Appendix A
Workshop to Define Serious or Complex Medical Conditions

The committee convened a workshop on June 14, 1999, to elicit the knowledge, expertise, and opinions of professionals with involvement in issues associated with serious or complex medical conditions. Seven individuals were recruited to participate in a panel discussion of these issues. Presenters included Jeff Crowley, M.P.H., deputy executive director for programs at the National Association of People with AIDS and cochair of the health task force of the Consortium for Citizens with Disabilities; John Durant, M.D., executive vice president for the Association of Clinical Oncology; Joanne Lynn, M.D., director of the Center to Improve Care of the Dying, and Americans for Better Care of the Dying; Kathleen Brody, project director for model care of Kaiser Permanente; Helen Smits, M.D., president and chair of HealthRight, Inc.; Lynn Etheredge, Ph.D., health care consultant; and Stan Jones, health care consultant.

The workshop provided the committee with the opportunity to benefit from the expertise of the panel members on a number of issues. Discussions addressed suggested definitions for serious or complex medical conditions and the impact of such definitions on specific patient populations including the disabled, cancer patients, and the elderly. A system for screening elderly patients for frailty was explored in detail, including the feasibility of generalizing such a system to other patient populations. The workshop presentations also provided a detailed analysis of the potential impact of the proposed regulations for Medicare+Choice on health care plans and opportunities to discuss issues of reimbursement and ensuring quality of care for patients with serious or complex conditions. The workshop was successful in stimulating questions and ideas among committee members, panel members, and workshop participants. Biographical sketches for each presenter can be found in Appendix B, a copy of the workshop agenda in Appendix C, and a list of workshop participants in Appendix D.



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--> Appendix A Workshop to Define Serious or Complex Medical Conditions The committee convened a workshop on June 14, 1999, to elicit the knowledge, expertise, and opinions of professionals with involvement in issues associated with serious or complex medical conditions. Seven individuals were recruited to participate in a panel discussion of these issues. Presenters included Jeff Crowley, M.P.H., deputy executive director for programs at the National Association of People with AIDS and cochair of the health task force of the Consortium for Citizens with Disabilities; John Durant, M.D., executive vice president for the Association of Clinical Oncology; Joanne Lynn, M.D., director of the Center to Improve Care of the Dying, and Americans for Better Care of the Dying; Kathleen Brody, project director for model care of Kaiser Permanente; Helen Smits, M.D., president and chair of HealthRight, Inc.; Lynn Etheredge, Ph.D., health care consultant; and Stan Jones, health care consultant. The workshop provided the committee with the opportunity to benefit from the expertise of the panel members on a number of issues. Discussions addressed suggested definitions for serious or complex medical conditions and the impact of such definitions on specific patient populations including the disabled, cancer patients, and the elderly. A system for screening elderly patients for frailty was explored in detail, including the feasibility of generalizing such a system to other patient populations. The workshop presentations also provided a detailed analysis of the potential impact of the proposed regulations for Medicare+Choice on health care plans and opportunities to discuss issues of reimbursement and ensuring quality of care for patients with serious or complex conditions. The workshop was successful in stimulating questions and ideas among committee members, panel members, and workshop participants. Biographical sketches for each presenter can be found in Appendix B, a copy of the workshop agenda in Appendix C, and a list of workshop participants in Appendix D.

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--> Clinical Implications of Defining Serious or Complex Edical Conditions The first panel of speakers addressed the clinical implications of defining serious or complex medical conditions for specific populations including the disabled, cancer patients, and chronically ill patients with one or more comorbid conditions. These discussions provided the committee with a perspective on the unique health care needs of these populations and how these needs might best be integrated with the Consumers' Bill of Rights and the regulations concerning access to care proposed for the Medicare+Choice program. Panel presenters were Jeff Crowley, M.P.H.; John Durant, M.D.; and Joanne Lynn, M.D. Disabled Populations Mr. Crowley emphasized the need for a definition that encompasses the changing and diverse needs of people with disabilities. He emphasized three major points for the committee's consideration. First, the purpose of the definition of serious or complex medical condition must be clearly articulated. Second, any definition of serious or complex medical condition must be inherently flexible and must encompass a diversity of individuals and types of services and health care needs. The third and last point emphasized by Mr. Crowley was the need for a definition that will lead to improvements in the quality of care received by people with such conditions. Mr. Crowley then elaborated on each of these three points. The purpose of the definition must be clearly articulated. People with disability already have experience with definitions. In fact, currently there are definitions of disability that cause many people to suspect that no good can come from creating some new definition. This is due, in part, to the fact that eligibility for cash assistance programs, such as Social Security income, the Supplemental Security Income program, and the Social Security Disability Income program, relies on a definition of disability that precludes the ability to be gainfully employed in the national economy. The narrow perspective of this definition can pose serious impediments for some people with disabilities to qualify for these income assistance programs and, subsequently, to qualify for Medicaid or Medicare health benefits. An alternative definition of disability has been promulgated by the Americans with Disabilities Act, which asserts that a person is disabled if he or she has a substantial impairment that limits one or more major life activities. Advocates have generally felt this definition to be more acceptable, but since the law was enacted in 1990, employers and others who are subject to this law have challenged it. Questions have been raised about whether the definition of disability in the Americans with Disabilities Act includes people with asymptomatic HIV infection, people in the early stages of multiple sclerosis, or people with conditions that can be mitigated by fitting them with devices such as contact lenses

