II 

111TH CONGRESS 

1ST SESSION S. 1781 

To provide for a demonstration program to reduce frequent use of health 

services by Medicaid beneficiaries with chronic illnesses by providing 

coordinated care management and community support services. 

IN THE SENATE OF THE UNITED STATES 

OCTOBER 14, 2009 

Mrs. SHAHEEN (for herself, Mr. BROWN, and Mr. MENENDEZ) introduced the 

following bill; which was read twice and referred to the Committee on Finance 

A BILL 

To provide for a demonstration program to reduce frequent 

use of health services by Medicaid beneficiaries with 

chronic illnesses by providing coordinated care management and community support services. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Reducing Emergency 

5 Department Utilization through Coordination and Em6 powerment Demonstration Program Act’’ or the ‘‘RE7 DUCE Demonstration Program’’. 


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1 SEC. 2. DEFINITIONS. 

2 In this Act: 

3 (1) CHRONIC CONDITION.—The term ‘‘chronic 

4 condition’’ means a chronic medical condition that is 

5 life-threatening or may result in permanent dis6 ability, including— 

7 (A) asthma; 

8 (B) cancer; 

9 (C) chronic obstructive pulmonary disease; 

10 (D) congestive heart failure or arrhythmia; 

11 (E) diabetes; 

12 (F) HIV/AIDS; 

13 (G) liver disease; 

14 (H) post-traumatic stress disorder; 

15 (I) renal failure; 

16 (J) rheumatologic disease; 

17 (K) severe mental illness; 

18 (L) substance abuse disorder; 

19 (M) thromboembolic disease; 

20 (N) traumatic brain injury resulting in 

21 cognitive impairment; 

22 (O) chronic pain; and 

23 (P) any other chronic medical condition 

24 that has been identified by a State and ap25 proved by the Secretary for inclusion under the 

26 REDUCE demonstration program. 


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1 (2) FREQUENT USER OF HEALTH SERVICES.— 

2 The term ‘‘frequent user of health services’’ means 

3 an individual who uses the emergency department, is 

4 admitted to the hospital, or uses other inpatient 

5 services frequently. 

6 (3) MEDICAID.—The term ‘‘Medicaid’’ means 

7 the Federal and State medical assistance program 

8 established under title XIX of the Social Security 

9 Act (42 U.S.C. 1396 et seq.). 

10 (4) PARTICIPATING STATE.—The term ‘‘partici11 pating State’’ means a State with an approved appli12 cation (as described in section 3(b)(1)) that has en13 tered into an agreement with the Secretary to con14 duct a REDUCE demonstration program. 

15 (5) REDUCE DEMONSTRATION PROGRAM.— 

16 The term ‘‘REDUCE demonstration program’’ 

17 means a program described in section 3 that is con18 ducted pursuant to an agreement between the Sec19 retary and a participating State. 

20 (6) SAFETY NET HOSPITAL.—The term ‘‘safety 

21 net hospital’’ means a hospital with a low-income 

22 utilization rate greater than 25 percent (as defined 

23 under section 1923(b)(3) of the Social Security Act 

24 (42 U.S.C. 1396r–4(b)(3))); 


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1 (7) SECRETARY.—The term ‘‘Secretary’’ means 

2 the Secretary of Health and Human Services. 

3 (8) STATE.—The term ‘‘State’’ has the mean4 ing given that term for purposes of Medicaid. 

5 (9) TARGETED MEDICAID BENEFICIARY.— 

6 (A) IN GENERAL.—The term ‘‘targeted 

7 Medicaid beneficiary’’ means an individual who 

8 has— 

9 (i) attained age 19 and is eligible for 

10 medical assistance under a State plan or 

11 waiver under Medicaid; 

12 (ii) been diagnosed with 2 or more 

13 chronic conditions; 

14 (iii) been identified by a participating 

15 State as a frequent user of health services; 

16 and 

17 (iv) been identified by a participating 

18 State as likely to benefit from participation 

19 in the REDUCE demonstration program 

20 (pursuant to the needs-based criteria de21 scribed in section 3(c)(3)). 

22 (B) VOLUNTARY PARTICIPATION.—A tar23 geted Medicaid beneficiary may participate in 

24 the REDUCE demonstration program on a volVerDate Nov 24 2008 00:11 Oct 16, 2009 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1781.IS S1781

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1 untary basis and may terminate participation at 

2 any time. 

