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99–671 2005

MEDICARE CHRONIC CARE IMPROVEMENT 

PROGRAM 

HEARING 

BEFORE THE

SUBCOMMITTEE ON HEALTH 

OF THE

COMMITTEE ON WAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED EIGHTH CONGRESS 

SECOND SESSION 

MAY 11, 2004 

Serial No. 108–51 

Printed for the use of the Committee on Ways and Means 

( 

ii 

COMMITTEE ON WAYS AND MEANS 

BILL THOMAS, California, Chairman 

PHILIP M. CRANE, Illinois 

E. CLAY SHAW, JR., Florida 

NANCY L. JOHNSON, Connecticut 

AMO HOUGHTON, New York 

WALLY HERGER, California 

JIM MCCRERY, Louisiana 

DAVE CAMP, Michigan 

JIM RAMSTAD, Minnesota 

JIM NUSSLE, Iowa 

SAM JOHNSON, Texas 

JENNIFER DUNN, Washington 

MAC COLLINS, Georgia 

ROB PORTMAN, Ohio 

PHIL ENGLISH, Pennsylvania 

J.D. HAYWORTH, Arizona 

JERRY WELLER, Illinois 

KENNY C. HULSHOF, Missouri 

SCOTT MCINNIS, Colorado 

RON LEWIS, Kentucky 

MARK FOLEY, Florida 

KEVIN BRADY, Texas 

PAUL RYAN, Wisconsin 

ERIC CANTOR, Virginia 

CHARLES B. RANGEL, New York 

FORTNEY PETE STARK, California 

ROBERT T. MATSUI, California 

SANDER M. LEVIN, Michigan 

BENJAMIN L. CARDIN, Maryland 

JIM MCDERMOTT, Washington 

GERALD D. KLECZKA, Wisconsin 

JOHN LEWIS, Georgia 

RICHARD E. NEAL, Massachusetts 

MICHAEL R. MCNULTY, New York 

WILLIAM J. JEFFERSON, Louisiana 

JOHN S. TANNER, Tennessee 

XAVIER BECERRA, California 

LLOYD DOGGETT, Texas 

EARL POMEROY, North Dakota 

MAX SANDLIN, Texas 

STEPHANIE TUBBS JONES, Ohio 

Allison H. Giles, Chief of Staff 

Janice Mays, Minority Chief Counsel 

SUBCOMMITTEE ON HEALTH 

NANCY L. JOHNSON, Connecticut, Chairman 

JIM MCCRERY, Louisiana 

PHILIP M. CRANE, Illinois 

SAM JOHNSON, Texas 

DAVE CAMP, Michigan 

JIM RAMSTAD, Minnesota 

PHIL ENGLISH, Pennsylvania 

JENNIFER DUNN, Washington 

FORTNEY PETE STARK, California 

GERALD D. KLECZKA, Wisconsin 

JOHN LEWIS, Georgia 

JIM MCDERMOTT, Washington 

LLOYD DOGGETT, Texas 

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records 

of the Committee on Ways and Means are also published in electronic form. The printed 

hearing record remains the official version. Because electronic submissions are used to 

prepare both printed and electronic versions of the hearing record, the process of converting 

between various electronic formats may introduce unintentional errors or omissions. Such occurrences are inherent in the current publication process and should diminish as the process 

is further refined. 

iii 

C O N T E N T S 

Page 

Advisory of May 4, 2004, announcing the hearing ............................................... 2 

WITNESSES 

Centers for Medicare and Medicaid Services, Hon. Mark McClellan, Administrator ..................................................................................................................... 10 

American College of Cardiologists, Janet S. Wright ............................................. 36 

American Heart Association, Vince Bufalino ........................................................ 40 

Disease Management Association of America, Christobel Selecky ...................... 29 

SUBMISSIONS FOR THE RECORD 

AdvaMed, statement ................................................................................................ 56 

Alzheimer’s Association, statement and attachment ............................................ 57 

American Association of Diabetes Educators, Virginia Zamudio, Chicago, IL, 

statement .............................................................................................................. 60 

American College of Physicians, statement ........................................................... 62 

American Geriatrics Society, New York, NY, statement ...................................... 65 

McKesson Health Solutions, Sandeep Wadhwa, San Francisco, CA, statement 67 

National Kidney Foundation, Brian J.G. Pereira, New York, NY, statement .... 70 

Urban Institute, Robert A. Berenson, statement .................................................. 5 

(1) 

MEDICARE CHRONIC CARE IMPROVEMENT 

PROGRAM 

TUESDAY, MAY 11, 2004 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON WAYS AND MEANS, 

SUBCOMMITTEE ON HEALTH, 

Washington, DC. 

The Subcommittee met, pursuant to notice, at 2:14 p.m., in room 

1100, Longworth House Office Building, Hon. Nancy L. Johnson 

(Chairman of the Subcommittee) presiding. 

[The advisory announcing the hearing follows:] 

2 

ADVISORY 

FROM THE COMMITTEE ON WAYS AND MEANS 

SUBCOMMITTEE ON HEALTH 

FOR IMMEDIATE RELEASE CONTACT: 202–225–3943 

May 04, 2004 

HL–8 

Johnson Announces Hearing on Medicare Chronic 

Care Improvement Program 

Congresswoman Nancy L. Johnson (R–CT), Chairman, Subcommittee on Health 

of the Committee on Ways and Means, today announced that the Subcommittee will 

hold a hearing on the Chronic Care Improvement Program authorized by the Medicare Modernization Act. The hearing will take place on Tuesday, May 11, 2004, 

in the main Committee hearing room, 1100 Longworth House Office Building, beginning at 2:00 p.m. 

In view of the limited time available to hear witnesses, oral testimony at this 

hearing will be from invited witnesses only. However, any individual or organization 

not scheduled for an oral appearance may submit a written statement for consideration by the Committee and for inclusion in the printed record of the hearing. 

BACKGROUND: 

As part of the Medicare Prescription Drug, Improvement, and Modernization Act 

of 2003 (MMA) (P.L. 108–173) that was signed on December 8, 2003, Congress provided for a Chronic Care Improvement Program (CCIP) within fee-for-service Medicare. On April 20, 2004, the Centers for Medicare and Medicaid Services (CMS) released a Request for Proposals (RFP) for chronic care improvement programs focused on congestive heart failure, diabetes, and chronic obstructive pulmonary disease. CMS will select programs to operate in 10 regions of the country to evaluate 

different approaches to the management of chronic conditions. The initial phase of 

the CCIP will be based on improved quality in health outcomes, beneficiary satisfaction, and financial savings to the Medicare program. 

Medicare beneficiaries with five or more chronic conditions represent 20 percent 

of the Medicare population but account for 66 percent of program spending. The 

CCIP represents a new way of approaching the care of beneficiaries within the feefor-service program by shifting from a focus on acute episodes to the management 

of on-going chronic conditions. 

In announcing the hearing, Chairman Johnson stated, ‘‘The chronic care improvement program is a major step forward for the Medicare program and the quality 

of health care it provides. It represents a fundamental shift in how we think about 

caring for our seniors and people with disabilities. This is a key element of how the 

Medicare Modernization Act truly modernizes the Medicare program by improving 

discussion and coordination between Medicare beneficiaries and their physicians.’’ 

FOCUS OF THE HEARING: 

CMS released the RFP for the CCIP on April 20, 2004. Proposals are due back 

to the agency in early August. Panel members at the hearing will include representatives from prospective bidders, physician groups, and beneficiary organizations. 

The hearing continues the series of hearings held by the Subcommittee on the implementation of the Medicare Modernization Act. 

3 

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS: 

Please Note: Any person or organization wishing to submit written comments for 

the record must send it electronically to hearingclerks.waysandmeans@ 

mail.house.gov, along with a fax copy to (202) 225-2610, by close of business Tuesday, May 25, 2004. In the immediate future, the Committee website will allow for 

electronic submissions to be included in the printed record. Before submitting your 

comments, check to see if this function is available. Finally, due to the change in 

House mail policy, the U.S. Capitol Police will refuse sealed-packaged deliveries to 

all House Office Buildings. 

FORMATTING REQUIREMENTS: 

Each statement presented for printing to the Committee by a witness, any written statement 

or exhibit submitted for the printed record or any written comments in response to a request 

for written comments must conform to the guidelines listed below. Any statement or exhibit not 

in compliance with these guidelines will not be printed, but will be maintained in the Committee 

files for review and use by the Committee. 

1. Due to the change in House mail policy, all statements and any accompanying exhibits for 

printing must be submitted electronically to hearingclerks.waysandmeans@mail.house.gov, along 

with a fax copy to (202) 225–2610, in WordPerfect or MS Word format and MUST NOT exceed 

a total of 10 pages including attachments. Witnesses are advised that the Committee will rely 

on electronic submissions for printing the official hearing record. 

2. Copies of whole documents submitted as exhibit material will not be accepted for printing. 

Instead, exhibit material should be referenced and quoted or paraphrased. All exhibit material 

not meeting these specifications will be maintained in the Committee files for review and use 

by the Committee. 

3. Any statements must include a list of all clients, persons, or organizations on whose behalf 

the witness appears. A supplemental sheet must accompany each statement listing the name, 

company, address, telephone and fax numbers of each witness. 

Note: All Committee advisories and news releases are available on the World 

Wide Web at http://waysandmeans.house.gov. 

The Committee seeks to make its facilities accessible to persons with disabilities. 

If you are in need of special accommodations, please call 202–225–1721 or 202–226– 

3411 TTD/TTY in advance of the event (four business days notice is requested). 

Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above. f 

Chairman JOHNSON. Today, I am pleased to chair this hearing 

on the Chronic Care Improvement Program (CCIP) that was passed 

as part of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (P.L. 108–173). The program is a 

major step forward for the Medicare Program and the quality of 

health care that it provides. It represents a fundamental shift in 

how we think about caring for our seniors and people with disabilities. The CCIP is a key element in how the MMA truly modernizes 

the Medicare Program by improving discussion and coordination 

between Medicare beneficiaries and their physicians. 

Medicare beneficiaries with five or more chronic conditions represent 20 percent of the Medicare population that account for 66 

percent of the program spending. The CCIP represents a new way 

of approaching the care for beneficiaries within the fee-for-service 

program by shifting from a focus on acute episodes to the management of ongoing chronic conditions. 

This new way of thinking will become even more essential as we 

approach the retirement of the baby boom generation. The 40 million beneficiaries currently in Medicare will double to more than 80 

4 

million over the next 30 years. More and more of those beneficiaries will be living with chronic conditions. The steps we are 

taking today to rethink how Medicare provides health care will be 

essential as the number of beneficiaries increases in future years. 

The Centers for Medicare and Medicaid Services (CMS) currently 

has several demonstration projects in place to test various types of 

disease management programs, but none matches the scale and 

scope of the CCIP included in last year’s Medicare law. 

I am extremely happy that this fundamental change in the program is rapidly being implemented. To a large degree, that is as 

a result of the firm resolve and strong support for this program 

from Members of Congress, Secretary Thompson, and Administrator McClellan as well as his staff. 

The CMS released this Request For Proposal (RFP) on April 20 

and will carry out Phase I of the CCIP in 10 regions of the country 

over the next 3 years. The first phase will focus on beneficiaries 

with congestive heart failure, diabetes, and chronic obstructive pulmonary disease. The initial phase of the CCIP will be based on improved quality and health outcomes, beneficiary satisfaction, and financial savings to the Medicare program, and successful programs 

will be expanded to more beneficiaries in the fee-for-service program. 

I might point out that this is the first time we have been able 

to build into Medicare a capacity on the part of the Secretary to 

pilot things that will make a positive health improvement in our 

seniors and then to roll them out automatically under his authority. This will accelerate the pace at which quality improvements in 

Medicare actually become available by not requiring that Congress 

have another vote, another bill, another go, before positive changes 

can be implemented in Medicare. 

I welcome today Dr. Mark McClellan in his first appearance before Congress as CMS Administrator. It is really a pleasure to welcome you, Mark. You have broad experience both in government 

and as a physician; and I welcome you before our panel to discuss 

CMS plans for implementing this terribly important program that 

I know you are not only well familiar with, but a strong advocate 

of. 

I also look forward to the testimony of our second panel, 

Christobel Selecky, President-Elect of the Disease Management Association of America, who will provide us with some insights into 

the ways in which various organizations are working together to 

respond to the RFPs for this program. Dr. Janet Wright, speaking 

on behalf of the American College of Cardiologists, will provide a 

practicing physician’s viewpoint on the importance of the CCIP to 

the Medicare population. 

Dr. Vince Bufalino from the American Heart Association (AHA) 

will discuss the impact that CCIPs can have on the lives of beneficiaries; and Dr. Robert Berenson of the Urban Institute had 

planned to provide us with a researcher’s perspective on the program. Unfortunately, they had an evacuation of the airport from 

which he was to leave, and it is extremely unlikely he will be able 

to join us. His testimony is very important both to the consideration of this RFP in the long term, to our consideration of how we 

reform our payment system for physicians. So, we will consider his 

5 

1 Among a number of recent policy documents that examine the issue of chronic conditions 

and Medicare is Eichner, June and Blumenthal, David, eds. Medicare in the 21st Century: Building a Better Chronic Care System. National Academy of Social Insurance. Washington, DC. January 2003. 2Partnership for Solutions, Medicare: Cost and Prevalence of Chronic Conditions. Johns Hopkins University, Baltimore, MD. July 2002. 3Wolff J. et al. Archives of Internal Medicine, November 11, 2002. 4 Berenson R, Horvath J, Clinical Characteristics of Medicare Beneficiaries and Implications 

for Medicare Reforms. Prepared for the Center for Medicare Advocacy, March 2002. Accessed 

February 2004, www.partnershipforsolutions.org/DMS/files/MedBeneficiaries2-03.pdf. It is also 

true that the presence of chronic conditions is associated with age; however, costs and use are 

similar for beneficiaries with multiple chronic conditions regardless of age. 

testimony as part of the base from which we will question panelists, and we will share that testimony with him at a time when he 

can be present. 

[The prepared statement of Dr. Berenson follows:] 

Statement of Robert A. Berenson, Urban Institute 

Madame Chairman, Mr. Stark, and members of the subcommittee: Thank you for 

inviting me to this important session dedicated to reviewing the challenge of better 

serving the growing number of Medicare beneficiaries with multiple and complex 

chronic conditions. 

Americans are living longer than ever, because of new medical treatments and 

technologies, better prevention, and healthier lifestyles. At the same time, people 

are living longer with chronic conditions, such as heart disease, diabetes, neuro-degenerative diseases, and even cancer. Diseases that used to be fatal early on in their 

course can now be managed effectively for years. And as we live longer, more of us 

are contending with multiple and complex chronic conditions that require a high degree of medical management and monitoring and a new commitment to encouraging 

and supporting patient self-management. 

Policymakers are just beginning to realize the implications for Medicare of beneficiaries living longer with chronic illness, particularly multiple chronic diseases.1

About 20 percent of beneficiaries have five or more chronic conditions, account for 

over two-thirds of Medicare spending, see about 14 different physicians in a year, 

and have almost 40 office visits.2 The chances of an otherwise unnecessary hospitalization—for conditions that can and should be managed effectively on an outpatient basis—increase from about 1 percent for a beneficiary with just one condition to about 13 percent for a beneficiary with five conditions and about 27 percent 

for a person with eight chronic conditions.3 It would seem then that beneficiaries 

with multiple chronic conditions have unattended complications despite their high 

health care use. It also would appear that the number of chronic conditions has 

more influence than age on health care spending in the Medicare population.4

Section 721 of the Medicare Modernization Act (MMA) provides for a new Chronic 

Care Improvement (CCI) program within the traditional Medicare program; the law 

also requires a new emphasis on chronic illness management within the restructured Medicare Advantage program. The CCI program is essentially a vendor-operated disease management program targeting beneficiaries with chronic obstructive 

pulmonary disease, congestive heart failure, diabetes mellitus, and other diseases 

that the Secretary may specify. The Centers for Medicare and Medicaid Services 

(CMS) recently published a Request for Proposals that makes clear that entities 

other than a disease management organizations are encouraged to apply, although 

the emphasis will be on organizations with large scale and scope, because of the risk 

requirement, generally far beyond that of even large group practices. The CCI will 

be tested for three years after which the Secretary will evaluate the program for 

financial outcomes (program savings), clinical quality (hospital readmission rates 

and adherence to clinical guidelines), and beneficiary satisfaction. 

In general, a CCI vendor must guide beneficiaries in managing their health. 

Every enrolled beneficiary will have a care plan that is to include disease self-management education and collaboration with physicians and other providers to enhance communication of relevant clinical information. Care plans can also include 

use of monitoring devices to facilitate transmission of clinical indicators. CCI vendors must also have tracking systems to follow beneficiaries across settings and 

record and monitor outcomes in each setting. 

In recent years, there has been growing dissonance between the evolving use of 

disease management by private health plans, convinced of its utility in improving 

patient care, and the continuing dearth of peer-reviewed evidence of its cost-effecVerDate Aug 18 2005 08:47 Sep 01, 2005 Jkt 099671 PO 00000 Frm 00009 Fmt 6633 Sfmt 6621 E:\HR\OC\99671.XXX 99671
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5 Chen, A, Brown, R; et al. Best Practices in Coordinated Care. Prepared for the Health Care 

Financing Administration. Mathematica Policy Research, Princeton, NJ. March 2000. Accessed 

February 2004 at www.mathematica-mpr.com/pdfs/bestsum.pdf. 6 Institute of Medicine. Crossing the Quality Chasm: A New Health System for the 21st Century. National Academy of Sciences. Washington, DC. March 2001. 

tiveness. One desirable aspect of the CCI program is that the technique will be tested in formal trials that should help provide data to better assess the cost-effectiveness of disease management for the Medicare population in the context of the traditional Medicare program. 

I would direct the subcommittee’s attention to a potential problem in the study 

design mandated in the MMA. The requirement that individual patients are to be 

randomized to intervention and control will make it very difficult for practice-based 

organizations to compete for an award because such an organization would normally 

provide the intervention to all of its patients that would benefit from the care coordination approach. For these applicants a trial that permits matching rather than 

randomization would be more appropriate. I would urge the Congress to give the 

CMS the flexibility to a study design that accommodates the circumstances of different applicants. 

Although the CCI program may be a good start, in my opinion it is insufficient 

for truly addressing chronic care needs in Medicare because it lacks a focused physician component. The Administration emphasizes that the new program creates a 

‘‘business platform’’ that will permit innovation, but the CCI program ignore the reality that beneficiaries look to their personal physicians for responsibility for their 

health care—and not business platforms—whether health plans, disease management companies, or other third party-vendors. 

Policymakers need to tackle the difficult challenge of engaging those responsible 

for health care quality and use, namely the doctors and other health care professionals. Further, in order to be successful, disease management and related case 

management should work better with the active involvement of the patient’s physician.5 Again and again studies have shown that care coordination only works with 

real physician involvement. Unfortunately, the CCI initiative is quite removed from 

the physician, although the legislation correctly calls for an individual’s care plan 

to include physician education and collaboration. 

Consistent with the overall philosophy of the MMA, this approach to addressing 

the growing need for improved care for those with chronic health conditions is a corporate one, focused on providing contracts to third-party vendors, rather than directly enabling professionals to better serve their patients. The traditional Medicare 

program has an unrealized opportunity to lead the restructuring of how physicians 

organize and deliver health services, as called for by the Institute of Medicine in 

its seminal ‘‘Crossing the Quality Chasm’’ report.6 Instead, the MMA would have 

Medicare merely follow private sector approaches have been tested in younger and 

somewhat healthier populations and that may not be as well suited to the Medicare 

beneficiaries. 

Disease management can likely bring important benefits, such as improved functioning and decreased hospitalizations, to relatively healthy individuals, with a welldefined chronic condition. It is also proper that CCI programs are required to identify and address enrollee co-morbidities. However, these programs have not generally been designed to address successfully the needs of medically complex patients, 

whose needs go well beyond learning disease self—management techniques and who 

have multiple professionals affecting the care and treatments of their different conditions. Nor are they designed to meet the needs of individuals with dementia, and, 

therefore cannot benefit form disease management’s heavy emphasis on patient selfeducation. 

It will be challenging for disease management companies and other vendors who 

may be awarded contracts under the initiative to develop the necessary links with 

physicians, especially because the law provides no new reason for physicians to engage with them. Creating effective relationships with treating physicians is further 

complicated by the probability that these management companies will be operating 

across great distances from a central location with no particular connection to the 

communities in which they will operate. 

Medicare disease management would benefit a certain segment of beneficiaries, 

and this approach could certainly be part of a comprehensive strategy to improve 

the care provided to Medicare beneficiaries with multiple chronic conditions. But it 

is not a sufficient response. 

These private-sector approaches have arisen partly because many physicians have 

been impervious to the altered needs of a patient population with far more well-established, chronic conditions and far fewer acute medical events than their training 

7 

has prepared them for. In addition, the financial underpinnings of a typical medical 

practice do not support physicians who actually do recognize the need to be more 

fully engaged in the components of chronic care coordination. These include: teaching patient self-management; communicating more often with patients outside of 

face-to-face office visits; managing polypharmacy; coordinating care among many 

other professionals and providers to avoid redundancy and errors; developing and 

maintaining more appropriate medical information summaries, preferably inside an 

electronic health record; and more forthrightly helping prepare patients and their 

families for death and dying. Simply stated, the Medicare payment system does not 

pay for these activities, so physicians either do not deliver these services directly 

or go unpaid when trying to do so. 

Bounced around the system, too many Medicare beneficiaries do not even recognize a particular physician who is responsible for coordinating their care. Where no 

physician is in charge, disease management certainly serves a useful stopgap role. 

Nevertheless, the program goal should be to promote a patient relationship with a 

primary care physician or a specialist willing to take overall responsibility for care 

coordination and the other functions that I identified earlier. Although disease management can assist a patient’s primary physician in caring for patients with multiple chronic conditions, its role should be viewed clearly as supplementary to the 

personal physician’s responsibility. Disease management currently appears to serve 

a useful purpose because of a quality chasm in how health care is delivered. The 

policy objective should be to address the causes of the chasm and not merely provide 

a partial stopgap. 

As stated earlier, among other areas that need attention is the overlooked issue 

of physician payment policy. Simply put, the incentives inherent in most fee-forservice payment systems, including Medicare’s and those of most private payers, penalize primary care physicians who would alter their professional interactions with 

patients to respond to the challenge posed by the reality of patients with multiple 

complex chronic conditions. 

Yet, the MMA mostly ignores alternative payment approaches affecting physician 

behavior. These payment approaches should go hand in hand with the new chronic 

care program to ensure the kind of change needed to improve care for Medicare 

beneficiaries. I would note that Sec 646 of the MMA, the Medicare Health Care 

Quality Demonstration Program, provides a possible platform for examining new 

payment approaches. This demonstration should be given high priority and should 

explicitly address chronic care improvement incentives for physicians and medical 

groups. 

Imagine if in the early 1980s, Congress, confronted with soaring Medicare Part 

A hospital costs produced partly as a result of an inherently inflationary, cost-plus 

payment system, had decided not to implement the Prospective Payment System. 

Imagine, instead, that Congress had chosen to fund third-party vendor, utilization 

review organizations to try to reduce lengths of stay for Medicare patients. That approach might have had some marginal beneficial effects on cost reduction—and 

plenty of unpleasant confrontations with physicians and hospital staff. Overall, trying to improve hospital efficiency while ignoring the incentives inherent in the basic 

payment system would have been foolhardy. Congress showed good sense by going 

to the root of the problem. 

I would argue that we now face a similar challenge to get the physician payment 

systems right, and to do so would mean entering mostly unchartered territory. But 

is it logical to think you can improve the medical care provided to Medicare beneficiaries with chronic conditions while ignoring physicians? 

One of the problems, of course, is that the medical profession itself has been slow 

to recognize that the nature of the practice of medicine is changing and it has not 

been very assertive in proposing new billing codes and payment approaches that 

would support altered physician activities. Indeed, as I noted above, I am not sure 

that most physicians even recognize the care gaps that result from maintaining a 

traditional orientation to responding expertly to acute medical events, while ignoring the less dramatic, but significant, needs of those with progressive chronic conditions. 

Recently, the specialty associations representing the primary care physicians who 

serve Medicare beneficiaries, including the American Academy of Family Physicians, 

the American College of Physicians, and the American Geriatric Society, have begun 

to address this particular quality gap and have supported specific legislation that 

I believe goes in the right direction. I urge the Committee to work with these and 

other interested parties to explore new payment approaches that should be intrinsic 

to any serious effort to refocus Medicare on the unique burden of chronic disease. 

Physicians should be paid and supported for taking responsibility for assertively coordinating care for patients with complex chronic conditions. Part of that coordinaVerDate Aug 18 2005 08:47 Sep 01, 2005 Jkt 099671 PO 00000 Frm 00011 Fmt 6633 Sfmt 6621 E:\HR\OC\99671.XXX 99671
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7Most recently, the complex clinical care payment concept was included as a demonstration 

in the Senate version of the Medicare reform legislation, Section 443 of S. 1, in June 2003. The 

provision set new standards for physicians willing to participate, including conducting a range 

of care coordination activities that linked medical and supportive services oriented to the beneficiary and family caregivers. 

tion certainly might involve interacting with nurses and others from disease management vendors. 

We should be testing various new payment approaches. There are already limited 

precedents in the Medicare physician payment system for the kinds of changes that 

would be needed. In contrast to true prospective payment systems used for other 

provider types, the physician payment system suffers for being ‘‘fee for individual 

items of service.’’ Yet, renal physicians for many years have received a monthly 

capitation payment for their professional services for end-stage renal disease. Similarly, Medicare pays for a few ‘‘care plan oversight services,’’ e.g., for patients under 

the care of home health agencies. These small payment precedents should be examined and built on. 

Payment models could distinguish how well a medical practice is integrated. For 

example, solo and other small practices might receive relatively small care management fees that essentially would enable them to better communicate with disease 

management vendors. On the other hand, larger, more integrated practices would 

receive larger care management fees and possibly Part B or maybe even Part A payments under some circumstances. This would that permit them to directly manage 

disease, without the need for a separate third-party organization. The additional 

payments initially might be focused on care coordination for those patients with 

multiple and complex chronic conditions, but over time I envision that traditional 

Medicare might pay some multi-specialty group practices forms of capitation for a 

much broader range of their patients. 

One new payment model has appeared in slightly different forms in Medicare legislation in the past two sessions of Congress, but ultimately lost out to the corporate 

approach.7 A token Medicare Care Management Demonstration, Section 649, similar 

to this approach, survived in the final MMA. It would place on physicians and their 

staffs responsibility and accountability for clinical care coordination of medically 

complex individuals. Participating physicians would coordinate clinical care, consult 

with other providers as necessary, and receive a monthly administrative payment 

for the extra time and attention involved. The model could be expanded in a number 

of ways. For instance, physicians could be required to have on staff or under contract a case management function to make referrals to community resources that 

could address the supportive service needs of these patients. 

In addition, CMS has proposed another approach to changing the nature of physician practice—the physician group practice demonstration, which I understand is 

scheduled to begin next year if the Office of Management and Budget signs off. 

However, the demonstration is limited to large-group practices that have at least 

200 full-time physicians. The physician group would receive bonus payments to the 

extent that spending is below established targets. This demonstration is on the right 

track, although it does not target the population with multiple chronic conditions. 

The size of the physician group would limit how well the model can be replicated 

if it proves successful. Nevertheless, it is another approach that attempts to change 

physician payment incentives and reward greater integration of physician practice 

and, accordingly, it deserves to be as high a priority as the CCI program. 

CMS has numerous other demonstrations to test care management and disease 

management models. However, all of them have design issues that will likely limit 

their success for medically complex individuals. Several projects target specific diseases, rather than beneficiaries with multiple conditions. And the demonstration 

models typically ignore addressing the crucial role of the treating physician in care 

management. 

In conclusion, I applaud the efforts of Congress in general and this subcommittee 

in particular for recognizing the unique challenge posed by the growing number of 

Medicare beneficiaries living with multiple and complex chronic conditions. The disease management initiatives are a useful response, but, in my opinion, an insufficient one. The traditional Medicare program has the opportunity to pioneer in the 

area of payment policy, as it has successfully done a number of times in other areas. 

