CMS programs tackle the chronic care costs of Medicare patients

Home health agencies use case management experience to get involved

(Editor’s note: This is the first of a two-part article that looks at care of chronically ill patients. This month we discuss the programs implemented by the Centers for Medicare & Medicaid Services to address high-cost and chronically ill patients. Next month, we examine strategies used by some agencies to provide more efficient, improved care to patients with chronic illnesses.)

With 15% of Medicare patients representing 75% to 80% of Medicare costs, it is no surprise that Section 721 of the Medicare Modernization Act calls for the development of chronic care improvement organizations that address the management of patients with chronic illnesses.

A strategy to address needs of patients with chronic illnesses is a logical way to decrease costs, says Jim Pyles, JD, a partner with Powers Pyles Sutter & Verville, a Washington, DC, law firm that specializes in health care law, and founder of the Farragut West Group, a policy development group that provided the CMS data and suggestions on how to address care for chronically ill patients. "If we can identify the sickest patients and help them manage their disease more effectively, we can cut down on hospitalizations and emergency care," he points out. This type of change does require a shift in the health delivery system from facility-focused care to patient-focused care, he admits.

CMS announced the nine voluntary Chronic Care Improvement Programs (CCIPs) that are designed to improve the care of chronically ill patients and decrease costs, but Pyles has reservations about the effectiveness of the programs.

"When researching potential strategies to address the costs of chronically ill patients, we found a number of existing programs that were designed to help patients better manage their conditions. There were two major reasons that they didn’t significantly affect costs," he says. Many of the programs, most of which were disease management companies, failed to target the sickest, most costly patients, and they did not involve physicians, Pyles notes. "The CMS initiative started to get off the track we suggested in the bidding process that required providers to serve a minimum of 10,000 beneficiaries," Pyles says.

"This means that only large providers were eligible to submit proposals, and we found that smaller programs that were able to tailor care plans to individuals were more successful," he explains. "It is not effective to use a cookie-cutter approach that applies the same services a healthy diabetic patient would need to a sick diabetic patient."

Physician involvement also is minimal, and that means the sickest patients are less likely to volunteer to change management of their care, Pyles says. "Although we want the sickest patients in this type of program to ensure a significant effect on costs, they are the least likely to volunteer."

In these cases, it will be important for physicians who believe the CCIP may be able to better manage the patient’s condition to be involved so they can help the patient understand that the switch to someone else to manage the condition won’t affect care or benefits, he adds.

Home visits still critical

Even if the CCIPs are successful in recruiting some of the sickest patients, home health managers are concerned that the reliance on case management protocols and telemedicine or telephone contact alone may not be enough to effectively manage a patient’s condition.

"We provide care to over 4,000 home care patients, and many of them have one or more chronic conditions," says Michael T. Caracci, chief executive officer of Sta-home Health Agency in Jackson, MS. "Although telephone contact with someone who is having no problem managing a chronic illness will work, the best way to educate patients who are having problems is to see them in their home.

"A nurse who is providing diabetes education needs to see what foods are in the pantry so that when the patient states that he or she never eats sugar, the nurse can point to the can of baked beans and show how much sugar is in the food," he adds.

CCIPs will be responsible for coordinating care of the Medicare beneficiaries who volunteer to enroll, and this will require coordination with existing providers, Pyles explains. "This does present an opportunity for home care agencies to work with CCIPs to provide on-site patient visits when needed."

Although the CMS’ request for proposals from companies requesting designation as a CCIP did not specify home care as a qualifying applicant unless partnered with another organization, Caracci says his agency is working with the CCIP for his region to provide the face-to-face visits the CCIP may need for some patients.

"It makes sense for home care to work with CCIPs because we have the case management experience with chronically ill patients," he notes. Because home care nurses are accustomed to tailoring education programs to a patient’s lifestyle, age, educational level, and capabilities, home care visits only can enhance a CCIPs ability to manage patients, Caracci adds.

