrate groups of 

providers, such as physicians (particularly primary care physicians), hospitals, and others around the ability to receive sharedsaving bonuses or losses from a payer by achieving measured quality targets and demonstrating real reductions in overall spending 

growth for a defined population of patients. Beneficiaries who are 

assigned to or voluntarily elect to be identified with an ACO conVerDate Sep 11 2014 07:47 Aug 04, 2017 Jkt 069010 PO 00000 Frm 00015 Fmt 6659 Sfmt 6602 E:\HR\OC\SR146.XXX SR146
16 

tinue to have standard Medicare Part A and B cost-sharing responsibilities, including deductibles and coinsurance payments. 

EXPLANATION OF PROVISION

The reported bill would authorize the Secretary to create an ACO 

Beneficiary Incentive Program, intended to encourage beneficiaries 

to obtain medically necessary primary care services by permitting 

incentive payments to beneficiaries. The program would be established no earlier than January 1, 2019 and no later than January 

1, 2020. The Secretary could terminate the program at any time. 

Current and future ACOs that have agreed to two-sided risk/reward models could apply to establish a program that would provide 

incentive payments to beneficiaries assigned to the ACO who receive primary care services from (i) a physician who has a primary 

care specialty designation, or (ii) a physician assistant, nurse practitioner, or clinical nurse specialist participating in the ACO, or (iii) 

a Federally qualified health center or rural health clinic. The program would continue for at least one year. The incentive payment 

could be up to $20, with the maximum amount to be updated annually by the percentage increase in the consumer price index. The 

incentive payment would be made regardless of whether or not the 

beneficiary is enrolled in a Medicare supplemental policy 

(Medigap), a Medicaid plan or waiver, or any other health insurance policy or health benefit plan, and would be made for each 

qualifying (primary care) service. The payment would be made no 

later than 30 days after the service is furnished. The Secretary 

would not make any payments to the ACOs for the costs associated 

with the implementation of the ACO Beneficiary Incentive Program. The incentive payments would be disregarded for purposes 

of calculating ACO benchmarks, estimated average per capita 

Medicare expenditures, and shared savings. ACOs would be required to report to CMS the amount and frequency of the incentive 

payments made and the number of beneficiaries receiving the payments. 

Incentive payments made under an ACO Beneficiary Incentive 

Program would not be considered income or resources or otherwise 

be taken into account for purposes of determining eligibility for 

benefits or assistance under any Federal program or under any 

State or local program financed in whole or in part with Federal 

funds, or for any Federal or State tax laws. 

The Secretary would conduct an evaluation of the ACO Beneficiary Incentive Program that would include an analysis of the impact of the implementation of the program on Medicare expenditures and beneficiary health outcomes. A report would be due to 

Congress no later than October 1, 2023, containing the results of 

the evaluation together with recommendations for such legislation 

and administrative action as the Secretary were to determine appropriate. 

Section 502. GAO Study and Report on Longitudinal 

Comprehensive Care Planning Services under Medicare Part B 

PRESENT LAW

No present law. 

17 

EXPLANATION OF PROVISION

The reported bill would require the Comptroller General to conduct a study on the establishment of a payment code, under Medicare Part B, for a beneficiary visit with an applicable provider for 

longitudinal comprehensive care planning services. In this section 

the term, ‘‘longitudinal comprehensive care planning services’’ 

would mean ‘‘a voluntary shared decision-making process that is 

furnished by an applicable provider through an interdisciplinary 

team and includes a conversation with Medicare beneficiaries who 

have received a diagnosis of a serious or life-threatening illness.’’ 

The term ‘‘applicable provider’’ would mean a hospice program or 

other provider of services (e.g., hospital, skilled nursing facility, 

home health agency), that furnishes longitudinal comprehensive 

care planning services through an interdisciplinary team, and 

meets such other requirements as the Secretary might determine 

to be appropriate. The term ‘‘interdisciplinary team’’ would mean 

a group that includes at least one physician, one registered professional nurse, and one social worker, and could include a chaplain, 

minister, or other clergy, and other direct care personnel. The purpose of such services would be ‘‘to discuss a longitudinal care plan 

that addresses the progression of the disease, treatment options, 

the goals, values, and preferences of the beneficiary, and the availability of other resources and social supports that may reduce the 

beneficiary’s health risks and promote self-management and shared 

decision making.’’ 

