Sally Hart, J.D., M.B.T.
Center For Medicare Advocacy, Inc.

INTRODUCTION

This paper discusses the inclusion of a coordinated care benefit in the traditional, fee-for-service Medicare program. However, the coordinated care benefit is a complex one, and there are many choices to be made in settling on the specific elements of its design. In this paper we will explore legal issues and policy questions raised by the prospect of a new Medicare coordinated care benefit. A draft of legislation that would amend the Medicare statute to establish the coordinated care benefit is the starting point of the discussions.

The federal Medicare program, established in 1965, provides health insurance for elderly and disabled individuals in this country. However, the Medicare package of benefits has focused traditionally on skilled services and acute care episodes, excluding many kinds of personal services needed by individuals with chronic health conditions. This focus causes hardship and suffering among many elderly and disabled beneficiaries who cannot arrange or pay for these necessary medical and health-related services on their own.

Social Security Act, Title XVIII.

HEALTH INSURANCE FOR THE AGED AND DISABLED.

Discussion:

The Medicare statute is found in the Social Security Act, at Title XVIII. It is codified in the United States Code at Title 42, Section 1395. The Medicare program is divided into two coverage components, Part A and Part B. Part A covers hospital, skilled nursing facility, hospice, CORF (Comprehensive Outpatient Rehabilitation Facility) and home health care. It is financed by the Medicare Trust Fund which is funded by matching employer and employee taxes. Part B coverage includes physician services, outpatient therapies, diagnostic tests, medical equipment and additional home health care. It is financed by beneficiary premiums and general revenue funds. While the traditional Medicare program is often referred to as the "fee-for-service" program, most services are now reimbursed according to various, predetermined payment systems.

Medicare Part C, more often known as Medicare+Choice, was added to the program in 1998. The Medicare+Choice program comprises a variety of financing and service delivery options, most notably managed care plans. Beneficiaries who choose a

Medicare+Choice plan should receive at least the same level of services and coverage as in the traditional program. Medicare+Choice plans are paid a capitated rate for Medicare covered services provided to their beneficiary members.

Part A. HOSPITAL INSURANCE FOR THE AGED AND DISABLED.

Sec. 1811 (at 42 U.S.C. § 1395c). DESCRIPTION OF PROGRAM.

   [Add ", and coordinated care services" after "hospice services", and remove the "and" before "hospice services".]

Discussion:

The proposed coordinated care benefit consists of a comprehensive package of services prescribed by the attending physician and supervised by a care manager working with the physician. Its characteristics are similar to those of the institutional, hospice, and home health services covered under Part A of Medicare. Unlike the kinds of individual medical services covered under Part B of Medicare, the coordinated care benefit will usually include a bundle of different kinds of services. Unlike the managed care option established in Part C of Medicare, however, the coordinated care benefit is not primarily a financing system. Thus, the most suitable place for the new coordinated care benefit appears to be the Part A section of the Medicare statute.

The coordinated care benefit appears to most closely resemble the current Medicare hospice benefit. Although there are significant differences in terms of the purposes of the two benefits, the expected durations of their services, and perhaps the payment methodologies (hospice being an all encompassing capitated benefit ,and coordinated care possibly a combination of structures), other characteristics such as the inclusion of social services and the focus on maintenance rather than improvement are the same for both hospice and coordinated care benefits.

Sec. 1812 (at 42 U.S.C. § 1395d). SCOPE OF BENEFITS.

    [Add to subsection (a) a new subsection (5), as follows:]
    "(5) coordinated care services provided to an individual in need of such care. "

    Add a new subsection (g), as follows:
    "(g) (1) An individual shall be determined to be in need of coordinated care based on,
                (A) a physician certification of need based on the likelihood that without such services the individual's condition will deteriorate, renewed at least once every 60 days, and
                (B) a finding of a significant reduction in the individual's ability to retain maximum level of function in a community-based environment; and

            (2) An individual who has been determined to be in need of coordinated care can elect a coordinated care agency from which to receive such services. The election of a particular agency can be made and revoked by such individual on a monthly basis."

Discussion:

A key policy decision that must be made in mapping out the coordinated care benefit is determining the criteria for eligibility.

Some commentators have looked to diagnoses of particular medical conditions as indicators of the need for coordinated care. Such diagnoses include: asthma, diabetes, congestive heart failure and related cardiac conditions, hypertension, coronary artery disease, cardiovascular and cerebrovascular conditions, multiple sclerosis, and chronic lung disease. In our draft legislation we have not required specific diagnoses for eligibility, but left the determination of medical need to the judgment of the beneficiary's attending physician. This too resembles the approach taken in the Medicare hospice benefit.