Working with the willing in the medical community, Medicare can help produce 

overdue restructuring of the practice of medicine and reorient at least some of the 

delivery system to chronic care management. 

While the MMA provisions are a start, I believe they are overly focused on a corporate, vendor solution—a business platform—for problems in the program that 

would be served better by involving those who actually deliver health care at the 

9 

front line—physicians and other clinical professionals in their own medical practices. f 

Chairman JOHNSON. So, I thank you all for appearing before 

us today. I believe that the CCIP is one of the most transformational elements of the Medicare modernization bill, as it challenges all of us to begin thinking about medicine and health care 

in new ways. I look forward to the testimony of all of our witnesses. Now, Mr. Stark, if you would like to make an opening 

statement. 

Mr. STARK. Thank you, Madam Chairman. I am pleased that we 

are here today to discuss the CCIP that was included in the bill 

last year. I must say I am pleased you are having the hearing. It 

is a tribute to your power and party that you could close an airport 

to keep my witness from attending, but I bow to political pressures 

these days all the time. I do know that we will have a chance to 

hear him, Dr. Berenson, at another time. 

The disease management approaches, such as the CCIP, I guess, 

that use patient coaches, and they can be helpful tools, but I hope 

we will also get to discuss today the difference between young 

working people with chronic illnesses and those of us who are older 

and often have far more, larger, multiple chronic illnesses. I think 

that it is fair to ask whether our money might be better spent on 

programs that enable chronically ill patients greater access to physicians rather than rely on corporate vendors that actually kind of 

remove the patients further from their doctors and funnel money 

to for-profit disease management companies. 

I want to encourage the Secretary to look into the effectiveness 

and efficiency of these vendor-based programs and to determine 

their value to Medicare relative to other approaches. I understand 

that they have been having some success with managed care plans, 

but a small percentage of our seniors are in those, and I think that 

we can’t overlook the 70 or 80 percent of beneficiaries who rely on 

a primary care physician. Because of the expense of covering seniors, we have—they are sort out of the employment-based insurance system, and we have the oldest and sickest people in America 

in our system, the Medicare system. So, approaches that work with 

younger, healthier problem might not apply to the far more complex situation that we find in many of our Medicare beneficiaries. 

I know you have expressed interest in advancing chronic care in 

Medicare and I think this is an area we could continue to work on. 

I think we should. I have been working for some time and currently have a bill to provide a comprehensive chronic care benefit 

in Medicare, and I think that is something we are going to have 

to work on with physicians to find what a chronic care protocol 

should be, and can there be one that we can define, as we now do 

various codes that we use to reimburse physicians. 

There are a whole lot of things that I don’t think we have the 

expertise in this Committee to define, but I think we have to encourage CMS perhaps and the various medical groups to come up 

with their suggestions as to what they think ought to be the physicians’ role in this, because I think without them, we may not get 

the results that we both want. Thank you very much. I look forward to hearing our witnesses. 

10 

Chairman JOHNSON. Dr. McClellan, welcome. 

STATEMENT OF THE HONORABLE MARK MCCLELLAN, M.D., 

PH.D., ADMINISTRATOR, CENTERS FOR MEDICARE AND MEDICAID SERVICES 

Dr. MCCLELLAN. Thank you, Chairman Johnson, Representative Stark, and Representative Crane. It is a real privilege to be 

here with you today at this critical time for the Medicare program 

to discuss the new CCIP. This is a major step for us, a new step 

for us, to improve the care of chronically ill beneficiaries in Medicare fee-for-service; and it is a real privilege to be involved at this 

time when we are taking so many new steps in Medicare. I want 

to thank you for your leadership in making this possible. 

Medicare beneficiaries living with chronic conditions in the traditional fee-for-service program face a particularly challenging task 

in managing their conditions. The goal of the CCIP, this program, 

is to work closely with health care professionals to assist those 

beneficiaries in using the latest evidence-based management techniques and information technology to get better outcomes. 

The widespread failings in chronic care management are a major 

public health concern today. In my own experience in medical practice, I have often seen doctors and nurses and other health professionals provide high-quality care for people with chronic illnesses 

in spite of, rather than because of, the systems in which they practice. Yet too often, Medicare beneficiaries do get less than optimal 

care for their chronic conditions because they have a lot of problems and can suffer if the care is fragmented and if they aren’t well 

informed about how to follow their doctor’s treatment plan. Fragmentation leads to poor health outcomes. 

Since chronic illnesses account for most of the deaths among 

Medicare beneficiaries today, this is a big deal for our Medicare 

beneficiary population. It can also lead to high medical costs. Beneficiaries with five or more chronic conditions represent 20 percent 

of our population; that is 66 percent of our program spending, and 

most Medicare expenditures for the care of these beneficiaries are 

for multiple and often preventable hospitalizations. Currently, our 

payments are not designed to promote disease prevention and 

avoid poor outcomes. Instead, as Representative Stark noted, we 

pay for services that are primarily related to dealing with disease 

complications themselves, missing opportunities to prevent the 

complications in the first place. 

The new MMA is our best opportunity ever to change the focus 

to prevention, and the CCIP is an important part of that effort. As 

my written testimony describes in more detail, chronic care management programs have repeatedly demonstrated an ability to reduce costs while improving health and the satisfaction of beneficiaries. 

Many Medicare Advantage health plans have engaged in disease 

management activities for our beneficiaries in the past 2 years. In 

one such program, hospital admissions for congestive heart failure 

were reduced by 70 percent. By preventing these acute complications, the plan saved $3 for every $1 it invested. Lower complications is one reason that Medicare Advantage plans save so much 

money for beneficiaries of chronic illnesses compared to fee-forVerDate Aug 18 2005 08:47 Sep 01, 2005 Jkt 099671 PO 00000 Frm 00014 Fmt 6633 Sfmt 6602 E:\HR\OC\99671.XXX 99671
11 

service Medicare, and that is why it is important for us to make 

sure that these kinds of plans are available to beneficiaries who 

prefer them, especially beneficiaries with limited means. 

Despite the proven advantages of chronic care improvement programs, however, millions of beneficiaries who are most likely to 

benefit from them have the least access because they aren’t part 

of fee-for-service Medicare. That is going to change now. As called 

for under the MMA, the Secretary will enter into agreements with 

qualified organizations, collaborative groups, including physician 

organizations and others, to run large-scale regional CCIPs for 3 

years using prospectively identified beneficiaries with congestive 

heart failure, complex diabetes, and chronic obstructive pulmonary 

disease. We expect that the CCIPs will collectively serve between 

150,000 and 300,000 fee-for-service Medicare beneficiaries during 

this first phase pilot program. 

These programs will be evaluated through randomized, controlled 

independent trials using the best scientific techniques available. 

We published the notice in the Federal Register announcing this 

program last month. Completed proposals from potential awardees 

are due by August 6 of this year, and we expect to implement the 

first service agreements on schedule by December 8, 2004. We expect the program operations will begin and services will be provided in full by early 2005. 

It is important to note in this program that beneficiary participation is completely voluntary and that beneficiaries can get access 

to the full set of fee-for-service benefits throughout this program. 

In fact, the point of the program is to help them get the most out 

of their fee-for-service benefits. 

The payment to program awardees will be performance-based. 

They don’t get paid unless they improve performance: performance 

in quality, performance in saving money for the Medicare Program 

at the same time. Fees paid to awardees will be at risk for performance improvements in clinical quality, in beneficiary and provider 

satisfaction, and for reduced costs across their assigned target populations compared to regional control groups. 

I want to emphasize again, we fully expect this program to improve beneficiary health outcomes, to increase their satisfaction 

with the services they receive, to improve the partnership between 

care givers, health professionals, and patients, and to save the 

Medicare Program money. It is an innovative model for care delivery, and it is a real pleasure to have the opportunity to be here 

working with you to implement it. Thank you for your time. I have 

more detailed written testimony that I would ask be read into the 

record, and I would be happy to answer any questions you may 

have. 

[The prepared statement of Dr. McClellan follows:] 

Statement of The Honorable Mark McClellan, M.D., Ph.D., Administrator, 

Centers for Medicare and Medicaid Services 

Chairwoman Johnson, Representative Stark, distinguished members of the Committee: I thank you for inviting me here today to discuss the new Chronic Care Improvement Program, (CCIP) about which we at CMS are very excited. As you know, 

this voluntary program was created by Section 721 of the Medicare Prescription 

Drug, Improvement, and Modernization Act of 2003 (MMA). The CCIP could be a 

major new step in improving the quality of care for chronically ill beneficiaries 

under Medicare fee-for-service. I would like to make particular note of the work that 

12 

Chairwoman Johnson did to champion this new program and let her know that we 

believe that her work will make a real difference in the lives of hundreds of thousands of Medicare beneficiaries across the country who suffer from chronic ailments. 

Today, I would like to address the questions of how the CCIP may help Medicare 

beneficiaries, and how Phase I will work, including beneficiary selection, payment, 

and criteria for expanding the program nationwide under Phase II. 

HOW CAN THIS PROGRAM BE HELPFUL? 

Medicare beneficiaries living with chronic conditions in the traditional fee-forservice Medicare program face a particularly challenging task in effectively managing their conditions. The goals of the CCIP are to assist these individuals utilizing 

the latest in evidence-based care management and information technology, as well 

as personal interactions with caregivers to ensure better outcomes. We believe that 

Medicare may be able to utilize these proven measures not only to improve the fiscal outlook of the program, but also to more adequately assist our beneficiaries in 

living healthier lives. 

Widespread failings in chronic care management are a major national concern. 

Many of these failings stem from systemic problems rather than lack of effort or 

intent by providers to deliver high quality care. Medicare beneficiaries are disproportionately affected because they typically have multiple chronic health problems. Fragmentation of care can lead to poor health outcomes. In addition, Medicare 

beneficiaries with five or more chronic conditions represent 20 percent of the Medicare population but 66 percent of program spending. Most of Medicare expenditures 

for care of these beneficiaries are for multiple and often preventable hospitalizations. 

Congestive Heart Failure (CHF) and diabetes are among the five most common 

chronic diseases in the Medicare population. According to findings from the 2002 

Medicare Current Beneficiary Survey, individuals with CHF, and coronary artery 

disease represent 21.3 percent of non-institutionalized fee-for-service Medicare beneficiaries and account for 36.8 percent of Medicare expenditures, including treatment 

for all their health problems. Individuals with diabetes represent 19.4 percent of 

beneficiaries and 30.4 percent of fee-for-service Medicare expenditures. Beneficiaries 

with these diseases tend to have complex self-care regimens and medical care needs, 

that when neglected, or uncoordinated, can lead to complications and acute care crises. The health risks of these beneficiaries depend heavily on how effectively they 

are able to control their conditions in their daily lives and whether or not they receive appropriate medical care and effective coordination of their care. Efforts to 

control their conditions successfully may benefit from ongoing guidance and support 

beyond individual provider settings. 

Prevalence rates of diabetes and CHF are even higher among minorities than 

among all Medicare beneficiaries. For example, as shown in Figure 1, the Centers 

for Disease Control and Prevention reports that 23.0 percent of black males and 

23.5 percent of Hispanic males ages 65–74 have diabetes compared to 16.4 percent 

of white males and 15.4 percent of all individuals in that age group. Black and Hispanic females in that age group have diabetes prevalence rates of 25.4 percent and 

23.8 percent, respectively, compared to 12.8 percent for white females and 15.4 percent for all individuals in that age group. Given these prevalence figures, improving 

quality and adherence to evidence-based care has the potential to improve outcomes 

and reduce racial and ethnic health disparities, consistent with HHS’ Healthy People 2010 goals. 

13 

1 Anderson, G. Chronic Conditions: Making the Case for Ongoing Care. Partnership for Solutions and the Robert Wood Johnson Foundation, p. 32. 

FIGURE 1 

The Medicare fee-for-service system is structured and financed to manage acute 

care episodes, not to manage and support individuals with progressive chronic diseases. Providers of care are organized and paid for services provided in discrete settings (for example, hospitals, physician offices, home health care, long-term care, or 

preventive services). Patient care can be fragmented and poorly coordinated and patient information difficult to integrate among settings. Providers may lack timely 

and complete patient clinical information to fully assess their patients’ needs and 

to help prevent complications. Ongoing support to beneficiaries for managing their 

conditions outside their physicians’ offices is rare. 

Fragmentation of care can be a serious problem for Medicare beneficiaries. The 

average Medicare beneficiary sees seven different physicians and fills upwards of 20 

prescriptions per year. In a recent survey, 18 percent of people with chronic conditions reported having duplicate tests or procedures and 17 percent received conflicting information from providers.1 Providers reported feeling ill-prepared to manage chronically ill patients and reported that poor coordination of care led to poor 

outcomes. Physicians and other practitioners desire to, and often do, provide very 

high levels of care in this country, but the challenges they face in integrating all 

of their efforts often frustrate their excellent intentions. As a practicing internal 

medicine physician I encountered these same challenges. I believe that the CCIP 

will assist currently practicing physicians and health care providers to avoid some 

of the challenges that I was faced with while actively treating patients. 

The gap between accepted standards of appropriate care for patients with chronic 

diseases and the care they actually receive is significant. According to findings of 

a recent national study published in the New England Journal of Medicine, only 56 

percent of patients with chronic diseases received recommended care based on wellestablished guidelines referenced by the researchers. Among patients in the study 

sample who had CHF, only 64 percent received recommended care, and among those 

with diabetes, only 45 percent received recommended care. Specifically, only 24 percent of diabetes patients in the study received three or more glycosylated hemoglobin tests over a two-year period. Similarly, in a recent study of practice patterns 


Insert offset folio 99671a.001
14 

2Michael W. Rich, Valerie Beckham, Carol Wittenberg, Charles L. Leven, Kenneth E. 

Freedland, and Robert M. Carney, ‘‘A Multidisciplinary Intervention to Prevent the Readmission 

of Elderly Patients with Congestive Heart Failure,’’ New England Journal of Medicine, 333, no. 

18, November 2, 1995: 1190–1195. 3 Annemarie Geddes Lipold, ‘‘Disease Management Comes of Age, Not a Moment Too Soon,’’ 

Business and Health, June 19, 2002. 4 Ronald E. Aubert, William H. Herman, Janice Waters, William Moore, David Sutton, 

Bercedis L. Peterson, Cathy M. Bailey, and Jeffrey P. Koplan, ‘‘Nurse Case Management to Improve Glycemic Control in Diabetic Patients in a Health Maintenance Organization,’’ Annals of 

Internal Medicine, 129, no. 8, October 15, 1998: 605–612. 

under Medicare, researchers found that, across all States, an average of 66 percent 

of Medicare beneficiaries with heart failure received ACE inhibitors and 16 percent 

with diabetes received a lipid test. 

A concerted effort to coordinate care and enhance patient compliance will result 

in fewer acute episodes of care, fewer disease complications and will help eliminate 

redundant services as physicians and other providers repeat tests and evaluations 

previously performed because they lack the ability to access results of those services. 

These changes alone have the potential to generate substantial savings. 

Currently, Medicare fee-for-service payments do not encourage prevention of diseases, good outcomes and performance. Instead, the payment system provides 

money for acute events, missing a potential opportunity to prevent these situations 

which could be beneficial from a cost standpoint, but, more importantly, from a 

health perspective. In a sense, payment incentives are the opposite of the way they 

should be. The CCIP seeks to address this problem, as well as others described 

above, by rewarding efforts to prevent acute episodes and improve health. Under 

CCIP, awardees will work to increase patient compliance, facilitate communication 

between patients and providers, and better coordinate care among providers caring 

for the same individual. In a much more direct way than ever before under fee-forservice Medicare, economic incentives will be directly lined up with prevention and 

performance. We hope to reward high quality care, rather than high volume and 

high intensity care. 

Our work with CCIP will nicely complement previous efforts to provide consumers 

with information on quality outcomes in nursing homes, home health agencies, and 

hospitals, and to line up economic incentives with quality standards. This shift in 

payment and emphasis is a demonstration of the Administration’s commitment to 

a coordinated, patient-centered approach to healthcare. 

CMS is also working to line up physicians’ economic incentives with quality care 

through such programs as the physician group practice demonstration project that 

will provide bonus payments for improvements in quality. We also will be conducting a demonstration under Section 649 of the MMA to encourage physicians to 

promote continuity of care, use established clinical guidelines and prevent or minimize exacerbations of chronic conditions. Additionally, beginning in 2006, all Medicare Advantage plans will be required to operate chronic care improvement programs of their own. These plans will be able to use varying payment methodologies 

to line up economic incentives with quality care from providers. The CCIP under 

Section 721, although important in its own right, is not the only tool CMS will be 

using to assist Medicare beneficiaries with chronic conditions to effectively manage 

their care. 

CHRONIC CARE IMPROVEMENT POTENTIAL 

To date, there has not been a sufficient number of thorough tests of whether 

chronic care improvement will improve health care quality and reduce costs in 

Medicare. However, private companies have been utilizing the techniques called for 

under CCIP for some time, and have demonstrated some success in improving 

health outcomes. 

Michael Rich and colleagues found that a nurse-directed multidisciplinary intervention program reduced net cost of care an average of $153 per patient, per month, 

for the treatment group versus the control group. Readmissions in the control group 

were nearly double that of the treatment group.2

A major U.S. company reported that a disease management program for diabetic 

patients run out of an on-site clinic realized savings of more than $600,000 in reduced sick time usage in its first year of operation.3

Ronald Aubert and colleagues found significant decreases in fasting glucose levels 

among patients who were provided with the services of a nurse case manager who 

was also a certified diabetes educator. These patients reported perceived improvement in their health status more than twice as often as their control group counterparts.4

15 

5 Jaan Sidorov, Robert Shull, Janet Tomcavage, Sabrina Girolami, Nadine Lawton, and Ronald 

Harris, ‘‘Does Diabetes Disease Management Save Money and Improve Outcomes?’’ Diabetes 

Care, 25, no. 4, April 2002: 684–689. 6 B. Riegel et al., ‘‘Effect of a Standardized Nurse Case-Management Telephone Intervention 

on Resource Use in Patients with Chronic Heart Failure,’’ Archives of InternalMedicine, 25 

March 2002: 705–712. Reported in Health Affairs, Sandy Foote, July 30, 2002. 7M.W. Rich et al., ‘‘A Multidisciplinary Intervention to Prevent the Readmission of Elderly 

Patients with Congestive Heart Failure,’’ New England Journal of Medicine, 2 November 1995: 

1190–1195. Reported in Health Affairs, Sandy Foote, July 30, 2002. 8 Hawaii Medical Service Association, a licensee of Blue Cross Blue Shield Association in Hawaii, has a cost-based contract to operate a fee-for-service Medicare plan. Myra Williams, HMSA 

vice-president, care management, confirmed study findings, also discussed with David Plocher, 

Cap Gemini Ernst and Young; and with Robert Stone, American Healthways. Reported in 

Health Affairs, Sandy Foote, July 30, 2002. 

Researchers at Geisinger Health Plan found that patients who chose to enroll in 

its diabetes management program had higher scores on diabetes-related HEDIS 

(Health Plan Employer Data and Information Set) performance measures and lower 

average monthly claims. Inpatient days per patient, per year, were lower, though 

there were more primary care visits.5

Another study found that telephonic nurse guidance for CHF patients following 

initial hospital admission resulted in a 47.8 percent decrease in heart failure readmissions at six months. The authors reported medical care cost savings net of 

intervention costs.6

In another study, readmissions for heart failure were reduced 56 percent in the 

first ninety days after discharge for high-risk CHF patients age seventy or older.7

The Diabetes Care Connection program, implemented in 2000 by the Hawaii Medical Service Association (HMSA), targeted all of its 40,000 beneficiaries with diabetes, including more than 6,000 Medicare beneficiaries. Cap Gemini Ernst and Young 

found that a much higher percentage of beneficiaries had their blood glucose levels 

tested during the first year of the program than in the baseline year. Also, total per 

capita claims costs were lower for HMSA Medicare beneficiaries with diabetes in 

2000 than in 1999, mainly because of reduced hospital costs.8

Despite these proven successes, Medicare beneficiaries who are most likely to benefit from chronic care management services are unlikely to participate in them because they have been unavailable under the fee-for-service program. Many of the 

Medicare Advantage health plans have engaged in one form or another of disease 

management in the past few years. These programs have assisted beneficiaries enrolled in those plans to reap the benefits of more coordinated and effective care 

management. In one such Medicare Advantage disease management program, their 

CHF program has produced a 70 percent decrease in hospital admissions. They calculate that for every dollar they invest in their disease management program, they 

realize a savings of three dollars. In their diabetes management program, this 

health plan has seen a 45 percent decrease in amputations made necessary by advanced conditions of the disease. New cases of retinopathy have declined by 20 percent among participants in the disease management program. The plan estimates 

that the 10 year benefit will save $1,500 per patient, or $30 million over that time 

frame. Unfortunately, the benefits of a disease management program have been unavailable to beneficiaries in the fee-for-service program until now. The CCIP will 

move toward changing this situation. 

The programs cited above resulted in patients who were healthier, who spent 

fewer days in the hospital and who were happier with the care they received. So 

what kinds of things do chronic care improvement organizations do to make such 

a positive impact in people’s lives? 

Mrs. Jones, a beneficiary with heart failure, was given the option of using a 1– 

800 number to call and report her weight on a daily basis, or the equipment that 

would report automatically. If her weight increases by more than a certain amount 

over a week, her physician would be notified immediately. The weight gain could 

be an indication that Mrs. Jones is retaining fluid, which could be a reflection of 

her heart failure flare-up. With such a timely notification, the physician could adjust Mrs. Jones’ medication over the phone, or do a simple, quick checkup in the 

office before a serious complication occurs, saving Mrs. Jones an unpleasant trip to 

an emergency room or worse. 

Another example might be Mr. Smith, a beneficiary with COPD. He could receive 

home health care on a regular basis to help ensure that his home environment does 

not exacerbate his condition. Since beneficiaries with COPD often have limited oxygen intake, his home health aid could help ensure that activities such as reaching 

for a jar from a kitchen cabinet are made easier, that he has air filters in his home, 

16 

or that he has hypo-allergenic bed sheets, for example. These are all simple activities that could send Mr. Smith to the emergency room. 

Another example might be Mr. Rodriguez, a beneficiary with diabetes. He could 

be in need of transportation services to get to the physician. He could have a history 

of failing to seek diabetic wellness visits due to transportation issues. These could 

have led to acute exacerbations of his diabetes, where he had to spend time in the 

hospital. His nurse case manager could help him obtain transportation so he does 

not miss critical preventive check-ups. These preventive check-ups, such as retinal 

exams, glycosolated hemoglobin tests, blood pressure tests, foot exams, etc. have 

documented benefits in preventing acute diabetic crises. 

Another example might be Mrs. Johnson, a beneficiary with CHF and depression. 

She could have had severe problems with medication compliance and general 

wellness stemming from her depression. A nurse in an IPA could reach out to her 

on a regular basis, provide self-care support for diet and exercise, and ensure medication compliance. The physician’s office could also bring her in for group therapy 

and schedule preventive check-ups with the physician. The IPA could use an electronic health record to track Mrs. Johnson’s progress and communicate with her 

other physicians. 

We expect many CCIPs to rely on innovative uses of IT equipment, including electronic monitoring, records, prescribing and alerts, to help them carry out their programs. These tools, when properly utilized, are tremendously powerful in aiding 

physicians, pharmacists and other caregivers to provide the best possible care. Individual physicians, nurses, home health agencies and other health providers may utilize electronic records or prescribing systems within their own practices, but it is 

often a challenge to integrate these systems so that information gleaned by one provider can be available to others who serve the same beneficiary. Part of the CCIP 

concept is that awardee organizations will work with the beneficiary and through 

their own innovative IT systems to ensure effective communication between the 

beneficiary’s providers. That sort of overarching view of things is expected to greatly 

assist these providers in their effort to overcome the fragmented state of care often 

encountered today. Additionally, we expect that when these individuals see the benefits of this technology they may be more apt to integrate it more fully into their 

broader practice. 

To put it in human terms, patients served by one of these organizations have said 

the following: 

• ‘‘[The program] is the best thing that ever happened to me. Thank God for you. 

Keep up the good work.’’ E.A. 60 yrs. Lake City • ‘‘Please keep this program. It helps in many ways. Keeps you on top of your 

health, and helps you understand what’s happening when things do go wrong. 

Good Program.’’ P.D. 51 yrs. Titusville • ‘‘I am very pleased to have someone help me to take better care of myself and 

my self esteem is stronger knowing others care about me. This program should 

extend to everyone.’’ M.M. 58 yrs Palm Coast • ‘‘The help I have received through your staff and educational material has 

helped keep me out of the hospital. Thanks a million. I also appreciate your personal phone calls. They are a great help.’’ D.B. 57 yrs. Pounce de Leon • ‘‘[The program] nurses have been a great help to me. I feel that with their help 

I have been able to control my CHF and the notes to the doctor have really 

helped getting the doctor to pay more attention to my problems and get to me 

faster when needed.’’ C.W. 51 yrs. Ocala • ‘‘My nurse is fantastic. She is very informative and cares about your condition 

and helps you to get better or take care of yourself as best that you can. She 

is the best. Thank you for assigning her to me. I feel blessed to know her.’’ L.G. 

35 yrs. Jacksonville 

These outcomes represent the kinds of results we hope to accomplish through the 

CCIP. 

HOW THE PROGRAM WILL WORK 

On April 23, 2004, CMS published in the Federal Register a notice informing 

chronic care improvement organizations of the possibility of working with CMS in 

providing services to Medicare beneficiaries under the new program established by 

Section 721 of the MMA. 

In Phase I, the Secretary will enter into agreements with qualified organizations 

to run large-scale regional CCIPs for 3 years, for prospectively identified beneficiaries with CHF, complex diabetes, and chronic obstructive pulmonary disease 

(COPD). There is some evidence that self-care support, education, and other tools 

targeted at beneficiaries with these conditions are particularly effective at improving clinical outcomes, reducing overall cost, and improving beneficiary and provider 

17 

satisfaction. The CCIPs are to be implemented in approximately ten regions where 

at least 10 percent of the Medicare population resides. We expect the CCIPs will 

collectively serve between 150,000 and 300,000 chronically ill fee-for-service Medicare beneficiaries. These programs will be evaluated through randomized, controlled 

trials, with at least 10,000 beneficiaries in the control group for each program. The 

evaluations will be conducted by an independent entity. 

Each program will offer self-care guidance and support to chronically ill beneficiaries to help them manage their health, adhere to their physicians’ plans of care, 

and ensure that they seek (or obtain) medical care that they need to reduce their 

health risks. The programs will include collaboration with participants’ providers to 

enhance communication of relevant clinical information. The programs are intended 

to help increase adherence to evidence-based care, reduce unnecessary hospital 

stays and emergency room visits, and help participants avoid costly and debilitating 

complications. CCIPs will be required to assist participants in managing their 

health holistically, including all co-morbidities, relevant health care services, and 

pharmaceutical needs. CMS will test models that use a wide variety of interventions 

to bring about improvements in clinical quality, satisfaction and reduced costs. 

As intended by Congress, CMS will seek to partner with awardees whose CCIPs 

are designed to support and improve the patient-physician relationship, not interfere with it. CMS is particularly interested in programs that have a track record 

of success in, or a comprehensive plan for, engaging beneficiaries’ physicians and 

other providers. Given the considerable time constraints that today’s physicians 

face, we anticipate that physicians will appreciate the timely, actionable information 

that these services could provide. We also anticipate that physicians will appreciate 

better-educated patients and better information about what is happening with patients outside their offices. There is nothing about these programs that will supplant 

a physician’s autonomy. 

Completed proposals from potential awardees are due by August 6, 2004 and we 

expect to sign the first service agreements by December 8, 2004. We anticipate that 

program operations will begin and services will be provided by early 2005. 

ELIGIBLE ORGANIZATIONS AND BIDDING 

Organizations eligible to apply to implement and operate programs under CCIP 

include: (1) disease management organizations; (2) health insurers; (3) integrated 

delivery systems; (4) physician group practices; (5) a consortium of such entities; or 

(6) any other legal entity that meets the requirements of the solicitation in the Federal Register, published April 23, 2004. 