The study would include analyses of a number of issues related 

to long-term comprehensive care planning, including the availability, use, and efficiency of existing services, and an examination 

of the barriers to and quality metrics for such care. The report 

would include many stakeholder views and concerns. The Comptroller General would submit the report to Congress no later than 

18 months after the date of the enactment, together with recommendations for such legislation and administrative action as the 

Comptroller General sees fit. 

TITLE VI—OTHER POLICIES TO IMPROVE CARE FOR THE 

CHRONICALLY ILL 

Section 601. Providing Prescription Drug Plans with Parts A and 

B Claims Data to Promote the Appropriate Use of Medications 

and Improve Health Outcomes 

PRESENT LAW

Under current law, standalone prescription drug plans (PDPs) 

provide Medicare’s prescription drug benefit to fee-for-service (FFS) 

beneficiaries. Certain Medicare beneficiaries who meet criteria described in section 1860D–4(c)(2)(a)(ii) of the Social Security Act are 

eligible to enroll in medication therapy management (MTM) programs offered by PDPs. MTM’s purpose is to coordinate prescription drugs for high-cost beneficiaries. However, PDPs do not have 

access FFS utilization data that may aid the PDP in coordination 

efforts. This differs from MA–PDs which are responsible for providing both Medicare’s prescription drug benefit but also Medicare 

Part A and Part B’s medical benefits and has access to all relevant 

data. 

18 

EXPLANATION OF PROVISION

The reported bill would require the Secretary of HHS to establish 

a process, beginning in plan year 2020, by which a Part D plan 

sponsor may submit a request to HHS to receive claims data under 

Parts A and B. These data, which would include the most recent 

possible claims, would be for the purposes of: optimizing therapeutic outcomes through improved medication use; improving care 

coordination as to prevent adverse health outcomes; and other purposes determined by the Secretary. Plan sponsors would be prohibited from using these data to: inform Part D coverage determinations, conduct retroactive review of coverage indications, facilitate 

enrollment changes to a different PDP or an MA–PD offered by the 

same parent organization, market benefits, and for other purposes 

determined by the Secretary to protect the identity of Medicare 

beneficiaries and to protect the security of personal health information. 

Section 602. Government Accountability Office (GAO) Study and 

Report on Improving Medication Synchronization 

PRESENT LAW

Individuals with chronic conditions are often prescribed multiple 

prescriptions by different clinicians. Because many prescriptions 

are for a standard period of time (i.e., 30 days) but may be prescribed at separate points during a course of treatment, a patient 

might have to fill a number of prescriptions at different times each 

month. There is a move toward prescription synchronization to enable patients to fill multiple prescriptions from various providers at 

the same time each month in an effort to improve prescription adherence. In 2012, CMS announced a regulatory change making it 

easier for Medicare Part D enrollees and their prescribers to synchronize prescriptions (42 CFR § 423.153(b)(4)). Under the rule, 

which took effect at the beginning of 2014, Part D plans must 

apply a pro-rated daily cost-sharing rate to prescriptions for less 

than a 30-days’ supply of a drug dispensed in an oral form, with 

some exceptions. The change means that a Part D enrollee must 

no longer pay a full month’s co-payment or coinsurance for drugs 

dispensed for less than a 30-day period. The pro-rating applies regardless of the setting where a drug is dispensed. 

EXPLANATION OF PROVISION

The reported bill would require the Comptroller General to submit a report to Congress, within 18 months of enactment, examining the extent to which Medicare Part D and private payers use 

programs that synchronize pharmacy dispensing schedules so that 

individuals who are prescribed multiple drugs may receive their 

medications on the same day to facilitate counseling services and 

promote medication adherence. The Comptroller would be required 

to recommend legislative and administrative actions as the Comptroller sees fit. 

The report would evaluate the extent to which pharmacies have 

adopted synchronization programs; look at the common characteristics of the programs, including how pharmacies structure counseling sessions under such programs as well as payment and other 

19 

arrangements to support pharmacy synchronization efforts; and 

compare the Medicare programs to private programs. The report 

would also assess the programs’ impact on medication adherence, 

health outcomes, and patient satisfaction; assess the extent to 

which Medicare rules support medication synchronization; and examine whether there are barriers to such programs in Medicare. 

Section 603. GAO Study and Report on the Impact of Obesity 

Drugs on Patient Health and Spending 

PRESENT LAW

Under existing law (Section 1860D–(e)(2)(A) of the Social Security Act) Medicare Part D excludes coverage of certain drugs or 

classes of drugs, or their medical uses. Among the excluded drugs 

are agents used to treat anorexia, weight loss, or weight gain (even 

if used for a non-cosmetic purpose such as a treatment for morbid 

obesity). 

