Medicare Chronic Care Improvement Program (CCIP): Update & Implications

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Medicare Chronic Care Improvement Program (CCIP)
Update Implications

• March 2005

Vince Kuraitis JD, MBA Better Health
Technologies, LLC www.bhtinfo.com (208)
395-1197
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Overview

• Capsulizing DM Today
• The Event of the Decade for DM Medicares
  Chronic Care Improvement Program (CCIP)
• DM Tomorrow Medicares CCIP Pilot Project Awards
  -- Observations/Implications

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I. Capsulizing Disease Management (DM) Today
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Over The Past Few Years A Number of Publications
Have Rigorously Examined DM....
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Common Themes in Describing DM Today

• DM penetration is increasing
• Cost as a major driver
• Data on ROI imperfect, controversial
• Physician reactions skepticism to limited
  support
• Stand alone DM IT integration challenges
• DM improves quality of care
• Patient satisfaction is high
• Focus on 4-6 diseases/conditions
• DM is a qualified success

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The CMS CCIP RFP Wished for the Pot of Gold at
the End of the Rainbow

• Specialization
• Integration
• Local Delivery System Integration
• Information and Communication Technology (ICT)
  Integration

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II. The Event of the Decade for DM Medicares
Chronic Care Improvement Program (CCIP)
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Medicares Chronic Care Improvement Program is
the Event of the Decade for DM

• December 8, 2003 President Bush signs the
  Medicare Modernization Act, including Section
  721, the Chronic Care Improvement Act (see
  Appendix C for details)
• April 20, 2004 CMS releases the CCIP Phase 1
  request for proposal (see Appendix D for details)
• August 8, 2004 final date to submit proposals
  to CMS
• December 8, 2004 CMS announces CCIP Phase 1
  awards

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Highlights From the CMS Website
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And the CCIP Winners Are....

• On December 8, 2004 the Centers for Medicare and
  Medicaid Services (CMS) announced nine awardees
  for CCIP pilot projects
• Humana, Inc. - Central Florida
• XLHealth Corporation- Tennessee
• Aetna Health Management, LLC - Chicago, Illinois
• Lifemasters Supported SelfCare, Inc. - Oklahoma
• McKesson Health Solutions, LLC - Mississippi
• CIGNA HealthCare - Georgia
• Health Dialog Services Corporation - Pennsylvania
  
• American Healthways, Inc. - Washington, D.C. and
  Maryland
• Visiting Nurse Service of New York Home Care and
  United HealthCare Services, Inc. - Evercare -
  NYC Queens Brooklyn

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Both Integration AND Specialization Are Key
Dimensions of Care Management Value Propositions

• Integration
• Patients - do my health care providers talk to
  one another, do they share appropriate
  information about my clinical condition, do they
  NOT share information inappropriately
• Provider consortia - We coordinate care across
  the continuum and provide one-stop-shopping in a
  defined geographic region, thereby lowering costs
  and improving quality.
• Specialization
• Patients - do my providers use world-class,
  state-of-the-art clinical guidelines, equipment,
  facilities, people
• Disease Management Service Companies (DMSCs) -
  As a national company, we treat more people with
  (a specific disease, e.g., diabetes, asthma,
  CHF) than anybody else, so we do it better and
  cheaper.

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To Date DM Clinical/Business Models Have
Emphasized Specialization

• Specialized companies providing services
• Specialized contracting/financing model --
  guaranteed savings
• Specialized focus on individual diseases
  (migrating toward multiple comorbid conditions)
• Specialized technologies predictive modeling,
  call centers, medical management workflow
  software, etc.
• Specialized delivery models are developing for
  unique customers
• Managed Care Organizations
• HMOs
• PPOs
• other
• Medicaid (in various flavors)
• Medicare
• Employers

• Specialty pharma
• State high-risk pools
• Multiple diseases
• Comorbid patients
• Highest cost/risk patients
• etc., etc.

