FR Doc 04-9127

[Federal Register: April 23, 2004 (Volume 69, Number 79)]
[Notices]
[Page 22065-22079]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr23ap04-92]

[[Page 22065]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-5004-N]

Medicare Program; Voluntary Chronic Care Improvement Under
Traditional Fee-for-Service Medicare

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Notice.

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SUMMARY: This notice informs interested parties of an opportunity to
apply to implement and operate a chronic care improvement program as
part of Phase I (CCI-I) of the Voluntary Chronic Care Improvement Under
Traditional Fee-for-Service (FFS) Medicare initiative as authorized by
section 721 of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (Pub. L. 108-173).
Eligible Organizations: Organizations eligible to apply to
implement and operate chronic care improvement programs under CCI-I
include: (1) Disease management organizations; (2) health insurers; (3)
integrated delivery systems; (4) physician group practices; (5) a
consortium of entities; or (6) any other legal entity that meets the
requirements of this notice.

FOR FURTHER INFORMATION CONTACT: For information concerning this
initiative, contact Raymond Wedgeworth, CMS Project Officer, at (410)
786-6676, or ccip@cms.hhs.gov.

DATES: Applications must be received on or before 5 p.m. e.s.t. on
August 6, 2004, to be considered.

ADDRESSES: Mail applications to: Centers for Medicare & Medicaid
Services, Attention: Raymond Wedgeworth, Mail Stop: C4-15-17, 7500
Security Boulevard, Baltimore, Maryland 21244.
Because of staff and resource limitations, we cannot accept
applications by facsimile (FAX) transmission or by e-mail.
Format: Applicants must submit a completed Medicare Waiver
Application. Although this is not a demonstration, CCI-I will contain
study elements, such as a control group and an evaluation. For this
reason, we have decided to use the Medicare Waiver Application as the
most appropriate available tool at this time. Application forms may be
found online at: http://www.cms.hhs.gov/medicarereform/ccip/default.asp.
Please refer to the file code CMS-5004-N in the upper

right hand corner on your application cover page. Detailed instructions
for completing and submitting applications appear with the application
form and are supplemented by information in the ``Requirements for
Submission'' section of this notice.

SUPPLEMENTARY INFORMATION:

I. Background

Section 721 of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003, Pub. L. 108-173, adds a new section 1807
``Voluntary Chronic Care Improvement Under Traditional Fee-for-Service
(FFS) Medicare'' to the Social Security Act (the Act). Section
1807(a)(1) of the Act specifies that the Secretary shall provide for
the phased-in development, testing, evaluation, and implementation of
chronic care improvement programs. Each program shall be designed to
improve clinical quality and beneficiary and provider satisfaction and
achieve spending targets with respect to expenditures for targeted
beneficiaries with one or more threshold conditions. Section 1807(c)(1)
of the Act requires the Secretary to enter into agreements to expand
the implementation of CCI programs or components to additional
geographic areas, which may include the implementation of CCI on a
national basis, if CCI-I programs meet certain statutory requirements.
This initiative represents one of multiple strategies that the
Department of Health and Human Services (DHHS) is developing and
testing to improve chronic care, accelerate the adoption of health
information technology, reduce avoidable costs, and diminish health
disparities among Medicare beneficiaries nationally.
In CCI-I, the Centers for Medicare and Medicaid Services (CMS)
plans to test programs in approximately ten areas in which in the
aggregate at least 10 percent of the Medicare FFS population resides.
In these initial programs, we will focus primarily on implementing and
evaluating programs for beneficiaries with congestive heart failure
(CHF) and/or diabetes with significant co-morbidities (hereafter
referred to as complex diabetes). In one or two areas, we may focus on
beneficiaries with chronic obstructive pulmonary disease (COPD). The
Secretary will define the selection criteria and prospectively identify
at least 30,000 beneficiaries in each area, split between intervention
and control groups.
One awardee will be selected per area to offer intervention group
beneficiaries services in CCI-I. Organizations will provide support in
improving beneficiaries' self-care and provide them and their providers
enhanced information and information tools to increase adherence to
evidence-based care. As specified in sections 1807(a)(3) and section
1807(d)(3) of the Act, participation in the programs will be voluntary
and will not change the amount, duration or scope of participants' FFS
Medicare benefits. FFS Medicare benefits will continue to be covered,
administered and paid under the traditional FFS Medicare program.
Programs will be of no charge to the beneficiary. Awardees will not be
able to restrict beneficiary access to care (for example, there can be
no utilization review or gatekeeper function) or restrict beneficiaries
to a limited number of doctors in a network.
We are particularly interested in applications for programs in
geographic areas (for example, States, metropolitan statistical areas)
that have a high prevalence of CHF and/or diabetes, or COPD among
Medicare FFS beneficiaries and poor Medicare quality rankings compared
to national averages. Applicants may propose to serve one or more
areas, but we may request that applicants adjust their proposed service
areas to ensure that the population is of an appropriate size and does
not interfere with current FFS chronic care demonstrations.
As specified in section 1807(f)(2)(A) of the Act, awardees will be
paid a monthly fee per participant; however, payment will be contingent
on improvements in clinical quality of care, beneficiary and provider
satisfaction, and savings to Medicare in the intervention groups
compared to control groups. The planned duration of CCI-I is three
years.
CCI-I programs will be evaluated by an independent evaluator per
section 1807(b)(5) of the Act.
The principal objectives of CCI-I are to develop and test new
strategies to improve quality of care and beneficiary and provider
satisfaction cost-effectively for chronically ill FFS Medicare
beneficiaries that are scalable, replicable and adaptable nationally.

A. Program Authorization

Section 1807(b) of the Act requires the Secretary to provide for
the phased-in development, testing, evaluation, and implementation of
chronic care improvement programs. The purpose of Phase I, the
developmental phase of the Voluntary Chronic Care Improvement Under
Traditional FFS Medicare initiative (CCI), is to develop and test,
through randomized controlled trials, the cost-effectiveness of
programs for target populations that may benefit from program
participation. The Secretary will evaluate whether quality of care

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and satisfaction improve for targeted beneficiaries with threshold
conditions and will ensure that Medicare expenditures, including CCI
fees, for these programs do not exceed what estimated Medicare
expenditures would have been for the targeted populations in the
absence of the CCI programs.

B. Concerns

Widespread failings in chronic care management are a major national
concern. Many of these failings stem from systemic problems rather than
lack of effort or intent by providers to deliver high quality care.
Medicare beneficiaries are disproportionately affected because they
typically have multiple chronic health problems. (Anderson, G.
Testimony before the Subcommittee on Health of the House Committee on
Ways and Means, Hearing on Promoting Disease Management in Medicare. 16
April 2002. http://www.partnershipforsolutions.org/DMS/files/4_16_02_testimony.doc
). Beneficiaries who have multiple progressive chronic

diseases are a large and costly subgroup of the Medicare population:
Medicare beneficiaries with five or more chronic conditions represent
20 percent of the Medicare population but 66 percent of program
spending.
Congestive Heart Failure (CHF) and diabetes are among the five most
common chronic diseases in the Medicare population. Beneficiaries with
these diseases tend to have complex self-care regimens and medical care
needs. In addition, many of these beneficiaries have other chronic
conditions that add to their self-care burdens and risks of developing
co-morbid conditions, complications, and acute care crises. The health
risks of these beneficiaries depend heavily on how effectively they are
able to control their conditions in their daily lives and whether or
not they receive appropriate medical care and effective coordination of
their care. Controlling their conditions successfully may require
ongoing guidance and support beyond individual provider settings.
According to findings from the 1999 Medicare Current Beneficiary
Survey, individuals with CHF represent 14 percent of non-
institutionalized FFS Medicare beneficiaries and account for 43 percent
of Medicare expenditures, including treatment for all their health
problems. Individuals with diabetes represent 18 percent of
beneficiaries and 32 percent of FFS Medicare expenditures. (Foote, S.
Population-based Disease Management in Fee-For-Service Medicare. Health
Affairs, Web Exclusive, 30 July 2003, W3-350.). Each year, 10 percent
of the Medicare population accounts for two-thirds of all Medicare FFS
program payments. (Centers for Medicare and Medicaid Services. CMS
Chart Book June 2002 edition, Section III. A, p. 29.) Many of these
high-cost beneficiaries suffer from progressive chronic diseases, such
as CHF and/or diabetes, and most of the Medicare expenditures for their
care are for multiple and often preventable hospitalizations.
Prevalence rates of diabetes and CHF are even higher among
minorities than among all Medicare beneficiaries. For example, the
Centers for Disease Control and Prevention reports that 23.0 percent of
black males and 23.5 percent of Hispanic males ages 65-74 have diabetes
compared to 16.4 percent of white males and 15.4 percent of all
individuals in that age group. Black and Hispanic females in that age
group have diabetes prevalence rates of 25.4 percent and 23.8 percent,
respectively, compared to 12.8 percent for white females and 15.4
percent for all individuals in that age group. (Centers for Disease
Control and Prevention, National Center for Chronic Disease Prevention
and Health Promotion, Diabetes Surveillance System. See http://www.cdc.gov/diabetes/statistics/prev/national/f5dt2000.htm.
Given these prevalence