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--> for legally blind persons. The Supreme Court is just beginning to address these issues. It heard the first case in the last term, and ruled that a woman with asymptomatic HIV was disabled under the Americans with Disabilities Act. To summarize, persons with disabilities are somewhat hesitant accepting definitions of disability that may result in the loss of legal protections to ensure access to health care and other services that are needed. Mr. Crowley also acknowledged the work of the President's Advisory Commission on Consumer Protection and Quality in the Health Care Industry. This commission focused specifically on issues associated with ensuring direct access to physician specialists by persons with a serious or complex medical condition. Mr. Crowley urged the committee to consider definitions of serious or complex medical conditions that extend beyond the particular issue of access to specialists. Ideally, the committee would develop a definition of serious or complex medical conditions that identifies persons for whom the absence of high-quality care has the potential to lead to a significant deterioration of their health status or quality of life or to prevent them from improving their health status. The committee was urged to establish a definition of serious or complex medical conditions that would guarantee access to the highest level of care that can be reasonably provided, including access to qualified, trained, and experienced providers. Experienced providers are a critical element in ensuring people get care that is consistent with current generally accepted standards of care. Mr. Crowley also emphasized the need for a definition of serious and complex medical conditions that is inherently flexible and capable of encompassing a broad diversity of individuals and types of service and health care needs. About 54 million people in the United States live with disabilities, and they are incredibly diverse in both the severity of their conditions and the types of services and support they require. The committee was urged to consider this diversity as it seeks to define what constitutes a serious or complex medical condition. Specifically, consideration should be given to people with mental retardation, cerebral palsy, epilepsy, muscular dystrophy, and cystic fibrosis, as well as persons who are blind or deaf, people living with HIV, and persons who are paralyzed. Recognition of this diversity requires that the committee also acknowledge the following: all of these conditions manifest themselves across a range of severity; there is a broad range of service needs among these people; assessment of the ability to perform activities of daily living or instrumental activities of daily living fails to capture all disabling conditions; some disabilities are episodic in nature, and persons can go through periods when they appear completely healthy, only to experience intermittent periods of serious illness; not all disabilities stem from illness; and finally, illness does not always progress in a predictable manner.

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--> Acknowledging these points requires the development of a definition of serious or complex medical conditions that is sufficiently broad to cover all people with disabilities for whom the absence of high-quality care holds the potential to lead to a significant deterioration of their health status or quality of life or to prevent them from improving their health status. Mr. Crowley strongly recommended that the committee not attempt to craft a definition that is categorical in nature. Rather, the committee was urged to look closely at the experiences of people with disabilities to develop a definition that can accommodate persons with the same condition at different stages of disease progression or different levels of severity. In addition, such a definition should not create differential access to treatment based on the stage of illness. A number of problems would be created if a definition of serious and complex medical conditions was crafted such that a person would be covered only if he or she was experiencing an acute episode of illness. In addition, measures such as activities of daily living or instrumental activities of daily living can help determine if someone does have a serious or complex condition. However, the failure to be categorized as disabled by one of these measures should not be seen as an exclusionary criterion for having a serious or complex condition. Such a categorical definition could preclude, for example, people in the early stage of HIV, and people with multiple sclerosis, epilepsy, or a variety of other conditions, from receiving the care they need. Mr. Crowley then went on to clarify that his remarks were intended to address special protections for people with serious or complex conditions to ensure that they receive the full spectrum and quality of services to sustain the highest level of health status and functioning. In fact, it is equally important that there be some mechanism for limiting who falls into this category, which raises the issue of defining medical necessity. A solid definition of medical necessity can ensure that the diversity of people with disabilities get the care they need. It can also help place limits on care so that only persons for whom such care is necessary receive it. The Centers for Disease Control and Prevention has a definition of medical necessity that might provide guidance for the development of a national standard for both public and private health care programs. Under this definition of medical necessity, health plans would be required to cover services that: are calculated to prevent, diagnose, correct, or ameliorate a physical or mental condition that threatens life; causes pain or suffering; or results in illness, disability, or infirmity; or to maintain or preclude deterioration of health or functional ability; are individualized, specific, and consistent with symptoms or confirmed diagnosis of the illness, disability, or injury under treatment and do not exceed the individual's needs; are necessary and consistent with generally accepted professional medical standards as determined by the Secretary of Health and Human Services or by state departments of health; and

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--> reflect the level of service that can be safely provided, for which no equally effective treatment is available. Mr. Crowley reemphasized to the committee the importance of establishing a definition for serious or complex medical conditions that would result in improvements in the quality of care received by people with such conditions. Once a definition has been selected, coordinated efforts must be made to ensure that persons with such conditions are guaranteed access to the highest level of care that can reasonably be provided—including access to qualified, trained, and experienced providers—and that is consistent with current generally accepted standards of care. This has the potential to produce some measurable improvement in the health status of people with serious or complex medical conditions. In order to achieve this, more than a definition is needed. It will be of equal importance to develop mechanisms for monitoring health care delivery as it relates to people with serious or complex medical conditions. Such efforts might involve the development of a disability-specific Health Plan Employer Data and Information Set. If the Health Care Financing Administration (HCFA) is serious about using a definition of serious or complex medical conditions, it will have to develop a strategy for collecting information regarding how well health plans provide care to people such conditions. Most likely this will require the development of a new construct for tracking health plan performance. In addition to tracking how health plans are performing, it is also important to establish new expectations. To date, most expectations established for health plans have related to minimal standards of care and services that would be available to all enrollees in different types of plans. Establishing a definition of serious or complex medical conditions can allow the bar to be set higher for what is expected of health plans for people with these conditions. This means that a great deal of work will have to go into the development of performance and outcomes measures relating to individual categories of persons with these conditions, as well as measures that can monitor health plan performance in the aggregate for people with serious or complex conditions. In response to questions from committee members, Mr. Crowley elaborated on several of his remarks. Emphasis was placed on developing a flexible definition for serious or complex medical conditions in order to prevent the problems from developing in areas such as the current context of health care delivery, regulatory expectations, and performance monitoring. Mr. Crowley clarified his belief that not all persons with disabilities should be considered to have a serious or complex medical condition. The tenet of medical necessity should serve as a check to ensure that inappropriate services or overuse of services will not occur. Mr. Crowley expressed the belief that some health plans have tried to minimize costs by essentially restricting everybody to primary care providers. However, for certain illnesses such as HIV, it has been demonstrated that a person will live longer if he or she has access to an experienced provider. It is necessary early on to provide access to specialized care for most people with disabilities. This is not to say that everyone needs to have a specialist as his or her primary care pro-