3 SEC. 3. REDUCE DEMONSTRATION PROGRAM. 

4 (a) IN GENERAL.—The Secretary shall establish the 

5 REDUCE demonstration program under which the Sec6 retary shall enter into agreements with States to provide 

7 for the development, implementation, and evaluation of in8 novative approaches to coordinated care management and 

9 increased access to community support services for tar10 geted Medicaid beneficiaries in order to reduce hospital 

11 admissions and the use of emergency health care services. 

12 (b) APPLICATION AND AGREEMENTS.— 

13 (1) APPLICATION.—A State seeking to partici14 pate in the REDUCE demonstration program shall 

15 submit to the Secretary, in such form and manner 

16 as the Secretary shall require, an application that, in 

17 addition to such other information as the Secretary 

18 may require, contains— 

19 (A) a description of the proposed dem20 onstration program, including the information 

21 specified in paragraphs (2) through (4) of sub22 section (c); and 

23 (B) a plan for ensuring continuity of serv24 ices for targeted Medicaid beneficiaries who are 

25 participating in the program on such date that 


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1 the demonstration program ceases to be con2 ducted in the State. 

3 (2) AGREEMENT.— 

4 (A) IN GENERAL.—Not later than 12 

5 months after the date of enactment of this Act, 

6 the Secretary shall enter into agreements with 

7 not more than 10 States to conduct the RE8 DUCE demonstration program in accordance 

9 with the requirements of this section. 

10 (B) DURATION.—An agreement entered 

11 into by the Secretary and a State to conduct a 

12 REDUCE demonstration program shall be for 

13 a period of 5 years. 

14 (c) DEMONSTRATION PROGRAM REQUIREMENTS.— 

15 (1) INDIVIDUALIZED CARE PLANS.— 

16 (A) IN GENERAL.—A REDUCE dem17 onstration program shall be designed to im18 prove the health outcomes for targeted Med19 icaid beneficiaries participating in the program, 

20 reduce hospital admissions and frequent usage 

21 of emergency care services, and reduce associ22 ated costs under Medicaid by— 

23 (i) identifying health care providers 

24 that provide integration of primary care 

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1 location of such services or use of multi2 disciplinary integrated treatment teams 

3 that work collaboratively to provide com4 prehensive and evidence-based treatment, 

5 rehabilitation, and support services for tar6 geted Medicaid beneficiaries; 

7 (ii) providing targeted Medicaid bene8 ficiaries with an individualized care plan 

9 (developed in consultation with the bene10 ficiary and the beneficiary’s support staff, 

11 medical care providers, and family) that 

12 provides for flexible services that are based 

13 on an examination of the beneficiary’s indi14 vidual care needs (as determined through 

15 application of needs-based criteria under 

16 paragraph (3)); and 

17 (iii) providing access to a care man18 agement team that— 

19 (I) includes, at a minimum— 

20 (aa) a physician, physician 

21 assistant, or nurse practitioner; 

22 (bb) a social worker; and 

23 (cc) a community health 

24 worker (as licensed or defined by 

25 the participating State); and 


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1 (II) provides health care services, 

2 coordination of primary and specialty 

3 care, and assistance with social serv4 ices in a home or shelter setting. 

5 (B) PHYSICIAN, PHYSICIAN ASSISTANT, OR

6 NURSE PRACTITIONER.—For purposes of the 

7 care management team described under sub8 paragraph (A)(iii), such team shall include a 

9 physician or, if a physician is not available, a 

10 physician assistant or nurse practitioner who 

11 may provide such health care services as are 

12 within their authorized scope of practice (as de13 termined by the participating State). 

14 (C) BEST PRACTICES.—Delivery of health 

15 care services provided pursuant to an individ16 ualized care plan (as described in subparagraph 

17 (A)(ii)) shall be determined based upon best 

18 practices and research regarding— 

19 (i) effective strategies for improving 

20 health outcomes (including behavioral 

21 health outcomes) and quality of life; and 

22 (ii) cost-effective methods for delivery 

23 of health care services. 

