Medicare Compliance & Reimbursement

At hearings last year, House Ways and Means Health Subcommittee Chair Nancy Johnson (R-CT) said it was her clear understanding that the rules of fee-for-service Medicare would never permit that program to incorporate disease management for people with multiple chronic ills. DM could be instituted only by private plans, Johnson said.

But a statement from Johnson announcing a Feb. 19 hearing on chronic-care management suggests the Ways-and-Means-ites could soften their stance on that point, and may be mulling some new flexibility for the fee-for-service program to adopt care-management innovations.

“Health care policy experts advocate early identification of patients at risk, treatment planning with a clear understanding of provider and patient roles, and patient self-monitoring and follow-up to improve health outcomes. Without a change in the law, however, traditional fee-for-service Medicare cannot evolve with these advances in the health delivery system,” says the statement. “It is unconscionable Medicare cannot incorporate these changes automatically.”

If legislators are serious about trying this route, it won’t be easy. Witnesses had suggestions for how lawmakers might build an actual chroniccare program on the foundation of demonstrations the Centers for Medicare and Medicaid Services is conducting, however.

The Progressive Policy Institute’s Jeff Lemieux, for example, advocated a “radical decentralization of Medicare’s administration, so that local Medicare administrators and medical directors are directly empowered to create disease-management programs … targeted to the needs of beneficiaries in their area.” Such decentralized administration would make it easier to hold Medicare accountable for implementing effective programs.

It also would acknowledge the fact that “disease management is inherently a local system, requiring cooperation between local health providers, community institutions, consumer and seniors’ groups, and, in some cases, local government agencies,” says PPI.

Administration Announces Disease Management Demo Meanwhile, Health and Human Services Secretary Tommy Thompson Feb. 27 announced a three-year capitated demonstration program to promote care coordination strategies for Medicare beneficiaries with chronic diseases like stroke, congestive heart disease, and diabetes. Participating organizations would receive a single capitated payment based on projected costs for each enrollee, using disease-specific risk adjusters being developed in connection with the Medicare+ Choice program. Organizations would provide the full range of covered hospital and physician services for enrollees, mostly Medicare fee-for-service beneficiaries, including those eligible for both Medicare and Medicaid.

“The demonstration would be especially appropriate for provider-sponsored organizations, but is also open to other types of organizations such as disease management organizations, academic medical centers, or M+C organizations,” according to the Feb. 28 Federal Register. CMS Administrator Tom Scully has said repeatedly over the past two years that hospitals and other integrated care systems are ready to take capitated rates for care coordination.

The initiative won praise from Senate Majority Leader Bill Frist (R-TN), who pointed out Feb. 27 how much of Medicare’s budget pays for enrollees with multiple chronic illnesses. Six percent of beneficiaries account for half of all costs, and 14 percent account for 75 percent of expenditures.

Medicare spends over $13,000 annually for people with five or more chronic conditions, Frist said, versus only about $2,000 for those with two chronic conditions, and $800 for those with one such condition.

Thompson said technology is available to identify who the high-cost enrollees with be, and to monitor and coordinate their care.