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--> vider. It is most important that disabled persons receive treatments that are consistent with evidence-based clinical practice guidelines and ensure access to experienced providers. Complexities of Patients with Cancer Dr. Durant's opening comments reminded the committee that cancer is a complex of 100 or more diseases and that it is a disease of the genes, either inherited or acquired through susceptibility to various events in one's life. Cancer is probably the most difficult problem encountered in humans in terms of understanding its pathobiology, its origins, and its course. It is a group of diseases of which, in the early 1960s, one person in three could look forward to being cured. Today, slightly more than one person in two can expect to be cured. These numbers represent people who are free of disease for 5 years. Most people with most cancers who survive free of disease for 5 years are cured of their disease. There are two extremely important things that must be done at the very beginning of the course of management. The first is a pathologic diagnosis, and the second is staging, including the use of molecular markers. Dr. Durant emphasized that neither of these activities should be left to amateurs. He cited a recent report to the Institute of Medicine by Hillner and Smith (Institute of Medicine, 1999) that demonstrated a clear dose-response curve between the experience of the health care provider and patient outcomes with a wide variety of cancers, stage for stage. That is, the survival of patients with a particular cancer improved significantly when they received care from practitioners with a large volume of experience in treating that type of cancer. Most cases of cancer require multidisciplinary evaluation from the outset. This usually means two or three or more people knowledgeable in the particular cancer, and in many cases treatment involves more than one discipline in a planned, prospective fashion. It is very important to understand that there is usually only one chance to cure the patient, and this is the first chance. After this, so-called salvage therapy may induce responses but, with only a few exceptions, does result in a cure. Exceptions to this rule include acute leukemia, where repeat treatment—usually a transplant—is sometimes very effective in children. Similarly, Hodgkin's disease, some lymphomas, and testicular cancer may yield to the second or third retreatment. Other than these types of cancer, with very few exceptions the first chance is the only chance. Dr. Durant also pointed out a societal problem with these numbers and the treatment and chance for cure. Specifically, he noted large gaps in survival rates for parts of our culture. African Americans and Hispanics, in particular, do not seem to do as well, probably for a variety of complex reasons. For example, black men with prostate cancer don't do nearly as well as white men. Black men with colon cancer do much less well than white men, and less well even than black women. Palliative care, including some specific cancer therapies, may

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--> improve the survival time, as well as increase the quality of life, but it is almost never curative. Early detection of a malignancy clearly improves chances for survival in the initial episode, but early detection of a recurrence does not improve chances for survival. Thus, it makes great sense to treat and cure at the time of the initial diagnosis, because all the strategies that have been employed for picking up recurrences early have resulted in increased survival rates. It is important to note that cured patients are at much higher risk for second malignancies than people who never had a malignancy. With the recent interest in breast cancer, it is fairly clear that the greatest risk is having had breast cancer before. This does not represent a metastasis of the initial cancer. Rather, it is a second breast cancer. The greatest risk for aero-digestive cancer is to have had a previous one from which you were cured. There are not many cancers in the aero-digestive system that yield to salvage therapy. Some patients with early larynx cancer may be cured if radiation therapy fails by laryngectomy, but most of the time the greatest problem is the development of another primary cancer. Despite the medical and technological advances of the past 25 or 30 years, it is still very difficult to tell which patients in a clinically similar group will do well. We have some general prognostic characteristics for virtually all sites. However, if one considers all women diagnosed with breast cancer and three positive nodes, it is very difficult to be sure which of these women will be cured and which will not. All of this means that experience and intuitions are sometimes helpful, but patients require some kind of follow-up until they are ''out of the woods.'' The management of cancer patients in the initial episode is well illustrated by pediatric oncology. Undergoing complicated, vigorous treatment at the time of the initial diagnosis cures most children diagnosed with cancer today. Indeed, most patients who are children enter clinical trials. This is an example of a care or treatment plan. A clinical trial is a method for ensuring accountability and responsibility for outcomes by being able to compare responses to treatment between apparently similar patients. In short, cancer is a complicated disease or set of diseases. We are in the middle of learning a lot more about them, but we are a long way from a complete understanding of risk factors, treatments, and prevention of recurrences. There are a couple of cancers that are not complex and serious and are also fairly common. One of them is cervical intraepithelial neoplasia (CIN). When it is not invasive, this condition is not considered a cancer; it is usually manageable by very simple means in a gynecologist's office and does not require inpatient treatment. Spread of this type of cancer to other organs, however, places the patient at significantly increased risk of morbidity and mortality. Another very common set of cancers that are not serious or complex are basal and squamous cell cancers of the skin. Once in a while, one of these forms of skin cancer spreads to surrounding tissues. This usually, perhaps invariably, occurs because the patient has neglected an obvious problem. However, these cancers are rarely serious or complex because they do not metastasize.

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--> According to the 50,000 members of all the clinical oncologic societies in this country, the initial evaluation of a patient and the treatment plan should be the result of the work of an interdisciplinary team of experts who individually have large volumes of experience with the disease. Dr. Durant again cited the Hillner and Smith report to the Institute of Medicine (Institute of Medicine, 1999) documenting clear dose-response curves between experience and survival. In his concluding remarks, Dr. Durant encouraged the committee to be flexible in developing definitions for serious or complex medical conditions. He also emphasized that there are important behaviors that influence the outcome for a fraction of patients who would benefit most from having care provided by experienced specialists at the time of the initial diagnosis. In response to a question about strategies to treat the third or fourth recurrence of a cancer and defining when the benefits of therapy, particularly aggressive therapy, outweigh the human and financial costs, Dr. Durant indicated that the medical oncology community has few guidelines. There is, however, one exception in this area, which concerns the management of advanced stage, non-small-cell lung cancer. Currently accepted guidelines support one chemotherapeutic regimen for patients with advanced disease. There is significant clinical evidence demonstrating the efficacy of this type of intervention. A poor response to this single treatment regimen would be followed by palliative care or participation in a clinical trial with a new agent if one was available. Dr. Durant urged the committee to be aware that treatment guidelines for most cancer patients rely on successful intervention at the time of initial diagnosis. Repeating treatments can cure very few people, and the likelihood of cure for persons with advanced disease at initial diagnosis or point of recurrence is very low. Dr. Durant also noted that geographic differences in treatment patterns and survival rates are well documented, with generally poorer outcomes for those treated in rural settings. Religious, cultural, and attitudinal factors contribute to such disparities in outcome. However, it is highly unlikely that practitioners in a rural community will see the volume of patients required to learn how to successfully manage different cancers. Dr. Durant urged that such patients be transported to a medical center that has a high volume of patients and concomitantly higher levels of practitioner experience. The Hillner and Smith report (Institute of Medicine, 1999) did not indicate that such a setting had to be an academic medical center; it just needed to be a medical center with a lot of experience. The report indicated that improved survival was first noted when the number of cases treated at a facility reached 50 and that, for every increment in patient volume, there was no plateau reached for experience and improved outcome. In response to a question about follow-up care to be provided after the 5 year window for survival, Dr. Durant indicated that most oncologists prefer that such patients return to their primary care physicians. They should then return at yearly intervals for a follow-up visit with the oncology specialist because of the potential for another cancer. In his concluding remarks, Dr. Durant supported the notion that Medicare should provide funding for controlled clinical trials,