A second issue that is related to the foregoing question of diagnosis is whether the coordinated care benefit should be limited to beneficiaries who are chronically ill, or should also be available to beneficiaries who are experiencing an acute care episode from which they can be expected to recover. In the draft legislation the benefit is not limited to those who are chronically ill, because some individuals in an acute care episode are also in need of coordinated care services. However, this broader eligibility standard may raise questions of cost that could make the new benefit less politically viable.

Sec. 1813 (at 42 U.S.C. § 1395e). DEDUCTIBLES AND COINSURANCE.

    [Add to subsection (a) a new subsection (5), as follows:]
    "(5) (A) [Here describe any coinsurance or deductibles to be imposed with respect to the coordinated care benefits.]

             (B) During the period when an individual is receiving coordinated care services by the election described in section 1812(a)(5), no coinsurance payments or deductibles other than those under subparagraph (A) shall apply with respect to such coordinated care services."

Discussion:

If the hospice benefit is used as a model for the coordinated care benefit, beneficiaries would be required to contribute some amount of coinsurance. Hospice service recipients must pay coinsurance for outpatient drugs and biologicals that approximates 5% of the average cost for drugs to the particular coordinated care agency, not to exceed $5 per prescription. They also pay coinsurance for respite care that, again, is calculated as 5% of the average cost of such services to the particular coordinated care agency.

Coinsurance requirements might be imposed on some or all of the coordinated care package of services. Using Medicare hospice coinsurance amounts as a model, these coinsurance requirements would be 5% of the average cost of the particular service to the provider. Alternatively, coinsurance for coordinated care services could be imposed at a uniform flat rate, such as $5 per service.

Other options that should be considered include imposition of a deductible at the beginning of a period when coordinated care services are used, with or without coinsurance requirements for subsequent services.

Sec. 1814 (at 42 U.S.C. § 1395f). CONDITIONS OF AND LIMITATIONS ON PAYMENT FOR SERVICES.

   [Add to subsection (a) a new subsection (9), as follows:]
    "(9) In the case of coordinated care provided to an individual–
            (A) (i)    The individual's attending physician certifies that such services are required to prevent
                          deterioration in the individual's medical condition;
                  (ii)   There is a finding of a significant reduction in the individual's ability to perform activities of
                          daily living measured by a functional screening test developed by the Secretary; and
                  (iii)  The individual's attending physician and care manager recertify at the beginning of each
                          subsequent 60 day period that the individual continues to meet the conditions specified in (i)
                          and (ii).

            (B) A written plan for providing coordinated care services with respect to such individual has been developed for the individual by the individual's personal care manager and attending physician prior to the beginning of services, and the written plan is reviewed and updated by the care manager and attending physician to respond to the individual's current needs once every 60 days thereafter.

            (C) The delivery to the individual of the coordinated care services specified in the written care plan shall be supervised by the care manager to assure that the services are actually provided on a dependable basis and that they meet standards of quality care."

Discussion:

As noted above, this model assumes an ongoing level of involvement in the coordinated care services benefit by the individual beneficiary's attending physician. Some other models assume that the attending physician will be less involved in designing and monitoring coordinated care services, and place sole or primary responsibility on the coordinated care agency and the care manager to initiate, supervise and modify the care plan and services. The rationale for the latter model is that constant physician involvement in non-acute care for chronically ill, but stable, patients is unnecessary and unrealistic in light of other demands on physician time and interests. See, e.g., "The Physician's Role in Medicare Home Health, 2001, OIG Report, OEI-02-00-00620, December, 2001.

On the other hand, the rationale for identifying the physician as the key to commencing and continuing care is that patients' attending physicians are best situated to know their medical conditions and related needs. In addition, Medicare has historically based authorization for services in the hands of physicians, and physicians should be actively involved in their patients' care.

   [Add a new subsection (m) that describes the payment mechanism to be used for Medicare coordinated care services.]

Section 1814 (42 U.S.C. § 1395f) is also the section of the Medicare statute where provisions establishing the way in which Medicare will reimburse coordinated care providers for services to beneficiaries should be located. For example, the current Section 1814(i) describes the way Medicare reimburses hospices for their services, and subsection (m) added by the draft legislation would similarly describe the reimbursement method for coordinated care services.