The bidding process is designed to allow different approaches to be reviewed in 

a comparable manner. Applicant organizations will propose the geographic region(s) 

they wish to serve. CMS will provide applicants with a de-identified nationally representative sample dataset of the type of beneficiaries who would be included in this 

pilot, on which applicants will base their bids. Finalists will be provided with geographic specific data to enable bids to be adjusted, if necessary, for regional variations. 

The beneficiary participation process will be conducted in a way that balances giving beneficiaries the greatest opportunity to participate if they want to, while protecting them if they do not. It is important to note that participation is completely 

voluntary. Beneficiaries who participate may terminate participation at any time. 

This program is not a form of managed care, in the sense that it has no gate-keeping function, operating to limit services, or do a pre-service review of appropriateness of care. Beneficiaries will remain enrolled in the traditional fee-for-service program and have access to the full range of Medicare benefits as they currently stand. 

Additionally, beneficiaries who participate in the program will have access to any 

participating Medicare provider. The beneficiary participation verification process 

works as follows: 

1. CMS identifies eligible beneficiaries. All beneficiaries in a chosen geographic 

area will be screened for eligibility based on historical claims data. Those beneficiaries who are deemed eligible will be randomly assigned to one of two 

groups—the intervention group or the control group. 

2. CMS contacts enrollees by letter. All beneficiaries in the intervention group will 

be notified of the opportunity to participate through a letter from the Medicare 

program including the information specified in the legislation. The letter will 

provide a description of the program and give the beneficiary an opportunity 

to decline to be contacted by the CCIP organization. The letter will detail how 

the beneficiary can obtain further information about the program. 

3. If the beneficiary says ‘No,’ awardee would not contact beneficiaries who opt not 

to be contacted regarding the opportunity. 

18 

4. If the beneficiary is silent—awardee attempts to contact beneficiaries to confirm 

participation. CMS will then expect each awardee to contact all intervention 

group beneficiaries in its area who were silent to describe the program and ask 

if the beneficiary would like to participate. CMS will provide a specific protocol 

that each awardee must use during the initial contact. With regard to non-responders, we will expect applicants’ proposals to specify detailed descriptions 

about their outreach protocols, including, for example, frequency and number 

of outreach attempts, and how the applicant will ensure that outreach efforts 

are respectful of beneficiaries. CMS may negotiate limits on the number and/ 

or frequency of outreach attempts during the outreach period, and may specify 

that awardees will be required to cease further outreach efforts after the outreach period. 

5. If the beneficiary is contacted and says ‘Yes’ or ‘No,’ the awardee will record 

the beneficiaries’ responses. Beneficiaries who agree to participate will be considered participants until they either become ineligible (for example, joining a 

Medicare Advantage plan) or notify the awardee or CMS that they no longer 

want to be contacted by the awardee. 

Again, participation is always voluntary. Participants can notify the awardee or 

CMS at any time that they no longer want to be contacted by the awardee. 

Awardee organizations will be responsible for serving an entire population assigned to them by CMS. They will be held accountable for improving clinical, satisfaction, and financial outcomes over the entire assigned population. Because of this 

fact, the program is considered to be ‘‘population based.’’ Awardees are held responsible for beneficiaries who choose to participate in the program, as well as those who 

choose to not participate. A valid comparison between beneficiaries offered the opportunity to participate in the intervention group and beneficiaries in the control 

group requires that awardees performance measures include data from intervention 

group beneficiaries who choose not to participate, since we would have no way of 

knowing the rate at which beneficiaries in the control group might similarly participate or not. 

The CCIP will be set up so that its activities, including contacting physicians with 

beneficiary health information, are health care operations of Medicare fee-for-service, and therefore, entail permissible disclosures under the Health Insurance Portability and Accountability Act (HIPAA). Health care operations, allowed under the 

HIPAA privacy rule, include population-based activities relating to improving health 

or reducing health care costs, case management and care coordination, contacting 

of health care providers and patients with information about treatment alternatives, 

and other related functions. Furthermore, CCIP organizations would be considered 

business associates of CMS, and therefore it would be permissible to transmit health 

information to them. 

PAYMENT 

The CCIP contracting model is flexible enough to accommodate a wide range of 

program models, but payment methods in all instances will be performance-based. 

Fees paid to awardees will be at risk for performance improvements in clinical quality, beneficiary and provider satisfaction, and reduced costs across their assigned 

target populations compared to their regional control groups. The statute purposely 

links payment and quality. The underlying premise of the CCIP initiative is that 

through performance-based contracting, improvements in quality will lead to better 

financial, health, and satisfaction outcomes 

As a condition of continued participation in the CCIP, organizations will be required to demonstrate improvements in quality of care for beneficiaries in the intervention group. Prior to award, the specific measures for improved quality and satisfaction will be negotiated with the organizations based upon the quality parameters 

listed in the solicitation as a minimum. CMS reserves the right to reduce or withhold payments should the mutually agreed upon quality targets not be achieved. 

The specific guidelines for such action will be negotiated with each organization 

prior to award. 

The goal of the CCIP is to reduce Medicare costs in traditional fee-for-service, 

while simultaneously improving beneficiary outcomes. CMS is requiring a guaranteed minimum of 5 percent savings to the Medicare program, including all CCIP 

fees for the assigned population compared to the control group’s experience. The 

exact amount of savings is contingent upon a number of unknown variables such 

as the total number of sites and beneficiaries who will be served across the program 

and whether CMS will receive and accept proposals with more aggressive savings 

guarantees. 

As part of the application process, all organizations will be required to show proof 

of their financial solvency and ability to assume financial risk up to 100 percent of 

19 

their monthly fees, up to the 5 percent net savings guarantee. The agreements between CMS and the awardees will specify the exact mechanism for guaranteeing 

performance and security. Their ability to achieve proposed Medicare savings targets will be evaluated on an individual basis based upon their proposed program 

designs, the results of site visits, and evidence of prior achievements. CMS plans 

to hold a bidders conference on May 13 for organizations interested in providing 

CCIP services under this new program. The conference will provide participants an 

opportunity to gain knowledge of issues associated with applying to implement and 

operate a chronic care improvement program as part of Phase I of CCIP. CMS has 

already enrolled as many potential bidders as it can to attend the conference. 

EXPANSION OF THE PROGRAM 

Phase II, the potential expansion phase of CCIP, depends on the success of Phase 

I. The statute provides for the Secretary to expand successful CCIPs or program 

components, possibly nationally. The Secretary may begin Phase II expansion not 

earlier than 2 years, and no later than 3‡ years, after implementing Phase I. Quality and satisfaction measures will continue to be a key part of contracts with CCIP 

awardees through Phase II. 

CONCLUSION 

We at CMS fully expect this program to improve beneficiary health outcomes, increase their satisfaction with the services they receive through Medicare, better the 

partnership between caregivers and patients, and save the Medicare program 

money. It is an innovative model for care delivery, focusing on preventing problems, 

rather than allowing them to develop in the first place. We appreciate the Congress’ 

support in providing the means for this program to take place and look forward to 

sharing the results with you as it progresses. Thank you for your time and I would 

be glad to answer any questions. 

f 

Chairman JOHNSON. Thank you, Dr. McClellan, for your testimony and your written testimony, which was very useful. Could 

you enlarge somewhat on the demonstration under section 649 

where you have the chance to encourage physicians to promote continuity of care? 

Dr. MCCLELLAN. That is another program that we are undertaking to achieve the same goals, improving quality at a lower cost. 

That is a demonstration program, because some of the techniques 

that we are going to implement there, such as more direct payments for performance to physicians and the like, have not been as 

well evaluated yet as some of the disease management and care 

management that will be part of the CCIP. 

So, that is a demo program that can help us with complementary 

approaches to get at the same goal, getting better outcomes to 

beneficiaries at a lower cost by supporting and encouraging providers to prevent complications in the first place. I think it can 

complement here what we are doing here well. That demonstration 

is still under development internally, and we will have more to say 

about that in the coming months. 

Chairman JOHNSON. Thank you. I hope it will allow smaller 

physician practices to participate, because I do think the issue, at 

least in developing this part of the law, was very unclear to us. I 

think it is still unclear how much of this function of management 

can be integrated into standards of practice for individual specialties, and we need a better handle on that as we move forward so 

that we only employ a coordinator where a coordinator is necessary, perhaps across specialties or whatever. 

A lot of what we are talking about should be part of the next 

round of physicians’ standards of practice. Therefore, this whole 

issue of chronic disease management is going to be present as we 

20 

deal with one of our other responsibilities that we have from the 

passage of the MMA, which is to rethink of how we pay physicians 

or we will be able to pass real reform under the physician payment 

section of the Medicare law. 

So, as we think about how we are going to change how we pay 

physicians, we need to think about the fundamental flaw in the 

Medicare Program, which is that it is acute episode focused and not 

focused on what really has become the challenge in medicine, 

which is to prevent the development of acute episodes. 

So, in that framework, there were a number of interesting comments by Dr. Berenson in his testimony. One of the briefer ones 

that he mentioned was they need to look at not just randomized 

controls, but matching, to allow smaller entities to compete in the 

trials. Do you have a comment on that? 

Dr. MCCLELLAN. We are using randomized approaches in this 

pilot program that was actually mandated by Congress, as you 

know, in the MMA. In many of our demonstration programs, however, we rely on other techniques to identify what the effects of a 

particular program might be. In some settings where it is not feasible to do randomizations, which might be the case involving small 

physician groups, matching may be a good alternative. I do want 

to try to take further steps to be able to implement steps, implement methodological approaches even in smaller settings. I would 

emphasize these CCIP programs are not going to succeed if they 

don’t work well with physician offices. 

Most Medicare beneficiaries get their care primarily through 

small physician groups; and because you have to improve the outcomes for a population in order to get the performance reward in 

the CCIP program, therefore, the groups are going to have to work 

well with these small physician offices, even in the CCIP. I think 

we can learn something from this effort and from the randomization techniques used here, about what works well in small physician groups, that can carryover to the broader goals you mentioned 

about improving our payment systems to physicians. 

Chairman JOHNSON. In your RFP, are you very specific about 

how that project should relate to physicians? 

Dr. MCCLELLAN. We are very specific in emphasizing that we 

expect these programs to work well with physicians and other 

health professionals. In my own experience in dealing with a variety of disease management programs, the ones that I found to be 

most helpful were the ones that supported my work, the ones that 

reminded my patients that they needed to come in for a follow-up 

exam or to get another laboratory test done, or the ones that 

helped my patients identify when they were having complications 

early before they got to a very serious stage, such as a little bit of 

weight gain in patients with heart failure, so they could come into 

the office if necessary and get that complication headed off. Those 

kinds of steps are built into this program, and we are backing it 

up by including provider satisfaction measures as part of the formal evaluation. The payments to these organizations that participate in CCIP will depend on how well they do with doctors and 

other health professionals. 

Chairman JOHNSON. Thank you. So, you will be evaluating 

that particular piece of the connection and the motivation for phyVerDate Aug 18 2005 08:47 Sep 01, 2005 Jkt 099671 PO 00000 Frm 00024 Fmt 6633 Sfmt 6602 E:\HR\OC\99671.XXX 99671
21 

sician involvement as you determine which of all the really many 

proposals you will select. I am pleased, what a tremendous response you are having for the informational seminar that is coming 

up this week. 

Dr. MCCLELLAN. It is tomorrow. We are oversubscribed. The 

auditorium at our headquarters in Baltimore is going to be full. We 

have more than 550 participants, and they span the spectrum. It 

not only includes disease management business, but also includes 

a number of physician group organizations, a number of academic 

medical center organizations. 

We have a very broad range of participants, and in many cases, 

I expect these different groups will be working together in order to 

serve the whole beneficiary population, which includes a lot of patients that are treated by small physician groups, includes a lot of 

patients with disabilities, cognitive impairments and the like. 

Again, you can’t do well on the performance measures unless you 

do well for all of these groups. 

Chairman JOHNSON. Are you having sufficient interest from 

those States that have geriatric centers to participate in that demo, 

where we want to look at how a geriatric center would pair with 

physicians, for example, in rural areas so we can look at physician 

performance, small office performance in this context? 

Dr. MCCLELLAN. We are going to include rural areas and geriatric programs that work with our rural providers and rural beneficiaries in this effort. As you know, there are other demonstrations 

and other initiatives in the MMA that are also targeted at geriatric 

research programs and geriatric programs in rural areas as well, 

so that will be part of this overall effort to learn more about how 

we can help doctors and other health professionals improve the 

quality of care for their patients. 

Chairman JOHNSON. Thank you, Dr. McClellan. I reserve the 

rest of my questions. Mr. Stark. 

Mr. STARK. Dr. McClellan, first of all, welcome to the Committee. I am puzzled just by a couple of things; and as a physician, 

you can help me here. I don’t—and this is how a patient might 

react and a physician might react, but it seems to me, as I have 

read through this, that there is nothing—if I am under care or 

going to an internist and I think of the internist as my doctor, 

okay, and I develop diabetes or high blood pressure and a bunch 

of different things, I will be contacted in one way or another by 

CMS. Will I get a letter or phone call? 

Dr. MCCLELLAN. You would initially get a letter from CMS 

that will inform you that you have the option to participate in this 

program. 

Mr. STARK. Will it reference my doctor at all? 

Dr. MCCLELLAN. The initial contact won’t. It will be based on 

beneficiaries. 

Mr. STARK. I would probably run to my doctor, right? I might 

say, what is this? First of all, I would be a little curious as to how 

you knew I had all of these problems, but—and that is a question 

of privacy that I want to get to in a minute. It is my understanding 

that this—the provider, the company or the corporation that is 

going to do this management, is going to try and entice my physiVerDate Aug 18 2005 08:47 Sep 01, 2005 Jkt 099671 PO 00000 Frm 00025 Fmt 6633 Sfmt 6602 E:\HR\OC\99671.XXX 99671
22 

cian into cooperating, but not necessarily pay him or her anything 

for doing anything; is that right? 

Dr. MCCLELLAN. The plans or the organizations that support 

these programs are going to have a hard time succeeding if they 

don’t have buy-in from that internist that you mentioned. 

Mr. STARK. How are they going to buy in? Are they going to pay 

the doctor something? 

Dr. MCCLELLAN. They don’t necessarily have to pay directly, 

but they do need to make clear to the physician why this is in their 

best interest to participate, and it is to make sure—— 

Mr. STARK. As a practicing physician, would it be a fair statement to say that physicians as a general rule—I won’t put this in 

order—but somewhere between ‘‘resent’’ and ‘‘rail against Congress’’ for interfering with their practice, CMS interfering with 

their practice, Blue Cross interfering with their practice, nurse 

practitioners telling them how to practice, or pharmacy detail people telling them how to do their practice. They tend to be relatively 

independent folk. How is my doctor going to react when some corporate guy calls them up and says, why don’t you check up on 

Stark and make sure he is losing weight and not smoking and 

doing all those things? I have a disconnect there that I think could 

be problematical from the physician standpoint. 

Dr. MCCLELLAN. Speaking as one of them, what I found most 

frustrating is when I was contacted by many of the types of individuals you described who were telling me to do something that I 

thought was not in the best interest of my patient. At other times, 

I have been contacted by disease management organizations, patient advocates and others who had some very helpful things to 

say, some things that I found useful in improving the care that my 

patients got and doing it in a way that helped me. 

Mr. STARK. I would understand how this would work if Kaiser 

decides to do it, and Kaiser Permanente tells all the doctors in 

their group, we are going to do this and we are going to cooperate, 

because they are all on salary. I have one other question, and that 

is a little bit off the topic, but we had some problems last year on 

estimates from the actuaries. Both you and Secretary Thompson 

have promised us publicly and in private to reinstate our access to 

the Office of the Actuary. Does that still stand? 

Dr. MCCLELLAN. We have both promised transparency in working with the actuary and access to estimates that you need. 

Mr. STARK. We have a couple of analyses at this point that we 

understand are completed. These are previous requests, not new 

work for them, that we understand are complete and are not being 

released. Would you get them to release those studies? 

Dr. MCCLELLAN. If you will send me the details, we definitely 

want to pass along final results. 

Mr. STARK. I hate to beat a dead horse. I didn’t mean Secretary 

Scully as a dead horse. Thank you, Madam Chairman. 

Chairman JOHNSON. I would like to recognize Mr. Crane, a diligent Member of our Subcommittee, always present at our hearings. 

Thank you very much. 

Mr. CRANE. Thank you, Madam Chairman. Dr. McClellan, the 

goal of this new program is to reduce Medicare costs while also improving beneficiary outcomes. Do you believe that Phase I of the 

23 

new CCIP, will meet both of these goals? If so, how much do you 

estimate Phase I will provide in savings to the Medicare Program? 

Dr. MCCLELLAN. I do think it will meet both of the goals, that 

performance contracts that we are setting up envision a 5-percent 

reduction in costs. Some of these programs that I mentioned in my 

oral testimony have achieved far larger savings than that. 

To stay on the conservative side, our actuaries have estimated a 

1-percent cost savings for all of the beneficiaries that will be involved in this program, but that is an important savings if we are 

achieving better health results at the same time. So, we are going 

to wait and see. The reason we are doing this as a pilot is to see 

which methods work best, and we can get the maximum savings 

and the maximum improvements in outcomes. 

Mr. CRANE. We all know that preventive health care services 

save the Medicare Program money, but it is often hard to track the 

savings of providing these services. I imagine it will be difficult to 

quantify the savings from the new disease management initiative. 

How will the CCIPs be evaluated and measured to ensure that 

they are improving clinical outcomes and actually reducing costs? 

Dr. MCCLELLAN. It is hard to get a handle on the actual impact of things that we do on outcomes, but that is why I appreciate 

the foresight of Congress in this case, asking us to do a randomized, careful study where we have two populations of patients, one 

population that gets access to this new pilot program and the other 

population which is from the same area and has exactly the same 

kind of characteristics. 

We are going to compare the outcomes for those populations, not 

just look at the people that a disease management program manages to sign up, a chronic care improvement program manages to 

sign up, but the whole population. We will compare those outcomes 

with the control group, and based on what I have seen of successful 

chronic care improvement programs, we should be able to see some 

improvements in outcomes in a pretty short timeframe. 

Some of the programs that have been implemented already to reduce complications from diabetes or heart failure pay for themselves more than one time over within a matter of months in terms 

of avoided hospitalizations with complications of the disease. So, we 

will be watching that very carefully and will be reporting to you 

along the way about how the programs are doing. 

Mr. CRANE. Critics have asserted that the CCIP initiative is removed from the physician and that the program does not promote 

a relationship between the patient and his or her doctor. Can you 

respond? 

Dr. MCCLELLAN. I think we are going to make sure that these 

programs do have elements that encourage an effective relationship 

between patients and providers. Those relationships are strained 

today as many Medicare beneficiaries are seeing more doctors than 

ever before. A Medicare beneficiary, on average, sees seven physicians in a year, and there is a lot of evidence out there that Medicare beneficiaries are not getting the best possible evidence-based 

care for their chronic illnesses. 

So, there is a lot of room for improvement, and I think some of 

the main ways that improvements can occur are ways that physicians may well appreciate, like having services that remind paVerDate Aug 18 2005 08:47 Sep 01, 2005 Jkt 099671 PO 00000 Frm 00027 Fmt 6633 Sfmt 6602 E:\HR\OC\99671.XXX 99671
24 

tients when they need to follow up with their physicians and helping patients understand their disease so they will understand why 

it is so important to comply with the treatment plan that their physician has provided for them, as well as taking steps to help beneficiaries spot complications from their diseases early, as I mentioned before, when their weight is up a little bit, when their blood 

sugar levels are off a little bit, rather than down the road when 

they get into costly complications requiring hospitalizations. 

All of these steps may actually increase the amount of contact 

through appropriate office visits with physicians. The difference is, 

the physicians will be seeing the patients to prevent the complications rather than seeing the patients after the complications have 

occurred. So, in short, we will be getting much more for our money, 

and physicians will be able to get much more out of the time that 

they spend with patients. This is going to be a challenge, and we 

will be watching closely how well we do and why we will be evaluating these programs in part based on the satisfaction that providers have with the services being provided. 

Mr. CRANE. Thank you, Dr. McClellan. We look forward to 

working with you. 

Chairman JOHNSON. Dr. McClellan, to follow up on that point, 

since it has been so frequently raised, why not just develop a code 

that shows what you need to coordinate and just change Medicare 

to pay doctors? 

Dr. MCCLELLAN. Well, first, we are paying doctors more. That 

was another set of provisions in the MMA; it is very important for 

access to high-quality physician care in this country. I think there 

are some further steps we can take to figure out whether there are 

better ways to pay doctors. 

As you mentioned in your earlier questions, we have other demonstrations going on and a lot of interest in CMS right now in developing appropriate pay for performance methods where you do 

get paid more for delivering higher-quality results, for providing 

better care and not just for having more visits and, in effect, more 

complications leading to higher payments. So, we will keep looking 

at the best ways to do this. 

The advantage of these CCIPs is that, I think, they are appropriately at a stage where they can be piloted on a large scale and 

then used on a large scale. There are proven approaches in these 

chronic care improvement ideas that can potentially have a largescale, positive impact for beneficiaries. 

I think we will learn more along the way in this program and 

in other demonstration programs about other ways which we might 

want to improve the payment system, but I don’t think it is a question of paying more under the current system. I think it is a question of how we can develop the best evidence to guide modifications 

through our payment system to get better outcomes at a lower cost. 

Chronic care improvement is one valuable way to do that; and I 

think there are probably others, and we will keep pursuing them. 

Chairman JOHNSON. It is my hope that out of the combination 

of pilots and demos that are in process, and others that you have 

the authority to develop, that we will be able over time to sort out 

this issue of how much can be integrated into individual physician 

practice standards and payments, and at what point there is a benVerDate Aug 18 2005 08:47 Sep 01, 2005 Jkt 099671 PO 00000 Frm 00028 Fmt 6633 Sfmt 6602 E:\HR\OC\99671.XXX 99671
25 

efit and a real value added to having a coordinator across specialties or across community-based support programs versus traditional medical support programs. So, I think we need to keep our 

eye on that ball, how much this can be ultimately implemented 

through physician payment structures involving coordination of 

care and how much needs to go beyond that, what kinds of patients 

need more assistance in that. That leads me to my last question. 

Almost all of the chronic programs involve a greater level of patient involvement, patient knowledge, patient education, patient 

management, and for a patient with dementia, this is hard. We 

were conscious of that in writing the bill. We do mention the issue 

of dementia and have some demonstrations that are working specifically on this issue of how do you manage disease management 

with a patient that has dementia. So, that is an issue raised by Dr. 

Berenson as well as one that we worked a lot on. Would you talk 

a little about that in the context of these pilots? 

Dr. MCCLELLAN. First of all, at a broad level, we need to be 

preparing for dealing with dementia issues on even a larger scale. 

As we are getting better treatments for many other diseases, more 

and more of our beneficiaries are living longer. Until we get truly 

effective treatments for dementia, this is going to be an important 

and probably growing part of our patient population, and dealing 

with it effectively is an essential part of providing high-quality care 

to all of our beneficiaries and doing so at the lowest possible cost. 

You mentioned a number of demo programs; also, Medicare Advantage programs are going to be specifically targeted to these 

types of populations, building on successes that we have already 

seen in particular instances. That is an important part of our response. 

I would highlight that in the CCIP itself, the program participants are going to be required to cover and improve outcomes and 

reduce costs for a whole beneficiary population. They don’t get to 

cherry-pick the healthy beneficiaries. They don’t get to target their 

interventions only at beneficiaries without dementia, without other 

kinds of cognitive impairments or other types of impairments that 

might make them harder to work with in terms of the standard 

management of care approaches. 

So, they will be evaluated on performance for improving outcomes for these segments of our population, and if they don’t improve it, then they are not going to get the financial rewards, they 

are not going to be selected to expand coverage more broadly. We 

are absolutely committed to make sure these chronic care improvement services work for all, for our increasingly diverse population 

of beneficiaries, and that means effective techniques to work with 

people with Medicare who have cognitive impairments as well. 

Chairman JOHNSON. Thank you very much, Dr. McClellan. 

Mr. STARK. Dr. McClellan, could I deal with some concerns on 

privacy? Let’s assume that I start out with one of these organizations, and then I decide I want to quit. What happens to my medical information that that chronic care group would have? Is it protected? 

Dr. MCCLELLAN. It is protected. The CCIP information is part 

of Medicare operations, and it is protected as part of our Medicarespecific activities. It doesn’t continue to be available. 

26 

Mr. STARK. Once XYZ corporation has my medical records and 

I decide not to continue participating, what happens to those? How 

am I guaranteed that they won’t sell them? 

Dr. MCCLELLAN. The same Health Insurance Portability and 

Accountability Act 1996 (HIPAA) (P.L. 104–191) protections apply 

to these records as applied to other confidential medical information. 

Mr. STARK. Why aren’t they a covered entity instead of a business associate? Covered entity, they could be subject to fines if they 

misbehaved. 

Dr. MCCLELLAN. They are covered in the sense that they are 

part of our business operations. 

Mr. STARK. Stop a minute. You could either be a business associate under HIPAA or you could be a covered entity, a provider. A 

covered entity has stricter disclosure regulations and more severe 

penalties for violating those. Why wouldn’t these groups be a covered entity? 

Dr. MCCLELLAN. If they use confidential medical information 

improperly and share it outside of the Medicare operations, they 

are subject to HIPAA sanctions and penalties just like anyone else 

who uses our Medicare information inappropriately. 

Mr. STARK. My staff tells me that there are two classifications. 

If they are classified as business associates, the violations are not 

as tight and the penalties are less severe than if they are, in fact, 

a provider or covered entity. By putting these activities under, 

quote, ‘‘health care operations,’’ it is my understanding that beneficiaries don’t need to give permission for their information to be 

shared nor can they track the sharing of information. So, there are 

some highly technical things in there that I hope you can look at. 

Dr. MCCLELLAN. I want to get that right and do want to emphasize that as business partners, they are subject to the HIPAA 

rules for business partners. If a beneficiary at their option decides 

not to participate in this program, they won’t collect any more information, in the first place; and even for those beneficiaries that 

do participate and stay in the program, they are subject to the 

same HIPAA rules that apply to our health care providers and others involved in our business operations. I do want to work with you 

to make sure we address this effectively, so that confidentiality and 

security is a very important part. 

Mr. STARK. So much for my questions; now my free advice. The 

Chair has discussed the idea of how we would reimburse physicians, and the only thing I can think of—and maybe you know of 

others—is with end-stage renal disease, that the dialysis and the 

drugs are paid for on a schedule. 

There is a capitated fee to the physician to supervise this endstage renal patient. I don’t know how it is designed or how the payment was arrived at, but ought we not to look for something in this 

chronic care that parallels that? It doesn’t cover the tests that they 

made and everything, but it is kind of a global fee—I am not sure 

‘‘capitation’’ is the right word—that the principal or primary physician would receive for checking up on the patient and doing the 

extra work. Would that make sense? 

Dr. MCCLELLAN. I think any proven steps that move toward 

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27 

tients and then giving the doctors the flexibility they need in this 

era of very modern and complex medicine, to provide that care as 

effectively as possible, that is a step in the right direction. I think 

the question for us is, how do we develop better evidence on whether those models can work? 

The capitated payments to dialysis organizations are a bit different than trying capitated payments for doctors and small groups 

who treat a very diverse range of Medicare patients. The smallgroup doctors may not be in as good a position as the dialysis organization is to provide those supportive services themselves. They 

may be better served by working with organizations like the CCIP 

organizations. I don’t know, but we are going to find out more 

about that. 

They may not want to bear the financial risks that come with 

those capitated payments. They are not in as good a position to 

have a predictable idea of what their costs are actually going to be 

for providing high-quality care as the dialysis organizations are. 

There are some challenges there. I agree with the goal that we 

need to be pursuing all the steps we can to learn about what really 

works in paying for performance and giving health professionals 

the support they need. 

Mr. STARK. How many years is it going to take—2, 3, 5 years? 

Dr. MCCLELLAN. The CCIP program is going to be a 3-year 

pilot, but we will be evaluating it before then. 

Mr. STARK. My worry is that they are not going to participate 

if they don’t get paid. 

