Local Examples: Highly Valued Care for High-Cost Medicare Beneficiaries

High Cost Health Care Exec Summary

Medicare is in the process of transforming itself from a passive bill payer to an active program manager. But this transformation will not be complete without a clear description of the spending and health performance goals that Medicare expects to achieve for beneficiaries and taxpayers—as well as accountability for achieving those goals. As a result of directives from Congress, the Centers for Medicare & Medicaid Services (CMS), and the Center for Medicare & Medicaid Innovation, in particular, has created many great initiatives, but these efforts are missing a key piece—an overall strategy that will lead to the delivery of highly valued care.

Highly valued care is individualized, convenient, and efficient care delivered in innovative ways to help each patient achieve their specific goals. Other than thresholds for moving a certain percentage of fee-for-service payments into alternative payment models, Congress and CMS have not set overall patient outcome and cost goals—key metrics for advancing highly valued care.

Large health plans, medical group practices, and even third parties provide effective examples for how Medicare can deliver highly valued care that improves beneficiary outcomes and reduces costs.

For example:


Aetna’s Medicare Advantage Provider Collaboration Program provides care management services for complex patients who are identified based on a risk score, frequency of hospitals admissions or emergency room visits, high-risk diagnoses, and predictive algorithms for readmission and advanced illness. The program utilizes a nurse case manager who is embedded with a medical group when patient volume reaches critical mass. Provider groups engage in collaborative agreements, including outcomes goals, data sharing, and collaboration and support for Medicare Advantage members. The program reduced admissions by 30-38%, emergency room visits by a 3-year average of 14%, and total cost of care by 19-33%, while ensuring 99% of patients had an annual office visit, 98% of patients with heart failure, diabetes, or COPD had semiannual visits, and 95% of patients discharged from the hospital had a follow-up visit within 30 days.

Arizona and California

SCAN Health Plan serves high-cost Medicare beneficiaries through its Medicare Advantage special needs plans (SNPs). SCAN takes a holistic approach to evaluating beneficiaries’ needs and improving their health by offering a range of home- and community-based services to help beneficiaries live in their communities. Part of their approach involves sending case managers, who may be nurses or social workers, to beneficiaries’ homes to help coordinate the range of health and social services a member may need to safely remain in their home. This may involve helping beneficiaries access meal and food services, apply for Medicaid or subsidized housing, or make doctors’ appointments and arrange for transportation. SCAN’s efforts result in reduced readmission rates, high quality and member satisfaction ratings, and a 26% reduction in readmission to nursing facilities.

Arizona, California, and Nevada

CareMore is an integrated health care company which offers Medicare Advantage plans, including special needs plans (SNPs) and a disease management program, and operates health centers that deliver care to members. CareMore’s Medicare Advantage health plans receive a risk-adjusted, capitated payment for each enrollee, and its health care centers only serve its plan’s members. In this way, CareMore has moved away from fee-for-service payments, which allows it to build specialized programs for high-risk, and high-cost, patients. For example, in order to ensure patients make their doctor’s appointments, CareMore provides free transportation to and from its clinics. Other nonmedical services to improve patient compliance include health care professionals who assess patients’ homes to mitigate fall hazards or ensure they have scales to track their weight, pill boxes equipped with an alarm to remind patients to take their medications, and other wireless monitoring devices.

CareMore employs different clinical models for its frail and chronically ill population and for its non-frail population. The frail and chronically ill population represents about 20% of CareMore members, and they account for 60% of its medical costs. The chief difference between the two models is the use of an “extensivist” who manages care for frail and chronically ill patients. As conceived by CareMore, an “extensivist” is a physician who connects a patient’s hospital care with their outpatient follow-up and continuing care. This ensures that the patient understands the care plans and instructions outlined by the multitude of providers they may see and works to reconcile those plans when they inevitably conflict. CareMore offers additional programs designed for specific chronic conditions, such as back pain, chronic kidney disease, diabetes, heart failure, and more. All of this care coordination is supported by what CareMore calls a “longitudinal patient record,” which collects information from 8-10 different sources—electronic health record information is just one source of many—to build a complete picture of each member’s health and health care.