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--> since in a number of disease areas it probably provides the best type of care. He noted that the Association of Clinical Oncology espouses the viewpoint that clinical trials represent a standard of care. If the trial is well constructed and is conducted in an ethically responsible manner, patients will get no less than the best and they might get better than the best. Serious and Complex Chronic Illness at the End of Life The remarks of Mr. Crowley and Dr. Durant were complemented by those of Dr. Joanne Lynn, director of the Center to Improve Care of the Dying and Americans for Better Care of the Dying. Her presentation focused on the relevance of the category of serious or complex medical conditions to the delivery of health care. She suggested that the language of the health care delivery system is terribly important, especially since constructs that lack labels are frequently overlooked or ignored. For example, traditional labels for health care delivery include inpatient hospital care; outpatient, ambulatory care from physicians; home health care; long-term care, and so forth. Then medical and nursing knowledge is categorized by diagnoses such as hypertension, diabetes, cancer of various kinds, and cardiopulmonary disorders. As a result of characterizing the health care delivery system by the environment in which care is delivered and by the diagnosis of disease, a specialist is defined as someone who is very good at delivering care in one or two environments such as the hospital and the physician's office. In addition, a specialist would have expertise in caring for a specific diagnosis or a group of related diagnoses. However, the current health care delivery system has not recognized a specialized service that works primarily to provide long-term care to persons with multiple diagnoses. With respect to long-term care for populations with serious chronic disease served by Medicare, it is most common for individuals to have health care needs that cross multiple delivery environments and require specialists to care for four or five different diseases, through to death. Dr. Lynn pointed out that current research on the health care delivery system is often limited in focus to populations with only a single disease. For example, the median age of cancer patients enrolled in studies is 60 or 62 years. However, the mean age at death from cancer is significantly older. In addition, virtually all of the studies are limited to people with one disease. Frequently, individuals with dementia, serious comorbidities, or physical access barriers to participation are excluded from studies of the health care delivery system. This results in an emphasis of research on patient populations limited to a single care environment or diagnosis. Dr. Lynn identified a need for research that will accommodate both multiple care environments and multiple diseases. Specialty care is necessary to address all the health care needs of people with, for example, breast cancer, older age, physical frailty, a bad hip, a bad heart, hearing disorders, low socioeconomic status, and a fragmented social support system. According to Dr. Lynn, dealing

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--> with these complex cases requires specialized care, although no such specialty is currently recognized by the American Board of Medical Specialists. A team of professionals with some interlocking medical disciplines and expertise would most effectively deliver such specialty care. Unfortunately, the structure of traditional Medicare fee-for-service payments encourages fragmentation rather than integration of care. Medicare managed care plans have the potential to offer integrated specialty care for patients with long-term health needs. However, a variety of social and political forces have prevented widespread integration of this type of system of service delivery for long-term care by Medicare managed care plans. Furthermore, few individuals have developed the comprehensive expertise to manage complex, long-term care for patients with multiple diagnoses. There are a very few exceptions to this. One is hospice, which provides care for about 20 percent of the population for, on average, the final month preceding death. Similarly, the Program of All-Inclusive Care for the Elderly takes care of about 10,000 elderly people across the country. There are also some other very small programs, often in older staff model health maintenance organizations such as Kaiser or Group Health, in which patients with multiple diagnoses or comorbidities receive multidisciplinary team care that integrates their physical, social, emotional, and mental health needs. This type of integrated, team-based care should be considered a specialty on its own, and delivery of such care probably underlies potential definitions and treatment plans for serious and complex illness. Dr. Lynn pointed out that several categories or groups emerge when the health of the general population is considered. One group includes a minority of persons with no particular health care needs at all, or those who shun health care because of religious persuasion or similar reasons. A second, much larger group is comprised of people who have minor, intermittent acute care and preventive health needs. This includes the majority of the American population. The third category consists of individuals who, on any given day, are ill with a condition that requires known and accepted medical intervention(s) to restore health. On the whole, these are sick people who are going to get well, such as individuals with peptic ulcer disease or those who are seen in the emergency room after, or while suffering a heart attack. Finally, there is a category that includes people with conditions that can be considered serious and complex because there is no therapeutic regimen that will make them fully well again. However, interventions are available to help these individuals maintain a role in society despite having a disability or chronic health condition that will persist until death. The paradigm case might be persons who are born with moderate to severe mental retardation. They are going to live with this disability for the duration of their lives. However, if they receive good support for their physical, social, emotional, and mental health, the impact on their life span will be moderate, if at all. In contrast, there are people with serious and complex conditions that will worsen over time and eventually result in death. For example, vascular surgery can be performed on an individual who experiences a heart attack. This individ-