Dr. MCCLELLAN. There is a surprisingly large amount of interest from many medical group associations, medical doctors, and 

others that come in to talk to me about wanting to focus more on 

the bottom line of improved patient outcomes. So, I think there is 

more interest there than before. 

This is by no means the only approach that we are taking. I 

think you are seeing, across the board, more interest than ever in 

CMS, more efforts than ever to develop better quality measures, to 

try out demonstration programs for what can work, and giving doctors the incentives and support they need to provide better care. 

So, this program will be an important part of finding the answers. 

This is an urgent question and I would like to work with you. 

Mr. STARK. I think we should let the doctors do it. You guys 

should come to us and say, we don’t know all the words. We can’t 

talk Latin. I think just as we did in the Resource-Based Relative 

Value Scale, let the doctors come and say—look to do this type of 

protocol. It might be one, two, three, four chronic diseases. If you 

have five rates higher, we will have to check this and respond to 

the CCIP person, and we will have to order tests and check up on 

the patient, and we think in the course of the year, it will take this 

much involvement, and set a fee for them. 

Let them come up with it, and you guys can bargain. If the doctors don’t design it, they are going to resent us telling them what 

they ought to charge for a new kind of way to practice. I would encourage us to ask the physicians to come and see what they think 

would be a fair relative to other procedures that they provide. 

Dr. MCCLELLAN. I agree with you about getting physician 

input. I think we can learn a lot from health professionals about 

28 

the best ways to meet our policy goals, and we have a lot in already and have heard a lot of good ideas about how to do a whole 

range of new initiatives successfully, ranging from e-prescribing to 

management programs to the section 649 and section 646 demos. 

You name it. There is a lot of physician interest out there, a lot 

of health professional interest that we can build on, and I intend 

to keep working with you all to do that. 

Mr. STARK. Thank you. 

Chairman JOHNSON. Thank you very much, Dr. McClellan. I 

think this issue of what portion of disease management can be supplemental to a physician action and what portion of disease management needs to cut across a larger swath of medical activity than 

any one individual physician would be prepared to manage is something we will learn from the demos and the pilots that we have out 

there. It is a very important issue. 

We are going to learn something more about how we reimburse 

for coordinated care as we work through the challenge of reimbursing oncologists and chemotherapists for cancer care. We have tried 

to, but not successfully, so, we have some example of trying to reimburse for better coordination of care for a bundle of services. In 

some places we have succeeded, and other places, we have failed. 

I appreciate it and I am delighted to have you as CMS Administrator and the experience that you bring to the table. It is extremely important to us achieving the kinds of goals that Pete and 

I and other Members of the Committee have. 

In closing, I just want to recognize David Kreiss, who has done 

so much work on this section of the law and, furthermore, who has 

worked so constructively and progressively and openly with the disease management experts, with disease management companies, 

with physicians themselves, and with a whole array of people over 

several years to get the base for these pilots broadly established. 

I thank him for his constancy and his work. 

I thank you for your intense interest in it and this tremendous 

step forward as you put out these RFPs. We will follow carefully 

the progress of the project and we will all learn a lot from it. We 

hope you will work closely with us as we look at the issue of physician payment and see if there aren’t steps forward we can make, 

away from the old acute care, incident-oriented, test-oriented payment structure of current Medicare toward a more holistic approach. 

I think physicians are much more interested now than they were 

a few years ago. I see that out there. That is what they ask you 

about. That is what they want to know. They are beginning to say, 

why are you so out of touch with what it is we are now trying to 

do? Thank you for your testimony and thank you for the good work 

of you and your staff. 

Dr. MCCLELLAN. Chairman Johnson, it is really a pleasure 

working with you. I want to thank you especially for recognizing 

David Kreiss and the rest of the CMS staff. They have done a terrific job in putting together a very innovative approach. 

The biggest pleasure of this job for me in the month I have been 

there has been the enthusiasm and the talent and, really, the experience and expertise of the staff in taking these new opportunities 

we have to do a much better job of delivering high-quality, personVerDate Aug 18 2005 08:47 Sep 01, 2005 Jkt 099671 PO 00000 Frm 00032 Fmt 6633 Sfmt 6602 E:\HR\OC\99671.XXX 99671
29 

alized care to all of our beneficiaries. It is going to be a real pleasure working with you. 

Chairman JOHNSON. We will invite the second panel up: 

Christobel Selecky, President-Elect and Chair of the Disease Management Association of America; Dr. Janet Wright, the Medical Director of Cardiology for the Enloe Medical Center of Chico, California; Vince Bufalino, Dr. Bufalino, a member of the Expert Panel 

on Disease Management of the AHA from Naperville, Illinois. As 

I say, we will respect Dr. Berenson in his absence, but continue to 

work with him when next we have a chance to meet with him. Dr. 

Selecky. 

STATEMENT OF CHRISTOBEL SELECKY, PRESIDENT-ELECT 

AND CHAIR, GOVERNMENT AFFAIRS COMMITTEE, DISEASE 

MANAGEMENT ASSOCIATION OF AMERICA 

Ms. SELECKY. Thank you, Chairman Johnson, and thank you 

for the promotion. I am not a doctor and I don’t play one on television. I would like to thank you very much for inviting me to appear here. As you know, my name is Christobel Selecky. I am the 

President-Elect of the Disease Management Association of America, 

which is a nonprofit, interdisciplinary association dedicated to the 

advancement of health improvement for people with chronic disease. I also am the Chief Executive Officer (CEO) of LifeMasters 

Supported SelfCare, which is a 10-year-old, privately held disease 

management organization that provides coaching, education, and 

support to more than 300,000 people with chronic disease nationwide. 

The fact that our health care system does not adequately care for 

people with chronic disease has been well documented. When 

chronically ill patients do not receive the right treatment for their 

conditions, they get sicker and end up in the hospital; and this not 

only results in poor quality of life for the beneficiaries, but it costs 

our taxpayers and our health care system a great deal of money. 

This gap in care occurs because patients are inadequately 

trained to manage their illnesses and rushed practitioners do not 

always have the time, information, and systems to follow evidencebased guidelines and to follow up with their patients and other 

health care providers. The care gap is particularly acute among our 

Nation’s seniors in traditional Medicare. Prior to last year’s MMA, 

recommended solutions to this problem were piecemeal, incremental, and measuring their impact on cost containment and quality improvement was difficult, if not impossible. 

Fortunately, the MMA has created a framework for transforming 

chronic care in America. Most notably, section 721 will make largescale, population-based disease management available to beneficiaries in traditional Medicare. In the first phase, financial savings, quality improvement and satisfaction are guaranteed. This 

approach represents real innovation and an opportunity for Congress and CMS to support delivery system change and outreach to 

chronically ill beneficiaries. 

Disease management programs work. My company, LifeMasters, 

provides services to a population of mostly aged, blind, and disabled fee-for-service Medicaid beneficiaries in the State of Florida. 

Over a 2-year period, we were able to reduce total health care costs 

30 

by $12.6 million on a population of just 3,500 beneficiaries with 

congestive heart failure and co-morbidities of Chronic Obstructive 

Pulmonary Disease, coronary artery disease, diabetes, and mental 

illness. This represented a 5.6-percent net cost savings to the State 

of Florida. 

This group also experienced a 38-percent reduction in hospital 

days, significant improvements in evidence-based care, and made 

significant lifestyle changes as well. I do want to say, too, physicians were actively involved in this program. In a survey we recently conducted, 89 percent of them said they would very highly 

recommend this program to their colleagues. 

These outcomes are typical of disease management programs. 

Extrapolating these savings to the Medicare CCIP, this could save 

billions of dollars to our health care system while improving the 

quality of life for millions of beneficiaries. There are many models 

possible under MMA, and CMS has encouraged consortia to apply 

for pilot projects. I would like to describe how a couple of these different kinds of consortia might work. 

A multispecialty medical group with sophisticated information 

technology and established disease management programs could 

contract directly with CMS. They might subcontract with a call 

center to do the outreach and enrollment function, but they would 

perform all of the chronic care improvement functions on their own. 

A health plan might contract with CMS and either provide the 

disease management services themselves or subcontract with a disease management organization. The health plan could provide 

high-risk case management and home health services, and they 

could also work with its physician network to develop physician incentive programs to reward active engagement in the program. 

A disease management organization could contract directly with 

CMS for a program. It would provide all of the standard disease 

management services and could subcontract with the home health 

agency, a biometric monitoring company and a high-risk case management company if necessary. At the local level, the disease management organization could also identify and develop relationships 

with community organizations devoted to providing services to seniors. 

Finally, a pharmacy benefit management company that is planning on being a prescription drug provider under the new drug 

benefit could partner with an entity that has an established disease management program. The pharmaceutical benefits manager 

could use per-member per-month payments from CMS to both 

cover the disease management costs and possibly even to fund a 

modified drug benefit that would start before the 2006 start date 

and also provide an integrated medication therapy management 

program. 

I would like to close with a few recommendations that I hope 

might help improve the effectiveness of this valuable program. Congress should support CMS with sufficient resources to build the infrastructure necessary to administer and monitor this program. 

Second, in order to ensure consistency and a standard level of quality, the Administration should consider accreditation by one of the 

major accrediting bodies or at least a minimum set of quality criteria as a threshold for contracting. 

31 

1McGlynn, Asch et al, The Quality of Health Care Delivered to Adults in the US NEJM 2003; 

348:2635–48. 

Third, because the goal of Phase I is to identify models that can 

be successfully used nationwide, in Phase II, the Administration 

should ensure that models selected in Phase I have proven outcomes and can be scaled to take care of millions of people. 

Fourth, in order to more quickly realize financial savings and ensure equitable and consistent measurement of results, the Administration should consider implementing all of the pilot programs simultaneously. Fifth, Congress and the administration should be 

open to expanding the program earlier than currently specified 

when the results begin to show expected cost savings and quality 

improvement. Finally, Congress should consider the implementation of disease management programs whenever you take up Medicaid reform. 

In closing, I would like to express my sincere appreciation on behalf of the entire disease management community to you, Chairman Johnson, and to the entire Committee, Chairman Thomas, 

Secretary Thompson and the leadership and staff at CMS, for making these important services available to the millions of seniors 

with chronic conditions who need the support to help them live a 

better quality of life. Thank you. 

[The prepared statement of Ms. Selecky follows:] 

Statement of Christobel Selecky, President-elect and Chair, Government 

Affairs Committee, Disease Management Association of America 

I would like to thank Chairman Johnson for inviting me to speak before the Committee today. 

My name is Christobel Selecky and I am the President-elect of the Disease Management Association of America, a non-profit, interdisciplinary association dedicated 

to the advancement of health improvement for people with chronic disease. 

DMAA’s membership comprises the spectrum of entities that have an interest in 

the advancement of chronic care improvement: 

• Healthplans and insurance companies; • Disease management organizations; • Academic institutions; • Integrated delivery systems; • Physician group practices; • Employers; • Monitoring and information technology companies; • Pharmaceutical benefit mangers (PBMs); and • Pharmaceutical companies 

I am also the CEO of LifeMasters Supported SelfCare, a ten year old privately 

held Disease Management Organization that provides coaching, education, and support to more than 300,000 chronically ill individuals nationwide. 

The fact that our healthcare system is not set up to adequately care for people 

with chronic disease is well documented. In its landmark report, Crossing the Quality Chasm, the Institute of Medicine (IOM) gave us a roadmap for the creation of 

a new health system for the 21st Century—a system that is patient centric and focused on closing the gap—the chasm—between best practice and actual care received. This gap was discussed in a well publicized study published just last year 

in the New England Journal of Medicine1 in which it was reported that people with 

chronic conditions receive recommended care only about 50% of the time. 

When chronically ill patients do not receive the right treatment for their condition, they end up getting sicker and winding up in the hospital—sometimes when 

it’s too late to help them. This not only results in poor quality of life but also costs 

our healthcare system—and ultimately the taxpayers in the case of Medicare—more 

money. 

The gap between actual and recommended care occurs because patients are inadequately trained to manage their illnesses, rushed practitioners do not always have 

32 

2 Berenson & Horvath, ‘‘The Clinical Characteristics of Medicare Beneficiaries, March 2002. 

the time or information to follow evidence-based practice guidelines, and systems 

don’t exist at the provider level to actively follow-up with their patients and other 

care providers to ensure the best outcomes. Our delivery system needs to change 

toward the Chronic Care Model described by Ed Wagner and others. But most physicians are operating in 2–3 person offices without resources, platform or staffing 

to achieve this—it costs a lot of money to build these capabilities—money that most 

physician practices simply do not have access to. 

The IOM recommended using sophisticated information technology systems to facilitate the conscientious, explicit, and judicious use of current best evidence and 

knowledge of patient values by well-trained, experienced clinicians. The goal is to 

integrate a fragmented system by building strong information pathways between all 

the stakeholders—patient, physician, family members and caregivers, and payors 

and facilitating a team approach. Information technology provides the platform to 

create that integration. 

Fundamentally, disease management is the platform that can facilitate the delivery of evidence-based medicine on a population-wide basis with a goal of helping 

each individual in that population achieve optimal health. Disease Management Organizations (DMOs) and other healthcare organizations with substantial resources 

and access to large patient populations have built the technology platforms and developed the processes and specially trained staff necessary to achieve this goal. And 

Disease Management supports the Chronic Care Model without imposing financing 

or access restrictions like capitation and by providing the scalability necessary to 

handle millions of beneficiaries with chronic conditions. 

In fact, DMOs create systems to ensure that the guidelines developed and proven 

over many years of research by academic and clinical institutions get implemented 

and that the patients are following the treatment plans prescribed by their physicians. 

Disease management programs work by: 

• Analyzing, on an ongoing basis, all available data (self-reported, claims, administrative, clinical, encounter) to create a profile of the beneficiary that identifies 

how severe their illness is and how wide the gaps in the standard of care 

• Contacting beneficiaries proactively to gain a better understanding of their psychosocial profile and their willingness to participate and to engage them in an 

intervention appropriate to their level of severity 

• Educating beneficiaries and their family members on self-care skills and providing support to help them adhere to the treatment plan prescribed by their 

physician and make necessary lifestyle changes 

• Monitoring changes in vital signs and symptoms that are indicative of changes 

in clinical status 

• Notifying the beneficiary’s personal physician of relevant changes and gaps in 

the standard of care 

• Measuring and reporting on improvements in clinical, financial, and satisfaction 

outcomes on an ongoing basis 

The care gap is particularly acute among our nation’s seniors who have high rates 

of chronic disease and, in the Traditional fee for service Medicare program, there 

are neither programs nor financing for care coordination on a large scale. Medicare 

beneficiaries with five or more chronic conditions represent 20 percent of the Medicare population but 66 percent of program spending.2 They utilize healthcare services at a very high rate and, in the Traditional fee for service Medicare program, 

have a very fragmented healthcare experience. On average, they: 

• Fill 49 prescriptions per year; 

• Have 37 physician office visits per year; 

• Visit 14 different (unique) providers each year; and 

• Stay 7 days in the hospital. 

Several approaches have been suggested to fixing this problem in Medicare including: 

• Introducing capitation or a gatekeeper structure into the fee for service program 

• Increasing reimbursement to physicians who provide care to patients with 

chronic conditions 

• Expanding the benefit structure by adding a variety of chronic care components 

such as home health visits, prescription drugs, and virtual (email or telephonic) 

office visits 

33 

While all of these suggestions have merit, the challenge is that these are all incremental changes and do not address the fundamental problems with chronic care 

that Disease Management can. 

• The impact of any one of these changes can’t be measured or controlled—which 

components are truly creating value? How can CMS make sure that services 

being rendered are truly appropriate to the management of chronic disease? 

How will the overall cost savings to the trust fund be measured? Population 

based disease management programs incorporate all of the components required 

to improve chronic care and are measurable at the population level. 

• It is premature to change the physician payment structure without the platform 

to measure quality and outcomes. Arguments to pay doctors more are about the 

increased amount of time and staffing resources necessary to care for chronically ill patients. Disease Management programs do nothing to reduce the 

number of office visits (and, as a result, do not compromise physician reimbursement) but do improve the efficiency of office visits and provide information 

and support to patients, thereby improving the cost effectiveness of each visit. 

As a result, the physician’s time is more efficiently used and they can treat 

more patients with less office staff. 

• Taking a piecemeal approach to chronic care management would significantly 

increase CMS’s oversight requirements and administrative cost—determining 

appropriate reimbursement levels, defining eligible services, increasing the 

number of transactions (claims), etc. With population based Disease Management programs, CMS would need to work with fewer contractors and wouldn’t 

need to change the basic structure of Traditional Medicare. 

• These changes are primarily provider-centric and do nothing to reach out to and 

engage beneficiaries with chronic disease. However, because people with chronic 

disease are providing their own monitoring and treatment 24 hours a day, they 

need support and tools to enhance their self-management skills. Populationbased Disease Management programs provide this outreach and support. 

• Capitation and gatekeeper models limit access to care and eliminate the element of choice fundamental to the Traditional Medicare program. Chronically 

ill patients generally need to see multiple physicians. The problem isn’t one of 

overutilization, it’s how to avoid preventable utilization. Disease Management 

programs often increase access to primary care and specialist physicians, reduce 

avoidable hospitalizations and emergency room visits, and operate as effectively 

in fee for service environments as they do in managed care. 

Disease Management programs have been available for several years to Medicare 

beneficiaries in M+C programs and employer retiree health benefit programs with 

documented improvements in clinical quality and reduced costs and, as a result, improved quality of life and satisfaction for patients and their physicians. 

In spite of being the largest insurance company in the world, however, the Medicare program has lagged the commercial marketplace. This is not for lack of trying. 

In the past several years, CMS and the legislature have been experimenting with 

disease management through a variety of small demonstration projects. 

Fortunately, the Medicare Modernization Act has now created a framework for 

transforming chronic care in America. Several sections are devoted to improving 

care for chronically ill beneficiaries: 

• Requirement to coordinate Medication Therapy Management Programs (Section 

1860D–4) with DM 

• Consumer-directed Chronic Care Demos (Section 648) 

• Care Management Pay for Performance Demos (Section 649) 

• Requirement for Medicare Advantage (M+C) Plans to have DM (Section 722) 

• Increases in payments to Medicare Advantage Plans—such payments to be 

passed along to beneficiaries—can be used to fund DM programs 

• Benefit changes 

• Coverage of Rx 

• Coverage of preventive physical exams 

• Coverage of diabetes screening tests 

• Coverage of cardiovascular screening tests 

Most important, however, Section 721 will make large scale, population based Disease Management available to beneficiaries in traditional Medicare. It will for the 

first time ever provide: 

• A single point of contact for beneficiaries to reduce fragmentation 

• Education for beneficiaries and caregivers to help manage their self-care 

34 

• Technological support and education for physicians and other providers to help 

them better manage clinical information about the beneficiary • Biometric monitoring technologies and processes to enhance exchange and timely response to clinical information • Information to beneficiaries about hospice, end of life, and palliative care 

This approach represents real innovation and an opportunity for Congress and 

CMS to support delivery system change, outreach to chronically ill beneficiaries, and 

real, measurable reductions in healthcare cost trend and improvements in the quality of life for beneficiaries, their family members, and their physicians. Rather than 

taking an incremental approach, this bill has jump started the fundamental and 

necessary change to deal with the chronic care crisis in America. 

• It takes a holistic approach to helping beneficiaries deal with their chronic conditions—ensuring that CCIOs focus not just on the primary condition to be 

managed but also on co-morbidities (other chronic conditions that exist simultaneously in the same person) and that efforts are made to enhance education, 

access to care, and physician/patient communication • It is patient/beneficiary centric rather than provider centric and will provide 

support for beneficiaries that busy physicians cannot afford to provide • It anticipates the use of proven models of disease management and chronic care 

improvement that can handle large populations and will be scalable after the 

initial evaluation phase • It will result in improved efficiency and increased time for physicians because 

it addresses many of the problems that chronically ill patients create for physician practices • It will result in the opportunity to provide enhanced quality of care and quality 

of life for millions of Medicare beneficiaries without increasing costs to the 

Trust Fund. In fact, it will result in a guaranteed reduction in costs to the Trust 

Fund and where else in Medicare have we seen that requirement? • In addition to resulting in cost savings, it will require clinical quality improvement and enhancement of patient and physician satisfaction • It will provide incontrovertible proof of the benefits of disease management because of its use of a randomized control methodology and a third party evaluator • It recognizes the critical importance of Information Technology and data analysis in large scale chronic care improvement efforts • It has the opportunity to provide measurable, large scale savings because it is 

population-based (meaning that it holds CCIOs accountable for engaging and 

then improving quality and reducing costs for all people in the population and 

it initially targets the conditions (CHF, Diabetes, and COPD) that will yield the 

greatest immediate savings for the Trust Fund • It provides an opportunity for all stakeholders to benefit—no one is cut out: 

• Primary care physicians and specialists 

• Home health agencies 

• Community organizations 

• Health insurance carriers 

• Disease Management Organizations 

• Technology companies 

• Beneficiaries 

• Taxpayers (through a more efficient and effective use of the Medicare Trust 

Fund) 

At LifeMasters, we have two recent examples of programs like this that have generated significant results in relevant populations—retirees in a PPO and fee for 

service Medicaid beneficiaries. 

We provided a Disease Management program to the Ohio State Teachers Retirement System whose members received their healthcare through a PPO. We saved 

the system $8.6 million in total healthcare costs in one year on a 6,000 member subset of their population with CHF, COPD, CAD, and Diabetes. This represented a 

6.9% net reduction in total healthcare costs for a 3.5 to 1 return on investment. 

These savings were generated through an 18% reduction in hospitalizations and resulted in a greater than 90% rate of high satisfaction with the program. 

We also provided a Disease Management program to fee for service Medicaid 

beneficiaries in the state of Florida. Over a two year period we saved the state of 

Florida approximately $12.6 million on an average population of 3,500 fee for service Medicaid beneficiaries with CHF and comorbidities of COPD, Diabetes, CAD, 

and mental illness. This represented a 5.6% net reduction in total healthcare costs 

for a 1.5 to 1 return on investment. These savings were generated through a 38% 

35 

reduction in hospital days. The group also experienced significant increases in evidence based care including a 32% increase in patients taking ACE inhibitor/ 

angiotensin receptor blocker therapy and a 77% increase in cholesterol screenings. 

In addition, there were significant lifestyle changes including an average of 5 pound 

weight loss across the entire population and 25% of participants quitting smoking. 

In another example, American Healthways has provided disease management for 

one of the nation’s remaining Medicare cost-plus plans with its diabetes population 

since July 1, 2000. It has done the same for this plan’s Medicare cost-plus members 

with cardiac disease since November 1, 2001. In the first two years, the net savings 

of the diabetes program was $12.9 million, with $5.1 million savings in year one and 

$7.8 million savings in year two. Net savings in the first year of the cardiac program 

was $20.2 million. The rates of savings are consistent with American Healthways 

results in other populations and geographic locations. 

These kinds of outcomes have been repeatedly shown in Medicaid, 

Medicare+Choice, and commercial populations across the country. Extrapolating 

these savings to the Traditional Medicare population, Disease Management or 

chronic care improvement programs could save billions of dollars while concurrently 

enhancing the quality of life for millions of beneficiaries and their family members. 

There are many models possible under MMA and CMS has encouraged consortia 

to apply for pilot projects. I can attest that my company and several members organizations of DMAA are actively working toward building solutions that are collaborative in nature. 

Here’s how some of these consortia might work: 

• A multispecialty physician group or integrated delivery system with sophisticated information technology including electronic medical records and claims 

analysis capabilities, established disease management programs, and a high 

risk case management program contracts directly with CMS. The physician 

group subcontracts with a call center company to perform the outreach and enrollment functions to get the intervention group engaged but performs all of the 

chronic care improvement functions on its own and holds all of the financial 

risk. The revenue flows to the physician group or IDN which uses the money 

to fund its services and subcontract and also to establish differential payment 

systems (pay for performance) for their physicians based on the outcomes and 

their willingness and effectiveness in participating. 

• A health plan subcontracts with a DMO. The DMO provides the outreach, educational, support, and monitoring services. The health plan provides high risk 

case management and home health services. The revenue flows to the 

healthplan which uses the money to pay the DMO for its services and also to 

cover its high risk case management costs, home health costs, and a risk premium to hold the bulk of the financial risk. The DMO retains a portion of the 

financial risk to ensure that incentives are aligned. 

• A DMO contracts directly with CMS for a program. It provides all of the standard disease management services and subcontracts with a home health agency, 

a biometric monitoring company, and a high risk case management company if 

needed. At the local level, the DMO also identifies and develops relationships 

with community agencies that provide social services to seniors. The revenue 

flows to the DMO which uses it to cover its own costs and to pay the subcontractors and perhaps even provide funding for the community agencies. The 

financial risk is carried by the DMO which may allocate some of this risk to 

its partners depending on what services they provide. 

• A pharmacy benefit management company (PBM) that is planning on being a 

Prescription Drug Provider (PDP) under the new drug benefit partners with a 

physician group practice with an established disease management program or 

a DMO. The PBM begins offering a modified drug benefit prior to the 2006 drug 

benefit start date and includes a Medication Therapy Management (MTM) program. The DMO provides the DM services. The PBM and DMO integrate their 

data systems and builds interfaces between the DM and MTM programs. 

In closing, I’d like to express my sincere thanks on behalf of the entire disease 

management community to you, Mrs. Johnson, and the entire Committee, Chairman 

Thomas, Secretary Thompson, and the leadership at CMS for your leadership in 

making these important services available to the millions of seniors with chronic 

conditions in America who need the support and programs to help them lead a better quality of life. 

As you may know, DMAA has submitted an extensive set of comments and recommendations to CMS in response to the RFP recently issued for Phase 1 of the 

Chronic Care Improvement program. In addition to that submission, I’d also like to 

36 

make a few recommendations that I hope might help improve the effectiveness of 

this valuable program: 

• That you continue to support CMS with the resources they will need to build 

the infrastructure necessary to administer and monitor this program • That you consider the implementation of disease management programs whenever you take on Medicaid reform • That CMS consider accreditation by one of the major accrediting bodies—or at 

least a set of minimum criteria—as a threshold for contracting in order to ensure consistency and a standard level of quality • That CMS consider incentivizing chronic care improvement organizations to devote resources over and above those necessary to achieve the minimum net savings requirement by allowing them to receive a share of savings over and above 

the 5% minimum guaranteed financial savings • That CMS consider implementing all of the pilot programs simultaneously rather than staging implementation over an extended period of time in order to ensure that results can be measured equitably and consistently • That you and CMS be open to expanding the program earlier that the currently 

specified two years from inception when the results begin to show the expected 

cost savings and quality improvements • That CMS ensures that models selected provide a win-win for all stakeholders 

in the chronic care community • Yet at same time, ensure that models selected have proven outcomes and reflect 

models that can be easily scaled for Phase 2. While we applaud the concept of 

experimentation, we want to make sure that this program is successful in reducing costs and improving the quality of life for the millions of beneficiaries 

with chronic disease and their families 

Thank you again for the opportunity to comment on the Chronic Care Improvement program and I would be happy to try and answer any questions you might 

have. 

f 

Chairman JOHNSON. Thank you very much, Ms. Selecky. Dr. 

Wright. 

STATEMENT OF JANET S. WRIGHT, MEDICAL DIRECTOR OF 

CARDIOLOGY, ENLOE MEDICAL CENTER, CHICO, CALIFORNIA 

Dr. WRIGHT. Good afternoon. I also appreciate this opportunity 

to come before you. As I mentioned in my written comments, I 

couldn’t presume to represent all the opinions of cardiologists in 

the country, but I do come here on behalf of my patients and what 

I think—on behalf of the hope that this is a breakthrough to improve medical care. I decided rather than read to you excerpts from 

my written comments that I would tell you a story that I hope illustrates my personal experience with the transformation of medical care. 

Bill Cosby started an album, ‘‘A long time ago, I started out as 

a child.’’ Well, I started out as a medical child. My father practiced 

family medicine in a small town in Arkansas for almost 50 years. 

He took care of a chunk of people in northeast Arkansas. For many 

of those years, my mother was his nurse. At night, on weekends, 

summer and Christmas vacations, I ran the front desk. I took cash 

and I recorded dutifully—on those folks who came under a farm account, I recorded their care in a ledger. The three of us were essentially the health care delivery system. 