However, there are a number of different reimbursement methods that must be carefully evaluated in order to create incentives for coordinated care providers to deliver services that are adequate in quantity, high in quality, and yet reasonable in cost to the Medicare trust fund. Payments options that should be considered are: traditional fee-for-service payments; prospective payments based on level-of-care-need groupings of beneficiaries; and flat capitation payments per beneficiary. In addition, to the extent that the coordinated care services include services of other distinct providers such as home health agencies, pass-through reimbursement according to established Medicare methods for such other providers might be adopted.

Sec. 1816 (at 42 U.S.C. § 1395h). USE OF PUBLIC AGENCIES OR PRIVATE ORGANIZATIONS TO
                                                        FACILITATE PAYMENT TO PROVIDERS OF SERVICES.

Discussion:

The Medicare program uses intermediaries or contractors to deal directly with providers in the administration of the program. Increasingly, Medicare uses a small number of specialized contractors to deal with particular service providers. For example, Medicare now contracts with regional home health intermediaries and regional hospice intermediaries who have expertise in the provision of home health or hospice services. It might be helpful to include in the statute similar provisions concerning use of specialized intermediaries to administer payment of Medicare claims for coordinated care services.

Part D. MISCELLANEOUS PROVISIONS

Sec. 1861 (at 42 U.S.C. § 1395x). DEFINITIONS OF SERVICES, INSTITUTIONS, ETC.

   [Add a new subsection (uu), as follows:]
    "(uu) (1) The term "coordinated care services" means items and services furnished by, or by others under arrangements made by, a coordinated care agency to an individual who meets the eligibility criteria set out in section 1812(g)(1), which are prescribed in a personal care plan developed by the individual's care manager and attending physician.

Discussion:

Section 1861 is the definitional section of the Medicare statute. In the following subsections the details of the new coordinated care benefit must be carefully spelled out.

              (2) "Coordinated care services" shall include any of the following items and services–

                     (A) Care manager services;

                     (B) Home health services, including:

                            (i)      Nursing care;
                            (ii)     Home Health aide;
                            (iii)    Medical supplies (including drugs and biologicals), equipment, and appliances;
                            (iv)    Physical therapy;
                            (v)     Occupational therapy;
                            (vi)    Respiratory therapy;
                            (vii)   Speech and audiology services; and
                            (viii)  Counseling and other behavioral health services;

                     (C) Medical supplies (including drugs and biologicals) and durable medical equipment;

                     (D) Necessary transportation services;
                   
                     (E) Adult day health services, including:

                            (i)     Planned care supervision and activities;
                            (ii)    Personal care;
                            (iii)   Personal living skills training;
                            (iv)   Meals and health monitoring;
                            (v)    Preventive, therapeutic, and restorative health related services; and,
                            (vi)   Counseling and behavioral health services;

                     (F) Personal care services;

                     (G) Homemaker services;

                     (H) Home delivered meals; and

                     (I) Discharge planning services.

Discussion:

The foregoing list of services was compiled from several different models of coordinated care programs, including a state Home and Community Based Services (HCBS) Medicaid program. Of course, this coordinated care benefit would be in addition to the other Medicare covered services such as hospital care, physician services, etc.

The list includes a home health benefit as part of a broader bundle of services supervised by the care manager. Unlike in the current Medicare home health benefit, to receive home health services as part of coordinated care the individual would not necessarily be home bound or need a skilled service. Another option would be to leave the home health benefit out of the coordinated care package of services and provide it separately, but this poses a risk of diluting the care manager's ability to respond to an individual's needs in a coordinated manner. In addition, the traditional home health benefit is only available if the individual is home bound and requires certain defined skilled services, and a more limited, less flexible level of care is coverable.

The suggested benefit package includes a number of services not previously covered by Medicare. These include outpatient drugs and biologicals now available only through hospice. (This drug benefit could be removed or limited if it proves politically unacceptable.) The covered services also include counselling and other behavioral health services, responding to the identification of depression as widespread among chronically ill elders. Other services that are less directly medical in nature than traditional Medicare services will be offered in the coordinated care benefit package. These include transportation services, adult day health services, personal care and homemaker services, and home delivered meals. Although not medical in nature, it has been recognized that these services are essential to maintaining the health of individuals who have limitations in their ability to perform activities of daily living.