CareMore’s model seems to be working. The company reports medical costs for its Medicare members 18% below the industry average, which it achieves with a hospitalization rate 24% below average, hospital stays that are 38% shorter than average, and an amputation rate for diabetics 60% below average.


In 2010, Cigna HealthCare launched the first patient-centered medical home in the Phoenix area, the Cigna Accountable Care Program, consisting of a large medical group practice treating members of a single private payer. With the aim of improving quality and lowering costs, the Cigna Medical Group physician practice focuses on intensive care coordination, particularly for patients with chronic illnesses and ongoing health care needs. Providers that meet quality and cost targets receive financial rewards, and the program has produced an 11% decrease in outpatient surgery and costs, 7% lower total medical costs, and average annual per patient savings of $336. Overall preventive care visits increased by 3% and adult preventive care visits, in particular, were up 12%.


Michael struggled with Type 2 diabetes and found managing his insulin and blood sugar levels overwhelming. He frequently used the emergency room to get care, using an ambulance for his transport. When a care coordinator through his Regional Care Collaborative Organization (RCCO) reached out to intervene, she discovered that Michael’s primary care provider had moved away. She connected him with a new provider, where he had access to diabetes education and a new glucometer. Since his care assessment, Michael has not returned to the emergency room and successfully kept all his appointments to see his doctor.

Colorado built on the infrastructure of its Medicaid health care delivery system, the Accountable Care Collaborative (ACC), in creating a managed care, fee-for-service demonstration model for individuals eligible for both Medicaid and Medicare. Under the ACC program, the state contracts with seven RCCOs to develop provider networks and coordinate physical, behavioral, and social services for beneficiaries. The state uses fee-for-service payments as a base, with additional payments tied to performance indicators such as emergency room visits and hospital readmission rates. If the dual-eligible demonstration achieves at least a 2% Medicare minimum savings rate, Colorado will be eligible for annual retrospective performance payments, based on the savings rate.

The seven-phase passive enrollment process for Medicare-Medicaid beneficiaries began on September 1, 2014. Beneficiaries were categorized into groups based on their location, delivery system, and provider type and enrolled accordingly, starting with individuals who have the least complex conditions. The demonstration allows for beneficiaries to keep their network of providers and to opt out or unroll at any time. Key elements of the program include a Service Coordination Plan (SCP), cross-provider communication agreements, disability competent care, and a beneficiary’s rights and protections alliance.

In 2014, the ACC achieved net savings totaling $29 million to $33 million after administrative expenses, and the state hopes to expand on these savings through the demonstration model for Medicare-Medicaid beneficiaries.


Jim Carraway, a 53-year-old retired state of Florida employee, suffers from Charcot-Marie-Tooth, a rare neurological disorder that causes progressive nerve and muscle degeneration. He also suffered a stroke, had six heart bypass operations, a defibrillator implanted, several surgeries on his feet, and has diabetes. He was exactly the kind of patient for whom the Capital Health Plan in Tallahassee designed the Center for Chronic Care. When the Center was created in 2003, Capital Health Plan identified their sickest patients, those with multiple chronic conditions who didn’t fit into existing programs for patients with single diagnoses, and, after consulting their primary care physicians, invited them to the Center for Chronic Care. Here, using a comprehensive, planned approach to care with a focus on patient engagement and self-management, every aspect of a patient’s care is coordinated. If a patient is admitted to Tallahassee Memorial Hospital, the largest hospital in the area which serves a significant percentage of the area’s residents, or visits the hospital’s emergency room, the hospital’s electronic health record flags the patient so that the Center for Chronic Care’s medical director can be closely involved in their care. Capital Health Plan has seen primary care physician visits and pharmacy costs increase for the Center’s patients, but inpatient hospital days dropped by 40%, emergency room visits decreased by 37%, and overall claims costs for these patients dropped by 18%. The care model makes a difference for patients like Jim Carraway who, according to his wife, Sarah, is “doing much better” than he was before becoming a patient of the Center. Jim says that at the end of each visit, his doctor sets “goals and expected outcomes for the next visit, like lose five pounds or keep your blood pressure at this level. He names them, and it is motivating, because you know someone is paying attention.”