figures, improving quality and adherence to evidence-based care should
also improve outcomes and thus reduce racial and ethnic disparities,
which is consistent with HHS' Healthy People 2010 goals.
The Institute of Medicine's landmark report Crossing the Quality
Chasm: A New Health System for the 21st Century (National Academy
Press, 2001) highlighted the challenges of assuring that patients with
major chronic conditions such as CHF and diabetes receive adequate
care. The current health care delivery system is structured and
financed to manage acute care episodes, not to manage and support
individuals with progressive chronic diseases. Providers of care are
organized and paid for services provided in discrete settings (for
example, hospitals, physician offices, home health care, long-term
care, preventive services, etc.). Some literature supports an argument
that provider incentives favor focusing on each patient only while he
or she is within the provider's care setting. (Todd, W. and Nash, T.,
eds. Disease Management, A Systems Approach to Improving Patient
Outcomes). Patient care can be fragmented and poorly coordinated and
patient information difficult to integrate among settings as patients
move from one care setting to another. Providers may lack timely and
complete patient clinical information to fully assess their patients'
needs and to help prevent complications. Ongoing support to
beneficiaries for managing their conditions outside their physicians'
offices is rare.
Fragmentation of care is a particularly serious problem for
Medicare beneficiaries. The average Medicare beneficiary sees seven
different physicians and fills upwards of 20 prescriptions per year.
(Anderson, G. Chronic Conditions: Making the Case for Ongoing Care.
Partnership for Solutions and the Robert Wood Johnson Foundation, p.
4). In a recent survey, 18 percent of people with chronic conditions
reported having duplicate tests or procedures and 17 percent received
conflicting information from providers. (Anderson, p. 32) Providers
reported feeling ill-prepared to manage chronically ill patients and
reported that poor coordination of care led to poor outcomes.
(Anderson, p. 36).
The gap between what we know is appropriate care for patients with
chronic diseases and the care they actually receive is significant.
According to findings of a recent national study, only 56 percent of
patients with chronic diseases received recommended care based on well-
established guidelines referenced by the researchers. Among patients in
the study sample who had CHF, only 64 percent received recommended
care, and among those with diabetes, only 45 percent received
recommended care. Specifically, only 24 percent of diabetes patients in
the study received three or more glycosylated hemoglobin tests over a
two-year period. (McGlynn, E., Asch, S., Adams, J., Keesey, J., Hicks,
J., DeCristofaro, A., Kerr, E. The Quality of Health Care Delivered to
Adults in the United States. New England Journal of Medicine. 2003;
348:26:2635-2645). Similarly, in a recent study of practice patterns
under Medicare, researchers found that, across all States, an average
of 66 percent of Medicare beneficiaries with heart failure received ACE
inhibitors and 16 percent with diabetes received a lipid test. (Jencks,
S., Huff, E., Cuerdon, T. Change in the Quality of Care Delivered to
Medicare Beneficiaries, 1998-1999 to 2000-2001. Journal of the American
Medical Association. 2003; 289; 305-312).
Quality of care is not a function of regional spending levels under
FFS Medicare. In a carefully controlled national study, Fisher et al.,
found that, ``quality of care in higher-spending regions was no better
on most measures and was worse for several preventive measures.''
(Fisher, E.S., Wennberg,

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D.E., Stukel, T.A., Gottlieb, D.J., Lucas, F.L., Pinder, E.L. The
implications of regional variations in Medicare spending. Part 1: The
content, quality, and accessibility of care. Ann Intern Med. 2003;
138:273-87). Thus, managing care in a cost-effective manner may in fact
raise the quality of care delivered if incentives are properly
designed.
Moreover, health information technology is expected to improve
quality and fundamentality change the way health care is provided
(Institute of Medicine, IOM 2004) by providing actionable evidence at
the point of care, reducing errors, duplicate tests, unnecessary
admissions, adverse events, and rejected claims.

C. Current Chronic Care Improvement Initiatives

Many payers in the private sector have begun sponsoring chronic
care improvement initiatives, such as disease management and intensive
case management programs, in an attempt to address pervasive problems
in ensuring that chronically ill individuals receive appropriate care.
The intensive case management programs are typically designed to assist
patients who develop costly and complex medical care needs and who need
help arranging for appropriate care. Private sector disease management
programs often include: Patient self-care support, provider information
support, and use of integrative clinical information systems to collect
and synthesize patient information from the fragmented segments of the
health care delivery system. These disease management programs are
often designed to--

Supply providers with timely, actionable clinical
information regarding their patients;
Provide clinical decision support for patients and
providers based on evidence-based guidelines;
Promote care coordination; and
Guide and encourage patients in adhering to
prescribed care management plans and self-care regimens.

The programs are also typically designed to ensure that preventive
measures are taken when appropriate (for example, screening tests) and
to prevent or mitigate complications that may result in costly
hospitalizations or emergency room visits. In most programs, individual
participants are assessed and stratified by their risk levels and self-
care concerns, permitting interventions to be targeted based on
individual needs. Some programs also provide social services,
transportation, and tracking of prescription medications.
While many private sector disease management programs initially had
a single-disease focus, many organizations today are attempting to
support patients in managing their self-care holistically, including
all their co-morbid conditions, regardless of the threshold condition
that triggered eligibility for the program.
Many of the current private sector disease management programs are
population-based, meaning that organizations are held accountable to
improve quality and cost outcomes for prospectively identified target
populations. Organizations often agree to put some of their fees at
risk if they fail to achieve savings. Organizations often stratify
individuals according to risk and tailor interventions to reflect the
intensity of changing individual needs; however, the programs are
responsible for achieving performance standards across the identified
population, regardless of which interventions are provided.
The National Committee for Quality Assurance (NCQA), the American
Accreditation Healthcare Commission/URAC and the Joint Commission on
Accreditation of Healthcare Organizations (JCAHO) have developed
quality standards and certification programs for disease management
programs.
The chronic care improvement programs to be tested under CCI-I will
have some program characteristics in common with the aforementioned
private sector disease management programs, but will need to be adapted
to suit the unique needs of beneficiaries in the FFS Medicare
environment.

II. Provisions of This Notice

A. Purpose/Design

Section 1807 of the Act authorizes the Secretary to begin building
chronic care improvement programs under the Medicare FFS program,
incorporating relevant features from private sector programs, but
allowing sufficient flexibility for us and the awardees to adapt the
design of CCI-I programs to meet the unique needs of the Medicare
population. For example, applicants will need to consider how to serve
individuals with complex problems that might typically be referred for
case management under private sector plans since FFS Medicare does not
operate an intensive case management program. Organizations will have
the latitude to stratify targeted beneficiaries according to risk and
need and to tailor interventions to the unique needs of FFS Medicare
beneficiaries, including self-care and caregiver support, care
coordination, education, and use of in-home monitoring devices as
appropriate.
As specified in section 1807(f)(3)(B)(ii) of the Act, the
organizations will also be required to agree to assume financial risk
in the event of failure to meet agreed upon performance guarantees for
clinical quality, beneficiary and provider satisfaction and savings
targets. We have established that financial risk is fee risk. Thus, we
believe that the chronic care improvement organizations in CCI-I will
have strong incentives to reach the targeted beneficiaries and their
providers on a continuing basis to help them improve chronic care
management. The CCI-I organizations will be expected to track and
improve the health outcomes of all identified members of their
intervention group, not just those who seek treatment during a given
time period.
1. Eligible Organizations
Section 1807(a)(2)(B) of the Act defines the organizations eligible
to apply to implement and operate chronic care improvement programs
under CCI-I. These include:

(1) Disease management organizations;
(2) Health insurers;
(3) Integrated delivery systems;
(4) Physician group practices;
(5) A consortium of entities; or
(6) Any other legal entity that the Secretary determines to be
appropriate.