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--> ual is diagnosed with mild heart failure and, with good medical management, might live another 20 years. However, the person has now been diagnosed with a disease that cannot be cured and most likely will be the eventual cause of death unless he or she develops a more serious, life-threatening health condition or experiences a serious trauma or injury. In fact, the number of persons with such serious and complex medical conditions is growing. The median age of adults at death is 80. Most people are diagnosed with a few serious illnesses before they reach the end of their lives. For example, the average woman now has 5 years of disability before death while the average man survives with 3 years of disability before dying. Most of these years of disability are due to complications arising from the disease that will ultimately result in death. The exceptions to this are arthritic and osteoporotic conditions that can cause significant disability but are not primary causes of death. In summary, serious and complex medical conditions can include those illnesses that cause progressive deterioration in health status over time and frequently require care from multiple specialties including health, emotional, social, and mental interventions. Dr. Lynn also emphasized that the medical community currently is not able to make accurate predictions about when persons with serious or complex conditions are likely to die. In reviewing relevant data, Dr. Lynn and her associates found that on the day preceding death, the median lung cancer patient had a 20 percent likelihood of surviving for 2 more months. Similarly, I week prior to death from lung cancer, the median patient had an estimated 50 percent chance of living 2 additional months (Lynn et al., 1997). In fact, tracking the experience of persons with cancer indicates that 20 to 30 percent actually die quite suddenly. These individuals are very sick and frail with their disease, but they are functioning with an acceptable degree of health that gives no indication that death could be imminent. This level of function, however, is abruptly compromised by events such as development of a pulmonary embolus, infection, or other acute complications, one of which ultimately results in a rather sudden death during the course of a chronic disease. Review of mortality data for patients suffering from congestive heart failure suggests a similar pattern (Lynn et al., 1997). For example, on the day preceding death, the median patient with congestive heart failure still has a 50 percent chance to survive an additional 6 months. One week prior to death, this patient has approximately an 80 percent likelihood of surviving 6 months, despite that fact that such individuals live for a long time with severe compromises to their cardiovascular and respiratory health. In fact, patients with cancer, congestive heart disease, and similar health conditions survive for quite a long time with significant functional disabilities. The data indicate that for most patients with cancer, the process of dying is usually confined to the last 6 or 8 weeks. However, most patients with serious or complex health problems are severely disabled for a long period of time. They experience intermittent, acute health threats (called exacerbations of disease) that are medically managed with good recovery until one particular complication causes death. However, at the beginning of the week prior to death, no one could

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--> Despite this lack of expertise, there is a real need to provide beneficiaries with assurances that plans of care will be developed and followed and that care management is in place and intended to improve the lives of patients rather than conceal efforts to ration care. Case managers will be among the first users of definitions of patient categories such as serious or complex. If these definitions are well conceptualized, they can accomplish a number of goals. They can identify patients who actually need more services. They can get patients to agree that they need more services. They can help case managers to coordinate care and can even allow clinicians who choose to specialize to compete for patients on the basis of the specialty care they can provide. It would be very useful to have competition on this basis, but in order to do so, systems are going to be required that not only define patients but also offer choices and resources to provide care. This is one reason that actuaries will have to become involved in some of this work. In Dr. Etheredge's opinion, the health care system is moving in the direction of providing patients with more choices than are currently available. Patients diagnosed with a particular illness such as cancer, congestive heart failure, chronic obstructive pulmonary disease, or stroke will be offered a series of choices that would allow them to enter specialized care programs having a partial capitation payment. This would allow the development and organization of care delivery systems that would compete to take care of stroke patients or patients with any of these other conditions. To accomplish this, it would be necessary to have criteria to define clinically relevant populations at need, as well as actuarial data about these populations that would support the calculation of some costs for care, to ensure that there really is effective choice and incentive for competition. This type of information would also be useful to health plan managers, especially network managed care plans, in which contracts must be established with health care providers to ensure access and delivery of services to patient populations. Such plans then have a choice of different providers of care in different settings. If plans were able to define patients with needs for particular arrays of service, they could then begin to monitor the effectiveness of these treatment services and develop strategies for more equitable cost management. This information would support the efforts of health plan managers to do a better job of managing and selecting their own providers. In turn, the boards of health care plans would have information to hold their own managers accountable and compare the performance of cost plans to see how well they are doing. External reviewers should be available to meet audit requirements imposed by the Joint Commission on Accreditation of Hospitals, National Commission on Quality Assurance, and state regulators. It is essential to be able to examine a plan and determine if the quality of care represents the state of the art or standards for acceptable quality. Finally, Dr. Etheredge argued that purchasers need a well-designed data system for chronically ill patients to begin to determine if they are getting value for the money. In most populations, including Medicare, about 5 percent of the

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--> population uses 50 percent of the care and 20 percent of the population uses about 80 percent. This allows health care plans to focus on a fairly small number of patients and have good control over the expenditure of resources. Dr. Etheredge also encouraged the committee to consider patients who are dual eligible for both Medicare and Medicaid. This includes about 6 million people who use about 30 to 35 percent of the resources from both programs. These are expensive, complex, and difficult patients, and HCFA and states are trying to develop new systems that would support reporting on the quality of care provided for these patients. Dr. Etheredge strongly urged the committee to consider a continuum of options, starting from the very simple option of saying there has to be a plan of care, involvement of a specialist, and a few things to be checked off and audited for patients with serious or complex medical conditions. This should then be expanded to include consideration of systems of care that can take care of both patients younger than 65 years with a need for acute care and an older population that is increasingly defined by chronic and multiple health problems requiring coordination of care by many providers. Such a system of care should involve the patient, family members, and professionals working together to determine patient needs and strategies to manage lives that are increasingly limited by disabling diseases. He further suggested that the committee should decide what point to choose on that continuum of options. If the committee selects definitions and regulations that are more limited in nature with a greater likelihood of immediate usefulness, it will be equally important to set in motion a series of recommendations, perhaps similar to those of the National Cancer Policy Board. Such recommendations would better define who is accountable and how the system would work in response to more complex options. The initial efforts of the committee should form the foundation for building a better system of care management and better system of choice for all patients. The committee was encouraged to ensure that its recommendations, especially those associated with quality assurance improvement efforts, would be coordinated with similar efforts underway by Dr. Lynn and her colleagues and the National Commission on Quality Assurance. In closing, Dr. Etheredge encouraged the committee to consider its efforts as part of an overall, ongoing strategy to build a better system to provide care to all patients, especially those with serious or complex medical conditions. The work of the committee should establish a foundation from which many other uses and users can develop. The committee requested that Dr. Etheredge expand on his comments concerning; application of the DRG system to the development of possible definitions for serious or complex medical conditions. In response, Dr. Etheredge described an ongoing, collaborative research effort in which he is trying to define new delivery systems for terminally ill patients. This effort requires the involvement of clinicians to review epidemiological data to identify the major causes of death. Actuaries then review Medicare data to determine what can be