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DM Models Have Emphasized Specialization
High
INTEGRATION
DM 2004
DM 1996
Low
Low
High
SPECIALIZATION
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III. DM Tomorrow Medicares CCIP Pilot Project
Awards --Observations/Implications

• While Medicares RFP Said We want local
  integration, All CCIP Awards Went to Specialized
  Companies
• Wall Street is Increasingly Impacting DM
• Scale, Scale, Scale
• One-Stop-Shopping (OSS) Beats Best-of-Breed (BOB)
• Distinctions Between Care and Care Coordination
  Blur Even Further

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While Medicares RFP Said We want local
integration, All CCIP Awards Went to Specialized
Companies

• All awardees are large, publicly traded DM
  service companies or health plans (with 1
  possible exception, discussed later)
• No awards were made to locally driven consortia,
  e.g., hospitals/delivery systems, physician
  groups
• There are major gains yet to be made in
  integrating DM models into local care
• Physician relations, financial incentives
• Information technology data sharing, EHR
• Can specialized DM companies achieve better local
  integration??

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2) Wall Street is Increasingly Impacting DM

• The score at the bottom of the third inning is
  Wall Street 8.5, Main Street 0.5

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The score at the bottom of the third inning is
Wall Street 8.5, Main Street 0.5

• bottom of the third inning its still very
  early in the game the CCIP awards are not the
  end of the game they are a very important
  milestone that hopefully will result in a major
  restructuring in the way that chronic care in
  America is delivered and financed.
• Wall Street 8.5 of the 9 CCIP awards, all
  included major health plans or disease companies
  that are publicly traded and/or venture capital
  backed.

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• Main Street 0.5 it is remarkable (and
  disappointing) that none of the CCIP awards went
  to locally driven and backed consortia, i.e.,
  hospitals/delivery systems, physician groups, and
  the like.
• The Main Street team does score 0.5 for the
  Visiting Nurse Service of NY (VNSNY)/Evercare
  award.
• VNSNY is a home health agency based in New York
  City, and thus is distinguished from the other
  health plan/DM company awardees. Nonetheless, it
  is the largest home health agency in the US,
  completing 20,000 patient visits every day!

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• Several DM companies are actively exploring
  options to become publicly traded on a stock
  exchange.
• Many other DM related companies are putting
  themselves up for an auction. They have hired
  investment bankers and are exploring options for
  sale, acquisition, merger.
• Several ventures are actively attempting to
  consolidate a number of DM companies.

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Expect to See More Deals Like This One....
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3) Scale, Scale, Scale

• Medicares awards suggest that company scale
  (size), IT systems, and experience in DM
  processes weighed heavily in Medicares
  determination. The most likely scenario for the
  future is that Medicare will continue to contract
  with a few large, specialized companies for
  disease management services it will likely NOT
  contract with hundreds of regionally based
  hospital and/or doctor organizations.

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4) One-Stop-Shopping (OSS) Beats Best-of-Breed
(BOB)

• In the past, there has been an ongoing
  marketplace battle between two competing
  clinical/business models
• One-stop-shopping (OSS) vendors covering
  multiple disease states, e.g., American
  Healthways, Lifemasters
• Best-of-breed (BOB) vendors cover individual
  disease states, e.g., Alere for CHF, AirLogix for
  respiratory.
• Prediction the Medicare CCIP awards will strike
  a final blow to BOB. BOB companies are a dying
  breed expect to see consolidations and mergers.

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5) Distinctions Between Care and Care
Coordination Blur Even Further

• DM companies and health plans traditionally have
  seen themselves in the business of coordinating
  care, NOT in the business of providing clinical
  care.
• Licensing issues with providing care, e.g.,
  avoiding the practice of medicine which requires
  a MD license
• Liability issues associated with providing care
  and/or being obligated to provide care
• Desire not to interfere with local providers,
  especially physicians
• While conceptually defensible, the practical
  distinctions between clinical care and care
  coordination are muddy.
• Due to the challenges associated with the unique
  Medicare population, the distinctions between
  providing clinical care and providing care
  coordination will become even more blurred.
• The CCIP projects will be caring for some very
  sick patients, ones whose conditions are subject
  to day-to-day and hour-to-hour changes requiring
  clinical intervention and action

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• One example sub-acute and long-term care
• Matrix www.matrixhealth.net is a physician
  practice company developed to provide care to
  patients in the long-term care setting.
• Matrix CEO Mike Quilty estimates that 10 of
  CCIP patients will be residents of sub-acute or
  long-term care facilities.
• McKessons CCIP award embeds Matrix services to
  provide care to patients in sub-acute and
  long-term care facilities.
• Are Matrix services care or care
  coordination? Its becoming increasingly hard
  to defend the traditional DM business/clinical
  model that works hard to draw this distinction.