I learned a lot of things from my parents and I learned, I think, 

how to do medicine. My father was available 24/7. He did not have 

an unlisted number. Everyone knew my dad’s number. I learned to 

answer the phone, ‘‘Dr. Wright’s residence.’’ I learned early on to 

hear the anxiety that is in a sick person’s voice. 

37 

We used to joke that a light went on in the water tower when 

we sat down to dinner, because that is when the phone started to 

ring. I remember that my father felt privileged to be a physician. 

He drew tremendous satisfaction from his job. I think the reason 

he did is that he worked hard, he prepared well, but he also felt 

he was doing a good job for his patients. I also remember him escaping occasionally the 30 miles or so to Memphis to spend a night 

in a hotel. He did what I called the death sleep where we often 

wondered whether he was alive, but he used it as a recovery. 

That deep satisfaction made a great impact on me and, in fact, 

it bent my career early toward medicine. I could have done nothing 

else. So, I will tell you about the 48 hours that I spent before I 

came here. I was on call for my group of seven. As I said, I am a 

cardiologist so that limits my scope already. I think I had 56 patient encounters in that 48 hours. I took the numbers down because I thought you might be interested. 

Out of those 56 encounters, 27 of those people were over the age 

of 80. As you know, we make problem lists and no patient had a 

problem list shorter than three; that was the 39-year-old. Everyone 

else had problems listing up to 12 or 15. 

I was usually one of three specialists on each of those person’s 

case. If you think that the lab sheet we look at, about 3 different 

sets of lab sheets and 3 times 58 comes out to be 168 or something, 

there were a lot of lab tests to go over. 

My practice is different than my father’s practice, but the requirement for satisfaction is just as great; and although a different 

reimbursement might give me some satisfaction, taking better care 

of my patients will give me the best satisfaction. I think that is 

what pulls my interest into disease management. 

From what I have read and what I have observed, their approach, looking at large numbers of people with similar medical 

problems who still need individual care and who need care continuously rather than episodically, makes a lot of sense; and I think 

physicians need the benefit of their expertise. 

I think physicians, as you mentioned, Representative Stark, are 

beleaguered. In addition to the five sources of information telling 

me how to practice, I also have the entire Internet source telling 

me how to practice, but I do need some assistance. I think there 

is hope in this program to learn from the initial experiments and 

then apply those in wider spectrums, not just to all my beneficiaries, but in different settings of practice; not just in large 

groups, as you said, Chairman Johnson, but in the smaller, individual practices. I appreciate all of your efforts on our behalf. 

[The prepared statement of Dr. Wright follows:] 

Statement of Janet S. Wright, M.D., Medical Director of Cardiology, Enloe 

Medical Center, Chico, California 

Chairman Johnson and members of the subcommittee: 

I am here today as a practicing cardiologist and a Fellow of the American College 

of Cardiology, (ACC) an organization whose mission is to advocate for quality cardiovascular care-through education, research promotion, development and application 

of standards and guidelines-and to influence health care policy. My comments reflect 

the policy position of the College, although I could not presume to represent the diverse opinions of the over 30,000 members of the ACC. I do however, represent the 

interests of my patients and on their behalf, I express my gratitude for the efforts 

you make on a daily basis to improve health care in America. I believe that your 

38 

contributions will initiate an historic improvement in the quality of health care for 

Medicare beneficiaries. 

Any policy maker, health care professional or sick person in America knows that 

our health care system is broken. Our striking success in combating life-threatening 

illnesses has extended the lives of millions of Americans, and in that victory, converted acute events into chronic conditions. Our older citizens suffer multiple diseases, visit an average of seven doctors a year, and take more than twice that many 

medications each day. These patients need near-constant oversight and continuous 

care coordination to stabilize their conditions and to avoid the episodic, usually urgent and costly rescue from a preventable deterioration. 

As seniors’ complex medical conditions multiply, the physician workforce is 

shrinking due to unmet needs for job satisfaction, adequate reimbursement, and liability protection, among other factors. Quality medical care takes time and resources to deliver and good doctors are struggling these days to care for the burgeoning chronic disease population. The therapeutic alchemy of the patient-physician relationship disintegrates under the pressures of today’s fragmented care interaction. When the personal connection breaks down between patient and doctor, so 

does adherence to advice, trust, satisfaction, and inevitably, the clinical outcome. To 

deliver excellent care, physicians need additional resources to provide patient and 

family education, to track practice adherence to established guidelines, and to supply our statistics to a variety of ‘‘measurers’’ in the health care arena. To practice 

21st century medicine, practitioners must have current, complete, and accurate 

data. Those data, and the resources for gathering them, are absent in most medical 

practices today. 

Advances in science, funded robustly by this Congress, have been translated into 

evidence—or guideline-based medicine, setting the standards of care and shaping 

medical decision-making. Yet few doctors can afford the information technology or 

human resources to bring these recommendations to the point of care delivery, much 

less to record, track, and report their performance, an increasingly common requirement in the medical marketplace. Despite best efforts of well-trained and dedicated 

physicians, our own measures of quality have demonstrated dispiriting gaps in care. 

Health care has metamorphosed; health care delivery systems have not. 

Although I do not know the solutions to our complex health care crisis, I can list 

the basic characteristics of those solutions. Collaboration is critical as the problems are clearly insurmountable by any single organization or entity. Improvements 

will be incremental or staged because the distance we must travel from our 

present state to a significantly better one is staggering. Evidence or guidelinebased medicine is the accepted standard, and a steady focus on quality, with all 

the attendant difficulties, will help guide us to a better system of care. The solution 

must be comprehensive, in the sense that quality care is to be delivered in all settings, for all conditions. Finally, and most importantly, the new system will be 

marked by enhanced communication on the macro level by adaptable IT and appropriate infrastructure, and on a personal level by a resuscitated patient-physician 

relationship. 

The approach known formally as disease management has grown exponentially in 

the current chaos because it provides among other things, vital systematic links 

among participants in the health care system. Emphasis on populations, self-care 

instruction, and continuous cross-talk between patients and the care team mark a 

few of the unique features of the disease management approach that are missing 

in the traditional care model. Disease management harnesses information technology and other important tools to assist with application of evidence-based medicine, data collection and analysis, patient and physician adherence, and performance 

enhancement. Disease management brings constructive additions to current health 

practices and holds promise for improvements in care delivery. 

As an example of highly effective disease management, I call your attention to a 

mature and profoundly valuable program which has provided education in self-management and health preservation, linked patients and doctors through frequent 

progress reports, and not just satisfied, but indeed, life-changed its participants. 

That program is one of the original disease management approaches known as Cardiac Rehabilitation. The design has from its inception been multidisciplinary, bringing together cardiac nurses, exercise physiologists, dieticians, and cardiologists with 

expertise in disease prevention and health promotion. These sophisticated programs 

begin with detailed intake interviews, identifying not only the medical conditions 

which require monitoring and management, but also the social and psychological 

hurdles to achieving and maintaining good health. The structured weekly sessions 

provide the continuous and repetitive feedback proven to effect changes in behavior. 

The care team members support these gradual, key behavioral shifts, become trusted sources of information, and most importantly, serve as community-extended 

39 

radar, detecting early signs of decompensation, medication errors or poor adherence, 

and new or recurrent disease states. 

Patients undergoing cardiac rehabilitation ‘‘graduate’’ armed with knowledge of 

their disease process, their prognosis, and their limitations; the latter most certainly 

reduced by the personalized protocol of exercise, nutritional counseling, stress-reduction training, and medical supervision. In these days of ‘‘drive-by’’ open heart surgery and two-day admissions for heart attacks, the educational process is so critical 

for the restoration of physical and mental health and improved functional status 

takes place in one and only one place: Cardiac Rehabilitation. Even with the fiscally 

constrained reach of cardiac rehabilitation programs, the disease management principles have succeeded in improving the outcomes and outlook for patients with cardiac disease. 

The Voluntary Chronic Care Improvement Programs will incorporate many features present in the CR/DM model, features which are fundamental to solving our 

health care crisis. This unique design calls for collaboration among the system experts (DM), the medical pros (physicians and health care team), and the payers in 

a mutually rewarding arrangement for the benefit of patients with congestive heart 

failure, complex diabetes, and chronic obstructive pulmonary disease. The successful 

models/components will be identified in a three-year process and made available to 

the appropriate Medicare population in a staged fashion. Outcome measures of quality and satisfaction will be selected in advance, monitored, and reported, highlighting the use of information technology and reinforcing the practice of guidelinebased medicine. 

Even though there are specific targeted diseases in the Phase I programs, the approach is most appropriately comprehensive in the attention given to co-morbid conditions and overall health status. This is both complicating for the program administrators and absolutely necessary for the applicability of these approaches to real-life 

medical care of aged and disabled Americans. Cost data will be important, but not 

sole determinants of program success. Although typically unprofitable for hospitals, 

cardiac rehabilitation programs achieve striking gains in quality of life, patient satisfaction, and clinical outcomes. Phase I programs that predominantly emphasize 

well-established clinical outcomes are in the patients’ and ultimately, the country’s 

best interest. In fact, the very foundation of a disease management strategy is that 

early and frequent intervention ( whether education, medication adjustment, further 

evaluation, and/or alteration in treatments) improves the patient’s ability to function at the highest level possible. I strongly encourage selection of programs that 

focus on quality improvement, as those are most likely to result in concomitant enhancements in beneficiary and provider satisfaction. Finally, I trust that the programs selected for Phase I will recognize the therapeutic value of a healthy patientphysician relationship and will support fluid communication among members of the 

care team, family members, and caregivers. 

In Section 721 of the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003, Congress has broken new ground in health care delivery 

design. Many aspects of the MMA are revolutionary in the transformation of health 

care in the United States. New partnerships will be formed, innovative approaches 

will be tested, and the underlying audacious concept is that quality medical care 

will lead to better financial, satisfaction, and clinical outcomes. 

That said, I believe that the greatest achievements of this legislation will be realized in an evolutionary way. Section 721 sets in motion a new direction in health 

care which will find expression in ways we cannot anticipate. We will learn from 

the experience of Phase I, and future innovators and disseminators will adapt the 

processes as populations and medical conditions mandate. I expect to discover 

through the Phase I project, the techniques and processes that work and those that 

need further modification or perhaps application in a different subset of patients. 

Learning where and how and in whom to apply these principles of care will be an 

invaluable lesson. I anticipate that practices, health plans, and other care delivery 

systems which are not part of the Phase I projects will follow the progress reports 

closely and begin to implement the winning strategies. The goal is to improve the 

quality of care for all, to close the gaps that still exist, and to do so in a cost effective manner which will enable us to provide care to all in need. It is my hope that 

as much meticulous care and concern go into these future designs as was invested 

in the crafting of this legislation and in its implementation. 

I encourage physicians to investigate the Chronic Care Improvement Programs, 

to consider the potential benefits to their patients and their practices, and to participate however possible so that the ultimate delivery model reflects what we know 

to be true: compassionate individualized care is effective, essential, and rewarding. 

We will always treat one human being at a time and, in that moment, serve the 

larger population well. The opportunity now presents to combine this best practice 

40 

of the healing arts with a high tech, population-based approach, a challenge which 

calls for the integrity and commitment of the brightest minds in health policy, system design, and medicine. 

In closing, I share a physician’s wish list for the future perfect state of medical 

care. Many of these wishes could come true in the Phase I and II programs and 

they are essential components of a fit and functional health care system. 

1. I want to be on the design team for the process of care. (Physician involvement) 

2. I want to know my ‘‘score,’’ how it is calculated, and to whom it is reported 

(Quality/performance measurement) 

3. I want my patients to have ready access to a team of experts in my practice 

and community who can extend health care beyond our office visit. (Team care, 

primary and secondary prevention) 

4. I want current, accurate, complete data available when I need it so that I can 

incorporate it into my practice. (Information technology) 

5. I want my patients to have validated, self-care advice when they need and so 

they can use it. (Patient education, prevention, information technology) 

6. I must have the ability to afford to deliver this care. (Adequate reimbursement 

for a chronic care management system) 

I deeply appreciate the efforts of this subcommittee in improving our health care 

system. Your dedication and commitment challenge all participants in health care 

to contribute our best to achieve creative and cooperative solutions. 

f 

Chairman JOHNSON. Thank you very much, Dr. Wright. Dr. 

Bufalino. 

STATEMENT OF VINCE BUFALINO, M.D., MEMBER, EXPERT 

PANEL ON DISEASE MANAGEMENT, AMERICAN HEART ASSOCIATION, NAPERVILLE, ILLINOIS 

Dr. BUFALINO. Thank you. Good afternoon, Madam Chairman, 

Representative Stark, Representative Crane. I thank you for the 

opportunity to testify on this important initiative. My name is 

Vince Bufalino. I am a practicing cardiologist for 22 years and the 

President/CEO of Midwest Heart Specialists, a 55-physician practice in suburban Chicago. 

I have been an active volunteer for the AHA over the last 20 

years and the incoming Chairman of the Advocacy Coordinating 

Committee nationally, and also serve as the Chairman of the 

Emergency Cardiac Care Committee where we direct 

Cardiopulmonary resuscitation and Advanced Cardiac Life Support 

programs for the United States. Currently, I am the president of 

the Midwest Region, of the seven States, and have been named to 

the board of directors. Finally, and why I am here is, I am a member of the AHA’s Expert Panel on Disease Management. 

I am speaking today on behalf of the AHA’s 22.5 million volunteers. As the largest voluntary health organization, the AHA’s mission is to reduce cardiovascular disease and stroke by 25 percent 

by the end of this decade. Our organization is unique. Our volunteers are patients, physicians, nurses, and other stakeholders, all 

dedicated to fighting heart disease and stroke, our Nation’s number 

one and number three killers. 

The AHA believes that chronic care management programs, if 

properly structured and carefully implemented, may help transition 

the Medicare Program into a more responsive and comprehensive 

health care program for America’s seniors. 

We are encouraged that the voluntary CCIP appears to be an important step in this regard. We applaud your leadership, Madam 

41 

Chairman, in ensuring that this issue was addressed in the MMA. 

We look forward to working with you, this Committee, and CMS 

to ensure that the CCIP fulfills its considerable promise to demonstrate improvements in patient outcomes and quality of life. 

We believe CMS has done an admirable job in developing the 

RFP. Much of what will ultimately matter most, however, cannot 

be explicitly detailed in an RFP. True success will depend on the 

extent to which this program recognizes and promotes practices to 

provide value to our patients. By this, I am referring to improved 

patient outcomes, the translation of evidence-based research into 

practice, the institution of measures to promote primary and secondary disease prevention, and effective beneficiary outreach so the 

beneficiaries can understand the true benefits of this program. If, 

however, the program becomes overly focused on reducing expenditures, we are concerned that much of the potential value to the patient may not be realized. 

I would like to devote my comments today to a series of recommendations focused on these issues that we believe address the 

improved patient outcomes for Medicare beneficiaries. After conducting extensive research, the AHA’s Expert Panel has established a set of principles on disease management and chronic care 

management. We believe these principles should be applied to 

chronic care management programs in both the public and private 

sectors and consistently across disease states and patient populations. 

Although the number of existing disease management programs 

and chronic care programs seek to balance cost containment with 

quality, quality and improved patient outcomes must always be the 

priority. The AHA recommends the following guiding principles for 

the implementation of the CCIP. 

Number one, the main goal of CCIPs should be to improve the 

quality of care and patient outcomes. The core principle underlying 

all of our recommendations is ensuring treatment and practices 

that improve outcomes. We appreciate the fact that this principle 

was the motivation for the inclusion of the CCIP in the MMA. Our 

challenge, however, is to implement this program in a way that 

meets the objective. 

Number two, evidence-based guidelines should form the foundation for all CCIPs. Efforts to manage beneficiaries with chronic conditions should incorporate the use of guidelines such as those developed by the AHA and other organizations in the medical community that provide clear direction as to how to reduce the risk of 

these chronic conditions and to ensure the beneficiaries received 

optimal care. 

Number three, performance measures should be designed to improve quality of care in clinical outcomes. Scientifically based quality indicators should be the key measurement upon which the success of the CCIP is evaluated. Careful attention should be given to 

the appropriate translation of these scientifically based guidelines 

into chronic care practices. 

Number four, to ensure the optimal patient outcomes, the CCIP 

must address the complexities in medical co-morbidities. According 

to recent research, 78 percent of the medical beneficiaries in Medicare have at least one chronic illness. Almost 32 percent have four 

42 

or more. Chronic care improvement must include the management 

strategies for these complex interactions. 

Number five, scientifically based evaluations should be a critical 

component of all of these programs. Ongoing evaluation efforts 

should examine the extent to which the chronic care management 

efforts have produced better quality of care and improved clinical 

conditions for our beneficiaries. 

Number six, the chronic care management program should exist 

within an integrated and comprehensive system of care in which 

the patient-physician relationship is central. Chronic care management services should not substitute a patient-provider relationship, 

particularly the patient-physician relationship, that is critical to 

the delivery of care. Instead, chronic care management programs 

should be one of several strategies to support and enhance the patient-provider relationship. 

A significant challenge exists for the enrollment of these beneficiaries in the CCIP. Successful enrollment will be closely linked 

to beneficiary education and outreach. Outreach efforts should include clear and easily understood information for beneficiaries that 

helps them understand the impact of this program. Beneficiaries 

should know that this new program will not force them to give up 

their doctor or reduce their current benefits. Instead, this pilot program should help them coordinate what is oftentimes a fragmented 

health care system through which the beneficiaries receive their 

care. 

In addition, beneficiary participation will be influenced by its impact on the patient-physician relationship. Individuals will not be 

receptive to a program that threatens their ability to be treated by 

their physician of choice or otherwise intrudes on this relationship. 

We urge CMS to reject proposals that attempt to supplant the care 

provided by the patient’s provider. 

A beneficiary willing to participate in the CCIP is also dependent 

on his or her understanding of this program, its benefits, its processes, and its objectives. The CMS must ensure that chronic care 

improvement organizations engage in substantial education efforts 

to inform the beneficiaries how the CCIP will improve quality of 

care, prevent future adverse events, and improve outcomes. Patients and their physicians must be convinced that the program 

will utilize the best science to aid in determining the most effective 

treatment course. 

Finally, it is important to recognize that each geographic area 

chosen for this program will have its own unique cultural and linguistic characteristics. In order for any beneficiary communication 

effort to be effective, it must consider these factors and develop outreach activities in a culturally significant manner. The AHA appreciates the opportunity to testify before the Committee on this important issue, and we look forward to working with you and CMS 

on this important initiative. Thank you. 

[The prepared statement of Dr. Bufalino follows:] 

43 

Statement of Vince Bufalino, M.D., Member, Disease Management Expert 

Panel, American Heart Association, Naperville, Illinois 

Introduction 

Good morning, Madame Chairperson and members of this Committee. Thank you 

for the opportunity to testify on behalf of the American Heart Association before 

your committee on this important initiative. 

My name is Vince Bufalino. I am the President/CEO of Midwest Heart Specialists, 

a 55 physician Cardiology practice in the Chicagoland area with fifteen offices located in the western and northern suburbs. As chairman of the Midwest Heart 

Foundation, a non-profit research arm of Midwest Heart Specialists, I oversee approximately 30 clinical research trials. 

I have been an active volunteer for the American Heart Association for the past 

20 years. I am the incoming chair of Advocacy Coordinating Committee nationally 

and serve as national chairman of the Emergency Cardiac Care Committee with responsibility of directing the CPR and Advanced Cardiac Life Support Programs for 

the United States. 

I am also currently president of the American Heart Association’s Greater Midwest Affiliate and have recently been named to the AHA Board of Directors and Administrative Cabinet, both at the national level. Finally, I am an active member of 

the AHA’s Expert Panel on Disease Management. 

I am speaking today on behalf of the American Heart Association and its 22.5 million volunteers and supporters. As the largest voluntary health organization, the 

American Heart Association’s mission is to reduce cardiovascular disease and stroke 

by 25% by 2010. Our organization is unique. Our volunteers includes patients, physicians, nurses and other stakeholders dedicated to fighting cardiovascular disease 

and stroke, our nations #1 and #3 killers respectively. 

The American Heart Association believes that chronic care management programs, if properly structured and carefully implemented, may help transition the 

Medicare program into a more responsive and comprehensive health care program 

for America’s seniors. 

We are encouraged that the Voluntary Chronic Care Improvement Program appears to be an important step forward in this regard. We applaud your leadership, 

Madame Chairperson, in ensuring that this issue was addressed in the Medicare 

Modernization Act. We look forward to working with you, this committee, and the 

Centers for Medicare and Medicaid Services (CMS) to ensure that the Voluntary 

Chronic Care Improvement Program fulfills its considerable promise to demonstrate 

improvement in patient outcomes and quality of life. 

We believe CMS has done an admirable job in developing the request for proposals for this program. Much of what will ultimately matter most, however, cannot 

be explicitly detailed in an RFP. True success will depend on the extent to which 

the program recognizes and promotes practices that provide value to the patient. By 

this, I am referring to improved patient outcomes, the translation of evidence-based 

research into practice, the institution of measures to promote primary and secondary disease prevention, and effective beneficiary outreach so that beneficiaries 

can understand the benefits of this program. If, however, the program becomes overly focused on reducing expenditures, we are concerned that much of the potential 

value to the patient will not be realized. 

American Heart Association’s Principles for Chronic Care Improvement Programs 

I would like to devote my comments today to a series of recommendations focused 

on issues that we believe must be addressed to ensure improved patient outcomes 

for Medicare beneficiaries in the implementation of the Chronic Care Improvement 

Program. After conducting extensive research, the American Heart Association Expert Panel on Disease Management established a set of principles on disease management and chronic care management. We believe that these principles should be 

applied to chronic care management programs in both the public and private sectors 

and consistently across disease states and patient populations. 

Although a number of existing disease management programs and chronic care 

management programs seek to balance cost containment and quality, quality and 

improved patient outcomes must always be the priority. 

The American Heart Association recommends the following guiding principles for 

the implementation of the chronic care improvement program to ensure improved 

patient outcomes for Medicare beneficiaries: 

1. The main goal of chronic care management should be to improve the 

quality of care and patient outcomes. 

44 

Evaluation of chronic care management programs should be based on more than 

just a reduction in health care expenditures. The emphasis should be on the ‘‘value’’ 

of chronic care management (i.e., the extent to which chronic care management efforts result in better quality for a given investment rather than on cost savings 

alone). Improvements in quality of care and patient outcomes should be the primary 

indicator of successful chronic care management. The use of performance standards 

in assessing quality of care and outcomes is critical in evaluating success. 

2. Scientifically derived, evidence-based, consensus-driven peer reviewed 

guidelines should be the basis of all chronic care management programs. 

Chronic care management strategies should be derived when available from scientifically-based guidelines such as those written by the American Heart Association/American Stroke Association and groups such as the American College of Cardiology and the American Academy of Neurology. These guidelines represent consensus in the cardiovascular disease and stroke communities regarding appropriate 

treatment and management of patients with cardiovascular disease and stroke. 

Careful attention must be given to the appropriate translation of these scientifically 

based guidelines into chronic care management practices. 

3. Chronic care management programs should include consensus-driven 

performance measures. 

Improved quality of care and outcomes for patients with cardiovascular disease 

and stroke should be the pivotal measurement upon which the success of a chronic 

care management program is evaluated. To measure improved quality of care and 

outcomes, consensus-based performance measures should be used to evaluate a 

chronic care management program’s effectiveness. Performance measures used in 

evaluating chronic care management programs should be those measures that are 

developed by a broad consensus-driven process such as the National Quality Forum 

and/or others. Ideally, these performance measures should be evidence-based. 

4. To ensure optimal patient outcomes, chronic care management programs should address the complexities of medical co-morbidities. 

Many chronic care management programs are designed to treat single disease 

states. A significant population of patients with chronic disease suffers from multiple co-morbidities. Some of the greatest challenges in caring for these patients involve the complex interactions of these co-morbidities. Chronic care management 

programs and guideline committees should develop algorithms and management 

strategies to fully address patients with co-morbidities. 

5. All chronic care management efforts must include ongoing and scientifically based evaluations, including clinical outcomes. 

Chronic care management programs have not traditionally undergone rigorous 

scientific evaluation regarding their impact on patient outcomes. The true measure 

of any health intervention is whether patients are better off having received the 

service or care provided. This determination requires a meaningful examination of 

clinical outcomes. Frequent scientifically-based evaluations should be included as a 

critical component of any chronic care management program, and these evaluations 

should allow for continued improvement in the program to maximize benefit. 

6. Chronic care management programs should increase adherence to 

treatment plans based on best available evidence. 

An important focus of chronic care management should be to influence the behavior of providers, patients and other caregivers to better understand and adhere to 

treatment plans that will help improve patient outcomes. The targets of such efforts 

may include a broad community of caregivers, e.g., physicians, nurse practitioners, 

family members and community-based organizations. To be meaningful, it is essential that such treatment plans be derived from the best available clinical and scientific evidence. The evidence and resulting treatment plans should be revisited periodically to reflect evolving standards and scientific knowledge. 

7. Chronic care management programs should be developed to address 

members of the under-served or vulnerable populations. 

Currently, most chronic management programs arise from employer-based, private health plans. Although a number of states have begun using chronic care management approaches within their Medicaid programs, in general, most chronic care 

management programs serve an employed, insured and healthier population. ChronVerDate Aug 18 2005 08:47 Sep 01, 2005 Jkt 099671 PO 00000 Frm 00048 Fmt 6633 Sfmt 6621 E:\HR\OC\99671.XXX 99671
45 

ic care management programs should be developed to incorporate or to specifically 

address the unique challenges of the under-served and vulnerable populations. 

8. Chronic care management programs should exist within an integrated 

and comprehensive system of care, in which the patient-provider relationship is central. 

Chronic care management services should not substitute for the patient-provider 

relationship(s), particularly the physician-patient relationship that is critical to the 

delivery of effective care. Instead, chronic care management programs should be one 

of several strategies employed to support and enhance the patient-provider relationship, resulting in an overall improvement in the quality of care and coordination of 

care delivered to patients with cardiovascular disease and stroke. 

9. Organizations involved in chronic care management should scrupulously address and avoid potential conflicts of interest. 

Organizations that provide chronic care management services should act in the 

best interest of the patient and avoid conflicts of interest. The primary goal of 

chronic care management organizations should be to improve patient outcomes. Efforts to achieve secondary goals such as product marketing or product sales, should 

not adversely affect the primary goal of improving patient outcomes. To the extent 

any conflict of interest arises that may compromise the primary goal of improving 

patient outcomes, it should not be pursued. 

Beneficiary Outreach and Education Should be Prioritized 

A significant challenge exists for enrollment of beneficiaries in the new chronic 

care improvement program. Successful enrollment will be closely linked to beneficiary education and outreach. 

Outreach efforts should include clear and easily understood information for beneficiaries that will help them understand the impact of this new program. Information and outreach to beneficiaries should be provided to help them understand that 

this program will not replace their relationship with their physician but instead, if 

done correctly, it will supplement or enhance the patient-physician relationship. 

Beneficiaries should know that this new program will not force them to give up 

their doctor or reduce their current benefits in any way. Instead, this pilot program 

should help coordinate what often times is the fragmented health care system 

through which beneficiaries receive care. 

In addition, beneficiary participation is influenced by its impact on the physicianpatient relationship. Individuals will not be receptive to a program that threatens 

their ability to be treated by their physician of choice or otherwise intrudes upon 

the physician-patient relationship. In order to succeed, the CCIP must be viewed 

and implemented as a tool to support and enhance existing provider-patient relationships. We urge CMS to reject proposals that attempt to supplant the care provided by a patient’s provider of choice. 

A beneficiary’s willingness to participate in the CCIP also is dependent upon his 

or her understanding of the program—its benefits, processes, and objectives. Thus, 

beneficiary education and outreach are essential. CMS must ensure that chronic 

care improvement organizations engage in substantial education efforts to inform 

beneficiaries about how the CCIP can improve the quality of care, prevent future 

adverse events, and improve patient outcomes. Patients and their physicians must 

be convinced that the program will utilize the best scientific research to aid in determining the most effective course of treatment. 