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--> known about the actual experience of diagnosing and treating these conditions. There is particular interest in defining the number of patients with one or multiple conditions and assessing costs and variations in cost for care. Dr. Etheredge also referenced work done in collaboration with HCFA in which epidemiological and cost data for chronic obstructive pulmonary disease and congestive heart failure were reviewed. These analyses can yield estimates for capitation payments for patients with these two health conditions. He suggested that specific cancers would also be amenable to this approach, and he referred to stand-alone cancer care centers that are competing for the business of managed care plans. The committee pointed out that by and large managed care in this country is discounted fee for service. Dr. Etheredge was asked to address the distinctions between things over which managed care plans have direct control and factors associated with the behaviors of health care providers who work for multiple, different plans including some fee-for-service and some managed care plans. It was pointed out that one of the main reasons the committee had been formed was to address the issue of inequitable access to specialty care. More specifically, the committee had been asked to determine if there are some benefits ensuring access to specialty care that are available to people with fee-for-service plans and not available to those receiving health care coverage from managed care plans. From this perspective, a second question was raised by the committee about whether managed care plans are being asked to develop a ''miracle'' health care delivery system to deal with the needs of persons with serious or complex medical conditions. Dr. Etheredge agreed that the managed care industry is likely to be worried about whether it will suddenly be required to solve every problem in the health care system. In response to the question about whether it is appropriate to view providers and health care plans as separate or integrated entities, Dr. Etheredge opined that the two are an entity if the plan is a managed care plan. The integration of the two is part of what is sold about managed care companies, and consequently, managed care plans should be held legally responsible for the care that is being delivered. If the managers of the managed care company do not know who has a serious or complex conditions and are not monitoring the quality of care being provided to these patients, who is and for what are they being paid? Dr. Etheredge further elaborated that there is a reason to treat managed care companies as an entity because they put themselves forward as an entity to manage care. He suggested that it will be important to use similar approaches to reform fee-for-service plans and develop a continuum of options, particularly for the chronically ill and terminally ill, that would pay for programs of care on a mixed capitation-fee-for-service basis. Dr. Etheredge noted that part of the problems with managed care is the current payment system. If a plan is losing money or struggling to survive in a competitive environment, most directors of managed care plans will look first at their enrollees who are costing them $20,000, $30,000, or $60,000 a year. This may result in a reduction in provision of the services of specialists. Such problems might be resolved if Medicare moves away from pure capitation toward

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--> mixed capitation and fee for service as a basic way of paying for health plans. Alternative payments plans will be of particular importance for high-cost patients. Identifying the types of patients who would benefit most from these new kinds of payment systems will be a useful and important first step. Dr. Etheredge was also asked his opinion of the feasibility of developing payment systems for illnesses that have reasonably defined futures that could lead to the determination of a lifetime charge for the management of these illnesses, no matter the final outcome. Dr. Etheredge concurred with this approach. He pointed out that it raises a very fundamental issue about the nature of disease in medical care—that is, how much of it is predictable and manageable for what populations? This approach also requires that outliers be eliminated from the payment equation. It remains to be determined how many of the serious and complex conditions can be considered predictable and manageable after the outliers are removed. Dr. Etheredge's research with Dr. Lynn suggests that lifetime costs can be determined for patients diagnosed with congestive heart failure and chronic obstructive pulmonary disease. Calculating these costs and managing these conditions well results in a significant amount of savings. In the absence of good disease management, patients ultimately seek care in emergency room visits that are quite costly. Systems such as those implemented by Kaiser for patients with congestive heart failure, which involve a daily telephone call to check on health status and weight, can be effective in preventing predictable crises and keeping patients out of emergency rooms. This, in turn, saves a lot of money. There may be other conditions for which case management and cost savings are not possible due to the nature of the illness. It is extremely important however, to try to manage care over the long-term for parts of the Medicare population rather than provide episodic care with discounted fee for service. To the extent that effective care management systems can be developed for specific patient populations, efforts should be devoted to building these systems. Other patient populations may have to continue with episodic care management. Dr. Etheredge suggested that the committee advocate for research programs to begin to resolve these issues so that managed care companies will actually be able to manage care in predictable ways for improving outcomes. At the moment, this is very difficult for almost anyone to do. The committee also discussed with Dr. Etheredge the issue that disaggregated systems of health care payment further exacerbate problems caused by a poorly coordinated health care delivery system. It was noted that one recent policy change resulted in limiting home care visits to homebound patients, which could alter or have adverse effects on the costs and even the outcomes of certain chronic diseases. Many patients such as diabetics and those suffering congestive heart failure had received home services in the past although these patients were not necessarily homebound. They did, however, benefit from home visits to maintain their condition. Dr. Etheredge was asked his opinions about the possible impact of such a policy change regarding home health and