The Secretary has determined an appropriate legal entity is one that
meets the requirements of this notice.
2. Identification of Intervention Groups
Section 1807(d) of the Act requires the Secretary to identify
targeted beneficiaries who may benefit from CCI-I. Section
1807(a)(2)(E) of the Act defines a targeted beneficiary for a CCI
program as a FFS beneficiary with a threshold condition covered under
the program.
Threshold condition is defined in section 1807(a)(2)(D) as a
chronic condition, such as CHF, diabetes, or COPD, or other diseases or
conditions selected by the Secretary as appropriate for the
establishment of a CCI program. For CCI-I, we have chosen to focus
initially on beneficiaries who have CHF and/or complex diabetes, or
Chronic Obstructive Pulmonary Disease (COPD) because they are major
population subgroups within Medicare with significant health risks and
disproportionately high health care

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costs that are not being consistently well managed. Evidence from
research and private sector experience suggests that chronic care
improvement programs may produce measurable improvements in quality and
health status and yield net reductions in health care spending for
these subgroups by lowering their hospital admission rates and
emergency service use, but the population-based programs have not been
rigorously tested in large populations of people aged 65 and older or
with severely disabling conditions in a FFS context. CCI-I will permit
us to implement and rigorously test these programs under Medicare FFS.
Section 1807(d) of the Act requires the Secretary to establish a
method for identifying eligible beneficiaries for CCI-I. Thus, we have
established that eligible beneficiaries will be those beneficiaries who
meet the inclusion and exclusion criteria established by us and who are
identified by us for randomization. Through analysis of Medicare
historical claims data, we initially plan to prospectively identify
eligible beneficiaries in each CCI-I geographic area (henceforth
referred to as a ``target population''). To be eligible for inclusion
in a target population under CCI-I, Medicare beneficiaries must be
enrolled in Parts A and B, have CHF and/or complex diabetes, or COPD,
and have Medicare as primary payer.
Beneficiaries with CHF and/or complex diabetes will be identified
using a combination of two or more professional visits on separate
dates for CHF or complex diabetes (or a hospitalization for CHF) based
on 1 year of historical claims data. Based on literature reviews and
extensive input from the private sector, we have decided to focus on
eligible beneficiaries with these threshold conditions who have
moderate to high Hierarchical Coexisting Condition (HCC) risk
adjustment scores in order to achieve our clinical and financial
objectives within the 3-year program window (see our Web site, http://www.cms.hhs.gov/medicarereform/ccip/default.asp
, for further

information on HCC risk adjustment scoring).
Because of the high prevalence of COPD in the Medicare population,
we will consider testing programs targeting beneficiaries with COPD in
one or two geographic areas if an applicant(s) presents a strong
proposal(s). For these program(s), beneficiaries with COPD will be
identified using two or more professional visits on separate dates for
COPD or a hospitalization in the year based on 1 year of historical
claims data. Eligible beneficiaries with COPD will have moderate to
high HCC risk adjustment scores as well.
As part of the process for identifying beneficiaries who might
benefit from CCI-I, we have established that the following groups of
beneficiaries will be excluded from CCI-I. We will not consider
beneficiaries if they are currently or become enrolled in any of the
following:
Medicare End-Stage Renal Disease (ESRD) program;
Hospice;
Medicare Advantage (Medicare+Choice) plan; or
A CMS FFS chronic care demonstration.
Detailed documentation on the inclusion and exclusion criteria
above, and a more detailed explanation of the identification
methodology, including the HCC risk score cut-off for each threshold
condition, will be included with the dataset we will provide for
bidding purposes. (See Section II.B. of this notice for further details
on the bidding process.)
As specified in section 1807(b)(1) of the Act, CCI-I requires
randomized controlled trials for Phase I. Our expectation is to
randomize beneficiaries in the target population in each area into
intervention and control groups at the beneficiary level. Randomization
is intended to ensure comparability on factors that could affect
performance improvement and overall health care costs.
In addition, we may request the applicant to adjust the size of the
proposed geographic area to ensure that the population is of the
appropriate minimum size to meet the requirements specified in section
1807(b)(3)(A) of the Act, that CCI-I in the aggregate cover areas in
which at least 10 percent of the Medicare population resides or address
other issues like conflicts with Medicare FFS demonstrations. If the
applicant and CMS cannot come to an agreement on the size of the
geographic area, that could be a basis to reject the proposal. Effects
on clinical quality, beneficiary and provider satisfaction and total
Medicare costs for individuals with CHF, for those with diabetes and
CHF, and for those with complex diabetes will be evaluated. Programs
targeting beneficiaries with COPD will be evaluated separately.
3. Identification of Potential Geographic Areas
We are interested in applications that target areas with higher
than average prevalence of CHF or complex diabetes, or COPD, and low
Medicare quality rankings.
We are particularly interested in applications for geographic areas
that do not conflict with a currently operating FFS chronic care
demonstration designed to reduce Medicare expenditures through care
coordination, disease management or other care management efforts (see
chart containing a list of the FFS chronic care demonstration areas).
Running a CCI-I program in the same geographic area as the
demonstration, even if enrollees in CCI-I cannot participate in the
demonstration, could confound the results of the CCI-I study by cross-
contamination of control groups. Chronic care improvement programs
would be measured against the results of organizations running other
demonstrations. To the extent that these demonstrations are successful
in reducing the costs of their enrollees, chronic care improvement
organizations would have a more difficult time demonstrating measurable
quality improvement, beneficiary and provider satisfaction and savings.
Moreover, we believe it would be inappropriate to cut into the enrollee
pools of existing demonstrations for potential enrollees in order to
assign populations of beneficiaries to CCI-I programs. However,
applicants who are interested in proposing an area where a
demonstration exists in part of a State are encouraged to contact us
for further details concerning how they might structure their CCI-I
proposals in a manner that will not cause cross-contamination with an
ongoing FFS chronic care demonstration.

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Medicare fee for Medicare
State service Percent Percent CHF Percent COPD quality rank Geographic areas with conflicting demonstraions \f\
beneficiaries \a\ diabetes \b\ \c\ \d\ \e\
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United States................................ 34,717,973 17 12 12
Alabama...................................... 661,747 20 14 15 42
Alaska....................................... 45,728 9 6 6 33
Arizona...................................... 474,227 12 9 10 29 AZ
Arkansas..................................... 436,271 15 13 12 48 NW AR

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California................................... 2,557,305 7 5 5 44 CA
Colorado..................................... 339,159 12 11 12 7 CO
Connecticut.................................. 454,662 18 12 12 9 S Central CT
Delaware..................................... 114,806 22 14 12 14
DC........................................... 73,382 11 7 4 37 DC
Florida...................................... 2,240,227 18 12 15 41 N FL
Georgia...................................... 927,667 20 13 13 47
Hawaii....................................... 116,160 2 2 1 16
Idaho........................................ 158,301 13 10 9 22
Illinois..................................... 1,535,043 17 13 11 46 Rural/E IL
Indiana...................................... 854,548 19 14 14 27 Central/Western IN
Iowa......................................... 474,090 16 11 11 6 NE IA, NW IA
Kansas....................................... 371,539 15 12 11 30
Kentucky..................................... 622,181 19 13 16 40
Louisiana.................................... 543,327 20 15 12 51 Corridor I-49
Maine........................................ 225,477 16 11 14 3 ME
Maryland..................................... 651,698 18 12 11 25 Mont. Cnty, DC Suburbs, Baltimore
Massachusetts................................ 768,883 17 12 12 15
Michigan..................................... 1,376,774 22 14 14 26 MI
Minnesota.................................... 596,098 14 10 8 10 E Rural MN, S Central MN
Mississippi.................................. 430,625 19 13 11 50
Missouri..................................... 764,550 17 14 13 28 SW MO, St. Louis
Montana...................................... 142,428 11 10 11 13 SE MT
Nebraska..................................... 251,062 15 12 10 12
Nevada....................................... 176,387 12 9 11 35
New Hampshire................................ 176,330 16 11 12 1 SW NH
New Jersey................................... 1,089,135 21 16 13 43
New Mexico................................... 211,363 14 9 11 36 NM
New York..................................... 2,327,080 21 16 12 24 NYC
North Carolina............................... 1,141,084 20 12 12 23 NW NC
North Dakota................................. 104,775 14 10 9 4
Ohio......................................... 1,497,640 20 15 14 38
Oklahoma..................................... 473,529 16 14 13 45
Oregon....................................... 336,477 10 7 7 11
Pennsylvania................................. 1,623,162 20 14 13 31 Eastern PA, Central NE PA
Rhode Island................................. 117,890 19 13 13 17
South Carolina............................... 597,582 22 13 12 32
South Dakota................................. 122,324 13 11 10 20 SD
Tennessee.................................... 829,852 19 13 14 39 NE TN
Texas........................................ 2,112,410 19 14 12 49 Houston, Urban/S TX
Utah......................................... 210,115 15 11 6 5
Vermont...................................... 92,798 15 10 11 2 E VT
Virginia..................................... 914,745 19 12 11 18 SW VA, Richmond
Washington................................... 616,018 13 10 9 19 W Central WA
West Virginia................................ 324,294 22 14 17 34
Wisconsin.................................... 769,142 16 11 9 8 N Central WI
Wyoming...................................... 67,139 13 11 13 21 N WY
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Sources:
\a\ Health Insurance Reform Project, George Washington University: Analysis of 5 percent Standard Analytic File (SAF), Denominator Files, Number of FFS Enrollees by State.
\b\ Health Insurance Reform Project, George Washington University: Analysis of 5 percent SAF, All Physician-Supplier Claims, Percent of FFS Enrollees in State with Diabetes Diagnosis Reported.