EXPLANATION OF PROVISION

The reported bill would direct the Comptroller General to submit 

a report to Congress within 18 months of enactment providing information, to the extent data are available, on the use of prescription drugs to control the weight of obese patients and the impact 

of coverage on health and spending and to recommend legislative 

and administrative actions as the Comptroller sees fit. The report 

would examine use of the drugs in the non-Medicare population 

and for Medicare beneficiaries who have coverage for weight-loss 

drugs as a Medicare Advantage supplemental benefit. 

The Comptroller General would analyze the prevalence of obesity 

in the population; the utilization of weight-loss drugs; the distribution of body mass index by those taking weight-loss drugs; and the 

available information on the use of obesity drugs in conjunction 

with other health care items or services, such as counseling, and 

how that compares with the use of other items and services by 

obese individuals who do not use weight loss drugs. 

The Comptroller General also would examine physician considerations in prescribing weight-loss drugs; the prevalence of processes 

to discontinue use of the drugs for patients who do not benefit; the 

available information on patient adherence and maintenance of 

weight loss, and the subsequent impact of obesity drugs on other 

medical services directly related to obesity; and what is known 

about the spending associated with the care of individuals who use 

weight loss drugs compared to those who do not. 

Section 604. HHS Study and Report on Long-Term Risk Factors for 

Chronic Conditions Among Medicare Beneficiaries 

PRESENT LAW

No present law. 

EXPLANATION OF PROVISION

The reported bill would require the Secretary of Health and 

Human Services (HHS) to conduct a study to evaluate long-term 

cost drivers to the Medicare program, including obesity, tobacco 

use, mental health conditions, and other factors that may conVerDate Sep 11 2014 07:47 Aug 04, 2017 Jkt 069010 PO 00000 Frm 00019 Fmt 6659 Sfmt 6602 E:\HR\OC\SR146.XXX SR146
20 

tribute to the deterioration of health conditions among individuals 

with chronic conditions. The study would identify any barriers to 

collecting and analyzing the information needed to conduct this 

evaluation and make legislative and regulatory recommendations 

for removing such barriers. The Secretary would be required to 

post the resulting report on the HHS public website no later than 

18 months after the enactment. 

TITLE VII—OFFSETS 

Section 701. Rescission of Funding in the Medicare Improvement 

Fund 

PRESENT LAW

Section 188 of the Medicare Improvements for Patient and Providers Act (MIPPA) established the Medicare Improvement Fund 

(MIF), available to the Secretary to make improvements under the 

original fee-for-service program under Parts A and B for Medicare 

beneficiaries. Under current law, $270 million is available for services furnished during and after FY2021. 

EXPLANATION OF PROVISION

The reported bill would eliminate the funding in the Medicare 

Improvement Fund. 

Section 702. Rescission of Funding in the Medicaid Improvement 

Fund 

PRESENT LAW

The Supplemental Appropriations Act, 2008 (P.L. 110–252) 

amended the Social Security Act established, the Medicaid Improvement Fund, available to the Secretary to improve the management of the Medicaid program. Under current law, $5 million 

is available for FY2021 and after. 

EXPLANATION OF PROVISION

The reported bill would eliminate the funding in the Medicaid 

Improvement Fund. 

III. BUDGET EFFECTS OF THE BILL 

A. COMMITTEE ESTIMATES

The Committee adopts as its own the preliminary cost estimate 

prepared by the Director of the Congressional Budget Office pursuant to section 402 of the Congressional Budget Act of 1974. 

B. BUDGET AUTHORITY

In compliance with section 308(a)(1) of the Budget Act, the Committee states that the extent to which the provisions of the bill as 

reported involve new or increased budget authority or affect levels 

of tax expenditures will be included in the statement from the Congressional Budget Office that will be provided separately, as described in Part C below. 

21 

C. CONSULTATION WITH CONGRESSIONAL BUDGET OFFICE

In accordance with section 403 of the Congressional Budget and 

Impoundment Control Act of 1974 (P.L. 93–344), the Committee 

advises that the Congressional Budget Office has submitted a cost 

estimate on the bill. The following is the cost estimate provided by 

the Congressional Budget Office pursuant to section 402 of the 

Congressional Budget Act of 1974. 