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--> how it might affect the whole continuum of care and the management of chronic disease. In reply, Dr. Etheredge noted that there is great concern and suspicion about adding new entitlements such as home health or case management as an open-ended benefit. The cost implications of such open-ended benefits could be staggering. Dr. Etheredge cited a previous publication in which he and his colleagues suggested that case management should be targeted to specific patients who meet specific criteria. Such care could best be delivered through prefer-red provider organizations (PPO) type contracts. Case management organizations should be selected competitively, and the patient's physician and the patient should select them so that they are responsive to what they want and the kind of care that is developed in the care plan. Dr. Etheredge also pointed out that the issue of fragmentation of payment systems is not particularly relevant to Medicare populations. There is Medigap coverage, but Medicare is so dominant and large today (and will continue to grow in the near future) that if Medicare pays for something for the elderly, other components of the health care delivery system start to provide these services as well. If Medicare doesn't pay for something, such as new programs for the chronically ill and so forth, other plans tend not to provide these services. So there is the opportunity to define a new system here using $200 billion a year of purchasing power. This is a nice resource to support efforts to reform the health system. If however this purchasing power is not applied, new programs for certain patient populations such as those with serious or complex medical conditions will not develop. Furthermore, systems to ensure improved quality of care will not emerge because the resources will not be there to pay for them. Dr. Etheredge's remarks prompted several comments and questions from Dr. Hausner of HCFA. First, Dr. Hausner asked if Dr. Etheredge's research collaboration with Dr. Lynn would be compatible with HCFA's effort to establish the diagnostic cost group system, which is almost ready for the first stage of implementation and will be based on inpatient diagnosis. The intention is to expand the system to include all the data systems that would provide opportunities to look at multiple medical conditions, not just the primary condition. Dr. Etheredge explained that his work with Dr. Lynn involved efforts to determine if the Medicare population could be divided into groups, including categories for the five leading causes of death: heart and lung failure, cancer, stroke, and dementia. The next step would be to determine if a reliable clinical indicator could be found that would identify patients as members of one of these five groups. The final step would be to determine a reliable payment system based on such clinical information. In one sense, Dr. Etheredge suggested that his work with Dr. Lynn is moving away from HCFA's efforts with the diagnostic cost group system. The latter system is getting more and more sophisticated and more and more complex. The collaborative work with Dr. Lynn is more simplified, which is necessary to develop estimates of payment for care of patients with these five conditions. It may be that greater differentiation beyond the five conditions does not improve the predictive value. Patients with one of these five conditions will typically have six

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--> or seven other diagnoses as well, but this information may not contribute in a meaningful way toward prediction of health care costs. From these perspectives, the work of Drs. Etheredge and Lynn is not compatible with HCFA's efforts to develop the diagnostic cost group system. Dr. Hausner also concurred with Dr. Etheredge's earlier remarks about the importance of moving toward payment plans that involve mixed capitation and fee for service. In fact, the work of Joe Newhouse and others in this field indicates that trying to take a purer capitation and adjusting it to all these sophisticated measures does not achieve a more fair system of paying plans and paying for patient care that is possible with a mixed capitation, fee-for-service system. Dr. Hausner also noted that HCFA is concerned with improving the fee-for-service system as much as the managed care system. Consequently, it is working with HEDIS and the consumer assessment system and developing quality improvement projects for fee for service. He expressed the opinion that managed care is in the forefront in terms of developing some management systems that will improve quality care for chronic conditions as well as care for all patients in general. The assessment systems that are being put into place and case management systems are innovating disease management. Both managed care and fee for services need dramatic efforts to improve the coordination of patient care, but managed care seems to have made a number of strides in specific areas, and it will be important to apply these lessons to the fee-for-service system. Serious or Complex Medical Conditions: Insurance Issues The final speaker at the workshop was Mr. Stan Jones. Mr. Jones opened his remarks by suggesting to the committee that it may not be possible at this time to respond to the questions posed by HCFA in the charge to the committee. He argued that simply developing a definition of serious or complex medical conditions, including recommendations about when access to specialists should be provided for Medicare+Choice enrollees, fails to address the fundamental problems and challenges of the current health care delivery system. Committing the resources necessary to develop sound definitions for serious or complex medical conditions could begin to resolve some of these basic problems. A fundamental problem is to ensure that higher-quality, better-coordinated care is available for really sick people. He noted that a primary obstacle to resolving this problem is the current lack of knowledge about ways to pay a fair price for people who cost a lot either to health care plans or to providers. Consequently, important financial disincentives have been built into the care delivery system, and there is a lack of confidence about the quality and coordination of a complex array of services. Mr. Jones noted a second fundamental problem—beneficiaries do not really know how to choose among providers or plans based on quality. Consumers do not know how to evaluate the quality of the care they are receiving, especially those with serious or complex medical conditions.

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--> Mr. Jones then suggested to the committee that it follow an ongoing process to develop a definition for serious or complex medical conditions. This process would acknowledge that all serious or complex conditions cannot be defined at once. Some conditions may be readily apparent as serious or complex. The definition of serious or complex illness might include consideration of specific health conditions combined with consideration of issues of functional status. The list would likely grow over time, and it is unlikely that all persons with a serious or chronic condition have been identified. Mr. Jones emphasized that efforts to identify conditions as serious or complex would be part of an ongoing process. He further suggested that a number of different players should be involved in the process of identifying serious or complex conditions. These would include clinicians, insurers, actuaries, and sophisticated consumers. Mr. Jones pointed out that the process of the National Committee for Quality Assurance for the development of quality standards might be applicable. The group of individuals involved with identification of serious or complex medical conditions could contact the National Committee for Quality Assurance to request a hearing to support the development of a new set of standards to select serious or complex conditions. The group should elicit external input and advice in determining if an area ought to be defined as serious or complex. It would also be important that the group have the capacity to advocate for more inclusive definitions of serious or complex medical conditions. This would help prevent different disease advocacy groups from advancing definitions that are more detailed and fragmented. Mr. Jones emphasized that his suggested approach to defining serious or complex medical conditions must be conducted on an ongoing basis and that the committee should initiate the process. The committee should also try to identify some of the criteria that conditions must meet to be added to the list of serious or complex conditions. These criteria are likely to be added and refined over time. In justifying his suggested approach, Mr. Jones pointed out that in the current system there are strong financial incentives not to invest capital and effort to improve the quality of care for high-cost populations. The premium level that insurers or providers receive for patients with serious or complex conditions is well below the costs they incur. As a consequence of these high-cost subscribers, the premium that the plan must charge for all of its subscribers must be increased, making the plan less competitive. Consequently, there is an incentive for plans and providers not to attract a lot of patients with serious or complex conditions that will incur high cost. A fair payment plan for high-cost patients with serious or complex conditions is necessary to create incentives for both providers and plans to compete and enroll these people. A system of fair payment is likely to encourage plans and providers to invest capital and resources in improving the quality of care for this patient population. The development of fair payments will rely on data that allow HCFA, health care plans, and providers to develop accurate estimates of costs to care for these conditions. In fact, Mr. Jones argued that the availability

