THE COMMONWEALTH

FUND

Chronic Care Initiatives toImprove the Medicare Program

Stuart GutermanDirector, Program on Medicare’s Future

The Commonwealth FundNational Congress on Health Reform

Washington, DCSeptember 22, 2006

2THE

COMMONWEALTH FUND

Medicare Spending, 1970-2015Medicare Spending, 1970-2015

$16.3 $36.8$72.3

$111.0

$184.2$221.8

$336.4

$533.0

$753.5

$7.5

$0

$100

$200

$300

$400

$500

$600

$700

$800

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

Sp

en

din

g (

in b

illi

on

s)

Note: Figures for 2010 and 2015 are projected.Source: 2008 Medicare Trustees’ Report.

3THE

COMMONWEALTH FUND

Medicare Enrollment, 1970-2015Medicare Enrollment, 1970-2015

24.928.4

31.134.3

37.639.7

42.946.7

53.7

20.4

0

10

20

30

40

50

60

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

En

roll

me

nt

(in

mil

lio

ns

)

Note: Figures for 2010 and 2015 are projected.Source: 2008 Medicare Trustees’ Report.

4THE

COMMONWEALTH FUND

Medicare Costs per Beneficiary,Medicare Costs per Beneficiary,1970-20151970-2015

$642$1,285

$2,322$3,267

$4,953$5,653

$8,019

$12,163

$15,041

$356

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

Co

sts

pe

r B

en

efi

cia

ry

Note: Figures for 2010 and 2015 are projected.Source: 2008 Medicare Trustees’ Report.

5THE

COMMONWEALTH FUND

Federal Spending on Medicare and Medicaid and Total Federal Spending on Medicare and Medicaid and Total Federal Spending as a Percentage of GDP, 1962-2082Federal Spending as a Percentage of GDP, 1962-2082

0

5

10

15

20

25

30

35

1962 1972 1982 1992 2002 2012 2022 2032 2042 2052 2062 2072 2082

Medic are and Medic aid T otal*

Percentage of GDP

*Total includes all federal non-interest spending.Note: Figures for 2007-2082 are projections.SOURCE: Congressional Budget Office. Budget Outlook.

6THE

COMMONWEALTH FUND

Cost of Chronically IllCost of Chronically Ill

Medicare BeneficiariesMedicare 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.)

7THE

COMMONWEALTH FUND

Caring for Chronically IllCaring for Chronically IllMedicare BeneficiariesMedicare Beneficiaries

• Heavily burdened by their illnesses

• Neither fee-for-service Medicare nor Medicare Advantage is currently configured to provide adequate care for these beneficiaries

8THE

COMMONWEALTH FUND

Caring for Chronically IllCaring for Chronically IllMedicare BeneficiariesMedicare 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

9THE

COMMONWEALTH FUND

Caring for Chronically IllCaring for Chronically IllMedicare BeneficiariesMedicare 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

10THE

COMMONWEALTH FUND

Implications for MedicareImplications 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

11THE

COMMONWEALTH FUND

ChallengesChallenges

• 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

12THE

COMMONWEALTH FUND

ObjectivesObjectives

• 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

13THE

COMMONWEALTH FUND

Medicare InitiativesMedicare 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

14THE

COMMONWEALTH FUND

Medicare InitiativesMedicare 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

15THE

COMMONWEALTH FUND

Medicare InitiativesMedicare 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

16THE

COMMONWEALTH FUND

Where Does That Leave Us?Where Does That Leave Us?

• Disappointing results

• We haven’t found the right model yet

• Band-aids on a broken system?

17THE

COMMONWEALTH FUND

Provider-Driven ModelsProvider-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

18THE

COMMONWEALTH FUND

The Healthcare Delivery SystemThe Healthcare Delivery System

Still:

• Acute care focused

• Fragmented

• Modeled on medical management

• Reactive system

19THE

COMMONWEALTH FUND

Value-Based Purchasing Value-Based Purchasing StrategiesStrategies

• 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

20THE

COMMONWEALTH FUND

Value-Based Purchasing Value-Based Purchasing StrategiesStrategies

• 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

21THE

COMMONWEALTH FUND

Medicare Health Care Quality Medicare Health Care Quality (MHCQ) Demonstration(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

22THE

COMMONWEALTH FUND

ConclusionsConclusions

• 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