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, August 1, 2017. 

Hon. ORRIN G. HATCH, 

Chairman, Committee on Finance, 

U.S. Senate, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for S. 870, the Creating HighQuality Results and Outcomes Necessary to Improve Chronic 

(CHRONIC) Care Act of 2017. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Lori Housman. 

Sincerely, 

MARK P. HADLEY

(For Keith Hall, Director). 

Enclosure. 

S. 870—Creating High-Quality Results and Outcomes Necessary to 

Improve Chronic Care Act 

Summary: S. 870 would affect the Medicare and Medicaid programs in several ways. Specifically, the bill would: 

• Modify and extend programs that provide services to beneficiaries with chronic conditions or other special needs, 

• Expand use of remote (telehealth) services, and 

• Rescind funding dedicated to improving the Medicare feefor-service program and the management of the Medicaid program. 

CBO estimates that enacting S. 870 would not affect direct 

spending in fiscal year 2018; would reduce direct spending for the 

Medicare and Medicaid programs by $217 million over the 2018– 

2022 period; and would have no significant effect on total direct 

spending over the 2018–2027 period. Pay-as-you-go procedures 

apply because enacting S. 870 would affect direct spending. Enacting the bill would not affect revenues. 

CBO estimates that enacting the legislation would not increase 

net direct spending or on-budget deficits by more than $5 billion 

in any of the four consecutive 10-year periods beginning in 2028. 

The bill contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act (UMRA). 

Estimated cost to the Federal Government: The estimated budgetary effect of S. 870 is shown in the following table. The effects 

of this legislation fall within budget functions 550 (health) and 570 

(Medicare). 

22 

1Measuring the cost of similar patients in the community has proved to be a very difficult 

technical challenge. As a result, each time the evaluators have analyzed the data for a performance year, they have recommended making substantial changes to how those costs will be estimated for a subsequent performance year. Participating providers have been given the choice 

of continuing to use the existing method or switching to the newly developed method. 

By fiscal year, in millions of dollars— 

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2017– 

2022 

2017– 

2027 

INCREASES OR DECREASES (¥) IN DIRECT SPENDING OUTLAYS 

Independence at 

Home Demonstration ..................... 0 0 2 7 7 0 0 0 0 0 0 16 16 

Special Needs Plans 0 0 6 13 13 14 14 15 15 16 17 46 123 

Value-based Insurance Design 

Demonstration .... 0 0 0 40 50 0 0 0 0 0 0 90 90 

Telehealth Costs in 

Medicare Advantage Bids ............ 0 0 0 ¥10 ¥10 ¥10 ¥10 ¥10 ¥10 ¥10 ¥10 ¥30 ¥80 

Telehealth in ACOs 0 0 0 5 5 5 5 5 5 10 10 15 50 

Telehealth Services 

for Stroke Patients .................. 0 0 0 0 10 15 20 25 30 35 45 25 180 

Assignment of Beneficiaries to ACOs 0 0 0 5 5 5 5 5 5 10 10 15 50 

Use of In-network 

Providers by ACO 

Beneficiaries ....... 0 0 0 ¥5 ¥7 ¥7 ¥7 ¥7 ¥7 ¥7 ¥7 ¥19 ¥54 

Rescissions: 

Medicare Program .......... 0 0 0 0 ¥235 ¥135 0 0 0 0 0 ¥370 ¥370 

Medicaid Program .......... 0 0 0 0 ¥5 0 0 0 0 0 0 ¥5 ¥5 

Total Changes ......... 0 0 8 55 ¥167 ¥113 27 33 38 54 65 ¥217 0 

Notes: Budget authority is equal to outlays. 

ACO = accountable care organization. 

Basis of estimate: For this estimate, CBO assumes that S. 870 

will be enacted near the end of fiscal year 2017. 

CBO estimates that enacting S. 870 would affect direct spending 

in each year, beginning in 2019, by a significant amount, but would 

have no significant net effect on total direct spending over the 

2018–2027 period. The provisions that would affect direct spending 

are discussed below. 

Independence at Home Demonstration. The bill would extend the 

Independence at Home (IAH) program for two years, through late 

fiscal year 2019, and would increase the aggregate cap on the number of Medicare beneficiaries served by participating providers from 

10,000 to 15,000. 