\c\ Health Insurance Reform Project, George Washington University: Analysis of 5 percent SAF, All Physician-Supplier Claims, Percent of FFS Enrollees in State with CHF Diagnosis Reported.
\d\ Health Insurance Reform Project, George Washington University: Analysis of 5 percent SAF, All Physician-Supplier Claims, Percent of FFS Enrollees in State with COPD Diagnosis Reported.
\e\ Jencks, S., Huff, E., Cuerdon, T. Change in the Quality of Care Delivered to Medicare Beneficiaries, 1998-1999 to 2000-2001. Journal of the American Medical Association. 289; 305-312;
2003.
\f\ CMS, Office of Research, Development and Information, Listing of Demonstrations.

4. Outreach to Intervention Group
Beneficiary participation in CCI-I will be strictly voluntary.
Eligible beneficiaries who are randomized to be contacted by us for
potential participation in a CCI-I program (henceforth referred to as
``intervention group'') will be notified of the opportunity to
participate through a letter from the Medicare program including the
information specified by section 1807(d)(2) of the Act. The letter will
provide a description of the program and give the beneficiary an
opportunity to decline to be contacted by the CCI-I organization. The
letter will detail how the beneficiary can obtain further information
about the program. We will then expect each awardee to contact the
intervention group beneficiaries in its area who did

[[Page 22070]]

not decline to be contacted to describe the program, confirm
participation, and initiate support services. Beneficiaries who
confirmed participation will be presumed to be ``participants'' until
they either become ineligible (for example, join a Medicare Advantage
plan) or notify the awardee or us that they no longer want to be
contacted by the awardee. Participation is still voluntary and the
beneficiary may terminate participation at any time.
We will provide awardees with historical Medicare claims data and
other information on the intervention group beneficiaries who did not
decline to be contacted in their geographic areas. Awardees will use
the data for outreach and preliminary assessment of beneficiary risk
levels and support needs. Our data will not include beneficiary phone
numbers.
We will expect applicants' proposals to specify detailed
descriptions about their outreach protocols, including for example,
frequency and number of outreach attempts, and how the applicant will
assure that outreach efforts are respectful of the beneficiary. The
``outreach period'' will consist of 6 months. We reserve the right to
negotiate limits on the number and/or frequency of outreach attempts
during the outreach period, and may specify that awardees will be
required to cease further outreach efforts after the outreach period.
Under our authority in section 1807(e)(4)(B) of the Act, awardees
will be required to maintain records of beneficiary contact and
confirmation of their participation in the program. We will also
require awardees to share beneficiary eligibility and participation
status (that is, whether a beneficiary declined to participate or
terminated participation) with us on a regular basis.
We will expect applicants to provide projections as to the percent
of intervention group beneficiaries confirming participation, the
percent of beneficiaries declining to be contacted (to the awardee or
to us), the percent of beneficiaries they expect they will be unable to
reach, and the percent of participants terminating participation.
Private sector experience has shown that this approach to program
start-up facilitates ramping up participation levels rapidly and
reaches individuals who are likely to benefit significantly from
participating but who are not otherwise likely to take the initiative
to seek this assistance. Programs will be evaluated based on health and
cost outcomes of their entire intervention group, including those
beneficiaries who chose not to be contacted, beneficiaries who dropped
out of the program at any time, and those beneficiaries the awardee was
unable to reach, over time and as compared to control groups.
Beneficiaries in the control groups will not be contacted to inform
them of the program, and therefore will not have the opportunity to
decline to participate.
5. Program Characteristics
As specified in section 1807(a)(3) of the Act, participation in
CCI-I will not--

Expand the amount, duration or scope of a
beneficiary's FFS Medicare benefits;
Provide an entitlement for participation in a
CCI program;
Provide for any hearing or appeal rights with
respect to a CCI program; or
Provide benefits under a CCI program for which a
claim may be submitted to the Secretary by any provider or supplier of
services.

Additionally, Medicare beneficiaries will continue to have access
to care and the same freedom of choice of providers as they do
currently. Participants can drop out of the program at any time.
Awardees must track and inform us of all participants who drop out of
programs. Awardees must be able to demonstrate that they conduct their
CCI-I programs in accordance with section 1807(e) of the Act.
As specified in section 1807(e)(1) and (e)(2) of the Act, CCI-I
programs must develop a care management plan with each participant. In
carrying out the care management plan and other CCI-I activities,
chronic care improvement organizations shall:
1. Guide the participant in managing the participant's health
(including all co-morbidities, relevant health care services, and
pharmaceutical needs) and in performing activities as specified under
the elements of the care management plan of the participant;
2. Use decision-support tools such as evidence-based practice
guidelines or other criteria as determined by the Secretary (see the
paragraph below for details on other criteria); and
3. Develop a clinical information database to track and monitor
each participant across settings and to evaluate outcomes.
We plan to provide monthly or quarterly claims data to awardees for
their assigned populations to support these activities.
Section 1807(e)(4)(B) of the Act specifies that the Secretary also
has the discretion to establish additional program requirements beyond
those specified in section 1807(e) of the Act. We are particularly
interested in programs that have a track record of success in engaging
beneficiaries' physicians and other providers in information sharing
and in working with community organizations, local and state agencies,
and other organizations that serve the proposed target populations.
Many chronic care improvement programs have developed integrative
information infrastructures, new applications of information and
communication technologies, expert clinical systems that incorporate
evidence-based guidelines for multiple conditions, and predictive
modeling capabilities to support their operations. Others have been
working to develop interoperative electronic health records and other
health information technology used at the point of care to improve
quality and safety. We are interested in receiving applications from
organizations that have proven to be successful in applying tools to
meet the individual needs of participants and their providers, reduce
fragmentation in patient information, and facilitate better
communications between chronically ill beneficiaries and their
providers at the point of care.
We recognize that some of these tools and capabilities may be
proprietary. We are not seeking ownership of the tools, protocols,
materials, and capabilities and we will work with awardees to ensure
that the confidentiality of proprietary tools and capabilities is
protected. Nonetheless, it is essential that we be able to conduct a
thorough evaluation of CCI-I to understand how the programs operate and
assess their effectiveness. Transparency is essential. Therefore,
awardees must agree to the following statement: ``At any phase in CCI-
I, including at its conclusion, the awardee, if so requested by the
project officer, must deliver to us all chronic care management
software, algorithms and associated documentation, as well as
beneficiary health information, program operational methods, and other
data used by the awardee in the course of performing the services
pursuant to CCI-I, to be used by us solely to further the purpose of
CCI-I.'' The data will not be subject to use for any other purpose
without written permission of the awardee. All proprietary information
and technology of the awardee (including, without limitation, the
specific proprietary algorithms used by the awardee for CCI-I) is and
remains the sole property of the awardee. We do not acquire (by license
or otherwise, whether express or implied) any intellectual property
rights or other rights to the proprietary information or technology.

[[Page 22071]]