                (3) "Coordinated care services" shall not be limited to services that are considered "skilled", "acute" or "restorative", but shall also include unskilled health-related services provided to eligible individuals who have "chronic" or "maintenance" care needs.

Discussion:

As discussed above, one of the key purposes of the coordinated care benefit is to provide elderly and disabled beneficiaries with services that have not traditionally been covered by Medicare because of limiting threshold criteria and limitations on coverage to services that are "skilled" or "acute" in nature. In order to make it perfectly clear that these traditional restrictions are not to be applied to the coordinated care benefit, specific language mandating a more liberal coverage standard should be included in the legislation.

                (4) The term "coordinated care agency" means a public or private organization (or a subdivision thereof) which--

                     (A)  (i)  is primarily engaged in providing the care and services described in paragraphs (1), (2),
                                 and (3);
                           (ii)  provides for such care and services in individuals' homes on an outpatient basis; and
                           (iii) in the case of services described in paragraphs (1),(2), and (3) that are not provided directly by the agency or organization, the agency or organization must maintain coordination and management responsibility for all such services furnished to an individual, regardless of the location or facility in which such services are furnished;

Discussion:

The coordinated care benefit package is so broad that agencies may not have the capacity to provide all of the diverse types of benefits directly. It is anticipated that the care manager may arrange for services to be provided by other agencies so long as the care manager coordinates and remains ultimately responsible for all services provided to the client.

                     (B) has an interdisciplinary group of personnel which–
                           (i)   includes at least one physician (as defined in subsection (r)(1)), one registered nurse, and
                                 one social worker, employed by or, in the case of the physician, under contract with the
                                 agency or organization;
                           (ii)  provides (or supervises the provision of) the care and services described in paragraphs
                                 (1),(2), and (3); and
                           (iii) establishes the policies governing the provision of such care and services;

                     (C) maintains central clinical records on all patients;

                     (D) in the case of an agency or organization in any State in which State or applicable local law provides for the licensing of agencies or organizations of this nature, is licensed according to such law; and

                     (E) meets such other requirements as the Secretary may find necessary in the interest of the health and safety of the individuals who are provided care and services by such agency or organization.

Discussion:

This draft legislation proposes certain minimum operational and licensing standards for coordinated care agencies. These standards might be expanded if minimum operational criteria are clear, or alternatively, they might be reduced if greater flexibility could be offered to this new type of service agency without compromising beneficiary safeguards.

                (5) (A) An individual shall be determined to be in need of chronic care based on a finding of both–

                            (i)   medical condition, as certified by the individual's attending physician and renewed at least
                                   once every 60 days; and
                            (ii)  a significant reduction in the individual's ability to perform activities of daily living,
                                   measured by an instrument and process developed by the Secretary in consultation with
                                   experts in the fields of geriatric medicine, public health, and geriatric social services.

                     (B) The term "attending physician" means, with respect to an individual, the physician (as defined in subsection (r)(1)), who may be employed by a coordinated care agency, whom the individual identifies as having the most significant role in the determination and delivery of medical care at the time the individual makes an election to receive coordinated care benefits.

Discussion:

This subsection assumes that a critical role in the development and delivery of coordinated care will be played by the individual's attending physician. However, mindful of the fact that all beneficiaries may not have an ongoing relationship with a personal physician willing to carry out this role, the draft legislation allows coordinated care agencies to supply this need through in-house physicians or medical directors.

                (6) (A) An entity which is certified as a provider of services other than a coordinated care agency shall be considered for purposes of certification as a coordinated care agency, to have met any requirements under paragraph (4) which are also the same requirements for certification as such other type of provider. The Secretary shall coordinate surveys for determining certification under the title so as to provide, to the extent feasible, for simultaneous surveys of an entity which seeks to be certified as a coordinated care agency and as a provider of services of another type.

                     (B) Any entity which is certified as a coordinated care agency and as a
provider of another type shall have separate provider agreements under section 1866 and shall file separate cost reports with respect to costs incurred in providing coordinated care services and in providing other services and items under this title."

Discussion: It is expected that the same agency may provide several kinds of Medicare services, for example both home health services and coordinated care services. In such situations, the draft legislation allows for simultaneous certification surveys to ease the administrative burden on such agencies so far as possible.

Sec. 1863 (at 42 U.S.C. § 1395z). CONSULTATION WITH STATE AGENCIES AND OTHER
                                                       ORGANIZATIONS TO DEVELOP CONDITIONS OF PARTICIPATION
                                                       FOR PROVIDERS OF SERVICES.