Primary care services provided in a number of settings, including 

a patient’s home, are covered by the Medicare program. The IAH 

program was established to test whether providing a financial incentive—bonus payments—for providers to deliver primary care 

services in a patient’s home would reduce Medicare spending and 

improve the quality of care. Providers participating in the IAH program receive a bonus payment if their practice meets quality 

standards and the average cost of Medicare benefits for its patients 

is less than 95 percent of the average cost of such benefits for similar patients in the community.1

23 

Those bonus payments would add to federal costs. The ultimate 

budgetary effect would depend on whether they resulted in offsetting reductions in Medicare spending. However, determining that 

the patients served by participating providers have Medicare costs 

that, on average, are below that 95 percent level does not necessarily indicate that the IAH program reduces Medicare spending, 

because it does not indicate that the program has changed Medicare’s costs for beneficiaries served by participating providers. Expanding the use of home-based services through the IAH program 

would probably increase the use of certain services, but would ultimately reduce Medicare spending if the resulting change in practice patterns lowered health care costs or if the IAH program shifted market share from higher-cost to lower-cost providers, as long 

as the resulting savings amounted to more than the bonuses paid 

through the program. To date, interim evaluations of the IAH program have not assessed whether such changes have occurred. In 

the absence of such information, CBO has no basis for concluding 

whether the bonus payments offered through the IAH program 

have spurred participating providers to make changes affecting 

Medicare spending. 

Further, the bonus payments, as designed, are not targeted exclusively at inducing changes to reduce spending. Instead, providers with relatively low costs would qualify for bonuses whether 

they make any changes in the way they provide care or not. Similarly, providers who do make changes, but do not lower spending 

by enough to qualify for a bonus would not receive one. On the 

basis of the bonus payments made to date, CBO estimates that 

Medicare would make annual bonus payments to participating providers that average about $5 million per 10,000 beneficiaries for 

each additional year of the demonstration. Taking into account 

both the 5,000 increase in the cap on the number of participating 

beneficiaries and the effect of interactions between changes in 

spending in the fee-for-service sector and payment rates in the 

Medicare Advantage (MA) program, CBO estimates that the bill’s 

changes to the IAH program would increase Medicare spending by 

$16 million over the 2018–2027 period. 

Special Needs Plans. Special needs plans (SNPs) are private 

health insurance plans in the Medicare Advantage program that 

limit enrollment to beneficiaries who require an institutional level 

of care, have certain chronic conditions, or are enrolled in both 

Medicare and Medicaid (dual eligibles). Under current law, the authority for an MA plan to operate as a SNP will expire at the end 

of calendar year 2018. 

S. 870 would permanently authorize SNPs if certain requirements are met. In particular, SNPs that limit enrollment to dual 

eligibles (D–SNPs) would be required to establish formal agreements with state Medicaid programs by January 1, 2021, to coordinate the provision of Medicaid-covered long-term services and supports (LTSS) or behavioral health services. Feedback from stakeholders indicates that state Medicaid programs find that D–SNPs 

offer an attractive option for identifying and contracting with private insurers to provide LTSS. Therefore, CBO expects that authorizing D–SNPs beyond 2018 would increase the number and the 

scope of managed LTSS programs covered by state Medicaid programs. 

24 

2The rebate is a portion of the amount by which the ‘‘benchmark’’ amount for the geographic 

area covered by the plan exceeds the MA plan’s bid for services it is required to cover. The 

benchmark is based on estimated spending per beneficiary in the fee-for-service sector in that 

geographic area. The rebate portion is between 50 percent and 70 percent, based on the plan’s 

Based on analysis of information from stakeholders, CBO concludes that managed LTSS plans enroll a small number of individuals who otherwise would receive informal, non-federally financed 

care in the community. Once those individuals are enrolled in a 

managed LTSS plan, they would receive Medicaid-financed LTSS 

for the first time. Compared to current law, CBO estimates that 

the number of people who would receive Medicaid-financed LTSS 

under S. 870 would grow over time. That increase would rise to 

about 1,300 by 2027. CBO estimates that expansion of participation 

in Medicaid-financed LTSS would increase federal Medicaid outlays 

by $123 million over the 2018–2027 period. CBO further estimates 

that permanently authorizing SNPs would not have a significant 

effect on Medicare spending because CBO estimates that Medicare 

payments to SNPs, on average, are comparable to Medicare’s payments to other MA plans or to providers in the fee-for-service sector. 