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--> of cost data should be one of the key criteria in determining what conditions are considered serious or complex. Mr. Jones also noted that the distinction between one serious or complex illness and another—or between an ordinary, everyday garden-variety condition and a serious and complex condition—has to be clinically precise. In the absence of such clinical distinctions, providers will group diagnoses and try to bill for the best price possible. Providers must develop thoughtful and realistic prices for the care that is delivered. Unfortunately, at this time, providers are not usually very accurate or skilled in determining realistic estimates for cost of care. There are, however, organizations in this country that can work with providers to develop such estimates. Clear clinical definitions for serious or complex conditions, combined with the ability to accurately estimate costs of care for these conditions, will allow providers such as specialists to develop proposals for insurance companies to care for such patients. This can allow specialists the opportunity to get involved with health insurance and compete with other health care plans to provide an array of services for specific groups of patients. Mr. Jones offered another reason for adhering to an ongoing process to identify serious or complex medical conditions. He suggested this as a method to hold HCFA more accountable for issues of quality of care. He observed that managed care plans have a deep suspicion that under traditional Medicare, people are not getting the quality of care that is available through other types of health plans. The ability to systematically define serious or complex conditions would allow tracking and comparisons of quality of care between Medicare and other reimbursement systems external to HCFA. This evaluation would be a method of discipline for traditional Medicare. Yet another reason to engage in a systematic, ongoing process to define serious or complex medical conditions is to help beneficiaries understand better the services available to them and the quality of these services. Mr. Jones suggested that most consumers have difficulty in determining where they can get the best-quality care. This can be especially true for those with serious or complex medical conditions that require a full array of medical, social, emotional, and functional care services. Mr. Jones referenced his work with elderly patients. Providers can itemize a list of conditions and health problems confronting these patients. However, asking the patients to identify the problems often results in a different and much simpler list. This simpler list of health concerns forms the basis for their selection of a health care plan. Mr. Jones then suggested that the committee consider a distinction between consumer choice at the point of service versus choice at the point of diagnosis. He asserted that patients get much more concerned and serious about providers and different types of health care plans when they are diagnosed with a condition. At this time, patients have a much greater understanding of the different types of care and service needs and wants. It may be at the point of diagnosis of a serious or complex medical condition that people under Medicare should have a choice among certified plans or the traditional Medicare program. The choice of health care plan may best be made at the time a patient is diagnosed with a

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--> serious or complex medical condition and advised about the types of services and care that will be required. Furthermore, Mr. Jones pointed out that if a reasonable reimbursement has been determined for the condition, it is likely that information and advertisements may be available to help patients decide which plans would best suit their needs. Such information might be provided by local specialty groups that have contracted with HCFA to provide services to patients with specific conditions for predetermined, equitable reimbursements. In larger metropolitan areas, patients might have several different specialty groups providing such information to them and making an effort to attract them. Mr. Jones concluded that this would be much more desirable than requiring plans or providers to let patients select specialists and go to them whenever they choose. A committee member asked Mr. Jones for his opinions on different types of reimbursement mechanisms for special-needs patient groups. Specifically, he was asked to comment on the use of actuarially defined payments combined with stop-loss options as well as partial fee for service. In response, Mr. Jones suggested that the most realistic way to deter-mine the appropriate amount of payment for patients with serious or complex medical conditions would be to solicit proposals for specific conditions. From HCFA's perspective, it would work best to identify a group of patients for whom services are required and realistic costs of care can be estimated. The Health Care Financing Administration could then request proposals from plans to provide care to these patient groups for the estimated capitation rates. Mr. Jones discouraged the use of a stop-loss approach to correct actuarially defined payments. The committee also inquired about Mr. Jones's thoughts concerning plans' reactions to being held accountable with report cards. It was pointed out that report card information could be very useful for consumers and would allow them to "vote with their feet." Mr. Jones indicated that a report card that could evaluate the care and outcomes of a specific group of people with a similar category of serious or complex illness would be extremely informative to consumers. It is extremely important to provide consumers with information that is pertinent to their specific situation before they can do anything about it. The nearer you can get to a patient's specific situation, the more potent is the information going to be. He acknowledged, however, that such report cards have a number of limitations and that many plans will not have sufficient numbers of patients within a category to support meaningful analysis and interpretation of quality-of-care information. It would be important also to focus on institutional and other requirements that plans or HCFA might make in the interest of improving and monitoring quality of care. Mr. Jones was also asked to comment on patient populations for whom cost estimation could not be developed because of lack of data. Potentially such patient groups might not be offered coverage and, as a result, might have the greatest need for a definition of serious or complex conditions and access to an array of services including care from specialists. Mr. Jones acknowledged the likelihood that there will be groups of patients who are difficult to categorize clinically and for whom a standardized reimbursement can be calculated. The whole

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--> issue of defining serious or complex medical conditions is quite large and unlikely to be solved completely for all patient groups. However, he urged the committee to begin the process of addressing issues related to defining serious or complex conditions and noted that information and data may become available in the future to address the needs of more difficult categories of patients. Mr. Jones was asked to elaborate further on his conceptualization of consumer choice at point of diagnosis rather than point of service. Specifically, he was asked to identify some of the risks of such an approach and how these might be rationally apportioned in this context. In response, Mr. Jones expressed the opinion that a patient first becomes really interested in the delivery system when he or she is diagnosed with something that is complicated or serious and requires a lot of services. Insurance surveys indicate that prior to this point, consumers are likely to change plans and do not have a great deal of provider loyalty. They are motivated to find the best plan for the best deal, and they are not concerned about their provider because they do not see him or her very often. However, patients' interests and the need for choice change at the point of diagnosis. Mr. Jones asserted that at this point, the consumer becomes a patient who is serious and ready to look for the best options for his or her particular condition. These options might include the plan in which the patient is already enrolled, as well as some other choices of health care plans and providers. Information about these choices might be made available to a patient by the provider or by specific plans that are marketing specialized services to the patient. Ideally, this is when the person ought to choose, when plans should compete for patient loyalty, and when providers ought to compete for patient choice. One committee member noted Victor Fuchs's assertion that there are two hierarchies of values—one that people employ when making purchasing decisions in health care, and one they employ when actually having to use the health care system. When consumers are well, their purchasing decisions are based largely on price. In contrast, consumers who become patients generally feel that price has no meaning when they need the services of the system. This raised the question of how risk could be spread actuarially in a way that would permit proactive management.

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