CCI-I programs must comply with all applicable laws, including but
not limited to privacy laws and the Health Insurance Portability and
Accountability Act (HIPAA).
6. Billing and Payment
Section 1807(f)(2)(A) of the Act specifies that each awardee will
be paid a fee for each participant per month in CCI-I. 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.
Claims for medical services provided to participants will continue
to be covered, administered, and paid under the Medicare FFS program.
The monthly rate paid to awardees for providing chronic care
improvement support to participants will be considered a programmatic
administrative fee, and no beneficiary coinsurance amount or deductible
liability will be applied. During the outreach period, we will pay a
per beneficiary monthly payment for all intervention group
beneficiaries, except those who declined to be contacted either to us
or to the awardee. After the outreach period, we will pay a per
participant monthly fee for all beneficiaries who confirm
participation, until they become ineligible or terminate their
participation in the program. We will not pay any per participant
monthly fees for beneficiaries who have not been reached by the time
the outreach period comes to a close unless agreed to by us and the
awardee and specified in the CCI-I agreements. No program start-up
funds will be allowable for costs incurred prior to program
implementation. No added payments will be made to awardees for their
program evaluation costs, travel, capital investments, data collection,
or any activity related to CCI-I. All program costs must be factored
into the per-participant fee. The bid should not include CMS
programmatic costs as the standardized satisfaction survey or
collection of information on control group beneficiaries, etc.
7. Performance Standards: Clinical Quality, Beneficiary Satisfaction
and Savings Guarantees
Section 1807(f)(3)(A) of the Act specifies that each agreement with
an awardee will specify performance standards for improving clinical
quality, improving beneficiary and provider satisfaction and achieving
savings. As part of the application process, we will expect applicants
to set forth their projections for improvement on clinical quality and
savings on a year-to-year basis in the intervention group and as
compared to the control group. The projections set forth by awardees in
their applications and agreed upon by us may be included in their CCI-I
agreements as standards that will be used in monitoring performance.
Section 1807(f)(3)(B)(i) of the Act also specifies that each
agreement will provide for adjustment in payment rates in the event the
Secretary determines that the awardee failed to meet its agreed-upon
performance standards.
Applicants will be expected to propose performance guarantees for
the first two performance standards, quality improvement and
beneficiary satisfaction, and propose payment adjustment amount(s) and
methods of liability calculation to be applied in the event of failure
to meet the proposed quality improvement and satisfaction guarantees.
The proposed guarantees for quality improvement can relate to
achievement of agreed-upon standards collectively rather than on
individual measures. The proposed guarantees will be evaluated as part
of the review of proposals. Performance guarantees, liability
calculation methods, and payment amounts agreed upon by us will be
included in agreements with awardees. We may terminate a program after
18 months of operation if the Secretary determines the program is not
demonstrating significant progress in improving clinical quality and
beneficiary satisfaction. Provisions relating to termination for non-
performance, including the methodology used to determine any fees to be
returned to us, will be specified in the CCI-I agreements. It is
important to reiterate that awardees' performance will be measured on
the entire intervention group (which includes those beneficiaries who
chose not to be contacted, beneficiaries who dropped out of the program
at any time, and those beneficiaries the awardee was unable to reach,
for all months in which they were eligible to participate).
For the third performance standard, savings, section 1807(f)(4) of
the Act requires the Secretary to ensure budget neutrality. To ensure
that neutrality, we are specifying that each awardee will also be
required to guarantee that the total of Medicare claims payments for
beneficiaries in the intervention group and chronic care improvement
fees under CCI-I paid for participants will be no more than 95 percent
of the amount that total Medicare claims payments would have been
absent CCI-I, as measured by claims for the corresponding control group
over a 3-year period (applicants will be given the opportunity to
propose multiple payment and savings guarantees structures, as
described further in section II.B.6 of this notice). Beginning in 2006,
beneficiaries will have the opportunity to purchase Medicare
prescription drug coverage under Pub. L. 108-173. We intend to include
Medicare drug expenditures in the calculation of total Medicare
expenditures.
Section 1807(f)(1)(B)(ii) of the Act specifies that organizations
must assume financial risk for performance under CCI-I agreements. We
are establishing that, in the event that 5 percent net savings is not
achieved over the 3-year program window, the awardee will be required
to refund to the government the amount of excess expenditures made
under CCI-I, up to the full amount of the total chronic care
improvement fees paid to the awardee. We may require awardees to make
refunds to the government based on interim performance monitoring
results or we may specify in agreements with awardees some other
mechanisms to limit our exposure, but the final financial settlement
will be based on 3-year program performance.
Throughout CCI-I, CMS and our contractor, in conjunction with the
awardee, will monitor Medicare benefit expenditures using Medicare
administrative claims records. Net savings will be calculated by
comparing the average Medicare expenditures per person per month,
including program fees, for the identified intervention group
(including those who declined to be contacted, those who could not be
reached or those who terminated participation) to the average Medicare
expenditures per person per month for beneficiaries in the control
group in the geographic area. All months for which a beneficiary was
eligible to participate in the intervention or control group will be
included, regardless of the number of months a beneficiary actually
participated in the program. Net savings calculations will include
appropriate claims run-out for both the intervention and control
groups.
8. Reconciliation Process
We will hire an independent contractor to monitor clinical quality,
beneficiary and provider satisfaction, utilization, and costs for
purposes of interim payment adjustments and to perform final financial
reconciliation at the end of the 3-year program period to determine any
refunds due to the government from awardees in the event awardees fail
to achieve agreed-upon

[[Page 22072]]

performance guarantees over the 3-year program window.
As noted previously, awardees are to assume financial risk related
to fees, not insurance risk. Awardees will be required to establish a
system to compensate Medicare (up to 100 percent of the applicant's
chronic care improvement fees) in the event that they fail to achieve
their performance guarantees. Applicants will need to demonstrate
financial solvency to assure us of their capacity to refund us up to
100 percent of their fees if this situation occurs, through available
reserves, reinsurance, withholds, or other appropriate means. Awardees
will be required to agree in writing to performance standards,
guarantees, and liability calculation methodology as a condition of
acceptance of CCI-I awards, and will have an opportunity to review the
annual and final calculations when completed.
9. Program Monitoring
We will conduct ongoing formative program monitoring throughout the
period of program operations. The formative evaluation will be
conducted in collaboration with CMS and awardees to help identify and
address operational problems, foster continuing improvement in program
operations, and inform us as to how we might expand the program as
specified by section 1807(c) of the Act if Phase I is successful.
Section 1807(f)(1)(B)(i) of the Act specifies that the Secretary
may establish other requirements as appropriate. Thus, awardees will be
required to cooperate with our implementation contractor, including
submitting performance monitoring data and operational metrics, as well
as hosting site visits as requested. Program monitoring includes both
performance monitoring (on clinical quality, beneficiary and provider
satisfaction and savings targets) and operational metrics (including
but not limited to, outreach and engagement rates, and management
information). Awardees will be expected to provide us with ongoing
program monitoring information by tracking various measures of program
performance and operational metrics. Awardees will be expected to track
clinical quality, satisfaction, utilization, and cost measures on
participants on a continuing basis and to analyze trends quarterly. The
requirements for data exchange and reporting will be established in
CCI-I agreements to satisfy our need for program monitoring and the
independent evaluator's needs for program analysis.
10. Independent Formal Evaluation
Pursuant to section 1807(b)(5) of the Act, we will hire an
independent contractor for the formal evaluation of program results.
The independent evaluator will study the experience of the intervention
group in each area compared to the relevant control group to ascertain
the ability of each program and individual elements of each program to
improve clinical quality, achieve high levels of beneficiary and
provider satisfaction, promote efficient use of health care services,
and produce savings for Medicare in the intervention group (as
specified by section 1807(b)(5) of the Act). Awardees will be expected
to cooperate with the independent evaluator, to participate in case
studies of their programs, and to track and provide agreed-upon
performance data for participants as needed for the independent
contactor's performance evaluation. Detailed definitions of the
indicators, measures, and calculation methods to be used in determining
performance will be agreed upon by us and specified in the CCI-I
agreements. A commonly acceptable standardized beneficiary and provider
satisfaction survey instrument will be developed to compare
satisfaction levels between the control groups and the intervention
groups.

B. Requirements for Submission

1. Awardee Selection Process
We will select awardees for CCI-I in a staged process. In the first
stage, we will provide prospective applicants with a de-identified data
set of Medicare claims information for a national sample of
beneficiaries who meet the inclusion and exclusion criteria for CCI-I.
This data set will be available on CD-ROM. Prior to receiving the data
on CD-ROM, applicants will be required to download, sign and mail to us
a Data Use Agreement that will be posted on our Web site in advance of
the publication of this notice. The applicant will analyze the data and
submit an application and bid, including proposed target population
(CHF, complex diabetes, or COPD), geographic area, per participant per
month fees and performance guarantees. Applicants should base their
proposals on 20,000 beneficiaries in the intervention group. Applicants
may propose to serve a larger size population as well, but, for
comparability, applicants must submit at least one proposal based on
20,000 beneficiaries in the intervention group. We reserve the right to
negotiate and limit the size of the population. Applicants may propose
adjustment factors to account for any differences between the
nationally representative sample population and the actual population
in their proposed geographic area that may warrant changes in
performance projections, payment structure, or guarantees. We reserve
the right to reject proposed adjustment factors. Applicants will have
90 days from the date the data are made available to submit
applications.
In the second stage, our review panel will evaluate all submitted
applications based upon the application evaluation criteria listed in
section II.C. of this notice and will recommend applicants to be
considered for the second stage of the awardee selection process. We
may conduct site visits to selected applicants based upon review panel
recommendations.
For applicants who are selected as finalists, we will provide the
actual historical data for the applicable target population in the
applicant's proposed geographic area. Finalists will analyze the data
to determine if originally proposed and agreed upon adjustment
factor(s) apply. (Adjustment factors must be specified in the initial
application in order to be applied at this point.) If the applicant
finds that an adjustment in the proposed payment or savings guarantees
applies due to the differences in the data, we will verify the analysis
and findings prior to entering into an agreement with the awardee.
The Administrator will make the final selections. Only one awardee
will be selected for any given geographic area, and will be provided
with HIPAA compliant identified data once selected. We may add to the
intervention group individuals who meet the eligibility criteria for
the original cohort.
2. Application
Applicants must submit completed applications following the
standard format outlined in our Medicare Waiver Application in order to
be considered for review by the technical review panel. Although this
is not a demonstration, CCI-I will contain study elements, such as a
control group and an evaluation. For this reason, we have decided to
use the Medicare Waiver Application. The application is available
online at: http://www.cms.hhs.gov/medicarereform/ccip/default.asp.

Applicants should also include in their applications the information
requested below related to each section of the Application. Only
applications that follow the standard Medicare Waiver Application
format and include the information requested in the Application
instructions and in this CCI-I notice will be reviewed.