Value-based Insurance Design (VBID) demonstration. The Center 

for Medicare and Medicaid Innovation (CMMI) began conducting a 

demonstration program in January 2017 to test the effectiveness of 

permitting private health insurance plans participating in the MA 

program to vary cost-sharing and benefits for Medicare beneficiaries with certain conditions in order to encourage the use of 

certain services and providers. As with other models tested through 

the CMMI, the Secretary will be permitted to expand the program 

if, after evaluating the results of the demonstration program, the 

Chief Actuary of the Centers for Medicare and Medicaid Services 

certifies that expansion would not increase Medicare spending and 

the Secretary determines that the expansion would not reduce 

quality of care. S. 870 would modify that demonstration project to 

make VBID available in all 50 states in 2020 and 2021. 

Expanding to all 50 states during testing would limit the Secretary’s flexibility to design and modify the demonstration. For example, it would be more difficult to focus on elements of the experiment that an initial evaluation suggests might be most promising 

or to ensure that the demonstration involves a control group that 

is adequate for the evaluation to produce meaningful conclusions. 

CBO expects that limiting that flexibility would be unlikely to result in greater savings than a similar model designed and refined 

under the existing CMMI program but could result in greater costs. 

Based on that one-sided effect on potential savings, CBO estimates 

that this provision would increase Medicare spending by a total of 

$90 million 2020 and 2021. That estimate is in the middle of the 

range of possible outcomes. 

Telehealth costs in Medicare Advantage bids. Under current law, 

MA plans may provide some telehealth services as part of the 

standard benefit, mirroring what is covered for beneficiaries enrolled in Medicare’s fee-for-service (FFS) program. However, if an 

MA plan wants to provide telehealth services that go beyond what 

is covered in the FFS program, the plan must receive approval to 

provide those services as supplemental benefits and use its ‘‘rebate’’ 

to pay for those services.2 S. 870 would allow MA plans to include 

25 

score on certain measures of quality of care. MA plans are required to use the rebate to pay 

for benefits not covered in the fee-for-service sector. 

the cost of additional telehealth services in their bids for contracts 

that cover 2020 or subsequent years. The costs included in the bid 

would not include capital or infrastructure expenses. Telehealth 

services would not count toward meeting network-adequacy requirements, and plans could not use the availability of telehealth 

services to limit access to in-person services. 

Based on a review of the literature and discussions with experts, 

CBO concluded that coverage of telehealth services by private payers sometimes results in higher spending and sometimes results in 

savings; in either case, the effects on spending tend to be small. 

For MA plans that offer telehealth services as supplemental benefits, this provision would increase spending, because Medicare’s 

payment would reflect the full cost of those benefits instead of the 

50 percent to 70 percent of the cost that is covered by the rebate. 

(The other 30 percent to 50 percent is covered by displacing other 

supplemental benefits that would be attractive to potential enrollees.) 

In general, CBO expects that an MA plan that begins or expands 

coverage of telehealth benefits under S. 870 would do so based on 

the plan’s expectation that it could manage telehealth services in 

a manner that would enable it to lower its bid. Because coverage 

of telehealth benefits as a supplemental benefit is very limited, 

CBO estimates that the savings from plans that begin or expand 

telehealth services would slightly exceed the increased cost for 

plans that already offer telehealth services as a supplemental benefit. On net, CBO estimates that enactment of this provision would 

reduce direct spending by $80 million over the 2018–2027 period. 

Telehealth in Accountable Care Organizations. The bill would expand the ability of certain ACOs to receive Medicare payment for 

telehealth services beginning January 1, 2020. Under current law, 

Medicare only pays for telehealth services delivered in rural locations, with the remote provider paid under the physician fee schedule and the originating site receiving a facility fee. Nevertheless, 

an ACO has an incentive to provide noncovered telehealth services 

if it expects those services to reduce the total cost of care for the 

ACO’s beneficiaries and to result in larger bonus payments from 

Medicare. 

S. 870 would eliminate the geographic component of the originating site requirement for ACOs and allow those programs to receive Medicare payment for certain telehealth services furnished to 

the ACO’s beneficiaries in their homes. No facility fee would be 

paid for services provided in the home of a beneficiary. CBO estimates that change would increase direct spending for Medicare by 

$50 million over the 2018–2027 period. 

Telehealth Services for Stroke Patients. Under current law, coverage of telehealth services is restricted to Medicare beneficiaries 

in rural areas. Beginning on January 1, 2021, S. 870 would remove 

that geographic restriction for telestroke services (a subset of telehealth services that involves consultation with a neurologist for a 

patient suspected of having had a stroke). 