Partners Healthcare’s Integrated Care Management Program (iCMP) helps patients with multiple medical conditions access appropriate care and services to prevent complications and hospital admissions. Patients are matched with a nurse case manager who works with the patient and their family to develop a personalized plan to address their specific needs and goals. This program evolved from a demonstration conducted at Massachusetts General Hospital, the care management program, which reduced hospital admissions for participating patients by 20%, reduced mortality rates by 4%, and resulted in annual savings of 7%. Every dollar invested in the program saved $2.65 in health care costs.

Sixty five-year-old Francine is overweight, suffers from cataracts, end stage renal disease, and depression. She often falls out of bed at night because it’s too narrow, and must call 911 for paramedics to help her back into bed. Yet Medicare has not approved an automatic bed that could be adjusted to the right height. Through the care coordination offered through MI Health Link, Michigan’s dual eligible demonstration, Francine could receive help overcoming barriers to care.

Under the demonstration, health plans, called Integrated Care Organizations (ICOs), collaborate with established behavioral health organizations called Prepaid Inpatient Health Plans (PIHPs) to integrate care for Michigan’s duals population. ICOs are responsible for physical health and long-term care supports and services, while PIHPs cover behavioral health supports and services for individuals with intellectual and developmental disabilities and substance abuse disorders. Coordination takes place through the “Care Bridge,” a framework that includes both an electronic health record integrated across ICOs and PIHPs and a lead coordinator from either entity that is chosen by the beneficiary. ICOs and PIHPs contract with the state and CMS for capitated payments and negotiate reimbursement arrangements with their network of providers.

Voluntary opt-in enrollment began in January 2015, followed by phased-in passive enrollment in April 2015. Beneficiaries can switch health plans or opt out of MI Health Link at any time. Health plans also allow people to continue to see their current health care providers for at least 90 days after enrollment in order to provide more continuity of care through the transition.

Michigan, Healthy Michigan Plan

Michigan is exercising recently granted flexibility in benefit design in its Medicaid expansion plan, called Healthy Michigan. Using its existing managed care delivery system, Michigan will permit health plans to, for example, waive cost-sharing on specific services for patients with certain clinical indicators or for office visits at a recognized patient-centered medical home. Plans may also develop prescription drug formularies that place pharmaceuticals into preferred and non-preferred categories based on clinical value, rather than solely based on acquisition cost. Plans are permitted to require cost-sharing for non-emergency use of emergency room services.


In one year, Larry was hospitalized four times for dehydration due to his difficulty taking care of his everyday needs and aversion to asking for help. His meals often included canned foods and soda. Once enrolled in Minnesota Senior Health Options (MSHO), Larry met with a care coordinator who arranged for Meals-on-Wheels to bring him a daily meal. A nurse now visits him every two weeks to help manage his diabetes and medication, and a home health aide assists with hygiene and personal care. The care coordinator also arranged for homemaking services and regular doctor appointments. During the first six months of MSHO enrollment, Larry was not hospitalized once.

Since 1997, Minnesota has combined Medicare and Medicaid financing and acute and long-term care service delivery systems through MSHO. The state contracts with managed care plans for a single, combined monthly capitation payment based on the population mix enrolled in the plan for the month. Minnesota’s current ongoing demonstration tests administration alignment within this existing financial structure. Health plans are responsible for care coordination between medical and social services as well as volunteer organizations, and they provide coverage for all services under Medicare A/B and Minnesota Medical Assistance, including behavioral health and the first 180 days of care in a skilled nursing facility for those participants who enrolled in the plan while living in the community.

Enrollment into MSHO is completely voluntary and can take place any time of year. The state prioritized flexibility for beneficiaries to retain or choose their own primary care physicians as an incentive for potential clients to select the program over other care options. As of July 2014, 70% of Minnesota’s eligible population were enrolled in MSHO. In particular, those in nursing homes have experienced significantly fewer hospitalizations, emergency room services, and preventable emergency services since enrollment in MSHO, according to an evaluation of the program in 2004.