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• Predictions expect to see two schools of
  thought about the distinction between care and
  care coordination
• Defensive As a DM company, we are not in the
  business of providing clinical care. For
  example, gathering real-time patient data
  through remote patient monitoring (RPM)
  technologies apprises us of situations which
  might require immediate clinical intervention.
  We dont have a license to practice medicine and
  we want to avoid liability. Therefore, we should
  avoid using RPM technologies.
• Offensive. There is no way that we can worry
  about the semantic differences between care and
  care coordination. To provide the best service
  to patients, we must gather real time data about
  patients using RPM technology. We must act on
  that data ASAP. We must set up systems to get
  patients care when they need it, e.g., getting
  standing orders from physicians when clinical
  parameters exceed pre-established norms.
• A further prediction The offensive school of
  thought will become predominant.

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APPENDICES
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APPENDIX ABetter Health Technologies, LLC
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Better Health Technologies, LLC

• Creating value for patients and shareholders
• Strategy, business models, partnerships
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• Consulting/Business Development
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BHT Clients

• Pre-IPO Companies
• Cardiobeat
• EZWeb
• Sensitron
• Life Navigator
• Medical Peace
• Stress Less
• DiabetesManager.com
• CogniMed
• Caresoft
• Benchmark Oncology
• SOS Wireless
• Click4Care
• eCare Technologies
• The Healan Group
• Fitsense

• Established organizations
• Samsung Electronics, South Korea
• -- Global Research Group
• -- Samsung Advanced Institute of Technology
• Medtronic
• -- Neurological Disease Management
• -- Cardiac Rhythm Patient Management
• Siemens Medical Solutions
• Joslin Diabetes Center
• National Rural Electric Cooperative Association
• Disease Management Association of America
• Blue Cross Blue Shield of Massachusetts
• PCS Health Systems
• Varian Medical Systems
• VRI
• Washoe Health System
• S2 Systems
• CorpHealth
• Physician IPA

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APPENDIX BDescribing Medicares Challenges With
Chronic Conditions
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Acute Care is Fundamentally Different than
Chronic Care
Source British Medical Journal VOLUME 320 26
February 2000, 526
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Patients Have Increasing Life Spans
Source Robert Wood Johnson Foundation, Chronic
Care in America A 21st Century Challenge, 1996
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The Prevalence of Chronic Conditions Increases
With Age
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The Number of People with Chronic Conditions is
Increasing
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Medicare Beneficiaries With Chronic Conditions
Account for Disproportionate Expenditures
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The CBO Sums Up Medicares ProblemA Sea of Red
Ink
Source The Congressional Budget Office, Social
Security and the Federal Budget The Necessity of
Maintaining a Comprehensive Long-Range
Perspective (August 1, 2002).
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APPENDIX C Overview and Background -- The
Chronic Care Improvement Act
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• Sections 721-23 of the Medicare Modernization Act
  (MMA) are known as the Chronic Care Improvement
  Act. With this program, Medicare will pilot
  coverage of chronic care services to
  fee-for-service beneficiaries. The Act is aimed
  at improving clinical quality, improving
  beneficiary and provider satisfaction, and
  reducing Medicare spending.

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• The legislation calls for a two-phased approach
• Phase I requires a three-year pilot project. The
  Centers for Medicaid and Medicare Services (CMS)
  is required to enter into contracts with chronic
  care improvement organizations (CCIOs) using
  randomized controlled groups.
• Phase II. If results of Phase I indicate improved
  clinical quality of care, improved beneficiary
  satisfaction and achieved spending targets, CMS
  is required to expand the program nationwide.
  Phase II reflects the full implementation of the
  program for all beneficiaries.