[[Page 22073]]

Additional information about CCI-I, for example, fact sheets, press
releases, question and answer documents, and information about the
bidders' conference will be posted on the Web site. All questions must
be submitted to us in writing; all responses will be posted on our Web
site.
As noted in the Application instructions, applications must be
typed using 12-point font with 1-inch page margins. The applications
must not exceed 40 double-spaced pages, exclusive of the cover letter,
executive summary, forms, and appendices. An unbound original, 2
copies, and 3 electronic copies on CD-ROM of the Application must be
submitted. Applicants may, but are not required to, submit a total of
10 copies to assure that each reviewer receives an application in the
manner intended by the applicant (for example, collated, tabulated,
color copies, etc.). Hard copies and electronic copies must be
identical. Applicants must designate one copy as the official proposal.
Applications will be reviewed by the technical review panel only if
they are received on or before 5 p.m. EST on August 6, 2004. At a
minimum, applicants should ensure that their applications and
supplemental materials include the information requested below by
section of the application.
1. Cover Letter.
2. Application Form.
3. Executive Summary.
4. Rationale for Proposed Geographic Area and Target Population
(Problem Statement).
Applicants should describe the geographic area(s) they propose to
serve (for example, State, metropolitan statistical area) and explain
the rationale for targeting each proposed geographic area. Applicants
should specify which target population they intend to serve (CHF and/or
complex diabetes, or COPD). Applicants should specify the size of the
population they intend to serve if it differs from the required
proposal based on 20,000 beneficiaries in the intervention group.
Applicants should describe the demographics of the Medicare FFS
population in the area, utilization rates, prevalence rates of CHF and
complex diabetes or COPD in the Medicare population, and Medicare
quality rankings (as defined by Jencks, S., Huff, E., Cuerdon, T.
Change in the Quality of Care Delivered to Medicare Beneficiaries,
1998-1999 to 2000-2001. Journal of the American Medical Association.
2003; 289; 305-312) for the area with comparisons to national averages.
The current health care delivery system and access to care in the
proposed geographic area should be briefly described. Obstacles to
providing chronic care improvement services in the area should also be
explained.
Applicants need not provide a description of Medicare coverage and
payment or discuss implications of changes as called for in the
standard application instructions as neither coverage nor payment for
Medicare benefits and services will change under CCI-I.
5. Chronic Care Improvement Program Design
Applicants should describe the proposed program and explain how the
proposed interventions will improve clinical quality, beneficiary and
provider satisfaction, and achieve savings for the intervention group.
In this section, applicants should explain how the proposed program
will address each of the following activities (see section II.C. of
this notice for further details on the application evaluation process):

A plan for outreach.
Describe how the program will actively engage
participants and the rate at which the applicant expects to ramp up the
program. Provide a detailed description about outreach protocols,
including for example, frequency and number of outreach attempts.
Describe how program will assure that outreach
efforts are respectful of beneficiaries. Describe how program will
overcome language or cultural barriers, or cognitive impairment in
outreach.
Describe how the program plans to reach out to
physicians to inform them of the program.
A plan to assess and stratify participants.
Describe how the program will stratify
participants by risk (including types and frequencies of interventions
for beneficiaries at various strata and an explanation of when and how
patients are transitioned between levels of intensity, if at all).
Describe the stratification tool and whether it
was validated.
Describe how the program will screen each
participant for conditions other than threshold conditions, such as
impaired cognitive ability and co-morbidities.
Frequency and type of interventions.
Describe how the program will work with
beneficiaries to develop and carry out their care management plans as
specified in section 1807(e) of the Act.
Describe how a beneficiary communicates with the
program and how the program communicates with the beneficiary.
Describe how the program will determine the
appropriateness of chronic care improvement interventions as specified
in section 1807(e)(2) of the Act, such as self-care education for
beneficiaries or caregivers, education for physicians, the use of
monitoring technologies, provision of information about hospice care,
pain and palliative care, and end-of-life care, etc.
Describe how the program will increase use of
preventive services.
Describe how the program will guide the
participant in managing his/her health, including all co-morbidities,
relevant health care services and pharmaceutical needs. Describe how
the program will improve efficiency and effectiveness of utilization of
Medicare services.
Appropriate services and educational materials
for participants.
Describe how the program will ensure that all
chronic care improvement services provided are tailored to meet the
needs of all participants, including those with limited reading skills,
with diverse cultural and ethnic backgrounds, with sensory/physical/
mental disabilities or cognitive impairment, or primary languages other
than English.
Describe how the program will use decision-
support tools to ensure adherence to evidence-based medicine and
monitoring of quality standards.
Describe how the program will ensure use of
clinical protocols or evidence-based medicine to guide care delivery
and management.
Adequate mechanisms for ensuring physician
integration with the program.
Describe the program's strategy to encourage
physicians and other providers to actively participate in the program.
Describe how the program will integrate
beneficiaries' physicians and other providers into the program and
ensure that the program enhances patient-provider relationships.
Describe how the program will ensure exchange of
patient information with applicable providers in an effective, timely,
and confidential manner across care settings.
Describe how the program will facilitate access
to timely and accurate patient information at the point of care. If the
program includes incentives for the physician to adopt or use decision-
support tools or other health information technology, describe the
basis and impact of these incentives.
Adequate mechanisms for ensuring coordination
with State and local agencies.

[[Page 22074]]

Describe how the program will coordinate, if
applicable, with State and local agencies, as well as other
organizations that serve the target population.
Adequate mechanisms for supporting participants
with more intensive needs.
Describe strategies for supporting participants
with more intensive needs (for example, describe whether there will be
a care coordination or intensive case management program as part of the
overall CCI-I program or some other mechanism for supporting this
population).
Data to be collected, data sources, and data
analyses.
Describe data to be collected and data sources.
Describe how the program will collect
information on intervention group beneficiaries that are not available
from claims data (for example, laboratory results, prescription drug
data, clinical information from physicians).
Describe data analyses.
Describe how the program will ensure privacy of
participant information.
Describe how the program will develop a clinical
information database to track and monitor patients' major chronic
conditions and integrate management for participants who have multiple
co-morbid conditions, such as diabetes and depression, across settings
and to evaluate outcomes.
Describe the data exchange between the program,
physicians and beneficiaries. Describe whether physicians can access
participant information on their patients. Describe process for sharing
sensitive information between physicians (for example, HIV status or
mental health diagnoses).
Describe how the program will anticipate
incorporating prescription drug data, including claims after 2006, to
the extent possible.

In addition, applicants should provide sample communications and
educational materials to be used with participants and providers and
explain any plans to customize them for Medicare.
Applicants do not need to describe how beneficiaries will be
assigned to intervention and control groups, as we will be responsible
for that function under CCI-I.
6. Organizational Structure and Capabilities
Applicants should demonstrate that they have the management
capacity and organizational infrastructure to carry out CCI-I.
At a minimum, in addition to the information requested in the
Application instructions, applicants should explain how the
organization has demonstrated capacity in each of the areas listed
below (see section II.C. of this notice for further details on the
application evaluation process) and how their programs could be
expanded or replicated over time.

Staff.
Describe type of staff, level of staff, level of
effort required to provide the service.
Describe staff to participant ratios and
required qualifications of staff that will be providing services to the
participants.
Describe similar detailed information on any
services to be performed on a sub-contracted or affiliated basis (List
full name and address of any subcontractors involved in the services to
be performed. Describe all handoffs and coordination arrangements).
Describe qualifications of the non-clinical
staff that will be responsible for the information systems, data
analysis, and other major program functions.
Describe organizational and reporting structure
of personnel.
Provide a listing of key personnel.
Provide a breakout of staff responsibilities.
Facilities.
Describe locations that will be used to operate
CCI-I.
Describe typical hours of operation (EST) in
terms of hours per day and days per week, including types of staff
available during these hours of operation. (If the organization is not
open 24 hours per day, 7 days a week, describe the process
beneficiaries follow to contact professional staff.)
Equipment.
Describe equipment, including participant
monitoring equipment or electronic input devices.
Strong working relationships with local
providers.
Describe how the organization reaches out to
local providers.
Provide contact information for at least two
physicians who provide care to program participants or representatives
from physician associations who have worked with the organization and
who will serve as references.
Strong working relationships with community
organizations in the area.
Describe how the organization interacts with
local community organizations (such as Quality Improvement
Organizations, among others).
Provide contact information for at least two
community organizations who have worked with the organization and who
will serve as references.
Provide contact information for a hospital or
health plan medical director who has worked with the organization and
who will serve as a reference.
Appropriate information and financial systems.
Describe the organization's information and
financial systems, including the organization's computer systems
capabilities and how the applicant collects, integrates, analyzes, and
reports data necessary to support program components. (Describe the
data repository, and how the applicant's computer systems can transmit
data to us.)
Provide samples of clinical, financial and
management information reports used in program operations.
Describe the modification of its existing data
systems, if necessary.
Describe how the organization ensures compliance
with all applicable laws, including but not limited to privacy laws and
HIPAA.
With respect to data flows between organizations
and us and within organizations, identify participating organizations,
their covered entity status and the relationships among the partners.
Indicate these data flows, detailing who is receiving what information
and for what purpose.
Clinical protocols to guide care delivery and
management.
Describe the clinical protocols used to guide
interventions, as well as processes and responsibilities for updating
them (clinical protocols must be derived from evidence-based medicine
or nationally accepted practice guidelines). Describe how clinical
protocols will support all of a participant's co-morbidities, not just
his/her threshold condition.
Ongoing performance monitoring.
Specify additional clinical and services
indicators other than the performance standards specified in section
II.B.7 of this notice and the timetable that the program proposes to
use to monitor health status and quality of care by condition and
severity level for all conditions, including co-morbidities.
Organizational background and references.
Describe the organization's history (including
how long the organization has been in business, including any relevant
predecessor companies), ownership, and current products and services.