Patient communications must facilitate enrollment. Special efforts should be made 

to emphasize the voluntary nature of this program with beneficiaries. If the enrollment process is perceived as too complex, it may serve as a disincentive to beneficiary participation. 

Finally, it is important to recognize that each geographic area chosen for the program will have its own unique cultural and linguistic characteristics. In order for 

any beneficiary communication effort to be effective, it must consider these factors 

and develop outreach activities in a culturally sensitive manner. 

The American Heart Association appreciates the opportunity to testify before the 

Committee on Ways & Means Subcommittee on Health on this important issue, and 

we look forward to working with Congress and CMS on this important initiative. 

f 

Chairman JOHNSON. I thank you all for your testimony. I want 

to clarify. First of all, you have all pointed to important aspects of 

46 

how this program must work. Certainly it must work with physicians and not be dictated to physicians. It has to be collaborative 

at every level and throughout its parts. I do want to point out 

something about the underlying law that some of you may be 

aware of, but not all of you. 

While these RFPs do require that you demonstrate savings, the 

underlying law does not. The Secretary retains the authority to roll 

out to the broad Medicare Program things that improve health 

quality, the quality of care and patient satisfaction, even if they do 

not save money. Now, he does not have that authority if they cost 

money, but he does have that authority if they just improve quality 

and do not save money. 

So, we were very deliberate in how we wrote the law so that saving money would not be one of the criteria that you had to meet 

in order to roll out an initiative in this area. You have to meet a 

criterion that enables you to demonstrate there is an improvement 

in patient quality and patient satisfaction. So, while I was not entirely happy with the 5-percent savings, I think, on these particular 

ones they are starting out with, that should be able to be met; and 

there seems to be no disagreement in the provider community that 

that was able to be met, and certainly the huge response to these 

RFPs indicates that that does not seem to be a problem. 

I did want you to know that that does not hamper the Secretary’s 

authority in the future. I also want to thank you, Dr. Wright, for 

the story about your father’s practice and your practice. That is a 

very, very important story. It is important that there were three 

of you in most of these cases. 

It is important that the quantity of medical knowledge is exploding at such a rate that it is very hard to keep track. I have had 

many physicians report to me to have some program that can remind your patient to come back, can make sure they bought the 

next refill of their prescriptions to keep the process of care moving 

accurately in a way that it would be very hard for a physician and 

his staff to do without today’s technology and the automatic flags 

that it can raise. 

I also want to mention an experience that we had at the press 

conference, that the Secretary and I had, announcing the RFPs, because your comment about needing care immediately as opposed to 

intermittently is really the heart of this change and doctors know 

it. It is not that they do not know it; it is that we do not know it, 

and we cannot recognize it in our payment structure. We do not 

recognize it until something is bad enough, until it triggers a doctor’s office visit or hospital visit. 

We had very interesting testimony or a comment at the press 

conference from a well-educated gentleman who was about 80, who 

was diagnosed with diabetes when he was 48 or 42. He was experienced as a young person in managing diabetes, he was experienced 

as a retiree in managing diabetes; and about 5 years earlier he had 

gotten into one of these chronic disease management programs. 

What was spectacular about it was that his mental health was 

so much better. He understood so much more about his disease. He 

felt so at home about it. He made the statement that, ‘‘I always felt 

sort of selected for this terrible burden, resentful of this terrible 

burden, angry at this terrible burden of diabetes; and now I underVerDate Aug 18 2005 08:47 Sep 01, 2005 Jkt 099671 PO 00000 Frm 00050 Fmt 6633 Sfmt 6602 E:\HR\OC\99671.XXX 99671
47 

stand it is just part of my body. It is the way things function. I can 

understand it. I know about it. I can manage it. Furthermore, I 

have an expert friend who is there as close as the telephone to ask 

any question about it.’’ 

Now, when you look at how we are using the Internet and the 

possibilities for communicating, no doctor can absorb all of those 

communications and still see the number of patients that it is important for him or her to see. So, if you want to talk about any aspect of that, this continuity of care and this continuousness of care, 

that is what is unique about chronic disease management, it would 

be helpful to us or anything else you want to add. Dr. Wright. 

Dr. WRIGHT. Thank you. I had the privilege of sitting in on that 

press conference and that patient’s words, what he said exactly 

was, ‘‘I finally got friendly with my diabetes.’’ I thought that was 

so powerful after having fought it so long as the enemy. 

Chairman JOHNSON. It is not that he did not have good coverage. He had terrific coverage. He had retiree coverage. There is 

a need that incident-based health care cannot meet and we have 

got to understand that. 

Now, there is also a way in which not only does our payment system not reimburse for that, but we are positively hostile to it. The 

Inspector General will look over your shoulder and say, you did not 

need to do that; that was not necessary. So, meeting this challenge 

as to how we restructure the payment system is going to be a big 

challenge, and I think this variety of pilots will help us. You need 

to make sure that the doctors in your area, in your specialty, and 

the doctors in other specialties begin to think about this, and that 

you work collaborative. 

I want to know, if all three of you on these cases sat down and 

figured this out, what solution would you—would you tell us, what 

would you tell us to pay for and how would you tell us to pay for 

it? So, in your spare time if you would raise that. 

Dr. WRIGHT. Yes. I have a plane ride back tonight. The frightening thing to me is not so much that 48 hours of call and the fact 

that there were so many specialists, but my hospital, which is an 

excellent institution, it has invested in a good computerized system, not a computerized medical record, but at least lab data that 

pops up and we can download it on a computer and get access to 

it. So, we are caring for those patients in-house pretty well. 

Those patients are discharged from the hospital into those specialists’ offices, all of which are spread out over a two-county area, 

and there is no link between the nephrologist’s office and my own 

except for me. That is where the system really disintegrates, trying 

to manage chronically ill patients, people who are sick every day 

of their lives, trying to help manage them episodically. We do it 

and we wait until they get sick enough to come back into the hospital. That is not a good plan. 

Dr. BUFALINO. One other comment to add to that. The congestive heart failure that we are talking about today is surely one of 

our biggest challenges. These are our sickest patients. So, your 

comments about the need for continuum are critical. 

Although we have episodic care when they are really sick in the 

hospital, our biggest need is over the time frame when they are at 

home and needing follow-up. Most of these patients are on 8 to 12 

48 

drugs, with a fair number of interactions, obviously. We have had 

to, in our own practice, extend ourselves by using nurse clinicians 

in the office setting by being able to connect to them at home, to 

be able to follow up and do some of the visits, because we cannot 

meet the need. 

So, we are always in need of more effort to be able to connect 

to this sickest group of patients, and they tend to have the most 

confusing set of problems altogether. A lot of what you heard today 

is that four or five illnesses are routine in a lot of the Medicare patients because these things all interact together. They have diabetes, high blood pressure, high cholesterol, bad arteries and a weak 

heart all together. That is a typical story. So, we are clearly challenged. 

Chairman JOHNSON. It is important for all of you and particularly for your group and their nurse practitioners to be able to 

think through exactly what do those nurse practitioners do. We 

tried to do that in the disease management section of the bill with 

enormous help from the disease management professionals. We 

need to know, what are those practical things that we would include were we to give a reimbursement, so there is as clear a delineation as possible? Because the clearer the regulations are, the less 

the Inspector General causes problems. Now, I have respect for the 

Inspector General, but you can micromanage this law so that you 

do not have much left at all. 

So, I do appreciate those comments and I urge you to encourage 

the physicians to think, if we were to accept a global fee for all of 

this, what would be the things that we needed to say we would be 

able to do? Even to look at these requests for proposals, if that 

were out there just as a reimbursement for you all, rather than a 

whole system of care, does it include everything that you do? What 

would be the appropriate payment? 

So, we do face a lot of challenges, but we cannot, we cannot continue with the current system we have. That is why passage of this 

bill called the MMA was crucial, because we were making no 

progress on what is the most underlying challenge in Medicare and 

that is to modernize what it is we are paying for and how we are 

relating to our own providers. So, thank you very much. Mr. Stark. 

Mr. STARK. Thank you, Madam Chairman. 

I guess CCIP fills the gap for certain people. I guess mostly those 

who are healthy enough to manage their own care and respond to 

suggestions that are for their benefit. I am concerned about those 

who are not responsible for reasons of dementia or a whole host of 

other, perhaps economics and they cannot perhaps buy the drugs 

that are required. 

I can see a potential conflict between the vendors that have to 

cut 5 percent and the pharmaceutical companies who want to sell 

more drugs and perhaps the physician who has prescribed the drug 

that the benefit manager might try to cut out. I am not sure there 

is not some conflict brewing in that area. It is just this year, after 

35 years or whatever it is, of Medicare that we decided to pay for 

an initial physical examination. In other words, Medicare beneficiaries were pretty much charged with going around and picking 

their own specialist if a specialist would take them without a referral because there was no way to get clocked into the system. I can 

49 

see the advantage of having Ask a Nurse or any of these benefit 

groups helping us along the way. 

I guess my question to the physicians on the panel is, does the 

physician not have to start out by assessing a patient and determining what is wrong, how many of these diseases does this patient have, and what ought to be the plan? Is that not where it all 

starts, or am I missing something? 

Dr. BUFALINO. I will be glad to answer that. I think you are 

absolutely right. The initial diagnosis is clearly made with the physician, either the family practice internist or a cardiologist, depending on the care loop. Those diagnoses are made and then a plan 

is laid out in terms of what needs to be done in terms of their therapy. So, most definitely. 

Mr. STARK. That plan has to be designed by a physician, does 

it not? 

Dr. BUFALINO. I think the initial plan, whether they are in the 

office or in the hospital is laid out by the physician. The question 

remains then is the follow-up, I think what Chairman Johnson was 

referring to, and the continuous loop. Although that initial interaction where we evaluate, decide the magnitude of their problem, 

do whatever diagnostic tests are necessary, the follow-up there is 

this chronic problem of trying to keep them out of the hospital. 

I guess from our reading of a lot of the savings, it is about, can 

we keep folks at home with these chronic conditions as opposed to 

having them have to come back through the hospital because they 

did not take the right drug or did not take the right dose or had 

not had that close follow-up. Whether it be the physician or another entity, somebody needs to be watching that they are taking 

their medications properly, clearly. 

Mr. STARK. Dr. Wright, what is your take on that? 

Dr. WRIGHT. I would perish if someone took away my job of outlining a plan for my patient. That is the diagnostic and therapeutic 

process. Therapeutic process, that is what I do. I think the way I 

see disease management techniques benefiting just an average physician like me is to select data to record and report data for me 

that I do not have time or the inclination, but I desperately need 

in order to assess my own performance. I see them assisting in the 

notification and the execution of the plan that I have set up with 

my patient. I agree with you that there are tremendous hurdles, 

not just in the complexity of these medical problems, the number 

and complexity, but also in the patients who have the cognitive 

deficits. 

Mr. STARK. Now, the practice of geriatrics, I guess, I was looking for their testimony which was submitted. Do they not attempt, 

the people who call them, whatever they call themselves, geriatrists? 

Dr. WRIGHT. Geriatricians, I think. 

Mr. STARK. Geriatricians. Is not that their role in a sense with 

old guys like me? Do they not say, okay, we are going to manage 

you, Stark, and look at you because you have problems at your age 

that younger people will not have. They are really, I hate to say 

‘‘glorified internists;’’ that may be mean to somebody, but is that 

not their role then to refer them, if I have a heart problem, to you 

50 

all, or if I have sciatica, to send me to a neurosurgeon or to a physical therapist. 

Dr. WRIGHT. I would have to tell you that at least in northern 

California, and I think this applies in more places, I also am a geriatrician because of the depth and breadth of cardiologic problems 

and because of the paucity of geriatricians in smaller communities. 

I would be delighted if someone came to town, but because of what 

I do every day, I am taking care of that population. 

Mr. STARK. Go ahead. 

Dr. BUFALINO. Your assessment is right. These are internists 

who specialize in patients over the age of 65 or over the age of 70. 

So, I think you are right on. Unfortunately, in our world, half of 

our patients are over the age of 65 just by the nature of heart disease. 

Mr. STARK. Then I am getting that once you all have determined what the protocol for keeping all of my moving parts in 

working order should be, you turn to Ms. Selecky and say, here is 

the plan for Mr. Stark; will you guys call him, follow up. You have 

determined that I am not in very serious dementia, and I can answer the phone; and maybe somebody comes by the house and 

checks to see where the pill bottles are, and then they come back 

to you. Is that the way you see the system working? 

Ms. SELECKY. Yes, thank you, Mr. Stark. My company was actually founded by a physician who was trying to find ways of delivering better care to his chronically ill patients, because these people have the disease 24 hours a day, 7 days a week, and the physician cannot be available all the time. 

Mr. STARK. They can if you pay the $1,500 for the boutique 

kind. 

Ms. SELECKY. What we do as an entity really is to support the 

physician’s plan of care. We very strongly support the doctor-patient relationship. We understand what the plan of care is. We try 

to reinforce it with the patient to make sure they understand why 

their physician told them to do something, why it is important to 

follow through with that. We help remind them to do things that 

they need. To your earlier point about people with dementia and 

people who otherwise have trouble understanding the program, 

these people still have family members that need to care for them. 

In the case where we cannot communicate directly with the patient, we communicate with their family member, because we are 

generally held accountable for the outcome of the entire population. 

Regardless of whether we can really engage that individual or not, 

we look for other ways of engaging them. So, there are a lot of 

things that we do to customize the program to the individual needs 

of our patient populations. 

While we do provide services to the commercial, employed populations, I would say the majority of people we take care of are people more in their seventies and eighties and people who have very 

serious combinations of chronic conditions. 

Mr. STARK. Thank you. I thank the panel very much. 

Chairman JOHNSON. Thank you very much. This issue, the 

physician retaining control and that relationship with their patient, 

is of course central. You cannot have a health care system if you 

do not protect that relationship. I was very interested, Dr. Wright, 

51 

in your comments about these three doctors, and then the comments about follow on care even if it is just one doctor; this issue 

of continuous need for care and continuous need for care of patients 

with multiple illnesses. This RFP, what we started with was those 

seniors that have multiple chronic conditions, so we are starting 

with that group that go beyond the one physician but have three 

physicians who have gone through this care plan and made decisions; and how do we integrate those plans? 

We also require everyone in the RFP to deal with patients who 

are cognitively impaired because there is no sense in learning how 

to do all of this when half of the population of our retirees have 

some level of cognitive compromise. So, we do need to learn that 

from the ones that are totally compromised to the ones that are 

just partially compromised. Recognizing the real dearth of geriatric 

physicians, we did have two of the demonstrations, I think it is 

two, specifically focused on: how do you couple a geriatric center capability with, particularly, small-practice physician capability? Because there the practicing physician is making the plan, and we 

are going to create a collaborative organization to oversee the implementation of that plan when there are multiple illnesses involved, but having that geriatric capability to look at that situation 

is going to be very useful to us. How do we spread the power of 

the geriatrician over a larger number of physicians, since there is 

never going to be a geriatrician in every community even as our 

population ages? 

So, I just wanted to clarify that, that the RFP is about multiple 

illness and involves people with cognitive problems so that we will 

get the full variety of solutions out there to this challenge. Mr. 

Crane. 

Mr. CRANE. Thank you, Madam Chairman. Dr. Wright, when 

you were reminiscing about your dad being a physician, it reminded me of my own personal experience. My dad got his first 

doctorate in psychology and he was treating at Northwestern. My 

mom went into labor on a Saturday and the obstetrician was out 

of town. So, my dad said he put newspapers on the bed and started 

boiling water and had the dog come in and sit at my mother’s side 

and he delivered me. I said, Pop, were you not a little intimidated 

by that? He said, oh, we delivered pigs and cows at the farm; it 

was no big deal. 

Then he got his medical doctorate and he delivered the next 

three of my siblings at home on purpose. He used to do surgery on 

the dining room table. My great-grandmother, when she was 92, 

had cataracts in both eyes, and he operated on one and restored 

her vision in one eye. We were excited to hear about that, and we 

said, well, that is just one eye. Are you not going to do the other? 

He said that she is 92. All she needs is one. 

Dr. WRIGHT. Cost conscious even then. 

Mr. CRANE. I could not follow in his footsteps. I could not even 

stand to look at a needle going in your skin and my kid brothers 

got their doctorates, one dentist and one physician, but I was overwhelmed by that sort of thing. I still reminisce for entertainment 

purposes about those years growing up. 

I would like to ask you one question about your testimony. You 

discussed the success of the cardiac rehabilitation program. Can 

52 

you provide some insights as to why these programs have been so 

successful and what lessons from them should be incorporated into 

the CCIP and Medicare? 

Dr. WRIGHT. Thank you, I would love that opportunity. I learn, 

I hope, I am getting wiser with time. I did not understand why I 

had always been interested in cardiac rehab, and then when disease management came across the radar, it struck me as something that was fascinating and important. It was not until I tried 

to put this essay together—it has been a while since I have written 

an essay, by the way—that I realized how linked they are, that cardiac rehab is actually one of the original disease management programs. 

I think there are many parallels between the successful programs that we have come to see in the medical care system, that 

we see right now, and the original one. Cardiac rehab, first of all, 

is based in science and it is successful because it builds personal 

relationships. When a sick person knows that the person caring for 

them is invested in them, actually cares about the outcome, and 

that contact is not continuous but frequent, and that the medical 

care person is well informed about the specifics of that person’s 

medical situation, that is a very powerful mechanism for healing. 

I think that is what cardiac rehab does. 

It is so much more than an exercise program. It actually allows 

surveys of that patient’s medical world, if you will, their environment, so that if a patient who has a recent angioplasty, starts to 

have a little chest discomfort on the track, the patient already has 

a contact with the nurse, the nurse already knows what that patient looks like going around the track, and when he or she starts 

to look a little different, questions are asked. Immediately we know 

that something is brewing and the patient gets referred early and 

the patient gets restudied or stented, restented, whatever the situation is. 

So, it works for prevention. It works for disease surveillance and 

treatment. It reinforces that the medical care system is designed 

to deliver medical care through to each individual according to his 

or her needs. 

Mr. CRANE. Ms. Selecky, in your testimony, you talk about the 

different ways that organization will partner to respond to the 

RFPs. Given the objectives of the RFP and the unique needs of 

Medicare beneficiaries with multiple chronic conditions, do you believe that an approach involving multiple organizations will be necessary and do you think such consortia can be successful? 

Ms. SELECKY. I think that what is necessary is understanding 

that disease management is really about creating a team environment to take care of people. People who have chronic disease, as 

we have already talked about here, not only have several different 

physicians, but there are a lot of people who are involved and a lot 

of entities that are involved in trying to make them successful in 

managing their health. 

Really, what disease management organizations are about is trying to defragment that system and make kind of a central location 

for all of that information and all of those efforts to be coordinated. 

So, it is very important that we not view this as an opportunity for 

any particular kind of an entity to be successful here. I think what 

53 

is important is that all of these efforts really reach out and make 

an effort to connect the different entities in the health care system. 

That being said, I think that what is important in this is really 

that the programs and the groups of providers and suppliers and 

whatever that come together to do these programs really understand what their role is and that there is good data integration 

among them and they come with some proven outcomes, that they 

can actually show CMS that the approach that they are going to 

take is going to be one that will enhance the outcomes for the beneficiaries as well as reduce cost. 

Mr. CRANE. Very good. Now, my neighbor, I would like to ask 

you this final question here. Dr. Bufalino, throughout your testimony you discussed the need for evidence-based performance measurements to evaluate quality of care and beneficiary satisfaction. 

Can you discuss further the types of measurement that CMS might 

want to consider in reaching agreements with bidders under the 

CCIP? 

Dr. BUFALINO. Thank you. I think it is a complex issue. They 

already have in the RFP a number of quality measures, and many 

of them are physician—driven. They are the assessment of that patient’s heart muscle function. 

If we talk about heart failure, which is my area of interest, and 

the measure of are they on the right drugs, is their blood pressure 

controlled, how often are they hospitalized, how often are they rehospitalized, how many trips do they make to the emergency room, 

those are all measures there. 

I think we would love to have the opportunity at the AHA, involved with the National Quality Forum, to help set some further 

outcomes, the opportunity to take science and give some meaningful measures. We want to know that these patients have better 

quality of life because of this program. Do they feel better? Are 

they able to spend more time with their family? Are they able to 

function at a higher level is important as part of this measure. 

Also, do they live longer? As much as this is a chronic disease and 

we are talking about do we keep them out of the hospital, do we 

prolong their lives is a critical question for us in terms of the benefits. 

I think those are important things, and we would like to participate in an opportunity that helps set those clearly science-based 

outcomes because we think there is an opportunity to make this 

meaningful. I think the Chairman has made it very clear here that 

this is about doing a better job, and we would love to participate 

in this. Our goal as physicians, or part of the organizations we are 

involved in is, how do we reduce death and disability from this disease? We still lost a million lives last year to heart disease, a huge 

problem. We have about 4.5 million folks in the country with heart 

failure. So, we can use all the help we can get, quite frankly. I 

think our plea is that we would like to be involved in helping improve those outcomes. I think there is a tremendous opportunity 

there to work on this together. 

Mr. CRANE. Thank you very much. I thank all three of you for 

your testimony, and we look forward to working with you in the future. 

54 

Chairman JOHNSON. I thank you all for being with us here 

today. I hope as we work on this together and we see how these 

pilots work and we combine our experience now in the government 

arena with your experience as practicing physicians, we can within 

the near future develop a sounder approach to encouraging coordinated care and integrated care in our health system systematically. 

I would also ask that you think, because all of you are where 

these decisions are made, what are we going to draw from this in 

terms of helping patients deal with end-of-life care decisions? Because we cannot continue—this is my personal opinion; this is nobody else’s opinion; this does not come from the Subcommittee. If 

we are going to serve twice as many seniors in the future, we have 

to enable them to live a healthier life, and this is crucial to that. 

We have to get them more involved in their health care, and this 

will do that. 

We also have to more intelligently understand the declining process and at what point does one really look for just palliative care, 

supportive care, those kinds of support systems that recognize that 

we are now in a different era of medical experience and personal 

experience. So, we need to think about, how does disease management better prepare us for understanding when the disease process 

is reaching a point at which it has a logic of its own and interventions are of little human value and of great social cost? So, I do not 

ask you to respond to that. 

Ms. SELECKY. I could though, Chairman Johnson, if you do not 

mind. I think, speaking to what Dr. Wright said earlier, it is about 

the personal relationships that you build with your patients and, 

in our case, with our program participants. That whole process is 

also a team approach where you have family members and physicians. 

Chairman JOHNSON. Are you seeing some of that? 

Ms. SELECKY. We see much of it because we take care of tens 

of thousands of people with congestive heart failure, and it is a terminal disease. We do end up spending a lot of time working with 

people, to have them understand what the consequences are of 

their condition; and as it appears that that might be something 

that we need to help them with, we refer them to hospice programs. We talk to them about living wills. We talk to them about 

advance directives. I tell you, it is always very sad when one of our 

program participants passes away, but we have many cases in 

which their family members have called us afterward and thanked 

our nurses for the care and consideration that they have shown 

them. So, it is a process. It is about trying to make people’s quality 

of life better regardless of what that quality of life entails. 

Chairman JOHNSON. Do either of you want to comment? 

Dr. BUFALINO. Two ends of the spectrum: I think the one thing 

that the MMA saw, very importantly, was to do a preventive piece, 

which we were missing, the idea to do screenings and get this disease early so we can do something about it. We have the tools and 

the ability to make a difference. We just sometimes do not get the 

chance. 

So, to prevent heart failure before it happens is where there is 

a huge savings to the country, and to that individual patient obviously. 

55 

On the other end, I think it is fascinating to see the difference— 

and I think you are very insightful on your comments about having 

people be comfortable when the end is near, and that really comes 

with that physician-patient relationship and with the family. 

I am sure Janet has the same experience to be able to sit and 

talk to that family and say, you know what, we have done everything we could for Grandma; I think we should keep her comfortable. I find many, many more patients today and their families 

much more comfortable with that decision than there were 10 or 

15 years ago. They know where this could go and the outcome is 

not likely to be any better. 

Heart failure is cancer of the heart. We just call it something different. It is a terminal disease. So, we prepare them from the beginning, once that diagnosis is made, that there is only so much we 

will be able to accomplish. We do want to keep them comfortable, 

but we need to decide when we have done all we can do. 

Dr. WRIGHT. I do not have anything else. They have said it and 

said it beautifully, and I do appreciate your interest in this also. 

I do not think we have done as good of a job as we should, but I 

would like to just add two quick thoughts about this legislation. 

Frankly, Chairman Johnson, hearing you speak about the potential 

impact for it and seeing your dedication and that of the Committee, 

it has given me hope. 

I did not tell you that my dad was disappointed when I went into 

medicine. He told me not to because the government was going to 

meddle in it, and I would not be able to enjoy practicing. I am glad 

I ignored him. It is the only piece of advice I ignored. 

My hope is that what we have seen happen with women’s health 

will happen with chronic disease health. By that I mean, in the 

early days of doing cardiology, we knew that women were dying, 

but we did not understand why. We did not understand that they 

were actually different than men. It sounds like such a novel 

thought. 

Women were not part of the research protocols, not because of a 

gender bias, but because women are hard to study. You cannot pick 

a research subject that is literally, from day to day, might be pregnant or might be nursing or in the menopause years, a period of 

5 or 6 years. The woman is different literally from day to day; I 

can testify to that. 

So, women were not selected for research until this body, until 

Congress said, you will include women; they are tough research 

subjects, but you will include them; we mandate that so we can 

learn about them. As a result, we have a flood of information. We 

have learned so much that will protect women and prevent heart 

disease, not to mention all the other problems, as a result of the 

action of this body. I have the same hope that this legislation and 

its implementation will create that kind of transformation in the 

care of older people with multiple diseases. 

Chairman JOHNSON. Thank you. I think we are capable of that 

and we are capable of some other alternatives which I hope to 

block. So, I appreciate your testimony today. This is a challenging 

time. It is an exciting time both in medicine and in government 

policymaking. I thank you for your participation in the process, in 

being with us today. Thank you. The hearing is adjourned. 

56 

[Whereupon, at 4:00 p.m., the hearing was adjourned.] 

[Submissions for the record follow:] 

Statement of AdvaMed 

AdvaMed is pleased to provide this testimony on behalf of our member companies 

and the patients and health care systems we serve around the world. AdvaMed is 

the largest medical technology trade association in the world, representing more 

than 1100 medical device, diagnostic products, and health information systems manufacturers of all sizes. AdvaMed member firms provide nearly 90 percent of the $71 

billion of health care technology products purchased annually in the U.S. and nearly 

50 percent of the $169 billion purchased annually around the world. 

Significant advances in health care technologies—from health information systems that monitor patient treatment data to innovative diagnostics tests that detect 

diseases early and lifesaving implantable devices—improve the productivity of the 

health care system itself and vastly improve the quality of the health care delivered. 

New technologies can reduce medical errors, make the system more efficient and effective by catching diseases earlier—when they are easier and less expensive to 

treat, allowing procedures to be done in less expensive settings, and reducing hospital lengths of stays and rehabilitation times. 

AdvaMed would like to thank the Congress for passing the Medicare Prescription 

Drug, Improvement, and Modernization Act of 2003 (MMA) (P.L. 108–173). We 

share your goals for the new law to make the Medicare program more efficient and 

effective for providers and Medicare beneficiaries. We believe it is in the best interest of patients and the Medicare program to have the system capitalize on advanced 

technologies, which have revolutionized the U.S. economy and driven productivity 

to new heights and new possibilities in many other sectors. 

Chronic Care Improvement Programs: Improving Patient Care and Modernizing Medicare 

AdvaMed strongly supported the inclusion of the Chronic Care Improvement Program (CCIP) in the MMA to establish a voluntary pilot program in fee-for-service 

Medicare focusing on congestive heart failure, diabetes, and chronic obstructive pulmonary disease. If designed appropriately, coordinated care for patients with chronic 

conditions and diseases will keep patients healthier and happier, as well as reduce 

the number of expensive hospital visits from complications related to the chronic illnesses. 