There are two types of stroke: bleeding in the brain (hemorrhagic) and clotting in the brain (ischemic). Use of a clot-dissolving 

26 

drug to treat clotting strokes within three to four-and-a-half hours 

of the onset of symptoms substantially improves outcomes, both by 

increasing survival rates and by reducing the likelihood that a 

stroke patient will be moderately or severely disabled. However, 

administering the clot-dissolving drug to a patient with a bleeding 

stroke is likely to cause death. Therefore, a timely neurological 

evaluation is essential to determine whether to administer the clotdissolving drug to a patient with stroke symptoms. 

Emergency medical services in most urban and suburban areas 

have protocols to identify patients with stroke symptoms and transport those patients directly to a hospital that is a ‘‘stroke center.’’ 

As a result, a large majority of stroke patients in those areas are 

taken directly to a stroke center. Such a facility always has a neurologist available—either onsite or via telehealth—to determine 

which drugs to administer to a stroke patient, so enacting S. 870 

would not affect outcomes for such patients. 

On the basis of an analysis of Medicare claims data, a review of 

the relevant literature, and discussions with experts, CBO estimates that about 550,000 strokes occur in the Medicare population 

in nonrural settings each year. Under S. 870, by CBO’s estimates, 

the proportion of those cases that is handled using telestroke services would increase from about 6 percent in 2021 to 14 percent in 

2027. 

To develop spending estimates for the bill’s extension of telestroke services, CBO focused on cohorts of Medicare patients who 

receive a telestroke consultation in a given year. That approach, 

which tracks groups of patients over a span, is particularly appropriate when spending is changeable over time. On the basis of a 

review of the relevant literature and discussions with experts, CBO 

concluded that spending—by the federal government and nonfederal providers combined—for a cohort would increase in the year 

in which the telestroke consultation occurs and then decline in subsequent years. 

Higher spending in the first year would be the result of: additional consultations, more medications, additional treatment, and— 

for patients who otherwise would not have survived—more spending for post-acute-care services during the 90 days after a hospital 

stay. Annual spending would be lower in subsequent years largely 

because the number of patients who are discharged from the hospital with moderate or severe disability would decline significantly 

as would spending for long-term care. 

Because Medicare does not cover long-term care services such as 

nursing home care, much of the savings from avoided long-termcare services would accrue to beneficiaries, other private payers, 

and state Medicaid programs—and not to the federal government. 

The federal government would share in the savings that accrue to 

state Medicaid programs. 

For a given cohort, CBO estimates that cumulative spending—including spending by nonfederal payers—would be reduced beginning in the fourth year after the telestroke consultation. Federal 

spending would follow the same basic pattern but with a lag because much of the savings would accrue to nonfederal payers. CBO 

estimates that federal spending would be reduced beginning in the 

sixth year after the telestroke consultation. 

27 

Taking into account that pattern of an initial increase in spending and a reduction over time for each cohort of patients each year, 

CBO expects that expanding Medicare coverage of telestroke services ultimately would reduce Medicare spending. Over the 2018– 

2027 period, however, CBO estimates the expansion of telestroke 

services would increase direct spending by $180 million. 

Assignment of beneficiaries to accountable care organizations. In 

general, Medicare beneficiaries are assigned to an ACO when they 

receive much of their primary care from providers affiliated with 

a particular ACO. For most ACOs, assignment of their beneficiaries 

is retrospective—that is, final assignment of a beneficiary occurs 

after analysis of the beneficiary’s claims for a year. S. 870 would 

allow ACOs to have beneficiaries assigned to them prospectively 

beginning in 2020. CBO estimates that this provision would increase federal spending by $50 million over the 2018–2027 period. 

That conclusion is based on two factors: First, prospective assignment would result in some beneficiaries being assigned to an ACO 

who would not be assigned to any ACO under current law. That 

increase in assignment rates would result in an increase in the 

number of beneficiaries for whom Medicare makes a ‘‘shared-savings’’ payment to an ACO. Second, it would also weaken the incentive for an ACO to lower costs for beneficiaries who are not assigned to it. 

Use of in-network providers by AOC beneficiaries. Under current 

law, health care providers generally are prohibited from offering financial incentives to Medicare beneficiaries to patronize the provider. S. 870 would waive that prohibition with respect to financial 

incentives offered by certain ACOs to beneficiaries who receive primary care services from a provider within the ACO’s network. CBO 

estimates that enacting that provision of S. 870 would reduce direct 

spending for Medicare by $54 million over the 2018–2027 period. 