Utilizing Section 2703 of the Affordable Care Act, which allows states to design patient-centered medical homes to provide care coordination to Medicaid beneficiaries with chronic conditions, Missouri requested and received approval to utilize health care homes for Medicaid beneficiaries with mental illness and for beneficiaries with at least two specific chronic conditions. The Affordable Care Act provides state Medicaid programs with enhanced federal funding for the first two years of a health homes program, which Missouri will use to support participating practices’ care management activities through a per member per month payment. Early results from the health home program include a 12.8% reduction in hospital admissions and an 8.2% reduction in emergency room use. Improvements were also noted in diabetes control, patient follow-up and medication reconciliation following a hospitalization, and in blood pressure levels in patients with hypertension. The program is credited with a reduction of $127.55 per member per month solely in hospital and emergency room use costs, and a total cost savings to Medicaid of more than $27 million in the first year.

New Jersey

To hear Eugene Allen tell it, he was nearly dead when he was wheeled into the Special Care Center in Atlantic City, New Jersey. He had just been discharged from the hospital, where he’d spent three months on a mechanical ventilator in the intensive care unit, unconscious most of the time. As a rule, Allen avoided doctors unless it was a medical crisis or his wife nagged him to see someone. So, when his right leg swelled up, he continued his work as a chef and didn’t seek care—until the blood clot travelled into his pulmonary artery and collapsed his lung. His chances at survival didn’t look great; in addition to the collapsed lung, he battled a hospital-acquired infection and weighed 480 pounds at the time. But Allen is just the kind of patient for whom the Special Care Center is made. There, health care providers work to engage patients as partners in their care with a focus on lifestyle changes, such as diet and exercise. To help patients succeed, they receive unlimited, free access to the Special Care Center, which assigns health coaches to help keep patients on track. Patients often also receive reduced-cost medications. Despite his initial misgivings, Irma, Allen’s health coach, was patient with him, helping him work through medication side effects and encouraging him to walk, up to 14 miles a week, which he credits with helping him lose 100 pounds.

The Special Care Clinic, part of AtlantiCare, a health system in Atlantic City, New Jersey, was established in 2007 to help two self-insured health plans—a casino workers’ union and AtlantiCare Medicare Center—reduce their health care costs. The clinic is exclusively available to workers who have or who are likely to have very high medical costs. These patients were incentivized to join the clinic with unlimited, free access—no co-payments, no insurance bills—and with a clinic designed around providing very sick patients what they need, such as guaranteed same-day appointments for the acutely ill and health coaches to help them meet their goals. Reduced-cost medications are also often available. Patients typically see their doctor at the clinic 6-8 times each year but have 35-40 visits with their health coach. Health coaches operate in a similar manner to community health workers—they come from the same communities as their patients, speak their native language, and work to connect with patients, understanding the challenges they face, setting goals and, together, developing a plan to meet those goals.

The Special Care Clinic is different from other clinics on the back end, too. It receives a flat, monthly fee for every patient, rather than a fee for every service performed. Because this is the only reimbursement the clinic receives, it has no billing department, eliminating a huge administrative expense. Physicians must focus on service to retain patients and, thus, their monthly fees. And, clinic staff meet each morning to review the charts of the patients scheduled to be seen that day, discuss those in the hospital, and identify those who must be contacted regarding lab results or for other reasons.

This model of care has both reduced costs and improved quality. During the clinic’s first 12 months:

  • Emergency room visits and hospital admissions dropped by more than 40%;
  • Surgeries dropped by more than 25%;
  • Only two of 503 patients with high blood pressure were in poor control;
  • Patients with high cholesterol experienced, on average, a 50-point drop in their cholesterol levels; and
  • 63% of smokers with heart and/or lung disease had quit.

Comparing these patients with a similar group demonstrated a 25% reduction in the cost of their care.