In fact, a report published in February 2004 by MEDTAP international entitled 

‘‘The Value of Investment in Health Care: Better Care, Better Lives,’’ shows the benefits of investing in health care far outweigh the costs, and it measures those benefits 

in human and economic terms. The study shows from 1980 to 2000 that each additional dollar spent on health care in the U.S. produced tangible health gains of 

$2.40 to $3. Overall findings by the year 2000 show that annual mortality rates declined 16%; disability rates declined 25%; life expectancy increased 4%, or 3.2 years; 

and hospital days fell 56%. In the four major diseases studied, the report finds in 

the year 2000, mortality from heart attack was cut almost in half; deaths from 

stroke were cut by over one third; breast Cancer mortality declined 20%; and diabetes management improved dramatically and produced a 25 percent reduction in 

complications such as blindness, kidney failure, stroke and death. 

The Important Role of Technology in Designing a Successful CCIP 

AdvaMed is monitoring implementation of the CCIP to ensure that it delivers the 

value promised to Medicare beneficiaries by the Members of this subcommittee who 

crafted the pilot program. In choosing organizations to participate in the pilot program, CMS should consider an organization’s ability to integrate a range of technologies into its proposed chronic care improvement program. Such technologies include, but are not limited to, remote monitoring devices, implantable devices, and 

information technology-based solutions. In addition, CMS should set per patient per 

month fees paid to organizations at a rate sufficient to cover the costs of the technologies and the staff necessary to employ them. 

We worked closely with CMS in between passage of the MMA and the issuance 

of the Request for Proposals (RFP) on April 20th and have provided comments to 

CMS with our specific concerns and questions about the RFP. Specifically, clinical 

management of patients with multiple, progressive, chronic conditions—such as 

complex diabetes, congestive heart failure, and chronic obstructive pulmonary disease—often requires intensive monitoring and intervention. However, the CMS solicitation for the CCIP states that there will be no change in the amount, duration, 

or scope of a participant’s fee-for-service Medicare benefits. AdvaMed seeks clarificaVerDate Aug 18 2005 08:47 Sep 01, 2005 Jkt 099671 PO 00000 Frm 00060 Fmt 6633 Sfmt 6621 E:\HR\OC\99671.XXX 99671
57 

tion from CMS as to whether existing Medicare Part B utilization controls will be 

modified or suspended under the CCIP. We are concerned that requiring awardees 

to reduce preventable hospitalizations, health care costs, and adverse health outcomes, in the context of an acute care-oriented program in which strict utilization 

controls continue to be enforced, could frustrate the purpose of the CCIP. 

For example, in an attempt to obtain and maintain tighter glycemic control, an 

organization might require certain patients with complex diabetes to perform blood 

glucose self-monitoring more often than current Medicare policies allow. Under current Medicare program guidelines, without additional medical necessity documentation, Medicare Part B reimbursement for blood glucose reagent strips and lancets 

is limited to 100 every three months in patients with noninsulin-treated diabetes. 

Instead of a rigid formula, CMS should provide CCIP contractors sufficient flexibility to maximize patient outcomes. 

In addition, as part of the per patient per month fees, organizations submitting 

bids must include the costs of services not currently covered by Medicare. CMS has 

left it unclear how these organizations should treat services for which the coverage 

varies by local carrier. 

Lastly, under the CCIP, organizations will be financially at risk for their fees if 

they fail to meet agreed upon performance guarantees for clinical quality, beneficiary and provider satisfaction, and savings targets. Notwithstanding the enforcement role of the threat of financial penalties, it would be in the best interests of 

the beneficiaries and organizations alike if the organizations’ programs improve 

themselves throughout the duration of the CCIP to increase the chances of executing Phase II. Therefore, AdvaMed has requested that CMS consider requiring 

each organization, as part of its beneficiary satisfaction and quality assurance measures, to establish an internal Beneficiary Ombudsman. The Ombudsman would ensure a clear channel of communication between beneficiaries and the organization, 

as well as provide the organization with a check on the quality of care that its beneficiaries are receiving. 

Conclusion 

AdvaMed thanks the Subcommittee members again for their collaborative efforts 

to improve and strengthen the Medicare program. We look forward to working with 

the Administration and this Committee on designing a comprehensive and successful CCIP to improve the quality of care for Medicare patients. 

f 

Statement of the Alzheimer’s Association 

Since our founding in 1980, the Alzheimer’s Association has provided more than 

$150 million to support research into the prevention, treatment and eventual cure 

for Alzheimer’s. Our nationwide network of chapters offer frontline support to individuals affected by Alzheimer’s with services that include 24/7 information and referral, safety services, and education and support groups. 

Section 721 of the Medicare Prescription Drug, Improvement, and Modernization 

Act authorizes Chronic Care Improvement Programs that will focus on one or more 

of three threshold conditions: congestive heart failure (CHF), diabetes, and chronic 

obstructive pulmonary disease (COPD). The Act requires entities that implement a 

Chronic Care Improvement Program to ‘‘have a process to screen each targeted beneficiary for conditions other than threshold conditions, such as impaired cognitive 

ability and other comorbidities, for the purpose of developing an individualized, 

goal-oriented care management plan.’’ 

When Alzheimer’s disease is present, the Medicare costs of already-expensive conditions like COPD, congestive heart failure or diabetes double. The attached fact 

sheets show: 1) the proportion of Medicare beneficiaries with each of the threshold 

conditions who also have Alzheimer’s disease and other dementias; and, 2) the impact of coexisting Alzheimer’s and other dementias on total Medicare expenditures 

and hospital use for beneficiaries with the threshold conditions. Although it might 

be assumed that older average age of beneficiaries with the threshold conditions 

plus Alzheimer’s or other dementias explains the higher Medicare expenditures and 

hospital use, data presented in the fact sheets show that this is not true. In fact, 

the difference between average Medicare expenditures for beneficiaries with any of 

the threshold conditions plus Alzheimer’s or other dementias vs. beneficiaries with 

the threshold condition but no Alzheimer’s or dementia is greatest in the youngest 

age group (beneficiaries age 65–74). 

58 

Entities that implement Chronic Care Improvement Programs should have procedures in place to accurately identify Alzheimer’s and dementia in their program participants. In addition, these entities should have procedures in place for developing 

and implementing a care management plan that takes into account the effects of 

Alzheimer’s and dementia-related cognitive impairment on a person’s ability to follow treatment recommendations, take medications as prescribed, and manage other 

aspects of his or her care. These entities should have procedures for identifying a 

family caregiver, if any, and managing care for participants with Alzheimer’s and 

other dementias who do not have family caregivers. 

Patient self-care and self-management approaches, which are used in many disease management programs are unlikely to be effective for many program participants with Alzheimer’s and other dementias. The entities that implement the 

Chronic Care Improvement Programs will have to adapt these approaches for participants with Alzheimer’s and dementia. Use of community services, including Alzheimer’s Association chapter services, is likely to improve outcomes for program participants with Alzheimer’s and other dementias. The entities that implement the 

Chronic Care Improvement Programs will have to develop effective ways of linking 

program participants with Alzheimer’s and dementia to these essential services. 

Medicare Beneficiaries with Congestive Heart Failure And Co-existing 

Alzheimer’s Disease or Other Dementias 

Prevalence of co-existing Alzheimer’s disease and other dementias in Medicare beneficiaries with congestive heart failure (CHF) 

Medicare claims data for a 5% national random sample of fee-for-service Medicare 

beneficiaries age 65+ indicate that in 1999, 11% of these beneficiaries had CHF. Of 

the beneficiaries with CHF, 21% also had Alzheimer’s disease or other dementias 

(AD/D). In 2000, 12% of Medicare fee-for service beneficiaries age 65+ had CHF, and 

21% of these individuals also had AD/D.1

Medicare expenditures and hospitalizations for beneficiaries with CHF and 

co-existing Alzheimer’s and other dementias 

In 1999, average Medicare expenditures and hospital use were substantially 

higher for beneficiaries with CHF and AD/D than for beneficiaries with CHF but 

no AD/D. 

• Total average per person Medicare expenditures for those with CHF and 

AD/D were 47% higher than for those with CHF but no AD/D ($22,459 vs. 

$15,271).1

• Average per person Medicare hospital expenditures for those with CHF and 

AD/D were 40% higher than for those with CHF but no AD/D ($13,210 vs. 

$9,414).1

• Medicare beneficiaries with CHF and AD/D were almost twice as likely as those 

with CHF but no AD/D to be hospitalized and almost twice as likely to have 

a preventable hospitalization. 

In 2000, total average Medicare expenditures and average hospital expenditures 

were about 50% higher for those with CHF and AD/D than for those with CHF but 

no AD/D.1

Increased expenditures for CHF with Alzheimer’s disease and other dementias are not explained by older age 

Total Medicare expenditures for Beneficiaries with CHF by AD/D Status and Age1

Age Beneficiaries with 

CHF and no AD/D 

Beneficiaries with 

CHF and AD/D 

% Increase associated 

with AD/D 

65–74 $17,993 $34,304 91% 

75–84 15,515 25,368 64% 

85 and over 11,947 17,632 48% 

Medicare Beneficiaries with Diabetes And Co-Existing Alzheimer’s Disease 

or Other Dementias 

Prevalence of co-existing Alzheimer’s disease and other dementias in Medicare beneficiaries with diabetes 

Medicare claims data for a 5% national random sample of fee-for-service Medicare 

beneficiaries age 65+ indicate that in 1999, 16% of these beneficiaries had diabetes. 

59 

Of the beneficiaries with diabetes, 11% also had Alzheimer’s disease or other dementias (AD/D). In 2000, 17% of Medicare fee-for-service beneficiaries age 65+ had 

diabetes, and 12% of them also had AD/D.1

Medicare expenditures and hospitalizations for beneficiaries with diabetes 

and co-existing Alzheimer’s and other dementias 

In 1999, average Medicare expenditures and hospital use were much higher for 

those with diabetes and AD/D than for beneficiaries with diabetes but no AD/D. 

• Total average per person Medicare expenditures for those with diabetes and 

AD/D were 144% higher than for those with diabetes but no AD/D ($19,395 vs. 

$7,940).1

• Average per person Medicare hospital expenditures for those with diabetes and 

AD/D were 163% higher than for those with diabetes but no AD/D ($11,192 vs. 

$4,254).1

• Medicare beneficiaries with diabetes and AD/D were 3 times as likely as those 

with diabetes but no AD/D to be hospitalized and more than three times as likely to have a preventable hospitalization.2

In 2000, total average Medicare expenditures were 150% higher and average hospital expenditures were 160% higher for those with diabetes and AD/D than for 

those with diabetes but no AD/D.1

Increased expenditures for diabetes with Alzheimer’s disease and other dementias are not explained by older age 

Medicare beneficiaries with diabetes and AD/D are older on average than those 

with diabetes but no AD/D. In 2000, 29% of those with diabetes and AD/D were age 

85+ compared with only 8% of those with diabetes but no AD/D;1 however, older average age does not explain the higher Medicare expenditures for those with diabetes 

and AD/D. In fact, the difference between average Medicare expenditures for those 

with diabetes and AD/D vs. those with diabetes and no AD/D was greatest for beneficiaries age 65–74. 

Total Medicare Expenditures for Beneficiaries with Diabetes by AD/D Status and Age, 2000 

Age Beneficiaries with diabetes and no AD/D 

Beneficiaries with diabetes and AD/D % Increase associated 

with AD/D 

65–74 $7,469 $24,392 227% 

75–84 8,563 19,920 133% 

85 and over 8,979 16,569 85% 

Medicare Beneficiaries with Chronic Obstructive Pulmonary Disease And Coexisting Alzheimer’s Disease and Other Dementias 

Prevalence of co-existing Alzheimer’s disease and other dementias in Medicare beneficiaries with chronic obstructive pulmonary disease (COPD) 

Medicare claims data for a 5% national random sample of fee-for-service Medicare 

beneficiaries age 65+ indicate that in 1999, 10% of these beneficiaries had COPD. 

Of the beneficiaries with COPD, 15% also had Alzheimer’s disease or other dementias (AD/D). In 2000, 10% of Medicare fee-for-service beneficiaries age 65+ had 

COPD, and 15% of them also had AD/D.1

Medicare expenditures and hospitalizations for beneficiaries with COPD 

and co-existing Alzheimer’s disease and other dementias 

In 1999, average Medicare expenditures and hospital use were substantially higher for beneficiaries with COPD and AD/D than for beneficiaries with COPD but no 

AD/D. 

• Total average per person Medicare expenditures for those with COPD and 

AD/D were 93% higher than for those with COPD but no AD/D ($23,614 vs. 

$12,220).1

• Average per person Medicare hospital expenditures for those with COPD and 

AD/D were 90% higher than for those with COPD but no AD/D ($14,225 vs. 

$7,472).1

• Medicare beneficiaries with COPD and AD/D were twice as likely as those with 

COPD but no AD/D to be hospitalized and almost twice as likely to have a preventable hospitalization.2

60 

In 2000, average Medicare expenditures were 90% higher and average hospital expenditures were 84% higher for those with COPD and AD/D than for those with 

COPD but no AD/D.1

Increased expenditures for COPD with Alzheimer’s disease and other dementias are not explained by older age 

Medicare beneficiaries with COPD and AD/D are older on average than those with 

COPD but no AD/D. In 2000, 32% of those with COPD and AD/D were age 85+ compared with only 12% of those with COPD but no AD/D;1 however, older average age 

does not explain the higher Medicare expenditures for those with COPD and 

AD/D. As shown below, the difference between average Medicare expenditures for 

those with COPD and AD/D vs. those with COPD and no AD/D was greatest for 

beneficiaries age 65–74. 

Total Medicare Expenditures for Beneficiaries with COPD by AD/D Status and Age, 2000 

Age Beneficiaries with 

COPD and no AD/D 

Beneficiaries with 

COPD and AD/D 

% Increase associated 

with AD/D 

65–74 $12,059 $28,463 136% 

75–84 12,782 24,416 91% 

85 and over 12,847 19,557 52% 

REFERENCES 

1These figures come from FY 1999 and FY 2000 Medicare claims for a 5% national random 

sample of fee-for-service Medicare beneficiaries age 65+. Those with no claims are included. 

Medicare beneficiaries who were enrolled in Medicare managed care and beneficiaries under age 

65 are excluded. Beneficiaries were classified as having COPD based on Clinical Classification 

Software (CCS) categories. Beneficiaries were classified as having AD/D if they had at least one 

Medicare claim with an ICD–9 code diagnosis 290, 294, or 331 in the relevant year. 2 Bynum JPW, Rabins PV, Weller W, et al., ‘‘The Relationship Between a Dementia Diagnosis, 

Chronic Illness, Medicare Expenditures, and Hospital Use,’’ Journal of the American Geriatrics 

Society, 52(2):187–194, 2004. 

f 

Statement of Virginia Zamudio, American Association of Diabetes 

Educators, Chicago, Illinois 

Thank you, Chairwoman Johnson, Ranking Member Stark, and members of the 

Subcommittee, for holding this important hearing today on the newly instituted 

Medicare Chronic Care Improvement Program (CCIP). I am Virginia Zamudio and 

I am a registered nurse, certified diabetes educator, and President of the American 

Association of Diabetes Educators. On behalf of AADE, a group of health care professionals dedicated to improving the care of people living with chronic disease, I 

am submitting this written testimony to express our strong support for the CCIP 

and to suggest additional measures the Committee should consider in its efforts to 

strengthen the Medicare program to improve care for beneficiaries with diabetes. 

About the American Association of Diabetes Educators 

Founded in 1973, the American Association of Diabetes Educators is a multi-disciplinary professional membership organization dedicated to advancing the practice 

of diabetes self-management training and care as integral components of health care 

for persons with diabetes, and lifestyle management for the prevention of diabetes. 

AADE’s more than 10,000 members are healthcare professionals who are members of the diabetes care team. They include nurses, dieticians, pharmacists, physicians, social workers, exercise physiologists and other members of the diabetes 

teaching team. AADE currently has 105 local chapters and 17 specialty practice 

groups. 

The Burden of Chronic Disease 

Chronic diseases such as heart disease, diabetes, and cancer are the leading cause 

of death in the United States, killing seven out of ten Americans. The costs of chronic disease are staggering—more than 75 percent of health care expenditures in the 

United States are for chronic illness. And that figure is expected to grow. By 2020, 

$1 trillion, or 80 percent of health expenditures, will be spent on chronic diseases. 

More than 125 million Americans live with some form of chronic disease, and millions of new cases are diagnosed each year. The challenges of treating chronic disVerDate Aug 18 2005 08:47 Sep 01, 2005 Jkt 099671 PO 00000 Frm 00064 Fmt 6633 Sfmt 6621 E:\HR\OC\99671.XXX 99671
61 

ease are myriad—patients often have more than one chronic condition and therefore 

see multiple health care providers. This results in un-coordinated care, duplicitous 

and sometimes contradictory treatment plans, and healthcare inefficiencies. 

Chronic diseases are especially burdensome in the Medicare program. Beneficiaries with more than five chronic conditions account for only 20 percent of the 

Medicare population, yet 66 percent of Medicare’s budget is spent treating these individuals. We can and should do more to improve disease management programs 

under the Medicare program. 

The Burden of Diabetes 

Diabetes poses a particular burden for the Medicare program. As you know, diabetes is a serious, debilitating chronic illness that afflicts more than 18 million Americans, including eight million Medicare beneficiaries. An additional eight million seniors suffer from a condition known as ‘‘pre-diabetes’’ that, when left untreated, will 

develop into diabetes. 

Diabetes’ devastating complications—kidney failure, blindness, lower extremity 

amputation, heart disease and stroke—result in significant costs to the program. Although beneficiaries with diabetes comprise only 20 percent of the Medicare population, spending on diabetes related complications account for more than 30 percent 

of expenditures. With the current obesity epidemic, the aging of the baby boom generation, and the expected growth in numbers of Medicare beneficiaries with diabetes, the cost of diabetes related complications could seriously undermine the financial stability of the Medicare program. 

The Value of Diabetes Self Management Training 

While the costs and complications of diabetes are daunting, there is much that 

can be done to prevent diabetes and reduce its complications. Patient self-management is cornerstone of chronic disease care, and in no case is that more true than 

diabetes self-management. Diabetes self-management training (DSMT), also called 

diabetes education, provides the skills that patients with diabetes need to successfully manage their illness. DSMT helps patients identify barriers, facilitate critical 

thinking and problem solving and develop coping skills to effectively manage their 

diabetes. Initial diabetes self-management training occurs over a four to six month 

period, with additional follow-up as needed. 

The goal of diabetes self-management training is to achieve measurable behavioral change outcomes in areas such as physical activity; meal planning; medication 

administration; blood glucose monitoring; problem solving for high and low blood 

glucose and sick days; reducing risk factors for diabetes-related complications; and 

living with diabetes/psychosocial adaptation. National standards for Diabetes SelfManagement Programs were established in the 1980s. 

Certified Diabetes Educators (CDEs) are highly trained healthcare professionals— 

often nurses, pharmacists, or dieticians—who specialize in helping people with diabetes develop these skills. To earn the CDE designation, a health care professional 

must be licensed or registered, or have received an advanced degree in a relevant 

public health concentration, have professional practice experience and have met 

minimum hours requirements in diabetes self-management training, and have met 

certification and recertification requirements. 

The value of DSMT is well documented. The Diabetes Prevention Program study 

of 2002 demonstrated that participants (all of whom were at increased risk for developing type 2 diabetes) were able to reduce that risk by implementing the lifestyle 

changes taught as part of DSMT. Additional studies have found that patients with 

diabetes achieved significantly better outcomes when part of comprehensive diabetes 

management programs. 

Diabetes Self Management Training and the Medicare Program 

The Chronic Care Improvement Program is an important measure aimed at improving the quality of care for chronically ill beneficiaries under Medicare fee-forservice. While we support this effort, we feel it is important to note that this is not 

the first time that Congress has attempted to improve disease management for 

beneficiaries with diabetes. 

Congress recognized the value of DSMT when it enacted the Balanced Budget Act 

(BBA) of 1997. Section 4105 of BBA provided coverage and reimbursement for 

DSMT by physicians and other individuals or providers who were eligible to bill 

Medicare for services or supplies, provided that DSMT was furnished incident to 

other covered services, regardless of whether those items or services are related to 

diabetes care. 

Under current law, all recognized providers can bill Medicare for DSMT, provided 

CMS guidelines and American Diabetes Association education recognition criteria 

are met. Because Certified Diabetes Educators are not recognized as Medicare proVerDate Aug 18 2005 08:47 Sep 01, 2005 Jkt 099671 PO 00000 Frm 00065 Fmt 6633 Sfmt 6621 E:\HR\OC\99671.XXX 99671
62 

viders, however, they are precluded from directly billing Medicare for DSMT. They 

must bill either through a hospital-based program or through a physician’s office. 

We believe that it is counterintuitive and counterproductive to exclude the group of 

health care providers that are most skilled and capable of providing this critical 

benefit. 

This provision could also seriously threaten beneficiary access to DSMT. As it is, 

the Centers for Medicaid and Medicare Services (CMS) reports that the DSMT benefit is underutilized—only 30 percent of eligible beneficiaries are receiving DSMT. 

This situation is likely to grow worse, however, as hospital based DSMT programs 

are closing at a rate of 2–5 per month. Absent legislative action, fewer and fewer 

Medicare beneficiaries will be able to access the services of a CDE. 

H.R. 3194, introduced by Congressman Curt Weldon and Congresswoman Diana 

DeGette, would correct this problem by recognizing CDEs as providers under the 

Medicare program. This legislation would help realize Congress’ intent in BBA, 

which was to expand access to DSMT programs for all beneficiaries with diabetes. 

As this committee considers ways to improve disease management for patients with 

chronic illnesses, we strongly recommend the enactment of H.R. 3194. 

Conclusion 

In conclusion, we wholeheartedly support efforts to improve diabetes care, such 

as CCIP. We feel it is incumbent upon the Congress, however, to ensure that measures already in place to improve diabetes care—such as the DSMT benefit—are 

strengthened so that beneficiaries with diabetes can gain the critical skills they 

need to manage their illnesses. 

Thank you, Madam Chairwoman, for allowing AADE this opportunity to express 

its concerns. We welcome the opportunity to work with you, and this Subcommittee, 

to further our mutual goals of improving diabetes care under the Medicare program. 

f 

Statement of the American College of Physicians 

The American College of Physicians (ACP), representing over 115,000 internal 

medicine physicians and medical students, is pleased to provide written comments 

on Section 721 of the Medicare Modernization Act of 2003, the Medicare Chronic 

Care Improvement (CCI) demonstration program. These comments are provided in 

follow-up to the May 11, 2004 hearing on the CCI program held by the Subcommittee on Health of the House Ways and Means Committee. 

1. Care for Chronically Ill Medicare Patients with Multiple Co-Morbid Conditions is Fragmented and Unduly Costly Under Medicare Fee-for-Service, 

Making CCI Pilot Testing Crucial for Medicare’s Future 

The CCI program represents an attempt to study the cost-effectiveness, quality 

of care outcomes, and provider and patient satisfaction which may result from using 

a coordinated care approach for selected chronically ill Medicare patients. According 

to the Centers for Medicare and Medicaid Services (CMS), while Medicare patients 

with 5 or more chronic conditions represent 20 percent of the total Medicare population, this group represents 66 percent of all Medicare spending, making it vital 

that their care be more cost-effective. The CCI program’s initial focus on patients 

with congestive heart failure or complex diabetes is a recognition by CMS that these 

beneficiaries have exceptionally high self-care burdens and high risks of experiencing poor clinical and financial outcomes. 

Case management of the care of chronically ill Medicare patients is a vital, high 

level service which, until now, has not been duly recognized and compensated under 

Medicare fee-for-service (FFS). Yet, there is accruing evidence that case management of the chronically ill can have a significant positive impact on the quality of 

patient care and reduce costs, when compared to receiving care in a fragmented, hitor-miss fashion under Medicare FFS. 

In a January 2004 Issue Brief, Georgetown University’s Center on an Aging Society concludes that ‘‘disease management programs can reduce health care use and 

expenditures’’ by being ‘‘successful at improving self-care practices and reducing use 

of various health care services, including hospital admissions and emergency room 

visits. As a result, health care expenditures for certain populations with chronic conditions have decreased.’’ 

The Disease Management Association of America (DMAA), in a paper titled, ‘‘The 

Benefits of Disease Management in Medicare and Medicaid,’’ cites evidence of how 

disease management improves quality of care and lowers cost. These positive findVerDate Aug 18 2005 08:47 Sep 01, 2005 Jkt 099671 PO 00000 Frm 00066 Fmt 6633 Sfmt 6621 E:\HR\OC\99671.XXX 99671
63 

ings led to DMAA’s statement that it ‘‘fully supports and commends the Congress 

and CMS for promoting the expansion of disease management programs in its efforts to modernize and revitalize Medicare+Choice and through coordinated care 

provisions of the Medicare, Medicaid, SCHIP Benefits Improvement and Protection 

Act of 2000 (BIPA), and other demonstration projects.’’ 

Unlike a number of other CMS chronic care demonstration programs, which are 

experiments with no statutory requirement for later adoption, the CCI program is 

intended to identify new approaches to coordinating and paying for chronic care case 

management which ultimately will become a permanent part of Medicare. As such, 

ACP applauds Congress’s willingness to use the CCI pilots to determine which models of care oversight work best for chronically ill patients, in terms of cost-effectiveness and improved patient outcomes, and then implement them nationally for the 

benefit of all Medicare patients. 

2. Internists Are Best Suited to Lead and Oversee the Care of Chronically 

Ill Patients 

ACP believes strongly that a physician skilled in the management of multiple 

chronic adult illnesses should lead the care management team. Only doctors of internal medicine are specially trained and experienced in caring for these complex 

patients. By using a patient-centered, physician-guided approach to care, all elements of care are supervised and monitored by a single responsible medical expert, 

who places the patient’s well being at the heart of care. Not only does this permit 

much tighter coordination of a patient’s care than is possible with a disease management (DM) organization, the physician team leader is free to make the best choices 

for high quality efficient care for their patients, without profit motives which impact 

clinical decision making. 

3. A Patient-Centered, Physician-Guided CCI Pilot Model Should Include a 

Physician Case Management Fee and Incentives for Performance 

It is ACP’s position that the heightened responsibility of this physician team leader position, as well as its potential to produce better patient outcomes at lower cost, 

clearly warrant an augmented payment to physicians for the extra coordination 

work this entails, as well as an additional incentive payment for improved patient 

outcomes and lowered costs. 

ACP’s position on the importance of using a patient-centered, physician-guided 

model which is linked to payment incentives is echoed loudly in the testimony of 

Robert A. Berenson, M.D., Senior Fellow at the Urban Institute, provided to the 

Subcommittee on Health on May 11, 2004: 

‘‘Although the CCI program may be a good start, in my opinion it is insufficient for truly addressing chronic care needs in Medicare because it lacks a focused physician component . . . The financial underpinnings of a typical medical 

practice do not support physicians who actually do recognize the need to be 

more fully engaged in the components of chronic care coordination—Bounced 

around the system, too many Medicare beneficiaries do not even recognize a 

particular physician who is responsible for coordinating their care—Among 

other areas that need attention is the overlooked issue of physician payment 

policy. Simply put, the incentives inherent in most fee-for-service payment systems, including Medicare’s and those of most private payers, penalize primary 

care physicians who would alter their professional interactions with patients to 

respond to the challenge posed by the reality of patients with multiple complex 

conditions. Yet, the Medicare Modernization Act mostly ignores alternative payment approaches affecting physician behavior. These payment approaches 

should go hand in hand with the new chronic care program to ensure the kind 

of change needed to improve care for Medicare beneficiaries.’’ 

ACP agrees strongly with the CCI program’s provision of a per enrollee per month 

case management fee to organizations winning CCI contracts with CMS. However, 

since these fees are paid to the contractors, we would urge CMS ensure that, wherever a physician case manager is the head of the care delivery team, that participating organizations be required to share this fee with their physician case managers 

The CCI program’s RFP also does not explicitly call for or preclude contractors 

from paying performance bonuses to their physician case managers. The major issue 

is that contractors’ are at risk for their case management fees, meaning if negotiated health improvement targets for their chronic care enrollees are not met in 

terms of cost savings, the shortfalls will be taken out of their case management fees. 