24 (2) STATE PLAN AND PROJECTIONS.— 


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1 (A) IN GENERAL.—A participating State 

2 shall provide the Secretary with a proposal for 

3 the development and implementation of the RE4 DUCE demonstration program that includes— 

5 (i) a projection of the number of tar6 geted Medicaid beneficiaries that the State 

7 expects to participate in the REDUCE 

8 demonstration program; and 

9 (ii) identification of targeted Medicaid 

10 beneficiaries through individual assessment 

11 and analysis of data from Medicaid claims, 

12 hospital records, or other informational 

13 sources to identify beneficiaries that 

14 have— 

15 (I) engaged in frequent use of 

16 emergency, inpatient, or crisis serv17 ices; or 

18 (II) exhibited identified risk fac19 tors that indicate the probability of 

20 frequent use of emergency, inpatient, 

21 or crisis services; 

22 (iii) a strategy for outreach to tar23 geted Medicaid beneficiaries to provide in24 dividualized health care services in order to 

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1 quent use of emergency, inpatient, or crisis 

2 services; and 

3 (iv) criteria for selection of health 

4 care providers (including behavioral health 

5 care providers) that have demonstrated 

6 their experience and capacity to effectively 

7 engage and serve individuals that— 

8 (I) have been diagnosed with 2 or 

9 more chronic conditions; or 

10 (II) exhibit other risk factors 

11 identified by the State. 

12 (B) GAINSHARING.—Subject to approval 

13 by the Secretary, a participating State may de14 velop and establish a gainsharing arrangement 

15 among health care providers participating in 

16 the REDUCE demonstration program to allow 

17 such providers to retain a share of any savings 

18 generated through the demonstration program 

19 in order to encourage improved outcomes and 

20 increased efficiency. 

21 (C) LIMITATION.—A participating State 

22 may, on a statewide or regional basis, provide 

23 for a limit on the total number of targeted 

24 Medicaid beneficiaries that may be eligible for 

25 services under the REDUCE demonstration 


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1 program and may establish a waiting list for 

2 such services. 

3 (D) PRIORITY CONSIDERATIONS.— 

4 (i) IN GENERAL.—In reviewing cri5 teria established by a participating State 

6 for selection of health care providers (as 

7 described in subparagraph (A)(iv)), the 

8 Secretary shall give priority to a State that 

9 includes in such selection— 

10 (I) safety net providers, including 

11 public hospitals, federally qualified 

12 health centers (as described under 

13 section 1905(l)(2)(B) of the Social Se14 curity Act (42 U.S.C. 

15 1396d(i)(2)(B))), and community 

16 mental health centers (as described 

17 under section 1861(ff)(3)(B) of such 

18 Act (42 U.S.C. 1395x(ff)(3)(B))); 

19 (II) health provider coalitions 

20 that— 

21 (aa) have a geographic, com22 munity-based focus; 

23 (bb) are based out of— 

24 (AA) a federally quali25 fied health center; 


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1 (BB) an university or 

2 academic medical center; 

3 (CC) a hospital (includ4 ing a safety net hospital); 

5 (DD) a private entity 

6 whose purpose is to improve 

7 access to community health 

8 care services for high-risk 

9 individuals and those requir10 ing primary care services; or 

11 (EE) a similar organi12 zation; and 

13 (cc) have agreements with 

14 not less than 2 hospitals, a hous15 ing agency, a mental health pro16 vider, and not less than 2 pri17 mary care physicians within the 

18 local community; and 

19 (III) programs that have dem20 onstrated a capacity to share, com21 bine, and analyze health data for fre22 quent users of health services through 

23 data sharing agreements with multiple 

24 local health institutions. 


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1 (ii) REIMBURSEMENT.—The Secretary 

2 shall not waive any requirements under 

3 title XIX of the Social Security Act relat4 ing to services provided by, or reimburse5 ment provided to, federally qualified health 

6 centers for purposes of the REDUCE dem7 onstration program. To the extent that 

8 participation by a federally qualified health 

9 center or safety net hospital in the RE10 DUCE demonstration program requires 

11 the center or hospital to provide services 

12 that are not covered under the State plan, 

13 the participating State shall be required to 

14 fully reimburse the center or hospital for 

15 the cost of such services. 

16 (3) NEEDS-BASED CRITERIA.—A participating 

17 State shall establish needs-based criteria for deter18 mining the eligibility of individuals for participation 

19 in the REDUCE demonstration program. The cri20 teria shall provide for consideration of an individ21 ual’s medical history, including— 

22 (A) the number and severity of chronic 

23 conditions; 

24 (B) functional impairments; 

25 (C) care and support needs; 


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1 (D) any recent patterns of excessive utili2 zation of emergency or inpatient care in a hos3 pital or similar facility; and 

4 (E) other factors which the State deter5 mines are associated with increased hospital ad6 missions or frequent utilization of emergency, 

7 inpatient, or crisis services (including housing 

8 status and other social determinants of health 

9 status). 

