1. THE COMMONWEALTH FUND Chronic Care Initiatives to Improve the Medicare Program Stuart Guterman Director, Program on Medicare’s Future The Commonwealth Fund National Congress on Health Reform Washington, DC September 22, 2006

2. THE COMMONWEALTH FUND 2 Medicare Spending, 1970-2015 Note: Figures for 2010 and 2015 are projected. Source: 2008 Medicare Trustees’ Report.

3. THE COMMONWEALTH FUND 3 Medicare Enrollment, 1970-2015 Note: Figures for 2010 and 2015 are projected. Source: 2008 Medicare Trustees’ Report.

4. THE COMMONWEALTH FUND 4 Medicare Costs per Beneficiary, 1970-2015 Note: Figures for 2010 and 2015 are projected. Source: 2008 Medicare Trustees’ Report.

5. THE COMMONWEALTH FUND 5 Federal Spending on Medicare and Medicaid and Total Federal Spending as a Percentage of GDP, 1962-2082 Percentage of GDP *Total includes all federal non-interest spending. Note: Figures for 2007-2082 are projections. SOURCE: Congressional Budget Office. Budget Outlook.

6. THE COMMONWEALTH FUND 6 Cost of Chronically Ill Medicare Beneficiaries 78 percent of Medicare beneficiaries have at least 1 chronic condition, accounting for 99 percent of Medicare spending 20 percent of Medicare beneficiaries have at least 5 chronic conditions, accounting for 66 percent of Medicare spending These beneficiaries are treated by an average of 14 different physicians in a given year, and fill an average of 57 prescriptions (SOURCE: The Johns Hopkins University, Partnership for Solutions.)

7. THE COMMONWEALTH FUND 7 Caring for Chronically Ill Medicare Beneficiaries Heavily burdened by their illnesses Neither fee-for-service Medicare nor Medicare Advantage is currently configured to provide adequate care for these beneficiaries

8. THE COMMONWEALTH FUND 8 Caring for Chronically Ill Medicare Beneficiaries Fee-for-service Medicare: --emphasis on provision of services by individual providers --centered on single encounter or spell of illness --no incentive for coordinated care needed by the chronically ill

9. THE COMMONWEALTH FUND 9 Caring for Chronically Ill Medicare Beneficiaries Medicare Advantage: --should be an appropriate environment for coordinated care --but current payment system based mostly on costliness of average beneficiary --until the MMA, rules limited ability to specialize in specific types of patients

10. THE COMMONWEALTH FUND 10 Implications for Medicare We need to find better ways to coordinate care for Medicare beneficiaries with chronic illnesses There’s a lot of money spent on these beneficiaries that can be better used to encourage appropriate care

11. THE COMMONWEALTH FUND 11 Challenges Need to retool data system Decentralized program administration In fee-for-service Medicare, drug benefit separate from medical benefit Difficulty communicating with beneficiaries Difficulty integrating physicians into process Pressure to provide quick payoff

12. THE COMMONWEALTH FUND 12 Objectives Improve access to needed and appropriate care Improve coordination of care Improve physician performance by making them more involved and responsive to patient needs Improve patients’ ability to become involved in health care decisions and participate in their own care

13. THE COMMONWEALTH FUND 13 Medicare Initiatives Medicare Case Management Demonstration –1st Medicare chronic care initiative (October 1993-November 1995) –3 sites –Focused on increased education regarding proper patient monitoring, management of target condition –Low level of enthusiasm from beneficiaries, due to lack of physician involvement or sufficiently focused interventions Medicare Coordinated Care Demonstration –Mandated in BBA (enrollment began in April 2002) –15 sites –Focused on complex chronic conditions –21,000 enrollees (60 percent at 5 sites) –Recruitment a challenge—most successful programs had close ties to providers –Well received by participants, but short on savings

14. THE COMMONWEALTH FUND 14 Medicare Initiatives Medicare Disease Management Demonstration –Mandated in BIPA (began in Spring 2004) –3 sites, up to 30,000 beneficiaries –Sites fully at risk –Disease management and prescription drugs –Sites encountered greater than anticipated difficulties identifying and enrolling beneficiaries—demonstration discontinued before completion Medicare Health Support Pilot –Mandated in MMA (began in August 2005) –8 sites, 160,000 beneficiaries –Sites at risk for fee (5% savings initially required) –Focused on diabetes, CHF –Opt-out enrollment model –Secretary given explicit authority to expand scope if initial data indicated savings and/or quality improvement –Sites failed to achieve savings, project ended

15. THE COMMONWEALTH FUND 15 Medicare Initiatives Special Needs Plans (Medicare Advantage) –Mandated in MMA (began in 2006) –Focus on individuals with special needs: dual-eligibles, chronic condition, institutionalized –Paid like other MA plans, but permitted to target enrollment –(As of 09/08) 770 plans (440 dual-eligible), 1.3 million enrollees (0.9 million dual-eligible) –Questions have been raised about whether SNPs are, indeed, special; provisions in MIPPA strengthen requirements for dual- eligible plans

16. THE COMMONWEALTH FUND 16 Where Does That Leave Us? Disappointing results We haven’t found the right model yet Band-aids on a broken system?

17. THE COMMONWEALTH FUND 17 Provider-Driven Models Physician group practice demonstration –FFS payment + shared savings/ performance bonus Medicare care management performance –Physician practice-based care management Care management demonstration for high- cost beneficiaries –Provider-driven alternative to MHS

18. THE COMMONWEALTH FUND 18 The Healthcare Delivery System Still: Acute care focused Fragmented Modeled on medical management Reactive system

19. THE COMMONWEALTH FUND 19 Value-Based Purchasing Strategies System efficiencies across providers –Care coordination –Managing transitions across settings Shared clinical information –Fewer duplicative tests and procedures Improved processes and outcomes –Increased guideline compliance

20. THE COMMONWEALTH FUND 20 Value-Based Purchasing Strategies Patient education –Self-care support Reduce avoidable hospital admissions, re- admissions, emergency room visits Substitute outpatient for inpatient services –Less invasive procedures for more invasive procedures Reduced lengths of stay

21. THE COMMONWEALTH FUND 21 Medicare Health Care Quality (MHCQ) Demonstration System redesign Payment models incorporating incentives to improve quality and safety of care and efficiency –Best practice guidelines –Reduced scientific uncertainty –Shared decision making –Cultural competence

22. THE COMMONWEALTH FUND 22 Conclusions Still looking for right model Can’t give up—too much riding on being able to improve, for both the program and, most importantly, for its beneficiaries Look at in the context of broader reform of the health care delivery system