    [Add in the first sentence of this subsection after "(mm)(1)", "and, (uu)(4)."  Remove the "and" before "(mm)(1)".]

Discussion:

In order to develop conditions of participation for providers of coordinated care services that are as compatible as possible with the requirements of other accrediting entities and health insurers, the draft legislation directs the Centers For Medicare and Medicaid Services to consult with these other entities and insurers.

Sec. 1866 (at 42 U.S.C. § 1395cc). AGREEMENTS WITH PROVIDERS OF SERVICES.

    [In subsection (a)(1)((F)(ii), substitute "home health agencies, and coordinated care agencies" for the current phrase "and home health agencies".
    In subsection (a)(1)(P), after "home health agencies" add "and coordinated care agencies".
    In subsection (a)(1)(Q), after "home health agencies," add "coordinated care agencies,".
    In subsection (f)(2)(C), after "home health agency" add "or coordinated care agency".]

Discussion:

In this subsection of the proposed legislation, terms of Medicare contracts with providers of coordinated care services that are similar to those already in use with respect to providers of home health services and hospice services are specified. It may be that additional contract terms peculiar to the administration of the coordinated care benefit should be included here as well.

Sec. 1869(a)(1) (at 42 U.S.C. § 1395ff(a)(1)). DETERMINATIONS; APPEALS.

    [Add to subsection (a)(1) a new subsection (D), as follows:]
    (D) Cases in which a provider of services plans to reduce or terminate services,
or to discharge the individual. In such situations, written notice must be given to the individual by the provider, including a specific, personalized explanation of the reasons for reduction or discharge and a description of the individual's right to an initial or expedited determination.

Discussion:

This portion of the draft legislation provides protections for beneficiaries against adverse coverage decisions made by their coordinated care agencies. It addresses a current gap in the Medicare appeals process, because Medicare providers often have financial incentives to reduce or terminate services for certain beneficiaries. To protect beneficiaries, providers should be required to give written notices like those required of carriers and intermediaries. The written notice described in the draft legislation would help give the beneficiary an opportunity to question the reduction or termination of coordinated care services.

Sec. 1891 (at 42 U.S.C. § 1395bbb). CONDITIONS OF PARTICIPATION FOR HOME HEALTH
                                                            AGENCIES.

    [Add a new subsection (h), as follows:]
    (h)   A coordinated care agency that provides home health services directly rather than under arrangements
            with a participating home health agency shall be subject to the conditions of participation set out in this
            subsection.

Discussion:

This subsection of the draft legislation simply states that coordinated agencies that provide home health care directly must meet the Medicare home health conditions of participation.

Sec. 1897 (at 42 U.S.C. § 1395--). INTERFACE OF MEDICARE AND MEDICAID PROGRAMS'
                                                        COORDINATED CARE BENEFITS.

    [At the end of Part D of the Medicare statute add a section setting up any interface with Medicaid program benefits, such as HCBS, that is part of the proposed coordinated care benefit.]

Discussion:

Many Medicare beneficiaries who are in need of coordinated care services have sufficiently limited income and resources that they are eligible or nearly eligible for Medicaid services. Some states have already elected as part of their Medicaid programs to establish Home and Community Based Services (HCBS) benefits that provide many of the non-skilled services that comprise the proposed Medicare coordinated care package. An existing and comprehensive care care model is also found in the PACE program. Since the essence of the coordinated care benefit is comprehensive care management, it is very important that the Medicare and Medicaid programs combine their resources to create a seamless benefit for dual eligible individuals. This might be done by putting federal Medicare money into a system administered by each state for both Medicare and Medicaid beneficiaries, or perhaps by separately funding coordinated care under common standards. Further study must be given to devising a system for optimizing the resources of both Medicare and Medicaid in providing coordinated care to beneficiaries.

CONCLUSION

Thoughtful observers of the Medicare program recommend that the current gap in health-related services be filled by providing a new coordinated care benefit. In this paper, a first attempt has been made to draft legislation to fill that gap. The detailed process of drafting such legislation forces attention to the very specific components of a coordinated care benefit, including: eligibility standards, services to be provided, certification requirements, monitoring of providers, payment mechanisms, beneficiary appeals, quality assurance, and integration with other insurers and government programs. Doubtless there will be many additions and improvements to the model suggested, but it is hoped that the formal structure of the draft legislation presented here will provide a useful focus for further planning.