A prominent disease-management official is blaming a lack of leadership at the CMS for the failure of a key demonstration project that last week culminated in one participating firm declaring bankruptcy.
First diseases, now debt
Groups blame CMS for failure of demo project
LifeMasters Supported SelfCare, Irvine, Calif., filed for Chapter 11 protection on
Sept. 14, saying that it owes the CMS about $100 million after participating in three demonstration projects.
Officials at the privately held company said though it is expected to be profitable, its debt to the CMS is crushing. The firm has assets between $10 million and $50 million, according to the bankruptcy filing.
Tracey Moorhead, president and CEO of DMAA: The Care Continuum Alliance, a trade group for disease-management firms and care-coordination groups, said the CMS is to blame. “From my perspective, one of the big problems is there is a huge vacuum in leadership at the CMS,” Moorhead said. “We're not seeing that commitment to long-term quality and health of Medicare beneficiaries, and I think that must come from leadership at the top.”
The CMS has not had a Senate-confirmed permanent administrator since Mark McClellan stepped down in October 2006. Charlene Frizzera, the agency's chief operating officer, has served as acting administrator since January. The CMS did not return calls seeking comment.
The main project LifeMasters is on the hook for is the Medicare Health Support Program, a three-year project involving about 240,000 Medicare fee-for-service and dually eligible Medicaid and Medicare patients. Eight companies participated in the CMS project, which aimed to reduce costs and improve outcomes and patient satisfaction for beneficiaries with diabetes, heart disease and other chronic diseases.
Participating companies besides LifeMasters were Aetna, Cigna Corp., Green Ribbon Health, Health Dialog, Healthways, McKesson Health Solutions and XLHealth.
The program launched in 2005 and 2006, but during the second year, three companies—including LifeMasters—dropped out, saying they could not achieve the required 5% savings, plus additional savings to cover their fees, according to a report to Congress released in January (Jan. 12, p. 12). LifeMasters exited at the end of 2006. “We realized it wasn't going to work,” said George Pillari, managing director with Alvarez & Marsal Healthcare Industry Group and newly named president and CEO of LifeMasters. “The way these programs were set up, it was very hard to demonstrate savings.”
Moorhead added that the CMS showed no flexibility in terms of adapting the demonstration project to achieve success. The Medicaid Health Support Program ended in August 2008, with five of the participating firms requesting early termination.
Indeed, none of the eight participating companies showed cost savings midway through the program, according to the second report to Congress, produced by RTI International. A third report on the program is expected in 2011.
Although the first two reports to Congress showed no savings and marginal achievements in improving quality, at least one participating company said it was a success.
Green Ribbon Health was formed as a joint project between Humana and Pfizer to participate in the demonstration project, and served about 20,000 Medicare beneficiaries in west central Florida. Humana deemed the demonstration project so successful that it bought Pfizer's share of Green Ribbon Health and relaunched it as Humana Cares. Humana Cares opened a national operations center in St. Petersburg, Fla., in February and serves about 30,000 Medicare Advantage members and dually eligible beneficiaries nationwide.
“Managing chronically ill people takes time and it takes time to see results,” said Jean Bisio, CEO of Humana Cares and former CEO of Green Ribbon Health. “It's not for everyone.”
Bisio said Humana Cares' case managers, nurses and other staff work closely with the patient's primary-care doctors, as well as churches and community groups, to make sure that people get the help they need. Telephonic case managers are supported by field managers, who conduct home visits.
“We marry medical care and social services,” Bisio said.
Such intensive interaction has shown to be profitable for Humana, Bisio said. Since January, Humana Cares has seen a 36% reduction in member hospital admissions, a 22% decline in emergency room visits and a 21% drop in medical claims, according to the company.
Bisio declined to say whether Green Ribbon, like LifeMasters, owed the CMS money after the demonstration project ended. McKesson declined to comment for this article and several other participating firms did not return calls by deadline.
Pillari of LifeMasters called the CMS demonstration project “unchartered territory” for disease-management firms, especially in terms of serving low-income seniors with complex medical conditions. “They're much more difficult to manage than someone in a corporate health plan who may have diabetes but is otherwise pretty healthy.”
Many of the dually eligible Medicare and Medicaid clients didn't have access to a telephone or Internet, so were difficult to reach, he said. The RTI report to Congress said that the sickest dual-eligibles with the most to gain from the program were the least likely to participate.
“With disease management, there's this whole idea of getting people engaged,” Pillari said. “It's tougher and tougher to do as people get older.”
Bisio disagreed. “Each person can learn to manage their own healthcare,” she said. “Members can change their behavior.”
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