[[Page 22075]]

For consortia, provide a history of the
consortium and any supporting relevant experiences of the partners
collectively and/or individually.
Provide references (including name, title, and
telephone number) for two organizations for which the applicant has
developed and currently administers programs of similar scope and
complexity as the proposed program.
Indicate the numbers of beneficiaries now under
active management by the applicant for CHF, for complex diabetes, and
for each other type of major chronic condition the applicant manages
(including as a co-morbid condition).
Describe the organization's risk management
history or demonstrated capability to operate with fee risk.
Indicate agreement to language regarding
proprietary data, materials, systems, etc. in the Program
Characteristics part of section II.A. of this notice.
Accreditation.
Describe accreditation for disease management or
chronic care improvement programs, if any. Section 1807(e)(5) of the
Act specifies that the Secretary may consider deeming accredited
organizations as meeting the CCI-I requirements. In the interest of
encouraging proposals from a broad array of organizational models, we
are not deeming accredited organizations at this time; however, we will
consider accreditation as a factor.

Applicants who are selected as finalists in the second stage of the
awardee selection process will also be expected to provide detailed
financial statements.
For consortia, applicants should describe how the new entity will
achieve the organizational capacity functions listed below. Consortia
may draw from the organizational qualifications of each of the
partners, but applicants should emphasize the capabilities of the
collective partnership. Consortia should describe the
interrelationships between the partners, a plan for dedicated resources
to develop infrastructure and seamless program cohesion (including
integrated interventions, communications, information systems, etc.),
and a plan for governance and management structure with dedicated
staffing and resources.
7. Performance Results

Past Performance: Clinical Quality, Beneficiary and Provider
Satisfaction and Savings.

In addition to supplying the information requested in the
Application instructions, applicants should describe how their proposed
interventions are likely to have a positive effect on clinical quality,
beneficiary and provider satisfaction, and savings for the intervention
group within the proposed geographic area. Applicants should show
evidence of positive outcomes from prior and current efforts.
Applicants must quantify their results for other large target
populations of individuals with CHF, complex diabetes, COPD, or other
major chronic conditions. Claims of prior success should include
definitions of performance measures used, evaluation methods, as well
as explanations of the length of time over which performance was
measured. For savings, to the extent possible, applicants should
include evidence of success in improving outcomes based on paid claims
data. If a consortium has no prior experience to draw from, the
applicant should, to the best of its ability, provide the relevant
experiences of one or more of the components of the consortium.

Performance Projections

As discussed in section II.A of this notice, we will expect
applicants to lay out their projections for improvement in clinical
quality, beneficiary and provider satisfaction, and savings year to
year in the intervention group and as compared to the control group.
The projections set forth by awardees in their applications may be
included in their CCI-I agreements as standards for monitoring
performance. As mentioned in section II.B. of this notice, we have
created a database of one year of historical data on a nationally
representative target population. As appropriate, the organization
should use this database as a point of reference to project performance
improvements. The organization should also describe to what baseline
values its projections apply and what adjustment factors would apply if
the true baseline values were outside of the anticipated range.
We have identified a core set of clinical
quality indicators. The applicant should provide projected rates of
improvement the awardee expects to achieve in each year of CCI-I on
each proposed quality performance measure in the intervention group as
compared to the prior year and as compared to the control group. The
applicant should also include additional measures it could track. For
each measure, the applicant should indicate its ability to track the
measure, data sources that would be used, and projected improvement
rates. Further information will be posted on our Web site. The measures
presented here are subject to change.
The applicant should provide projected savings
for each year of the program in addition to the aggregate savings
projections specified in section II.B.8 of this notice.
The applicant should provide projections on
operational metrics for each year of the program, including but not
limited to, outreach and engagement rates. The applicants should
provide detailed projections as to the percent of intervention group
beneficiaries confirming participation, the percent of beneficiaries
declining to be contacted (to us or to the awardee), the percent of
beneficiaries they expect they will be unable to reach, and the percent
terminating participation.

[[Page 22076]]

Sodium intake counseling
Compliance with medication regimen
Spironolactone for patients with AHA/
ACC III or IV classification
Daily aspirin, other antiplatelet or
anticoagulant
---------------------------------------
Diabetes
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annual Hemoglobin A1c test
Lipid profile performed once every
year
Eye exam performed once every year
Monitoring for nephropathy (test for
microalbumin) or receiving treatment
for nephropathy
Annual foot exam performed
HbA1c controlled (<=7.0)
Lipids controlled (LDL <130 mg/dl)
within past 2 years
Poor HbA1c control (9.0
percent)
Blood pressure controlled (<130/80)
Patients with microalbuminuria on ACE
or ARB
Compliance with medication regimen
Daily aspirin
---------------------------------------
COPD
--------------------------------------------------------------------------------------------------------------------------------------------------------
Systemic corticosteroids for acute
exacerbation
Oxygen therapy
Smoking quit rate
Annual spirometry testing
Oxygen status
--------------------------------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------------------------------
Projected % improvement in intervention group Projected % change compared to control group
over prior year -----------------------------------------------
Measure Data source* -------------------------------------------------
1YR 2YRS 3YRS 1YR 2YRS 3YRS
--------------------------------------------------------------------------------------------------------------------------------------------------------
Preventive Measures
--------------------------------------------------------------------------------------------------------------------------------------------------------
Receipt of pneumococcal vaccine ever
Annual flu shot
Cigarette smoking cessation counseling
Nutrition screening/counseling
Depression screening
---------------------------------------
Utilization of Health Care Services
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hospital admission rates
Hospital re-admission rates
Emergency service utilization rates
Rate of hospitalizations for lower
extremity complications (for diabetes
patients)
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Data Source: C=Claims, SR=Self-Report, VSR=Validated Self-Report, P=Provider, S=Survey, PBM=Pharmacy Benefit Manager, L=Labs, CR=Chart Review

[[Page 22077]]

8. Payment Methodology & Budget Neutrality
Using the historical claims database of a representative target
population that we provide (available on CD-ROM), applicants must
provide a fee proposal in the format of Model 1 below for comparability
across applications. We will also entertain applications that propose
up to two additional payment proposals. All applicants must propose a
payment structure that guarantees 5 percent net savings and places
chronic care improvement fees at 100 percent risk for savings
shortfalls relative to that target. For comparability, in this model,
applicants should base this payment structure on 20,000 beneficiaries
in the intervention group. All applicants must submit this bid in the
format specified in Model 1. In addition, applicants may also include
up to two alternative payment structures for programs in which
organizations guarantee more than 5 percent net savings and/or propose
to serve larger populations. In these scenarios, the applicant could
propose to limit its fee risk associated with any shortfall relative to
the proposed savings guarantee. Under these alternatives, however, an
awardee would still be responsible for refunding us the full amount of
its fees if net savings fall below 5 percent.

------------------------------------------------------------------------
Alternate fee
Model 1 5% net structure 5% net savings

------------------------------------------------------------------------
Per participant fee/month..... $--------/month.. $--------/month.
Percent net Medicare savings 5%............... ----%.
guaranteed.
Percent fees at risk for 100%............. 100% on 5% net
guaranteed savings. savings; Define fee
risk for net savings
5% and <
guarantee.
------------------------------------------------------------------------

An applicant should describe the components of its monthly fee. The
proposed fee should include the projected cost for each chronic care
improvement service, including any ancillary services, such as
transportation or provision of equipment, and administrative costs in
aggregate and per participant. All administrative costs relating to
CCI-I should be included in this budget, including costs for
recruitment, travel, capital investments, data collection, profit, and
any other relevant items or services. An applicant should describe the
assumptions that underlie its price structure, including but not
limited to, expected outreach and engagement rates, assessment rates,
levels of intervention intensity, drop-out rates, etc.
In addition, in conjunction with each bid, the applicant should:
Describe what differences, if any, in the
demographic composition or claims experience of the population in the
selected geographic area relative to the national sample would require
adjustment in the proposed fees or savings guarantees (for example,
hospital admission rates); and
Specify the proposed adjustment factor to be
used to calculate final fees and performance guarantees if the
identified values in the actual target population falls outside the
corridor for which the proposed fees apply.
An applicant should also propose fee adjustments in the event its
program fails to achieve agreed-upon performance guarantees for
clinical quality improvement and beneficiary and satisfaction. An
applicant should provide a detailed explanation of its proposed fee
adjustments and methods for calculating liability in the event of
failure to meet agreed-upon performance guarantees.