Eligible ACOs would have two potential reasons to offer financial 

incentives for patients to use primary care providers in their networks. The first would be to increase volume at the expense of providers that are not part of the ACO’s network, which would affect 

providers’ incomes, but would not have a significant effect on Medicare spending. The second reason is because the ACO would expect 

that, on average, a dollar spent on financial incentives would be 

more than offset by higher ‘‘shared-savings’’ payments. Because 

shared-savings payments would increase only if Medicare spending 

was lower, CBO expects that eligible ACOs would use those incentive payments in ways that would result in lower Medicare spending relative to current law. 

Rescissions. S. 870 would rescind amounts earmarked for making 

improvements to the Medicare fee-for-service program and to managing the Medicaid program. CBO estimates those rescissions 

would reduce direct spending for Medicare by $370 million and 

would reduce federal spending for Medicaid by $5 million. 

Pay-As-You-Go considerations: The Statutory Pay-As-You-Go Act 

of 2010 establishes budget-reporting and enforcement procedures 

for legislation affecting direct spending or revenues. The net 

changes in outlays that are subject to those pay-as-you-go procedures are shown in the following table. 

28 

CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR S. 870, AS ORDERED REPORTED BY THE SENATE 

COMMITTEE ON FINANCE ON MAY 18, 2017 

By fiscal year, in millions of dollars— 

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2017– 

2022 

2017– 

2027 

NET INCREASE OR DECREASE (¥) IN THE DEFICIT 

Statutory Pay-As-You-Go 

Impact ............................ 0 0 8 55 ¥167 ¥113 27 33 38 54 65 ¥217 0 

Increase in long-term direct spending and deficits: CBO estimates that enacting the legislation would not increase net direct 

spending or on-budget deficits by more than $5 billion in any of the 

four consecutive 10-year periods beginning in 2028. 

Intergovernmental and private-sector impact: S. 870 contains no 

intergovernmental or private-sector mandates as defined in UMRA. 

CBO estimates that the state share of increased Medicaid spending 

for higher enrollment in LTSS plans would total $93 million over 

the 2018–2027 period. Because states have significant flexibility to 

adjust their financial and programmatic responsibilities, such additional expenditures would not result from an intergovernmental 

mandate as defined in UMRA. 

Estimate prepared by: Federal costs: Alice Burns, Lori Housman, 

Jamease Kowalczyk, Kevin McNellis, Andrea Noda, Lisa RamirezBranum, Lara Robillard, Colin Yee, Rebecca Yip; impact on state, 

local, and tribal governments: Zachary Byrum; impact on the private sector: Amy Petz. 

Estimate approved by: Holly Harvey, Deputy Assistant Director 

for Budget Analysis. 

IV. VOTES OF THE COMMITTEE 

In compliance with paragraph 7(b) of rule XXVI of the Standing 

Rules of the Senate, the Committee states that, with a majority 

present, the Creating High-Quality Results and Outcomes Necessary to Improve Chronic (CHRONIC) Care Act of 2017 was ordered favorably reported by a roll call vote of 26 ayes and 0 nays 

on May 18, 2017. 

V. REGULATORY IMPACT AND OTHER MATTERS 

A. REGULATORY IMPACT

Pursuant to paragraph 11(b) of rule XXVI of the Standing Rules 

of the Senate, the Committee makes the following statement concerning the regulatory impact that might be incurred in carrying 

out the provisions of the bill. 

Impact on individuals and businesses, personal privacy and paperwork 

In carrying out the provisions of the bill, there is no expected imposition of additional administrative requirements or regulatory 

burdens on individuals or businesses. The provisions of the bill do 

not impact personal privacy. 

29 

B. UNFUNDED MANDATES STATEMENT

The Committee adopts as its own the estimate of federal mandates prepared by the Director of the Congressional Budget Office 

pursuant to section 423 of the Unfunded Mandates Reform Act of 

1995 (P.L. 104–4). The Congressional Budget Office estimates the 

bill would not impose intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act and would 

impose no costs on state, local, or tribal governments. 

VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS 

REPORTED 

In the opinion of the Committee, it is necessary in order to expedite the business of the Senate, to dispense with the requirements 

of paragraph 12 of rule XXVI of the Standing Rules of the Senate 

(relating to the showing of changes in existing law made by the bill 

as reported by the Committee). 

Æ