Although Sentara Home Care in Chesapeake, VA, successfully uses telemedicine to reduce the number of home visits per week to congestive heart failure patients, nurses still see the patients in person, says Ray Darcey, vice president of Sentara Home Care.

"Even though our telemedicine program has helped us cut costs, reduce hospitalizations, and improve our patients’ care, there is no replacement for a nurse sitting with a patient who needs extra support," he notes.

The one home health agency partnering with another company to serve as a CCIP is the Visiting Nurse Service of New York (VNSNY). "We are partnered with United Healthcare Services to provide case management services for high-risk patients," says Holly Michaels Fisher, vice president of program planning for VNSNY. "We already offer a long-term managed care program, and we see this move as a natural progression for our agency," she notes. Not only will VNSNY’s familiarity with the clinical care plans for chronic illnesses be beneficial, but the agency’s track record of working with other providers to coordinate care is important to the success of the project, Fisher adds.

Another CMS effort to address high-cost beneficiaries is the Care Management for High-Cost Beneficiaries (CMHCB) that is geared toward smaller companies, Pyles explains. This demonstration project differs from the CCIP initiative in that it specifically targets the high-cost patient, he adds. The deadline for applications for this demonstration project was early January 2005, and CMS expects to name participants in the project 30 to 60 days following that deadline, he says.

Both the CCIP initiative and the CMHCB demonstration place responsibility for meeting performance standards for clinical quality of care, beneficiary and provider satisfaction, and Medicare savings, but Pyles is concerned about the way those standards are enforced. CCIPs will be given the names of beneficiaries in their geographic area who have a chronic illness.

It is the CCIPs responsibility to contact the beneficiaries and enroll them in the program. Because the program is voluntary, a CCIP may not get all of, or even a majority of, the beneficiaries in the intervention group identified by CMS, Pyles says. "The CCIP, however, is still responsible for costs and outcomes of the entire group."

While this responsibility does create an incentive for CCIPs to enroll as many beneficiaries as possible, there is the chance that many may not enroll, making it difficult for the CCIP to manage care in a way that does control cost and improve outcomes, Pyles explains. "The risk to patients who enroll is that a CCIP that is suffering financial losses may decide to discontinue participation in the program, leaving vulnerable patients with no one in place to manage their care," he says.

Because CMS has set up each CCIP as a regional monopoly, it will also be difficult to renegotiate agreements that are favorable to CMS. This gives the CCIPs more negotiating strength once beneficiaries are enrolled, he adds.

Pyles does admit that targeting chronically ill Medicare patients who typically are high-cost Medicare patients, is the most positive strategy for addressing rising Medicare costs. Other options such as decreasing benefits or increasing the financial burden to other taxpayers are not attractive to politicians, he says.

As CMS proceeds with plans to target high-cost patients, Pyles sees opportunity for home health agencies to work with CCIPs and CMHCBs to demonstrate how effectively their approach manages chronically ill patients’ conditions. "Even though home health agencies have been providing care to this population and finding ways to cut hospitalizations, CMS has cut home health reimbursement. This is a golden opportunity to use data from your own agency to demonstrate home health’s value to the health delivery system."

For more information about Centers for Medicare & Medicaid Services’ programs to address high-cost Medicare patients and the role of home health, contact:

Jim Pyles, JD, Powers Pyles Sutter & Verville, 1875 Eye St. N.W., 12th Floor, Washington DC. Phone: (202) 466-6550. Fax: (202) 785-1756. E-mail:

Michael T. Caracci, Chief Executive Officer, Sta-home Health Agency, 406 Briarwood Drive, Building 200, Jackson, MS 39206. Phone: (601) 956-5100. Fax: (601) 956-3003. E-mail:

Ray Darcey, Vice President, Sentara Home Care, 535 Independence Parkway, Suite 200, Chesapeake, VA 23320. Phone: (757) 382-4980. E-mail: