Definition of Serious and Complex Medical Conditions (1999)

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.

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.

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

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:

1. all of these conditions manifest themselves across a range of severity;
2. there is a broad range of service needs among these people;
3. assessment of the ability to perform activities of daily living or instrumental activities of daily living fails to capture all disabling conditions;
4. 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;
5. not all disabilities stem from illness; and finally,
6. illness does not always progress in a predictable manner.

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:

1. 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;
2. 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;
3. 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

4. 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-

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.

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

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.

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,

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.

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

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-

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

have predicted the death in that particular week because the disability associated with the disease had been present and unchanged for a long time.

Patients with serious or complex medical conditions have disease of long duration, episodic crises and exacerbation of disease, and significant, long-term disability. They may require a type of specialty care that presents a very different challenge to our current health care system. The need for such specialized care has emerged only over the past 20 years as medical knowledge and technology have led to the development of interventions that are capable of sustaining life for patients with chronic, disabling conditions for long periods of time. It is no longer the exception, but the rule, that people with significant compromises to their health live for a long time postdiagnosis due to advances in technology and medical management interventions. There is a need for a specialization or area of specialty care to attend to the long-term and diverse needs of these patient populations.

Dr. Lynn then suggested the following definitions for serious and complex conditions. Serious medical conditions would include those that are substantially disabling, progressive, and eventually fatal. Complex conditions would require services in a variety of domains or disciplines for the person to live well in the time preceding death. Examples of programs that have used these or similar definitions include the following:

1. Franklin Health.

Patients with serious or complex illnesses are targeted for intensive personal care management, with results demonstrating significant improvements in the value of care services.

2. Franciscan Health System, Tacoma, Washington.

This program identifies patients in general medicine with a "surprise" question (is this patient sick enough that you would not be surprised he or she died in a few months?). The program targets advanced planning and community care coordination, which in turn lead to dramatic improvements in patient satisfaction, use of hospice care, and deaths at home.

3. Medicare Expenditures.

Following hospitalization for a serious or complex illness such as congestive heart failure or chronic obstructive pulmonary disease, ongoing payments for care average about $24,000 per year until death. Patients in these cohorts are identified by one serious exacerbation of their illness and a simple physiological test such as an echocardiogram for congestive heart failure or blood gas for chronic obstructive pulmonary disease.

Dr. Lynn advocated that serious or complex medical conditions be used as a category in three ways. The first use of the category is to trigger direct access to specialist care that can be defined as "a health care practitioner, facility, or center ... that has adequate expertise through appropriate training and experience to provide high-quality care in treating the condition." The second use would be as a substitute for the continuity-of-care provisions that are currently extended to those with terminal illness. Patients with a serious and complex condition such as congestive heart failure are terribly disabled and should be protected from

suddenly losing their provider, as are those with terminal illness in the Consumers' Bill of Rights and Responsibilities. A third use is as protections to ensure that suitable specialist(s) are eligible to provide care under a particular Medicare+Choice plan, will take new patients, and are willing to take a particular patient with a serious or complex condition. The provider must be accessible and acceptable to the patient.

Finally, Dr. Lynn discussed insights gleaned from quality improvement work in this area. Patients with serious or complex conditions can be identified with meaningful administrative and clinical criteria. For example, congestive heart failure might qualify with one hospitalization for failure and an echocardiogram to document an ejection fraction less than 30 percent or severe diastolic dysfunction. Insights on the qualifying thresholds and the standards of practice will arise from research on variation in treatment practices for such conditions, along with efforts to identify better or best-practice guidelines and evidence of substantial improvements in the quality and standardization of care.

Dr. Lynn was asked by the committee to elaborate further upon guidance she would suggest to HCFA with respect to providing access to specialized care versus access to specialists. In reply, Dr. Lynn cited the model provided by hospice where the physician specialty is almost irrelevant. Dr. Lynn also referenced several Senate bills, which suggest ways to define specialists, such as Senate bill 6, proposed by Senators Daschle, Kennedy, and others. This bill defines the term "specialist" for a specific health condition as a health care practitioner, facility, or center, such as a Center of Excellence, that has adequate expertise through appropriate training and experience to provide high quality care in treating the condition. Dr. Lynn concurred with such a definition for specialists and went on to clarify that a new understanding is necessary to determine what type of specialist(s) is needed to take care of patients with serious and complex health problems. Given the complexity of care needs among these patients, it is unlikely that a single specialty, selected from the current list of medical specialties, is adequate. Currently, a 92-year-old woman with 16 different diagnoses and no income is unlikely to receive the type of coordinated care that would be necessary to sustain her life. Similarly, there is a large and growing group of people with serious and complex conditions involving multiple diagnoses and multidisciplinary care for which no single existing medical specialty has been defined. On the other hand, a patient with one discrete diagnosis, such as ovarian cancer, can be reasonably well assured that she will receive the current standards of care for her disease from one medical specialty such as oncology or gynecologic oncology.

Dr. Lynn was also asked to provide her thoughts about the inclusion of people with mental retardation in the larger group of people with serious and complex conditions who require multispecialty care. The committee pointed out that for persons with mental retardation, it is often the nonmedical specialties that are most critical to their being able to at least maintain their functional status.

Dr. Lynn pointed out that a single specialist often handles acute care health crises well with little or no regard to interpersonal skills, continuity of care, and other related issues. In contrast, persons living with a progressively worsening

chronic condition such as heart disease, chronic obstructive pulmonary disease, or cancer have a very different set of needs. These include the following:

1. good medical treatment with a focus on prevention of disease exacerbation, improvement of overall functional status, and survival and comfort;
2. good symptom control or management;
3. a care management system that offers continuity, coordination, and comprehensiveness;
4. clearly stated and understood expectations by patients and family members of what is likely to occur during the course of the illness;
5. customized care that reflects the preferences of the patient and family members;
6. support for the physical, psychological, social, and spiritual needs of the patient and family members in order to maximize the quality of each day; and
7. judicious use of society's resources.

A team of specialists, including a physician, is necessary to accomplish these seven diverse needs. However, a nurse, social worker, or physician can lead the team. There has to be a helpful doctor in the team mix. Dr. Lynn pointed out that teams that are not dominated by doctors often provide much greater assistance to families and children coping with serious illness or mental retardation than physician-led teams. Doctors may be present, but they are not the dominant force. Living with serious disease is the challenge, rather than fixing or curing such disease.

Dr. Lynn was also asked to clarify the point at which an illness becomes serious and complex since such illnesses begin to accumulate as people age. This was noted to present a wide zone of clinical uncertainty. It was Dr. Lynn's opinion that data systems and analysis are not yet available to provide a clear response to this question. She did suggest, however, that four kinds of illness are largely responsible for 90 percent of the deaths in the Medicare population: (1) cancer; (2) heart and lung failure; (3) dementia and stroke; and (4) frailty of advanced old age. Dr. Lynn suggested that it is fairly easy to determine a threshold for each of these conditions. For example, the threshold for congestive heart failure might be one exacerbation, hospitalization for failure, and ejection fractions of less than 30 percent or diastolic dysfunction. The threshold for dementia might be immobility and incontinence.

Such thresholds could be established for the primary diseases leading to death. In addition, overall well-being or functional status could be assessed by inability to exercise at a certain level, inability to ambulate a certain distance, and so forth. This would ensure the inclusion of persons who do not meet the disease-specific thresholds but are, for some reason, self-care disabled. These thresholds would be the cutpoints for determining when individuals are considered to have a serious or complex medical condition. It would then be necessary to define the service array to meet the comprehensive care needs of this cohort, which would likely include the seven needs identified earlier. This could then be

coordinated with determination of the right price to provide the requisite care, as well as regulations to support implementation of the care plan.

Dr. Lynn suggested that defining the characteristics that result in classifying a condition as a serious or complex as well as identification of the array of required services, would in turn facilitate efforts to determine the right price for care delivery to these patient populations. For example, improved financing might be a risk adjustment or a rate for the Program of All-Inclusive Care for the Elderly or an appropriate reimbursement rate in the VERA system at the Veterans Administration. She suggested that risk adjustment, which has already been used with some success, might be a viable alternative for determination of price. As an example, Dr. Lynn proposed application of the currently accepted risk adjusters for congestive heart failure at the first episode of illness exacerbation and when the patient met the ejection fraction criteria, rather than in the next fiscal year. The risk adjustment rates could be provided to the managed care company from that point on until death. This would prevent having to retrigger the rate at least once a year with subsequent hospitalizations. This rate could support the development of some terrific service arrays for a disease that accounts for 25 percent of all deaths.

An urban setting could support a comprehensive health care delivery team that really knew how to take good care of congestive heart failure, for example, if the providers of care could make a living at it. Dr. Lynn further suggested that many patients have both chronic obstructive pulmonary disease and congestive heart failure, with cigarette smoking the dominant etiology. It is likely that the same service provider group would take care of these patients as well. Different teams might work with dementia.

From HCFA's perspective, all that is necessary would be to define the service array through regulation and rate of payment after the criteria for identifying patient cohorts with serious and complex conditions have been determined. Identifying when patients cross the threshold of having a serious and complex condition also generally identifies a population in the last I or 2 years of life. These patients drain resources significantly, yet are also frequently dissatisfied with the quality of care they receive. In fact, such patients require a specialized array of services to cope with all aspects of their illness, and these can be provided most efficiently and cost-effectively when a multidisciplinary, experienced team assumes responsibility for care.

In a final question from the audience, Dr. Lynn was asked if she thought it was possible to develop definitions and arrays of service only for serious or complex conditions or for thousands of conditions based on the International Classification of Diseases, Ninth and Tenth Editions (ICD-9 and ICD-10), which affect great numbers of people. Dr. Lynn concurred that as the population continues to age, the need for multidisciplinary care services by teams will increase. For example, 80 percent of the people on Medicare who die have one of five diagnoses within a year preceding death: heart disease, respiratory failure, cancer, dementia, or stroke. At this time, it appears that the service array is likely to be similar for each of these five conditions. Perhaps with 3 or 4 years of experi-

ence with this service array, special services for one or more of the diagnoses will be identified and advocated. Dr. Lynn suggested that rather than taking on all diagnoses, HCFA should focus on the major causes of morbidity, mortality, and resource utilization including heart and lung failure, cancer, stroke, dementia, and also frailty of old age. Frailty lacks an ICD-9 code, but it is likely that persons with very little physiological reserves and problems in five or six areas are not going to be able to handle an added acute health threat such as pneumonia. The frail elderly also deserve consideration as a serious and complex medical group requiring an appropriate array of treatment services led by a multidisciplinary team. Such services also merit efforts to determine appropriate pricing by a mechanism such as risk adjustment and regulation to support the service array and reimbursement plan.

Kathleen Brody, P.H.N., is a public health nurse with 15 years experience working with the Social Health Maintenance Organization associated with Kaiser Permanente in Portland, Oregon. Since 1996, she has served as the Project Director for Project Seek (Screen Every Elder in Kaiser), also known as Kaiser Permanente's Medicare Screening Project. Her presentation provided the committee with an example of a population-based screening intervention, targeted to patients 65 years of age and older, to facilitate integration of care delivery.

In her opening remarks, Ms. Brody provided some background information on Kaiser's Social Health Maintenance Organization project, which is a national Medicare demonstration project designed to maintain frail elderly in their homes by providing comprehensive benefits that include home-based, long-term-care services. During the past 15 years, this project has relied on a self-report health status form in compliance with the mandate by HCFA that social health maintenance organizations collect self-report data from members about their health on an annual basis. Analysis of this information is intended to identify those who are at risk of nursing home placement and Rely to need extra services to maintain stability in their home.

The initial health status form self-assessment tool started as a paper-and-pencil system and through the years evolved into a computerized, optical scan form. Some of the research base for the instrument had its roots in work completed by Douglas Reid and funded by the National Institute on Aging that examined relationships between depression and the use of antihypertensive drugs. Similarly, a study received resources from the Garfield Memorial Fund to support the development of a model that could correctly identify people who would be in need of daily assistance in order to continue to maintain themselves in their homes. In addition, there is a significant literature examining the relationship between identified risk and high utilization of services.

In 1990, Kaiser Permanente began to examine the model of care it was providing, which consisted basically of outpatient, ambulatory care services that plan members accessed when they felt they had a need. These needs were then assessed and treated. This was, and still is, the basic model of care for Kaiser. In the course of its analysis, however, Kaiser found that there was a cohort of people within its membership that the basic model of care delivery failed to serve adequately. This cohort included vulnerable patients who were no longer seeking active treatments to eliminate or improve their disease. It also included patients suffering simultaneously from a number of complex disease processes that could not all be addressed in ambulatory, outpatient care settings or whose totality of medical care needs required not only a physician but a complex medical health care team approach. Kaiser then defined these cohorts of patients as those at risk who are in need of a second model of care. That model of care would be a health care team approach that does active outreach to the members, especially those who are vulnerable and are not able to come into the medical office and seek care themselves.

In developing this second model of care, Kaiser proposed that a person could have any number of diseases or symptoms, and the model of care required would involve a person-based goal-setting process that incorporated all of the member's needs. It was then to be determined whether these needs could be met by the traditional model of self-care planning or alternatively, by a care management model which would rely on a case management approach.

The Health Status Form Questionnaire was examined to build an empiric model instrument, to predict elderly members at risk of frailty in the coming year. A total of 5,810 members returned completed questionnaires for a 92 percent response rate. The self-report data were supplemented by information from several Kaiser Permanente Northwest data systems, including the Pharmacy System Database; Admission, Discharge, and Transfer Database; Membership Information System Database; and Nursing Home Certification and Long-Term Home-Based Care Database.

The study design was a retrospective observation of a cross-sectional, 1-year sample. Self-report data were collected on day 1, and the observation period covered the next 365 days, during which episodes of frailty were noted. Frailty was defined as having one or more of three possible outcome events during the year. These events were (1) becoming certified for nursing home care, (2) having a nursing home admission, and (3) receiving home-based long-term-care services.

Applying a stepwise logistic regression model that relied on data from these various sources resulted in the identification of 13 variables statistically associated with frailty. These included the following:

1. assistance required for medication use,
2. assistance required for bathing,
3. assistance required for dressing skills,
4. prior nursing home use,

5. use of a wheelchair,
6. use of a bedside commode,
7. two or more hospital admissions,
8. self-report that health interferes with activities of daily living,
9. presence of four or more health conditions,
10. increasing age,
11. assistance required for eating,
12. poor health as compared with others, and
13. assistance required for managing money.

By applying the weights from the logistic regression model for these 13 variables, it was possible to identify more than one-half of the members who would experience frailty within the coming year. The sensitivity of the predictive model was 54.6 percent; more than half of the members who experienced frailty during the year were classified by the model using 13 Health Status Form Questionnaire variables. The specificity of the model was 97.9 percent. The false-positive rate was 18.1 percent, while the false-negative rate was 7.3 percent. The overall positive predictive value of the model was 81.9 percent.

Further analysis of the data revealed that four of the self-report variables (age, needing or receiving bathing assistance, needing or receiving assistance to take medications, and indicating that health conditions interfered with daily activities) explained 90 percent of the residual chi square from the intercept and classified persons almost as well as the total model of 13 variables. Specificity for the smaller model was identical to that for the 13-item model, and sensitivity decreased only 4 percent. The false-positive rate for the four-variable model decreased by 2.5 percent, and the false-negative rate increased only 0.6 percent. The positive predictive value for the four-variable model was 79.4 percent.

Kaiser Permanente Northwest was able to follow the entire test population of 5,810 at regular intervals as members moved into and out of all the silos of care settings. During the initial phase of this research in 1984 and 1985, patient enrollment in the study included a fairly healthy group of age-eligible Medicare beneficiaries. Now these members have aged into a cohort with a mean age of 83 years. This cohort looks similar to the projected older population for the United States by the year 2015. Analysis of the cohort provides a perspective on a microcosm of what it will look like in ambulatory care settings that deal with an aging population. Applying the age-and gender-specific rates of frailty for the Kaiser cohort and adjusting these rates to per-thousand population, a health maintenance organization in a different part of the country could disperse its own age-gender population and apply the age-adjusted rates to its members in order to determine within a given year how many members will experience frailty. This frailty cuts across disease strata including diagnoses of dementia, depression, and other types of disabilities. There is little variation in the distribution attributable to gender, but the distribution is extremely sensitive to age.

Ms. Brody then addressed the action items undertaken by Kaiser Permnente to put the Health Status Form Questionnaire in place at Kaiser sites across

the United States. The Center for Health Research developed the information needed to disseminate the form to local Kaiser divisions so that it would influence care in medical offices and help to identify best practices. The coefficients of the model were applied to estimate a member's probability of frailty by taking these weightings and the intercept and creating a risk. Kaiser used 5 as the frailty cutoff, and that's how it determined the members it was looking for.

It was proposed that the Center for Health Research would mail forms to all new Medicare enrollees at participating Kaiser medical offices. As data are returned to the center, the information is analyzed and distributed to the local Kaiser markets. Member response rates to the Health Status Form Questionnaire range between 85 and 90 percent. The initial strategy for data collection and management was discussed at the Kaiser Interregional Committee on Aging in 1992 and resulted in funding for some pilot projects. By 1996, Southern California Kaiser, Orange County, began to utilize the services of the Center for Health Research. Now the data collection, management, and analysis by the Center for Health Research are conducted for Kaiser regions across the United States including the Southern California, Northern California, Rocky Mountain, Mid-Atlantic, Northwest, and Northeast regions.

Kaiser divisions participating in the Medicare Screening Project send their Medicare enrollment information, including address, age, and name information, to the Center for Health Research via e-mail. Mailing of the Health Status Form Questionnaires to new members is done on a monthly basis. Completed member questionnaires are received daily and scanned into a computer for analysis. The center completes a weekly summary report on all the data received, including information that can be used by Medicare managers and membership services departments on new deaths, new terminations, corrections in names and addresses, and so forth. In addition, each Kaiser site receives a software package through Microsoft Access. Ibis software stores the aggregate data and produces single-page member summaries, which tell exactly what the member's responses were to the eight pages of questions on the Health Status Form Questionnaire.

Sites are encouraged to use information such as physician provider codes, facility codes, division codes, and so on, to facilitate aggregation of the data in a useful manner. These aggregate analyses produce additional reports for triaging and screening new enrollees. Needs for prevention services, acute care services, mental health services, and so on, are identified for each enrollee based on the self-reported responses to the questionnaire. This information is integrated into a care plan that is negotiated with the member and facilitates identification of priority concerns.

Use of information from the Health Status Form Questionnaire has improved the aggregate description of Kaiser's Medicare population, which in turn has improved efforts for planning and delivery of services. For example, a baseline description of the health and service utilization needs of each member is established at the point of enrollment. This information can be monitored over time to identify positive and negative changes in health status. The information assists in proactive treatment and patient triage to augment the standard medical

care model. This information also helps the staff in medical offices to organize care and to improve the delivery of day-to-day health care services by identifying those patients with the most acute need. Medical staff can use this information to facilitate interactions during the patient's first visit to a physician. The physician is informed about major issues of concern prior to the patient interaction, and the patient does not have to repeat information captured by the Health Status Form Questionnaire.

On average, 5 percent of new enrollees are defined as currently frail or at risk of becoming in the next year. The identification of specific individuals at risk for frailty facilitates efforts by medical staff to establish complex plans of care and treatment. Having such plans ensures better coordination and continuity of care as the patient proceeds from one site of care to another.

Proposed next steps for the project include the following:

1. Design of a re-screening instrument and methodology to determine how many years it takes for the nonfrail to develop frailty: the cohort established for the Social Health Maintenance Organization will provide useful information to answer this question
2. Comparison of mortality rates between the frail and the nonfrail: initial analysis of the data indicates that almost 27 percent of the frail will die within 12 months of their being identified as frail.
3. Assessment of the development of new incidence of frailty among the nonfrail over a 10-year period of time: this will help determine the sensitivity and specificity of screening at different intervals such as 5, 3, and 2 years.
4. Initiation of contracts with other health care plans and service providers to screen their new enrollees in Medicare for frailty.

Committee members expressed a great deal of enthusiasm for Ms. Brody's presentation on Kaiser's Medicare Screening Project. One question of interest was whether the Health Status Form Questionnaire could be used to screen nonelderly enrollees in Medicare. It was pointed out that these patients might benefit from a similar type of screening and from development of the same type of care plan. Ms. Brody indicated that plans are underway to use the same instrument with the nonaged Medicare population. She cautioned that the frailty prediction score would not be available due to a lack of data and insufficient time to observe outcomes in this new population. She noted, however, that responses to the questionnaire would be useful to physicians and health care teams in order to provide a complete picture of nonelderly members of Medicare and facilitate the development of care and treatment plans that address a comprehensive set of patient needs.

One committee member noted that the type of screening conducted under the Kaiser model could yield two different outcomes. First, it could provide a tool and screening results that would allow plans to avoid patients with certain risk profiles. Alternatively, it could be a tool to identify risks and then couple the scores with an appropriate plan. As such, it would be part of efforts to conduct

quality assessment of care plans. It was also noted that a similar screening effort was initiated by the OASIS project, which yielded a scale or score for physiological risk or functional assessment. A representative from HCFA indicated that initial difficulties with the Medicare Home Health Care Quality Assurance and Improvement Demonstration Outcome and Assessment Information Set (OASIS-B), concerning violation of patient privacy, had been overcome and the system was available for use. A comment was made that the OASIS project also provided the opportunity to collect data on risks and outcomes that could facilitate development of care plans and serve as an assessment of the effectiveness of these plans.

Ms. Brody was also asked if the interventions and care plans developed in response to results from the Health Status Form Questionnaire were mandated within the Kaiser system and subject to audit. In response, it was noted that Kaiser developed the Medicare Screening Project in response to some of the requirements of the Balanced Budget Act of 1997. It was felt that the screening effort had the potential to define a new target population and associated care plans that could be tracked though an audit trail. However, the development of the care plans is not yet a mandatory requirement for all Kaiser facilities. The specific elements of an appropriate care plan for elderly Medicare enrollees identified as at risk of frailty have not yet been determined, although efforts to do so are ongoing across the United States. There is some indication of the need to develop experts or specialty care services to deal with the needs of a geriatric population. This is particularly true as the number of aging Americans continues to increase in the coming decades. The screening effort raises clinicians' awareness of issues relevant to the care of this population. It also ensures that when a patient comes to a medical setting such as an ambulatory care center or emergency room, staff will have computer access to the patient's care plan. This is intended to maintain and improve the continuity of care for such patients.

The committee also discussed with Ms. Brody the issue of depression, which is one element of the calculated score for risk of frailty. Specifically, Ms. Brody was asked to describe the importance of depression in determining the overall level of disability. In response, Ms. Brody noted that the inability to deal with the chronicity of their disease over time presents a significant challenge to people who are having these slow transitions toward death. It was her opinion that depression, lack of motivation to engage in self-care, and decreased motivation and resilience in coping with the annoyances of living with chronic disease can build up over time. As support systems fail, loved ones die and resources diminish, depression seems to be more evident. The Health Status Form Questionnaire provides clinicians with specific information about depression. As a result, it can be included as an issue to be addressed by the care plan.

A final questioned was posed by one of the members of the workshop audience. The panel was asked if there was anything comparable to OASIS in home health care for the Medicare enrollee in managed care plans that would be based on a standardized needs assessment. It was noted that such an instrument would provide HCFA with an opportunity to compare the effectiveness of treatment

between different plans. It was acknowledged that the Kaiser project was innovative and could provide a model for a methodology to identify at-risk patient populations and develop appropriate treatment plans, especially for more complicated, less profitable patient groups. Adaptation of the Kaiser methodology by HCFA could lead to much more effective treatments for patients with complex medical conditions, as well as the necessary financing and regulatory structure that is often ignored in discussions of quality improvement.

In response to these remarks, a committee member indicated that HCFA does have a Medicare risk measure. It is known as the Health Outcomes Study, which was designed to compare plan performance in the care of the Medicare risk enrollees. However, this study relies on random selection of patients from each plan's membership rather than selection of patients based on data. Plans are blinded to the selection process. Results from the study provide a quality audit rather than a measure of the effectiveness of different treatment interventions among plans.

A panel of three speakers addressed issues associated with health care policy and the insurance implications of defining serious or complex medical conditions. The three panel members were Dr. Helen L. Smits, Dr. Lynn M. Etheredge, and Mr. Stan Jones. The session opened with remarks from Dr. Smits concerning issues related to the range of managed care plans, the response of plans' medical directors to the issue of serious or complex conditions, and potential risks and concerns associated with plans of care.

Dr. Smits noted that people writing and talking about managed care today still tend to think about the original Kaiser staff model. This was essentially an arrangement in which the insurance plan was buried in a provider system that owned ambulatory care, specialty care in the original Kaiser model, and the actual hospital beds and other facilities. This is one extreme model of managed care. In contrast, one can consider the Oxford system. In this, an insurance company contracted with providers in a fairly wide range of ways to provide services. These are the two extremes of managed care, and regulations concerning serious or complex medical conditions must encompass both models.

In fact, the managed care industry also involves many big indemnity plans or network-type managed care plans. These types of plans enter into risk-sharing arrangements with providers, which is somewhat similar to the original Kaiser model of care. Under such a model, the physician may have within his or her care team a fair amount of control over what resources are going to be available

to specific patients. Dr. Smits then addressed issues related to case management in different types of managed care plans. Most medical directors of plans would begin to identify categories of patients with serious or complex medical conditions by collecting information from their case managers about the types of patients they are managing.

Case management would be very tightly related to the process of patient care within a Kaiser-type model of managed care, a staff model health maintenance organization, or a physician group accepting risk. There would be a provider giving care within the constraints of a care planning process. Someone may be named as case manager, usually a nurse or a social worker. The plan of care would usually be developed in full collaboration with, and with the knowledge of, the patient. It is likely that the patient would know the identity of the case manager. The patient would also have some involvement in the creation of the plan of care, although the degree of involvement would depend on the attitudes and preferences of the health care team. This health care team would be similar to the team described by Dr. Lynn to provide specialty care.

The classic network-type plan would also rely on case managers, often either social workers or nurses. These case managers would be very sophisticated and well trained. In many instances they would have very sophisticated computer support to inform them about the patient. However, they usually would not know the patient personally and would not interact with the patient other than by telephone. Their work would be primarily with providers. They would manage cases and try to put together a package of services, which would be authorized and paid for, that suited the needs of a patient with a complex medical condition, such as a pregnant methadone addict with severe congestive heart failure. Such a patient would need services in the home as well as require more than one kind of medical care. The case manager in the plan would generally know who is providing care to this patient and who is authorizing the services. It is likely that a case manager for a patient with a serious and complex condition would be unknown to the member, and the care planning process also would be unknown to the member.

Under this model of managed care, providers with contracts for services would be responsible for developing the plans of care. Network health plans might, in the process of making case management decisions about complex cases, receive copies of a care plan, or discuss it over the phone with the provider, or record elements of it in the computer. However, the case manager would not be responsible for developing the plan of care. Rather, the professionals involved in providing care to the patient would develop the care plan.

Dr. Smits provided the network model of case management and plans of care in order to suggest to the committee that the development of a care plan increases the likelihood of duplicating or replicating in some way an activity that really belongs in the provider's hand. This has its own potential for creating complexities in the caregiving process. She stressed that many managed care plans are very different from the traditional Kaiser model with respect to case management and the development of care plans.

Dr. Smits then reflected on some of the details of plans of care. She reiterated that there is a wide range of people with serious and complex conditions. On the one hand, there are the elderly, particularly the old and the dying elderly. On the other hand, there are considerably younger people, often with one primary illness such as HIV/AIDS that is associated with a series of problems. A plan of care is, almost by definition, something that is wanted by providers. However, it is essential to ensure that plans of care do not become a coercive activity. The core of the Consumers' Bill of Rights is to protect consumers, at least in one way, by making sure that they have access to specialists of their choice.

For example, a patient has been going to the same neurologist for 5 years for a condition that is progressively deteriorating. This provider is associated with Hospital A. The patient also knows that friends with the same chronic condition go to Hospital B in order to see another neurologist in the same network but with a different approach to treatment. According to the patient's plan of care, she or he has had sufficient access to a neurologist and all necessary tests. However, the patient wants to see the neurologist at Hospital B in order to have access to the alternative treatment. The patient wants the right to see the second neurologist.

Dr. Smits reminded the committee of the importance of not developing regulations that support efforts by plans to exert excessive control over issues that are properly individual decisions about care. People ought to have the right to make choices about their care and care providers. Medicare beneficiaries, especially the disabled, should have the right to make up their own minds when they want to walk out of one plan of care and into another. It is equally important to ensure that the regulations do not advocate for an audit process that identifies managed care systems as lacking treatment or care plans in instances when patients have chosen not to follow the suggested plan of care.

Dr. Smits went on to note that fully 50 percent of all of the individuals who now participate in clinical trials at the National Institutes of Health (NIH) are self-referred. Many locate information about these trials directly through Internet sites, by contacting the 800 numbers established for the trials, or by calling the NIH directly to request information about possible trials. Such self-referrals are a radical change over the last 5 years, and many of the people self-referring to these trials are likely to have a serious or complex medical condition such as cancer. These patients have chosen to walk away from the providers who were involved with their original diagnosis and treatment plan. In many instances, they will self-refer to a clinical trial while not informing the members of their original care team. This pattern of self-referral will be important to consider in any definition or treatment plan for serious and complex medical conditions. It has implications both for the committee's definition of serious or complex conditions and for any regulations that emerge from this definition.

Dr. Smits also urged the committee to consider recommendation of regulations that would facilitate access to certain special privileges within a health plan by patients who are defined as having serious and complex conditions. An ex-

ample of such a special service might be to provide patient access to the plan of care. Currently, network-type health plans have no obligation to reveal the care plan to the member. Patient access to the care plan would be most important in instances of disputes about care. Similarly, Dr. Smits cited the issue of advance appeal mechanisms as a potential special service for patients with serious or complex conditions. There may be instances where a case manager will have a plan of care outlining treatment for the upcoming nine months. The patient, however, disagrees with this plan. Under such circumstances, appeals should not be delayed until an x-ray or physical therapy does not occur as soon as the patient expects. In fact, Dr. Smits advocated that the patient be able to appeal the plan as it is laid out for however long in the future.

The issue of continuity of care was also emphasized in Dr. Smits's remarks. In fact, discontinuity in care coordination occurs with disturbing frequency in the current health care delivery system. For example, a plan writes a contract with someone to provide pharmacy or mental health services; the next day these providers have been sold to someone else or somebody else has replaced the provider group. A health plan may have a contract with a large doctor group. Suddenly, a second plan offers them a special deal if they become exclusive providers. Consequently, a sizable proportion of members in the first plan choose to go with the second plan in order to continue with their provider or simply change plans because they did not like their choice of providers in the first plan. This is a time of very rapid change in the delivery and reimbursement of health care services. It is essential that consumers receive protections to ensure that they can make their own health care choices. Conversely, protections are necessary for consumers in order to ensure continuity of care when contracts change or expire.

In summarizing her thoughts, Dr. Smits urged the committee to consider carefully the issues of chronicity, persistence, and progressive deterioration in the definition of serious or complex medical conditions. She specifically cited pregnancies covered by Medicaid plans, which can involve serious and complex conditions that are ultimately resolved when the pregnancy ends. This does not mean that the conditions are any less serious or complex or that the patient is any less entitled to special protections during pregnancy. Other examples of serious or complex conditions that eventually resolve include some cancers, severe infections, and episodic crises for patients with HIV/AIDS. These conditions are more prevalent in younger populations. It is important not to label a patient as serious or complex for a lifetime, particularly when payment systems are not adaptable if, in fact, the medical condition changes over time.

The committee requested clarification and additional details from Dr. Smits on a number of issues. Specifically, she was asked about members of the HealthRight, Inc., managed care plan with serious or complex medical conditions and whether their classification as serious or complex had any relationship to the amount of money being spent on them? Dr. Smits agreed that enrollees with serious or complex health conditions were likely to appear on a printout of the highest-expenditure patients over a period of 5 or 6 months. It was suggested

that expenditure of resources might be one method of identifying patients with serious or complex medical conditions. Dr. Smits was then asked if patients with serious or complex medical conditions would comprise the top I percent of the highest-expenditure patients.

In response, Dr. Smits pointed out that the most expensive members in Medicaid managed care are premature babies. The costs are overwhelming during the time these infants are hospitalized. A plan of care was established for the interval of hospitalization, but after discharge there is not a great deal of care management for these infants. She pointed out that if a health care plan looked just at the most costly I percent of its enrollees, many premature infants would be identified, but the plan would miss people with serious or complex conditions who comprise the top 5 or 10 percent of total expenditures.

Dr. Smits was also asked if a premature infant would still be considered a serious or complex patient after discharge from the hospital. She acknowledged that this was likely to be the case immediately following discharge because the infant would most likely require some home care. Case management would continue for those infants with serious disabilities. In contrast, some infants would be released to home quite healthy, and after 4 or 6 months, if the mother is reliable about follow-up visits, further case management would not be required.

Dr. Smits was also queried about when a managed health care plan would decide that case management was no longer necessary for a specific patient. She acknowledged that the final answer to this is not yet known but suggested that it might be when requests for services are discontinued. She also noted that in some cases, there would be a very clear cutoff point. For example, a severely ill pregnant woman would require intensive case management including home services until the birth of the baby. Following the birth, special services continue on a tapered basis for the first 3 months and then are usually no longer required. Dr. Smits advocated for managed care plans using good computer systems for case management that will allow the case manager to close a case but also generate a reminder in 4 or 6 months to follow-up with the patient or provider to determine current health status and needs.

A similar question about duration and scope of case management for disabled children was raised. Dr. Smits explained that such children would require one or more case managers or care coordinators because of their eligibility from birth to 3 years of age for services that may well include non-Medicaid services, so as to ensure access to early invention programs and Title V services. She pointed out that although Medicaid would not be the payment source for such ancillary services, the Medicaid case manager would be expected to know where these services could be found. There would be an incentive to find them and link the member to them at every level, from low-level services such as locating certain kinds of equipment or furniture for use in the home to very high-level services such as access to specialized training and education programs. Establishing links to community services would be an essential aspect of the Medicaid case manager's responsibilities.

The committee explored in further detail Dr. Smits's remarks concerning special protections. She was asked to define what these special protections might be and what they might protect against. In response, Dr. Smits referred to the proposed final regulations from HCFA for the Medicare+Choice program. According to Dr. Smits's interpretations of the original legislative language for the Consumers' Bill of Rights, people with serious and complex conditions may not be receiving as good care as they should be from managed care. Some of these patients are doing fine and do not require any protections. Having the right to know about things such as their plan of care, the right to appeal forward, and similar rights will help people who are dissatisfied with the services provided by their managed care plan to improve their situation. Special protections may be necessary if patients are to have at their disposal all of the possible tools to obtain good care on their own behalf. Dr. Smits cautioned the committee that her remarks about special protections were not intended to imply that everybody is dissatisfied with the care provided by their health plan. Rather, the term was used in a generic sense to address consumer protections in health care.

Dr. Smits was further queried about the issue of special protections and whether they should protect patients from certain events or rather ensure access to special services. She clarified that special protections would apply to ensure that patients received the care they chose instead of the care that their doctor(s) wanted to provide. The committee commented that remarks from earlier presentations by Dr. Lynn and Ms. Brody advocated strongly for case management for patients with serious or complex conditions, in which one individual assumes responsibility for coordinating all aspects of the requisite care. Dr. Smits generally concurred with this perspective but suggested that it might not apply as well for the elderly or for patients who do not want details about certain aspects of their health (e.g., mental health treatments) revealed to their primary care provider. Efforts to maintain the privacy and confidentiality of patients can often result in giving them control over what information is to be shared.

Pursuing this line of thought, Dr. Smits was asked if providers would need to be exempt from liability for full responsibility for patient care in instances where they were uninformed about aspects of a patient's medical care and health status. In responding, Dr. Smits used Connecticut as an example. Under current Connecticut law, the provider cannot know about mental health services or family-planning services unless specific permission has been given by the patient for such information to be released by the health care plan. Similarly, in New York State, health plans cannot provide primary care providers with lists of all medications taken by their patients. To do so could result in disclosure of information about patient use of psychopharmaceutical agents because in doing so, the plan would reveal information about mental health care services. Dr. Smits acknowledged that this presents significant challenges to primary care providers who must be absolved from responsibility for mistakes that could be attributed to lack or inadequacy of information. However, privacy is a very significant issue for most patients.

The committee then turned its attention to Dr. Smits's remarks about providing members of managed care plans with an advance appeal mechanism for specific aspects of the care plan. It was pointed out that Medicare currently has an extensive external appeals mechanism in place that permits patients to appeal any denial of a service of any sort. Dr. Smits was asked if she was suggesting that the existing Medicare mechanism should be expanded to give beneficiaries the right to appeal a care plan for external review. Dr. Smits elaborated further on her comments first by pointing out that a denial of service means that a claim has been submitted and not paid or a request has been made to authorize a service and the request has been denied. For example, a physician wants to do magnetic resonance imaging (MRI) on a patient. The plan is contacted by the provider for approval of this test, which is denied. The provider can appeal this decision under the current Medicare appeals process. Dr. Smits suggested that people with serious and complex medical conditions should be allowed to review their plan of care and to proactively appeal elements of the plan with which they disagree. These patients should have opportunities to appeal future events outlined in care plans in order to eliminate the delays that occur under the current system of denial.

Dr. Tony Hausner of HCFA provided further clarification of some of Dr. Smits's remarks. First he noted that the regulations for Medicare+Choice require that a care or treatment plan be developed for all persons with serious or complex conditions. In response to questions from plans about giving beneficiaries the right to approve these care plans, HCFA encouraged managed care organizations to allow the beneficiary to participate in the development of the treatment plan but did not mandate it. Dr. Hausner also noted that the proposed final regulations for Medicare+Choice have requirements for coordination of care, especially for persons with serious or complex conditions. These requirements are contained in Section 422.112, Access to Services, of the Federal Register publication of the final rules concerning establishment of the Medicare+Choice program (Federal Register, June 26, 1998).

With respect to Dr. Smits's comments about appeals, Dr. Hausner clarified that the plan of care can be appealed to an external organization. He suggested that a grievance process would apply in such instances where a patient would want to express disagreement with his or her plan of care. He also expressed strong support for case management systems and recommended Sierra Health Services in Nevada as a very comprehensive case management system that would merit consideration by the committee.

Dr. Smits suggested that HCFA consider reimbursement of providers for the time taken to prepare plans of care. Payment for a mandated service such as the development of care plans would seem to be appropriate. The committee acknowledged the importance of Dr. Smits's observations about issues of personal control over health care decisions and the complexities posed by the expression of such personal controls. It was pointed out that Medicare still provides enrollees with choices about whether to be in a managed care or a fee-for-service indemnity plan. Dr. Smits was asked if she believed that persons enrolled in

managed care plans should have the same amount of free choice as persons enrolled in indemnity plans. Do you tell patients enrolled in managed care plans who request more choices and involvement in their care plan to switch to a fee-for-service plan? Alternatively, do you explain to the patient that certain guidelines and management rules are associated with the choice to enroll in a managed care plan? Dr. Smits pointed out that health care reform is moving toward a time when patient choice will no longer be as easy or frequent as it is even now. However, if patients are locked in for a year to a specific Medicare managed care organization, they need some protection of their right to make choices about their health care. Dr. Smits expressed doubt that Medicare members who have chosen managed care should be entitled to absolute, total free choice. She concluded that for the elderly enrolled in Medicare managed care plans, privacy and confidentiality will be equally as important as the right to independence and personal choice.

The remarks of Dr. Lynn M. Etheredge addressed possible implementation strategies for the Medicare+Choice regulations concerning patients with complex or serious medical conditions. He focused particularly on some policy context for thinking about data systems in Medicare and actually making such systems work to produce change. Dr. Etheredge acknowledged that Medicare has had much more experience in developing regulatory requirements in data systems than in actually using data systems effectively to bring about changes in health care delivery. Issues addressed by data systems include fundamental questions of taxonomy—what is medical care and how it should it be organized? Often the data systems involve multiple agendas and multiple organizational responsibilities. Medicare plans try to determine who is reporting to whom for what purpose and to identify appropriate uses for data. In doing so, one is actually trying to define a health care system in a health care environment in which such systems do not occur naturally or, if they do, are organized around medical disciplines and individual institutional roles.

Dr. Etheredge suggested that these issues reflect a very early stage of managed care. Efforts are ongoing to answer questions about the type and extent of management that should be provided by managed care plans, especially for patients with serious or complex medical conditions. If not case management for serious or complex conditions, what is managed care doing in addition to limiting costs? The issue of defining serious or complex medical conditions raises some fundamental issues of accountability: who is accountable, how are they held accountable, and what is the heart of managed care? Such discussions begin by examination of current ways of thinking, conceptualizing, and defining medical activity. However, the earlier remarks by Mr. Crowley, and Drs. Durant and Lynn, emphasized that current concepts of care delivery and management do not

relate very well to issues that arise for plans providing care to patients with serious, chronic, and complex medical problems.

Currently, managed care is organized either around institutions such as hospitals or, more frequently, around the practice of fee-for-service medicine. Data are readily available to count numbers of physician visits, medical and laboratory tests, admissions to hospitals, and visits to emergency rooms. In contrast, data to describe improvements in patient health status, effectiveness of treatments for diabetes or cancer, or failures to improve health status are not readily available or reported.

Dr. Etheredge cited the recent report of the Institute of Medicine National Cancer Policy Board on quality of care for cancer patients. The report demonstrated that answers to questions about the quality of care received by cancer patients are not readily available. Existing data systems to monitor and measure quality of care are only in the very early stages of development. The report included a number of ambitious recommendations to respond to this informational gap. Specifically, measures to assess quality of care have to be developed. Benchmarks for standards of quality care for cancer patients should be established.

Dr. Etheredge urged the committee to consider the recommendations of the National Cancer Policy Board report and identify those areas that would be representative of the issues relevant to serious or complex medical conditions. He also recommended that the committee view its policy challenge as one of initiating a process of developing a quality management and reporting system for patients with serious or complex medical conditions that would apply to both managed care and fee-for-service plans. He argued that the two types of plans should apply similar, if not the same, standards of care for patients with serious or complex medical conditions. Dr. Etheredge advocated for an outcome or set of outcomes that would be both useful and future oriented.

Medicare has tens of thousands of pages of regulations, and it is very easy to take any problem that occurs and write more regulations about it. The problem is actually getting anyone to apply these regulations to the practice of health care. Dr. Etheredge emphasized that any requirements or regulations resulting from the committee's deliberations on serious or complex medical conditions should be something people can apply and find useful today. Such regulations should also include support for efforts to build a new kind of quality system, measurement system, or accountability system for the future, in recognition of the fact that there will be several more evolutions beyond what this committee is able to accomplish within a limited time.

Dr. Etheredge made reference to some of Medicare's previous experiences with trying to change the medical care system and get it to behave in different ways by defining and classifying certain kinds of patients and constructing payment systems around these new classifications. For example, the development of diagnosis-related groups (DRGs) was probably the most ambitious attempt to reform the Medicare classification system. It took more than 10 years to accomplish and was developed by quality assurance engineering experts at Yale. The DRG system tried to move beyond per day and per admission to define a diag-

nosis and a procedure to which modern management techniques could be applied. This would allow Medicare to manage the system, measure the quality, measure the cost, pay on this basis, and complete the health system on this basis. The DRG system came from a whole different paradigm that attempted to define patients in terms of needs and then follow through with specific procedures to fulfill these needs. The greatest impact of the DRG classification has probably been on payment systems, although there may be some cases in which providers are managing quality on this basis.

Examples of other areas with experience relevant to the efforts of the committee to define serious or complex medical conditions might include the following:

1. coverage of kidney disease patients and other serious or complex conditions, combined with efforts to build payment systems and quality assurance around these categories of patients;
2. hospice care;
3. nursing home care and regulations, especially those focused on issues of quality assurance, plans of care, and related requirements;
4. efforts by HCFA to define Centers of Excellence for interventions such as coronary artery bypass surgery and to establish benchmarks for state-of-the-art plans and providers; and finally,
5. risk adjustment using adjusters that are better predictors of health care utilization than patient age, gender, welfare status, nursing home status, and so forth.

Dr. Etheredge noted that many of the better predictors of health care utilization might include race, socioeconomic status, and patient status as alive or dead. He commented that these are not necessarily socially or politically correct, and many of them would be susceptible to gaming if they were used. Problems arise, however, when efforts are made to label or categorize people. He concluded that the most effective methods for patient categorization would combine clinical and actuarial data. In order to impact the health care delivery system, plans will have to pay for better care or give people choices to select their own care. In the absence of a payment system that is integrated with data systems on quality, there will be a tendency to have the regulators fighting against economic incentives, and economic incentives usually will win.

Dr. Etheredge also noted that in general, managed care organizations have focused on populations under age 65. This is where most of their expertise has been obtained. People who are terminally ill and all of the Medicare beneficiaries who are going to die due to the processes of aging are very different kinds of populations. Many of the things that managed care plans do or have done for people under 65—for example, triaging people away from specialists and primary care—will frequently have to be reversed to meet the needs of elderly populations. It is important to note that current and new managed care plans will not have the expertise to meet the needs of the elderly Medicare populations.

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

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

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

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

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

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.

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.

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

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

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

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.