Considering the novelty of the CCI pilots in terms of care delivery models being 

tested and size of pilot populations, contractors may be hesitant to risk using case 

64 

management fees for expanding IT adoption or paying physician case managers for 

performance in the early stages of the program. 

In developing health care improvement targets for CCI contractors and their physician case managers, it is important for CMS to keep in mind that these performance goals be limited to elements of care completely under the physician’s control. 

To the degree possible, each physician case manager’s caseload must be appropriately risk adjusted for the complexity of their patients, while patients who fail 

to comply with prescribed care plans should not be counted when measuring physician performance. 

The CCI program is available to a wide array of organizations: Health insurers, 

disease management companies, physician group practices, integrated delivery systems, consortia of these entities, and any other legal entity that meets the requirements of the solicitation in the Federal Register. The scope of the CCI program is 

vast, operating in at least 10 pilot locations and requiring each contractor to oversee 

the care of 15,000 to 30,000 Medicare beneficiaries—far out of the reach and capabilities of the small physician group practice. Among ACP’s practicing members, 

67.4 percent are in practices of 10 or less, while 50.2 percent are in practices of 5 

or less. Clearly, the CCI program is biased in favor of large organizations such as 

DMs, making it virtually impossible that a small physician group practice could win 

a CCI contract. 

Since, by statute, elements of the CCI program pilots which prove themselves successful will eventually become a permanent components of Medicare, it is critically 

important to have practicing physicians fully vested in the all the care models tested, in order to demonstrate that physician case management is the key to successful 

CCI efforts 

4. Use of Advanced Information Technology Should be an Essential Element 

of CCI Phase I Pilot Testing 

ACP is a strong advocate of bringing the advances of information technology (IT) 

to enhance the quality of patient care, as reflected in two major papers released in 

2004 (see references at end of this testimony). We believe optimal case management 

of chronic care patients cannot occur without instantly accessible electronic information from all sources of care, the goal of an interoperable national health care information system—a goal ACP supports and is actively pursuing. The CCI program 

represents an ideal opportunity to provide incentives for adoption of quality enhancing IT. Having rapid electronic access to all vital patient information, as well as 

clinical decision support software such as ACP’s Physician Information and Education Resource, will be crucial in assuring the physician case manager can optimally serve his/her patients, which is why incentives for IT adoption are so important. The CCI program’s Request for Proposal (RFP) does encourage contractors to 

assist care providers in adopting enhanced communications technology, though any 

such support they provide to physicians and other providers must come out of their 

negotiated case management fee. 

However, ACP believes there is sufficient leeway for CMS, in negotiating case 

management fees and health improvement targets with contractors, to allow contractors to offer information technology incentives. ACP would thus urge CMS to assign one or more of its pilot sites to test use of these additional incentives. 

Summary 

ACP strongly encourages CMS to ensure that one or more of its CCI pilot 

sites utilize a patient-centered, physician-guided approach to care as defined above, to be certain this model is fairly evaluated against all other 

models tested. ACP also urges this model include a physician case management fee and incentives for physician performance and IT adoption. If such 

a model is not selected for testing in Phase I of the CCI program, ACP 

would ask Congress to pass corrective legislation to address this major 

oversight. 

ACP also heartily endorses CMS’s stated goals for the CCI pilot program, listed 

on the CMS website, as follow: 

• It leads toward a stronger focus on improving health outcomes for prospectively 

identified targeted populations who are not well served by the fragmented FFS 

health care delivery system. 

• It creates a new focus on setting measurable performance goals and tracking 

improvements in clinical quality, provider and beneficiary satisfaction, and costeffectiveness in a regional, population-based framework. 

• It develops and tests the concept of tying contractor payment to results in 

achieving quality and cost targets and satisfaction levels. 

65 

• It helps modernize Medicare by creating incentives for the private sector to harness advances in information technology and innovation in care management on 

behalf of FFS Medicare beneficiaries 

• It addresses quality failings without changing beneficiary’s benefits, providers, 

or access to care. 

• It is an approach that is regional, yet potentially replicable nationally. 

• It is a substantial investment for those beneficiaries who need it most that will 

help reduce avoidable costs. 

• Minority populations suffer disproportionately from chronic diseases and will 

stand to benefit most from the program. 

ACP urges CMS to ensure that a physician-centric CCI model is tested at a least 

one of its 10 pilot sights. ACP also stands ready to work with any CCI bidders that 

offer a physician-centric model that includes the incentives identified above, and 

would also encourage use of its clinical decision support tool, PIER. For any bidder 

which offers a physician-centric model which, upon close inspection meets all ACP 

requirements, the College may be willing to endorse the bidder’s proposal and encourage ACP members residing in that particular geographic area to participate in 

the pilot program 

References 

1The Paperless Medical Office: Digital Technology’s Potential for the Internist, ACP Discussion Paper, March 2004. Available at: http://www.acponline.org/hpp/paperless.pdf?hp 2 Enhancing the Quality of Patient Care Through Interoperable Exchange of Electronic 

Healthcare Information, ACP Policy Paper, April 2004. Available at: http://www.acponline.org/ 

hpp/quality_care.pdf?hp 

f 

Statement of American Geriatrics Society, New York, New York 

The following written testimony is on behalf of the American Geriatrics Society 

(AGS), an organization representing geriatricians and other health care professionals dedicated to the care of older adults. 

Brief History of Geriatrics 

Geriatric medicine promotes preventive care, with emphasis on care management 

and coordination that helps patients maintain functional independence in performing daily activities and improves their overall quality of life. With an interdisciplinary approach to medicine, geriatricians commonly work with a coordinated 

team of other providers such as nurses, pharmacists, social workers, and others. The 

geriatric team cares for the most complex and frail of the elderly population. 

Geriatricians are primary—care oriented physicians who are initially trained in 

family practice or internal medicine, and who, since 1994, are required to complete 

at least one additional year of fellowship training in geriatrics. Following their 

training, a geriatrician must pass an exam to be certified and then pass a recertifying exam every 10 years. There are almost 7,000 geriatricians in the United 

States. 

The Frail Elderly/Chronically Ill Population 

Americans are not dying typically from acute diseases as they did in previous generations. The Partnership for Solutions, a Robert Wood Johnson founded initiative 

of which we are a partner, has found that about 78% of the Medicare population 

has at least one chronic condition while almost 63% have two or more. Of this group 

with two or more conditions, almost one-third (20% of the total Medicare population) 

has five or more chronic conditions, or co-morbidities. 

In general, the prevalence of chronic conditions increases with age—74% of the 

65 to 69 year old group have a least one chronic condition, while 86% of the 85 years 

and older group have at least one chronic condition. Similarly, just 14% of the 65– 

69 year olds have five or more chronic conditions, but 28% of the 85 years and older 

group have five or more. 

Medicare Reform and the Geriatric Patient: How Does Disease Management Differ from Geriatric Care? 

The Medicare program has recently undergone major reforms: the addition of outpatient prescription drug coverage and disease management. Will these new 

changes address the problems faced by frail older persons and the physicians who 

treat them? 

66 

Little is being done to change the nature of the system from acute episode care 

to sustained chronic care. As today’s hearing notes, the Medicare bill included several new chronic care provisions, including a new study on chronic care, a small 

scale physician-oriented demonstration program, and, of relevance today, a larger 

scale disease management pilot program. Unfortunately, the new disease management program may not adequately address the needs of persons with multiple 

chronic conditions. 

The new disease management pilot program establishes chronic care improvement 

organizations (CCIOs) under the Medicare fee-for-service program. CCIOs, which 

may include disease management organizations, health insurers and integrated delivery systems, will be required to improve clinical quality and beneficiary satisfaction and achieve spending targets in Medicare for beneficiaries with certain chronic 

conditions. CCIOs will be held at full risk for their role in helping beneficiaries manage their health through decision-support tools and the development of a clinical 

database to track beneficiary health. 

Why aren’t disease management programs sufficient to transform the system of 

care for frail older persons? 

Disease management covers many different activities influencing individual 

health status and the use of health care services. Typically, disease management 

programs treat patients with specific, clearly-defined diseases, such as diabetes, 

asthma, congestive heart failure or chronic obstructive pulmonary disease where the 

evidence is clear and management strategies are straightforward. Disease management focuses on patient education and evidence-based self-management strategies 

as tools to improve care. Disease management relies on improved disease outcomes 

to improve health and reduce disease-specific health care utilization. Patients who 

are the best candidates for disease management programs are those who have the 

motivation and cognitive skills to appreciate their role in illness management and 

implement self-management strategies. 

Geriatric care is another term for coordinated care or care management. Care coordination programs generally enroll patients with multiple chronic conditions. The 

combinations of conditions puts the patients at high risk of medical and social complications that requires specific interventions tailored to the specific needs of each 

enrollee. These interventions include an array of services, such as telephone coordination with other physicians, extensive family caregiver support, referrals for social 

supports, and high levels of medication management. 

While disease management is appropriate for certain Medicare beneficiaries with 

a single chronic condition, such as diabetes, asthma or hypertension, it fails to address key issues for patients that have multiple chronic illnesses and/or dementia. 

This issue is further explored below. 

First, disease management is not typically appropriate for persons with more than 

one chronic condition. Imagine putting a patient with diabetes, hypertension, dementia, asthma, and COPD into a disease management program for each of these 

conditions. Most of the people who are most costly to Medicare have multiple conditions and the care for these people can not be segmented into different disease management programs. In fact, many of these individuals with one or more chronic conditions also have Alzheimer’s disease or another dementia. Disease management focusing on diabetes without taking dementia into account wouldn’t be successful. 

While some disease management companies suggest that they have taken a new holistic approach to patient care, this evidence remains anecdotal. 

Second, when used for patients with multiple co-morbidities, disease management 

can disrupt a patient’s critical relationship with a primary care physician. Some disease management programs utilize specialists that focus only on specific interventions tailored to one condition. The nature of chronic illness requires a comprehensive, care coordination based approach that utilizes a variety of interventions. Disease management programs that lack a physician component do little to coordinate 

the care of older persons with multiple illnesses and little to mitigate the safety hazards of fragmented, redundant care delivered by multiple providers. Significantly, 

a recent, large-scale Mathematica best practices study noted that maintaining and 

fostering the physician-patient relationship is critical to the success of chronic care 

delivery. 

Third, a major component of disease management involves self-management and 

patient education. These simply do not work for persons with Alzheimer’s disease 

or a related dementia. Diabetes self management often involves patient education 

or patient self management which is inappropriate for a beneficiary with Alzheimer’s disease or related dementia. Likewise, disease management for asthma and 

hypertension depends on patient compliance with treatment recommendations; this 

would not be effective for persons with Alzheimer’s disease or related dementia. In 

67 

comparison, care coordination models rely on engaging family and caregivers and 

maximizing their involvement. 

Fourth, disease management does not always address functional issues that are 

common in old age or the complications that arise from multiple chronic illnesses. 

Fifth, treatment guidelines provide little guidance when multiple chronic illnesses 

co-exist. Therapeutic decisions are less straightforward, making treatment decisions 

less amenable to algorithmic self-management protocols. 

Finally, disease management programs place little importance on using social 

support services, a major component of a care coordination approach which relies 

on a holistic model of patient care. 

Additional physician participation and attention to the needs of multiple chronic 

conditions and especially dementia could improve project outcomes, but the model 

remains different from the approach of a new fee-for-service care coordination benefit. 

Instead, the AGS recommends the legislative authorization of a new Medicare feefor-service chronic care benefit, which would include a physician assessment and 

team based care management benefit. This is based on the Geriatric Care Act, legislation introduced in the House by Congressman Gene Green (D–TX) and in the Senate by Senator Blanche Lincoln (D–AR) and the Medicare Chronic Care Improvement Act, legislation introduced in the House by Congressman Pete Stark (D–CA) 

and in the Senate by Senator John D. Rockefeller IV (D–WVA). 

Conclusion 

While the introduction of the CCIO program represents a modest step forward in 

the delivery of chronic care, we remain convinced that a significant portion of our 

nation’s needs will remain unmet without the addition of a related but different 

physician directed chronic care benefit within the fee-for-service system. We hope 

to work with the Subcommittee on Health on such a change. 

f 

Statement of Sandeep Wadhwa, McKesson Corporation, San Francisco, 

California 

I am pleased to submit this statement on behalf of McKesson Corporation to the 

Subcommittee on Health of the House Committee on Ways and Means, subsequent 

to the May 11, 2004 hearing on the Medicare Chronic Care Improvement Program 

(CCIP). 

As the world’s largest healthcare services company, McKesson is an industry leader in the provision of disease management services to the Centers for Medicare and 

Medicaid Services (CMS) through our Medicaid fee-for-service contracts with seven 

states. We commend the members of the Committee and the Congress for incorporating a disease management program for Medicare beneficiaries within the Medicare Modernization Act and are pleased to share our perspective on the use of disease management programs to improve quality and clinical outcomes in CMS populations while decreasing health care costs. 

Our disease management clients cover a broad host of purchasers of health care, 

including: 

• State contracts for the Fee-for-Service Medicaid populations in Mississippi, 

Washington, Oregon, Colorado, Florida, New Hampshire, and Montana 

• Managed Medicaid plans such as Triple-C (Puerto Rico) and the Santa Clara 

Family Health Plan 

• Individual high risk insurance pools like CoverColorado and the Oklahoma 

Health Insurance High Risk Pool, Utah High Risk Pool 

• Commercial health plans such as Blue Cross Blue Shield Federal Employees 

Program and Blue Cross Blue Shield of Texas 

• Medicare+Choice plans such as Order of Saint Francis and Group Health Insurance 

McKesson is the industry leader in care management services and software and 

also has market leadership positions in demand management and utilization criteria. Furthermore, we are leading providers of physician and quality profiling software and case management workflow software. As an early provider of these programs, we have been delivering disease management services since 1996. 

McKesson’s disease management programs leverage our experience with patient 

services, pharmacy management, and health care quality improvement activities. 

Many of these programs and services reflect the capabilities and expertise of our 

68 

1 Robert Berenson, Testimony to Subcommittee on Health of House Ways and Means Committee, May 11, 2004. 

170 year old company, one of the largest nationwide distributors of pharmaceuticals 

and health care products and the largest health information technology company in 

the world. 

Over the past three years, many states have turned to disease management programs to help contain their rising Medicaid budgets and provide better services for 

low-income population groups. Our analyses of the Medicaid fee-for-service (FFS) 

population show a surprising similarity to many of the issues confronting the Medicare FFS population. In particular, the blind and disabled Medicaid utilization patterns are similar to the Medicare population that we serve in Medicare+Choice 

plans. Like the Medicaid FFS blind and disabled population, the Medicare population has highly complex health care needs. Both groups are considered vulnerable 

populations because of their age, poverty or disability. Additionally, both are able 

to see any physicians or emergency rooms that accept Medicaid or Medicare payment. 

In the following sections, we provide comments on the CCIP through the lens of 

our experience overseeing similar interventions in the Medicaid FFS population. 

Some of the specific concerns likely to be factors in the CCIP have been addressed 

in our Medicaid FFS experience. 

Patient Identification and Participation 

One of the most significant barriers to the success of the CCIP will be successfully 

engaging patients to participate in these interventions in a manner that is respectful and non-discriminatory. Experience in the Medicaid fee-for-service setting is illustrative. Patients are identified for these programs primarily through historical 

claims analysis. This process is highly efficient and accurate and allows for a comprehensive population based identification method rather than relying on costly and 

more fallible chart reviews at physicians’ offices. Initially, the physicians of these 

identified patients are also contacted. Direct mailings then go out to the patients 

informing them of the chronic care management program’s design and goals. Community based awareness campaigns help to raise awareness among patients and 

physicians. 

Once patients have been identified, enrollment campaigns ensue. Initial enrollment and assessment takes place telephonically or through face-to-face meetings 

with patients. In our experience, fewer than five percent of eligible patients have 

opted out of these programs, and the highest rates of participation are among those 

who are the sickest, the frailest and the most vulnerable. These patients are also 

the heaviest utilizers of services and thus afford the greatest opportunities for generating savings. Interviews we have conducted indicate tremendous appreciation for 

these outreach services. These programs also comply with all HIPAA standards. The 

proposed methodology for enrollment for the CCIP by CMS will largely follow this 

Medicaid model. In our experience, this process is highly respectful, professional, 

and well-received by beneficiaries. 

In the Medicare population, we also anticipate much higher rates of cognitively 

impaired beneficiaries due to dementia, which is similar to the cognitive impairment 

of the Medicaid population due to schizophrenia. Disease management programs 

which serve the Medicaid schizophrenia population make strong efforts to involve 

the beneficiaries’ caregivers. Caregiver involvement is a key tenet for all disease 

management programs; for patients with cognitive impairments and insight disorders, it is especially critical. Our experience has shown that caregivers appreciate 

the emotional support, skill training, and counseling services that are provided. Furthermore, we have found that these programs help sustain and renew caregivers in 

providing care for an often unappreciated and demanding role. Similar services need 

to be provided to those who are acting as caregivers to the Medicare population. 

Provider Involvement 

During the recent hearing, concern was expressed that those who are awarded 

CCIP contracts to provide disease management services will find it challenging ‘‘to 

develop the necessary links with physicians’’.1 Most disease management programs 

are successfully able to overcome physicians’ concerns that these programs replace 

or disrupt their care. Prior to contacting patients, disease management organizations typically engage in an extensive physician awareness campaign about the programs’ methods and objectives. These efforts have dramatically eased physicians’ 

concerns about the nature of disease management programs and have increased 

physician participation. It is critical to educate physicians that disease management 

programs promote adherence to their treatment recommendations and provide their 

69 

patients with education services to augment their efforts. In Mississippi, McKesson 

has partnered with the University of Mississippi Medical Center and with the Mississippi Primary Health Care Association, the Mississippi trade organization of community health centers, to educate Mississippi providers about the disease management initiative. Similar types of interventions will be beneficial for providers before 

Medicare patients are enrolled. 

A key issue in treating the Medicare population is the slow adoption of national 

clinical practice guidelines. The elderly are more apt to be under treated. An important component of disease management interventions is to accelerate the adoption 

of these national clinical practice guidelines. Patients are educated on the guideline 

recommendations and encouraged to discuss the appropriateness of the recommendations with their physicians. Disease management firms are able to present 

reports to physicians on the gaps that exist between practice and guideline recommendations. Patient safety deliberations often focus on medical errors that have 

been committed, rather than on errors which result from omitted treatment. 

Through clinical decision support tools and patient empowerment, disease management programs are designed to reduce these errors of omission. 

Care Coordination 

In Medicare FFS, patients often see multiple physicians without one serving as 

a primary coordinator of care. The absence of a physician ‘‘quarterback’’ contributes 

to excessive testing, medication errors, and miscommunications. A key dimension of 

the CCIP will be to assist the patient in identifying a ‘‘medical home’’, which is a 

physician or a clinic primarily responsible for treating and managing the patient’s 

chronic condition. Once a medical home is established, the disease management 

nurse cements the relationship by serving as an advocate for the patient and informing the physician of symptoms, self management practices, and gaps with nationally accepted clinical guidelines. The quality of the patient/physician interaction 

is enhanced through patient education and nurse advocacy. 

CMS has recommended greater communication and collaboration among those involved in caring for the elderly, and the CCIP provides incentives for such increased 

collaboration between disease management organizations and providers. McKesson 

welcomes the opportunity to further integrate our services and enhance our collaboration with provider organizations to fulfill the vision of a population-based, patientcentered, provider-coordinated chronic care model. 

Proven Benefits from Disease Management Programs 

McKesson programs have demonstrated dramatic improvements in the health status of patients, with marked reductions in hospitalization and emergency room visits that have resulted in net reductions in health care costs. In order to achieve improved outcomes, our programs focus on teaching patients self-management principles, symptom control strategies and optimal medical management practices. 

Overall, patients in our programs have reported very high satisfaction with the 

service and noted improvements in their overall quality of life. Attached are case 

studies that summarize the positive results achieved in the Washington, Oregon and 

Mississippi state Medicaid programs. 

Conclusion 

In conclusion, the experience we have obtained from providing Medicaid FFS disease management services indicates that many of the expected barriers and concerns with the Medicare population can be addressed and overcome. Realization of 

cost savings, patient participation, provider involvement, adherence to guidelines 

and coordination of care are all barriers that have been surmounted in similar settings, through a rigorous process that provides the necessary respect and privacy 

for those who participate in the program. The outcomes-focused, evidence-based 

interventions provided in disease management programs improve patients’ ability to 

participate in their care and to assist physicians by reinforcing their medical recommendations. As Congress continues to deliberate about new ways to improve the 

quality and delivery of health care, we believe the greater utilization of disease 

management programs is a vital way to enhance care outcomes for the elderly and 

other vulnerable populations while concurrently reducing the cost of delivering better care. 

We look forward to working with you and members of this Subcommittee as you 

address these important concerns. 

f 

70 

Statement of Brian J.G. Pereira, National Kidney Foundation, New York, 

New York 

The National Kidney Foundation (NKF) congratulates Congress for authorizing 

the Secretary of the Department of Health and Human Services to develop a program of chronic care improvement under Subtitle C of the Medicare Prescription 

Drug, Improvement and Modernization Act of 2003 (MMA). This program could promote better outcomes for the 20 million Americans who have chronic kidney disease 

and are at risk for developing End Stage Renal Disease (ESRD), many of whom are 

Medicare beneficiaries. Nevertheless, we maintain that this chronic care improvement program would be enhanced if the Centers for Medicare and Medicaid Services 

(CMS) included a specific focus on chronic kidney disease in its implementation of 

the legislative mandate. We recommend that this be accomplished in two ways: 

first, by establishing a chronic care improvement program specifically designed for 

Medicare beneficiaries with chronic kidney disease, and secondly, by refining the request for applications for diabetes care and heart failure that the CMS published 

on April 20, 2004. Evidence-based clinical practice guidelines developed by the NKF 

provide the scientific foundation for the development of the programs that we recommend. Those guidelines are part of NKF’s Kidney Disease Outcomes Quality Initiative (K/DOQI) program. 

I. Basis for a Chronic Care Improvement Program for Chronic Kidney Disease 

MMA provides that chronic care improvement programs shall be designed to improve clinical quality and patient satisfaction for Medicare beneficiaries with one or 

more threshold conditions as well as enhance provider satisfaction and reduce avoidable costs. The term ‘‘threshold condition’’ is defined in section 721 (a)(2)(D) of Public Law 108–173 as a chronic condition, such as congestive heart failure, diabetes, 

chronic obstructive pulmonary disease (COPD), or other diseases or conditions, 

as selected by the Secretary as appropriate for the establishment of a 

chronic care improvement program.’’ (Emphasis added.) For the reasons stated 

below, we believe that chronic kidney disease meets the statutory criteria for a 

chronic care improvement program. 

a. The K/DOQI Guidelines for the Evaluation, Classification and Stratification 

of Chronic Kidney Disease establish that chronic kidney disease is a major 

public health problem in the United States, based on data from the 1998 report from the third cycle of the National Health and Nutrition Examination 

Survey (NHANES III). NHANES III, conducted from 1988 to 1994, estimated 

that 6.2 million individuals over 12 years of age had reduced kidney function, 

as defined by serum creatinine concentration. This represents an almost 30- 

fold higher prevalence of reduced kidney function compared to the prevalence 

of ESRD during the same interval. 

b. Timely identification and treatment of patients at risk of developing End 

Stage Renal Disease is crucial. The United States Renal Data System’s 

(USRDS) 2003 Annual Report estimates that the number of patients with 

ESRD may reach 2.24 million by 2030. (As of December 31, 2002 there were 

a total of 297,928 people on dialysis in the U.S.) The rates of ESRD are high 

in both minority and elderly populations and the projected growth of minority populations, coupled with the rising age of the post-World War II ‘‘baby 

boomers,’’ show the potential for a dramatic increase in the number of people 

needing ESRD therapy in the next 30 years. Disease management could play 

a significant role in delaying and preventing the progression of chronic kidney disease and/or its complications and, thereby reduce avoidable costs. See, 

for example, the study by Hock Yeoh, et al., ‘‘Impact of Predialysis Care on 

Clinical Outcomes,’’ published in Hemodialysis International last year. 

c. The K/DOQI Clinical Practice Guidelines for Chronic Kidney Disease: Evaluation, Classification, and Stratification specify the diagnostic criteria that 

can be used to identity patients in the various stages of chronic kidney disease and suggest interventions that would be appropriate to prevent or delay 

the progression of chronic kidney disease and/or its complications at each 

stage. 

II. Kidney Disease and Chronic Care Improvement for Diabetes and Heart 

Failure 

The Notice that CMS published on April 20, 2004 to implement the Section 721 

initiative reads: ‘‘In these initial programs, we will focus primarily on implementing 

and evaluating programs for beneficiaries with congestive heart failure (CHF) and/ 

or diabetes with significant co-morbidities (hereafter referred to as comVerDate Aug 18 2005 08:47 Sep 01, 2005 Jkt 099671 PO 00000 Frm 00074 Fmt 6633 Sfmt 6621 E:\HR\OC\99671.XXX 99671
71 

plex diabetes).’’ (Emphasis added.) However, the terms ‘‘diabetes with significant 

co-morbidities’’ and ‘‘complex diabetes’’ are not defined anywhere in this 76-page 

document. The CMS should specify that kidney disease is a significant co-morbidity 

for Medicare beneficiaries with diabetes and that relevant diagnostic and therapeutic interventions for individuals with diabetes and kidney disease be included in 

proposals to participate in this pilot project. 

According to the USRDS 2003 Annual Report, the population of existing patients 

whose ESRD is caused by diabetes, which tripled from 1990 to 2000, is expected to 

grown ten-fold by 2030, to 1.3 million, and the number of patients diagnosed each 

year with ESRD caused by diabetes is expected to grow from 41,000 in 2000 to 

300,000 in 2030, a 600 percent increase. Furthermore, according to Guideline 14 of 

the National Kidney Foundation’s Guidelines for Evaluation, Classification and 

Stratification of Chronic Kidney Disease, the risk of cardiovascular disease, retinopathy and other diabetic complications is higher in patients with diabetes and kidney 

disease than in diabetic patients without kidney disease. 

An expanded focus on chronic kidney disease in Medicare beneficiaries with diabetes would require expansion of the initial chronic care improvement program guidelines. For example, on April 20, 2002, the CMS published a core set of clinical quality indicators for which applicants are required to establish expectations. ‘‘Monitoring for nephropathy (test for microalbumin)’’ is appropriately included among the 

diabetes measures. On the other hand, there is an important indicator of chronic 

kidney disease missing from this core set. Medicare beneficiaries with diabetes 

should be evaluated for possible decline in kidney function through estimates of Glomerular Filtration Rate (GFR). GFR estimates are the best overall indices of the 

level of kidney function. Individuals with reduced GFR should, in turn, be evaluated 

and treated for complications of reduced GFR. This includes measurement of anemia, nutritional status and bone disease. Estimated GFR should be monitored yearly in patients with chronic kidney disease and diabetes. 

Similarly, non-diabetic patients with chronic kidney disease have an increased 

prevalence of cardiovascular disease compared to the general population. (K/DOQI 

Guideline 15 for Evaluation, Classification and Stratification of Chronic Kidney Disease.) Measures for chronic care improvement for Medicare beneficiaries with heart 

failure should be expanded to include assessment of kidney function (by GFR measurement) and kidney damage (by tests for protein in the urine). 

III. Conclusion 

The National Kidney Foundation respectfully requests that the Committee monitor the implementation of the MMA chronic care improvement program by the CMS 

to insure that Medicare beneficiaries with chronic kidney disease, as a co-morbidity 

with diabetes and/or heart failure, benefit to the fullest extent possible from the 

agency’s initial program announcement. Furthermore, while diabetes is the largest 

single cause of End Stage Renal Disease, constituting 44% of new ESRD cases annually, more than half of new ESRD patients do not have diabetes. Additionally, there 

could be millions of Medicare beneficiaries with chronic kidney disease but without 

diabetes, who could benefit from the diagnostic and therapeutic interventions that 

are recommended by the K/DOQI program. Therefore, we respectfully request that 

the Committee urge the CMS to develop a chronic care improvement program for 

chronic kidney disease in the near future. 

Æ