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• The CCIP-I RFP informs interested parties of an
  opportunity to apply to implement and operate a
  chronic care improvement program as part of Phase
  I under Section 721 of the MMA.
• The RFP is 75 pages long!
• The RFP is available on the Chronic Care
  Improvement Program page of the Medicare website.
• The RFP incorporates CMS thinking-to-date about
  broader chronic care improvement opportunities,
  as well as laying out the path for prospective
  applicants to submit applications. THIS IS A
  VERY IMPORTANT DOCUMENT!

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Timeline Summary

• December 8, 2003 -- MMA legislation enacted
• April 20, 2004 -- CMS releases the CCIP-I
  (Chronic Care Improvement, Phase 1) RFP
• August 6, 2004 -- proposals due back to CMS
• Mid-Fall 2004 -- awardee selection
• Late-Fall 2004 -- negotiations with presumptive
  awardees
• December 8, 2004 -- latest date on which CMS can
  announce the first contract
• December 2005 -- Interim progress report due from
  Medicare to Congress
• December 2006 -- earliest date on which Medicare
  could announce that the projects are successful
  and begin Phase II -- national implementation of
  contracting
• December 2007 -- end date for 3 year
  demonstration projects (assuming all contracts
  are announced in December 2004)
• May 2008 -- Final project analysis report due
  from Medicare to Congress
• May 2008 -- Latest date at which Phase II can
  begin if Phase I projects prove successful

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Dont Be Confused by Other Medicare Chronic Care
Improvement Projects and/or other MMA
Demonstration Projects.

• For the past several years, Medicare has already
  been experimenting with various ways of financing
  and delivering chronic care improvement services
  to chronically ill patients. These programs are
  described on the Demonstration Projects and
  Evaluation Reports page on the Medicare website.
• The MMA also authorizes many other demonstration
  projects. These are summarized on the CMS
  Demonstrations Projects under the Medicare
  Modernization Act (MMA) page of the Medicare
  website.

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Acronyms

• CMS - Centers for Medicaid and Medicare Services
• CCIP-I Phase I of the CMS Chronic Care
  Improvement project
• CCIP-II Phase 2 of the CMS Chronic Care
  Improvement project
• CCIO Chronic Care Improvement Organization --
  organizations that are awardees of Chronic Care
  Improvement contracts from CMS
• DM disease management
• MMA Medicare Modernization Act
• RFP request for proposal

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APPENDIX DA Summary of the CMS Chronic Care
Improvement-I RFP
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Chronic Care Improvement ProgramHighlights From
the CMS Website
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A Conceptual Model of the CCIP
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Purpose/Design of the RFP (pp. 15-39)

• Eligible Organizations DM organizations, health
  insurers, integrated delivery systems, physician
  groups, a consortium of entities, and anybody
  else that CMS deems appropriate
• Identification of Intervention Groups
• CMS is focusing on patients with CHF, complex
  diabetes, COPD
• CMS will identify eligible beneficiaries through
  claims data
• Beneficiaries will be randomized into
  intervention and control groups

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• Identification of Potential Geographic Areas.
  CMS is interested in applications that target
  areas
• with higher than average prevalence of CHF or
  complex diabetes, or COPD
• with low Medicare quality rankings
• that do not conflict with current chronic care
  improvement projects

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• Outreach to Intervention Group
• Beneficiary participation will be voluntary
• Eligible beneficiaries in the intervention group
  will receive a letter and given an opportunity to
  opt-out of participation.
• Organizations awarded contracts will then be
  expected to confirm participation with those who
  do not decline to participate.
• Applicants proposals are expected to specify
  detailed outreach protocols the outreach period
  will be 6 months.
• The control group will be passive -- they will
  not be offered participation, nor will they be
  aware of their status

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• Program Characteristics
• Programs must develop a care management plan for
  each participant
• Guide the participant in managing their health
• Use decision support tools such as evidence based
  guidelines
• Develop a clinical information database
• CMS expects transparency of proprietary
  protocols and systems, but does not expect to
  transfer any intellectual property rights

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• Billing and Payment
• Each awardee will be paid a Per Member Per Month
  Fee for each participant
• The fee amounts to be paid to awardees may vary
  because we envision testing a range of program
  models that may have different cost structures.
  We will establish fee amounts by agreement with
  each awardee.