Medicare Expenditure Projections

The applicant should estimate the expected total yearly Medicare
expenditures for the population in the sample dataset and give
projections for the intervention group with and without CCI-I, and the
resulting net savings to Medicare by major service category, for
example, inpatient hospitalizations, outpatient services, emergency
department utilization and physician office visits. While we do not
have historical claims data available for drug costs, we will include
Medicare prescription drug expenditures in cost comparisons between the
intervention and control groups beginning in 2006. The applicant should
explain any differences it projects in drug costs between the
intervention and control group and how these differences (if any) are
accounted for in its 3-year net savings projection. Estimates of
expenditures with CCI-I should include chronic care improvement fees as
well as the payments for traditional Medicare benefits provided to the
intervention group as described in section II.A Purpose/Design (Billing
and Payment section) of this notice.
An applicant should show the basis for the assumptions used in its
proposed payment methodology and budget. The strength of the evidence
supporting these estimates will be considered in evaluating the
proposals. Further, applicants selected for award will be required to
submit data supporting their utilization and financial assumptions
prior to award. CMS or its financial contractor will use the
information provided by the applicant, as well as Medicare claims and
other data, to determine an estimate of what we would pay to provide
care for a population similar to the projected intervention group both
with and without CCI-I.
9. Implementation Plan
An applicant should provide the implementation information
requested in the waiver application as well as those listed below.
Provide schedule with timelines for all
essential tasks.
Describe modifications to protocols, services,
outreach, education initiatives, timelines, etc., if any.
Describe what process improvements the
organization has made in the last 12 months as part of continuous
quality improvement related to providers, patients, health plans,
communication, health education and/or training. Describe the
organization's plan for implementing process improvements.
Among the staff named and biographies provided,
identify the individual who will be the liaison to us for CCI-I.
10. Supplemental Materials (Appendices)

C. Application Evaluation Process and Criteria

As noted in the Waiver Application instructions, a panel of experts
will conduct a review of responsive proposals. The panelists'
evaluations will contain numerical ratings based on the application
evaluation criteria, rankings for all responsive proposals, and a
written assessment of each application.

[[Page 22078]]

1. Application Evaluation Criteria and Weights

a. Rationale for Proposed Geographic Area and Target Population (5
Points)

The proposal provides a thorough and convincing rationale for
choosing the targeted population in the selected geographic area as
specified in section II.B. of this notice, including:
Demographics and socio-economic characteristics.
Access to and utilization of health care
services, and Medicare quality ranking.
Characteristics of the health care delivery
system.
Prevalence of CHF and complex diabetes, or COPD.
Obstacles to providing chronic care improvement
services.

b. Chronic Care Improvement Program (25 Points)

The proposal describes or demonstrates clear and convincing
evidence that program design will improve quality of care for
participating beneficiaries and reduce aggregate costs to Medicare
(with any applicable supporting materials) as specified in section
II.B. of this notice, including:
A plan for outreach to the intervention group.
A plan to assess, stratify, and screen
participants.
Frequency and type of interventions, including
plan for development and implementation of care management plans.
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 handling participants
with more intensive needs.
Data to be collected, data sources, and data
analyses.

c. Organizational Capabilities and Structure (25 Points)

The proposal describes or demonstrates clear and convincing
evidence that the organization has the structure and capacity to
conduct the chronic care improvement program effectively as specified
in section II.B. of this notice, including:
Staff.
Facilities.
Equipment.
Clinical protocols to guide care delivery and
management.
Strong working relationships with local
providers.
Strong working relationships with community
organizations in the area.
Appropriate information and financial systems.
Ongoing performance monitoring.
Organizational background and references.
Accreditation, if any.

d. Performance Results: Past Performance and Performance Projections
(25 Points)

The proposal describes or demonstrates clear and convincing
evidence that the organization can produce a positive effect on
clinical quality, beneficiary and provider satisfaction, and savings
with respect to the intervention group in the selected geographic area
as specified in section II.B. of this notice, including:
Positive outcomes from prior and current
efforts, including quantified results for clinical quality, beneficiary
and provider satisfaction and savings.
Past success in performance standards data
capture and management necessary to monitoring this type of program.
Reasonableness of projections for quality
improvement and beneficiary and provider satisfaction.
Willingness to work with us to determine data to
be collected and procedures for submission of those data.
Willingness to cooperate in independent formal
and formative evaluations of CCI-I.

e. Payment Methodology & Budget Neutrality (20 Points)

The proposal describes or demonstrates clear and convincing
evidence that the proposed fees and performance guarantees are
appropriate to improve quality of care for participating beneficiaries
and reduce aggregate costs to Medicare as specified in section II.B.6
of this notice, including:
Justification and explanation for the proposed
chronic care improvement fees.
Reasonableness of the proposed chronic care
improvement fees and savings guarantees.
Reasonableness of applicant's estimates of the
expected net Medicare savings and the expected total yearly Medicare
expenditures for the intervention and control groups.
Financial solvency and an ability to compensate
Medicare in the event the organization fails to meet its performance
targets, including reinsurance, withholds, unreserved assets or some
other means.
2. Final Selection
The CMS Administrator will make the final selection of
organizations for CCI-I from among the most highly qualified
applicants, taking into consideration a number of factors, including
operational feasibility, geographic location, and Medicare program
priorities (for example, testing a variety of approaches for delivering
services, targeting beneficiaries, payment, and using integrative
information and communications tools). We will also conduct a financial
analysis of these proposals and evaluate the proposed programs to
ensure that aggregate Medicare program expenditures will be reduced.
Applicants must be aware that proposals may be accepted in whole or in
part. Awards may be subject to special terms and conditions that are
identified during the review process. We reserve the right to conduct
one or more site visits before making awards. The Administrator
reserves the right to negotiate and limit the size of the population
and the number of areas. We expect to make the awards in the fall of
2004. Once awarded, CCI-I will be phased in over a period of time.

III. Collection of Information Requirements

Under the Paperwork Reduction Act of 1995, we are required to
provide 60-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. In
order to fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act
of 1995 requires that we solicit comment on the following issues:
The need for the information collection and its
usefulness in carrying out the proper functions of our agency.
The accuracy of our estimate of the information
collection burden.
The quality, utility, and clarity of the
information to be collected.
Recommendations to minimize the information
collection burden on the affected public, including automated
collection techniques.
Therefore, we are soliciting public comment on each of these issues
that contain information collection requirements:
This notice informs interested parties of an opportunity to apply
for a pilot program agreement for the Voluntary Chronic Care
Improvement Under Fee-for-Service Medicare initiative. If interested,
applicants must submit a completed Medicare Demonstration Waiver
Application that can be found online at: http://www.cms.hhs.gov/medicarereform/ccip/default.asp
.

[[Page 22079]]

Requirements for this submission are described in Section B of this
notice.
The burden associated with this information collection is estimated
to be 1,200 hours annually (80 hours per response x 15 respondents).
This information collection requirement is subject to the PRA;
however, the burden associated with this requirement is currently
approved under OMB control number 0938-0880 entitled ``Medicare
Demonstration Waiver Application'' with a current expiration date of 7/
31/2006.
If you comment on these information collection and recordkeeping
requirements, please mail copies directly to the following:
Centers for Medicare & Medicaid Services, Office of Strategic
Operations and Regulatory Affairs, Regulations Development Group, Attn:
Dawn Willinghan, CMS-5004-N, Room C5-14-03, 7500 Security Boulevard,
Baltimore, MD 21244-1850; and
Office of Information and Regulatory Affairs, Office of Management
and Budget, Room 10235, New Executive Office Building, Washington, DC
20503, Attn: Brenda Aguilar, CMS Desk Officer.
Comments submitted to OMB may also be emailed to the following
address: e-mail: baguilar@omb.eop.gov; or faxed to OMB at (202) 395-
6974.

Authority: Section 721 of Pub. L. 108-173, the Medicare
Prescription Drug, Improvement, and Modernization Act of 2003.

(Catalog of Federal Domestic Assistance Program No. 93.779, Health
Care Financing Research, Demonstrations and Evaluations).

Dated: March 3, 2004.
Dennis G. Smith,
Acting Administrator, Centers for Medicare & Medicaid Services.
[FR Doc. 04-9127 Filed 4-20-04; 8:45 am]

BILLING CODE 4120-01-P