10 (4) COVERED SERVICES.— 

11 (A) IN GENERAL.—A participating State 

12 shall provide the Secretary with a comprehen13 sive list of services that shall be available to 

14 targeted Medicaid beneficiaries under the RE15 DUCE demonstration program. Such services 

16 shall be established and targeted to reduce fre17 quent utilization of health services by targeted 

18 Medicaid beneficiaries. 

19 (B) ADDITIONAL SERVICES.—Upon re20 quest by the State and subject to approval by 

21 the Secretary, a participating State may pro22 vide additional services under the demonstra23 tion program that are not covered under the 

24 State plan upon a showing that such services 


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1 will reduce avoidable utilization of health serv2 ices by targeted Medicaid beneficiaries. 

3 (d) WAIVER.—Except as provided in subsection 

4 (c)(2)(D)(ii), the Secretary may waive such requirements 

5 of titles XI, XVIII, and XIX of the Social Security Act 

6 as the Secretary determines necessary for a participating 

7 State to conduct the REDUCE demonstration program. 

8 SEC. 4. EVALUATION AND REPORT. 

9 (a) EVALUATION.— 

10 (1) IN GENERAL.—Subject to paragraph (2), 

11 the Secretary shall, by grant, contract, or inter12 agency agreement, provide for an evaluation of the 

13 REDUCE demonstration programs conducted by 

14 participating States under this Act, including an as15 sessment of whether the demonstration programs— 

16 (A) reduce avoidable hospitalizations or 

17 other institutional admissions (including at in18 termediate care facilities for the mentally re19 tarded or nursing facilities); 

20 (B) reduce the use of ambulances, hospital 

21 emergency health services, detoxification treat22 ments, or emergency mental health services; 

23 (C) reduce expenditures under the Med24 icaid program; and 


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1 (D) improve the overall health status and 

2 satisfaction of the targeted Medicaid bene3 ficiaries participating in the program (including 

4 improvements in housing status and other so5 cial determinants of health status). 

6 (2) EVALUATION REQUIREMENTS.—The evalua7 tion shall be conducted by an entity that has dem8 onstrated experience with care improvement pro9 grams. Such evaluation shall be conducted on an on10 going basis throughout the duration of the dem11 onstration program. 

12 (b) REPORT.—Not later than 12 months after com13 pletion of all REDUCE demonstration programs con14 ducted by participating States under this Act, the Sec15 retary shall prepare and submit a final report on the re16 sults of the evaluation to Congress that contains rec17 ommendations for such legislative and administrative ac18 tions as the Secretary determines appropriate to develop 

19 additional programs to provide coordinated care for indi20 viduals with complex medical and behavioral health condi21 tions and reduce avoidable hospital readmissions and the 

22 use of emergency health care services. 

23 SEC. 5. FUNDING. 

24 (a) MANNER OF PAYMENT.—The Secretary shall pay 

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1 tures for providing a covered service (as specified in sec2 tion 3(c)(4)) to targeted Medicaid beneficiaries that par3 ticipate in the REDUCE demonstration program con4 ducted by the State. Such payments shall be made in the 

5 same manner as other quarterly payments are made to 

6 the State under section 1903(a) of the Social Security Act 

7 (42 U.S.C. 1396b(a)). 

8 (b) MATCHING RATE.—Subject to subsection (c), the 

9 Secretary shall pay a participating State for State expend10 itures described in subsection (a)— 

11 (1) for fiscal years 2011 or 2012, 100 percent 

12 of the amount of such expenditures for the fiscal 

13 year; and 

14 (2) for fiscal years 2013, 2014, or 2015, 75 

15 percent of the amount of such expenditures for the 

16 fiscal year. 

17 (c) LIMITATION ON FUNDS.—The total amount of 

18 payments under this Act shall not exceed $150,000,000 

19 for the period of fiscal years 2011 through 2015. 

20 (d) APPROPRIATION.— 

21 (1) IN GENERAL.—Out of any funds in the 

22 Treasury not otherwise appropriated, there is appro23 priated to the Secretary to carry out this Act, 

24 $150,000,000 for the period of fiscal years 2011 


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1 through 2015, of which $15,000,000 shall be used 

2 for the evaluation required under section 4. 

3 (2) BUDGET AUTHORITY.—This Act constitutes 

4 budget authority in advance of appropriations Acts 

5 and represents the obligation of the Secretary to 

6 provide for the payment of amounts provided under 

7 this Act. 

Æ 


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