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• Performance Standards Clinical Quality,
  Beneficiary Satisfaction and Savings Guarantees
• Applicants are expected to set forth projected
  improvements in clinical quality and savings
• Awardees will be penalized financially for not
  meeting agreed upon performance standards
  applicants will be expected to propose
  performance guarantees for quality improvement
  and beneficiary satisfaction
• Performance will be measured on the entire
  intervention group (including those who chose not
  to be contacted, those who dropped out, and those
  unable to be reached)
• Awardees are required to guarantee 5 net
  financial savings to Medicare

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• Organizations must assume financial risk for
  performance. In the event that 5 net savings
  are not achieved, the awardee will be required to
  refund the difference to the government, up to
  the total amount of fees paid to the awardee
  (i.e., awardees assume financial risk for fees,
  not insurance risk)
• Reconciliation Process
• An independent contractor will monitor outcomes
• Applicants will need to demonstrate financial
  solvency (presumably through a strong balance
  sheet and/or by obtaining reinsurance)

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• Program Monitoring
• CMS will conduct ongoing program monitoring
• Awardees will be expected to provide ongoing
  program monitoring information
• Independent Formal Evaluation
• CMS will hire an independent contractor for
  formal evaluation of program results
• Experience of intervention groups will be
  compared to control groups

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Requirements for SubmissionAwardee Selection
Process (pp. 39-41)

• Awardee Selection Process. There will be a 2
  stage process.
• Stage 1
• Prospective applicants will be given a
  de-identified set of Medicare claims data
• Applicants will analyze the data and submit an
  application and bid
• Applicants should base their proposals on 20,000
  beneficiaries in the intervention group
• Stage 2
• CMS review panel will evaluate applications and
  will recommend applicants for the second stage of
  the process
• Applicants selected as finalists will be provided
  actual historical data for the applicable target
  population in the applicants proposed geographic
  area.

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• Finalists will be allowed to propose adjustments
  in proposed payments or savings guarantees
• The CMS administrator will make final decisions

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Requirements for SubmissionApplication (pp.
41-67)

• Cover Letter
• Application Form
• Executive Summary
• Rationale for Proposed Geographic Area and Target
  Population
• Chronic Care Improvement Program Design
• A plan for outreach
• A plan to assess and stratify participants
• Frequency and type of interventions
• Appropriate services and educational materials
  for participants
• Adequate mechanisms for ensuring physician
  integration with the program
• Adequate mechanisms for ensuring coordination
  with State and local agencies
• Adequate mechanisms for supporting participants
  with more intensive needs
• Data to be collected, data sources, and data
  analyses

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• Organizational Structure and Capabilities
• Staff
• Facilities
• Equipment
• Strong working relationships with local providers
• Strong working relationships with community
  organizations
• Appropriate information and financial systems
• Clinical protocols to guide care delivery and
  management
• Ongoing performance monitoring
• Organizational background and references
• Accreditation
• Performance Results
• Past Performance Clinical Quality, Beneficiary
  and Provider Satisfaction and Savings
• Performance Projections
• core set of clinical quality indicators
• projected savings for each year
• projections on operational metrics

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• Payment Methodology Budget Neutrality
• Implementation Plan
• Supplemental Materials (Appendices)

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Application Evaluation Process Criteria (pp.
67-72)

• Application Evaluation Criteria and Weights
• Rationale for Proposed Geographic Area and Target
  Population (5 points)
• Chronic Care Improvement Program (25 points)
• Organizational Capabilities and Structure (25
  points)
• Performance Results Past Performance and
  Performance Projections (25 points)
• Payment Methodology Budget Neutrality (20
  points)

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• What will winning proposals look like?
• The Foundation Demonstrate proficiency at the
  basics -- a rigorous understanding of DM
  contracting and program design elements
• Differentiators Demonstrate creativity at the
  discretionary elements
• Physician integration
• Working with community organizations, local,
  state agencies
• Integrative information infrastructures
• Application of information and communication
  technologies

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END