New York

Residents of the Washington Heights-Inwood section at the northern tip of Manhattan face numerous social and cultural barriers and experience disproportionately higher rates of chronic disease. Recognizing that the health needs of this disadvantaged community were not being met, New York-Presbyterian Hospital partnered with Columbia University Medical Center and community providers to reduce individual and population health disparities. The care model centered on converting seven ambulatory care centers into National Committee for Quality Assurance Level 3 patient-centered medical homes (PCMHs), which earned them increased reimbursement rates from New York’s Medicaid program. The medical home team included new, culturally competent and often bilingual front line workers from the community—whose backgrounds were similar to many of the patients served by the medical home. In addition, the New York-Presbyterian Regional Health Collaborative, as the partnership is known, took the PCMH model a step further, linking the medical homes to other providers and community-based services to create a “medical village.” This model of care reduced emergency room visits by 29.7%, reduced hospitalizations by 28.5%, achieved increased patient satisfaction scores across a host of measures, and yielded a short-term return on investment of 11%. A large part of the financial gain was due to increased Medicaid reimbursement to the medical homes, but the reduction in emergency room visits contributed $381,000 in cost savings.


Integra ServiceConnect is one example of a non-provider, non-health plan service that connects individuals to the health care and social services they need to live healthier, more productive lives. Integra partners with health plans, health systems, accountable care organizations, and even government programs (such as state Medicaid programs) to improve health outcomes. By deploying teams of community health workers, who are from the communities in which the targeted individuals live, Integra is able to find, engage, and connect with people with high health care costs, helping them become invested in their health and health goals as well as connecting them to a variety of services.

Integra’s community health workers, called community coordinators, help individuals establish contact with a primary care physician, support them in advocating for themselves and ensuring all their questions are answered at health care appointments, and teach them about appropriate emergency room use, among many other responsibilities. On the social services side, community coordinators may connect individuals with local food banks or housing services to meet their needs. One of Integra’s partnerships with a Medicare Advantage dual-eligible special needs plan in Pennsylvania yielded an 80% reduction in emergency room visits. Spending for members of the plan with a behavioral health primary diagnosis dropped by 12% through a combination of decreased medical claims and increased pharmacy claims, as patients presumably learned better self-management skills. The cost of care for the engaged cohort dropped by approximately 60%.

South Carolina

Once enrolled in Healthy Connections Prime, dual eligible beneficiaries in South Carolina receive help from a care coordinator in determining what care they need and where to get it. Managed care organizations, called Coordinated and Integrated Care Organizations (CICOs), are paid a blended capitated rate of Medicaid and Medicare funds with a savings percentage applied upfront. In turn, they provide, arrange for, and coordinate a continuum of benefits, including medical and behavioral health, preventive services, prescription drugs, long-term services and supports, social supports, and palliative care for patients with serious, chronic illness.

The state began with a voluntary enrollment period during which beneficiaries could join the demonstration and select a health care plan. This was followed by a passive enrollment period when the remaining beneficiaries were automatically assigned to plans based on existing provider relationships and history with other managed care plans. CICOs must allow new enrollees to maintain their current providers and preauthorized services for 180 days from the date of initial enrollment. Individuals can opt out or dis-enroll from the program at any time, and continue receiving coverage through fee-for-service Medicaid and original Medicare or Medicare Advantage.


One Virginia resident, who suffers from Alzheimer’s, congestive heart failure, aphasia, and incontinence, was primarily cared for at home by her daughter before joining Commonwealth Coordinated Care (CCC). During the patient’s initial care assessment upon enrollment, the coordinator observed that the daughter was under great strain from her caregiving role and considering nursing home placement for her mother. After completing the assessment and discussing care options with the family, the coordinator facilitated the approval of increased hours for an in-home attendant. This additional support from both the coordinator and attendant enabled the patient to remain in her home while giving her daughter the relief she needed.

CCC offers primary, preventive, acute, behavioral, and long-term services and supports to Virginia’s dual eligibles through a single, integrated program under CMS’ Financial Alignment Demonstration initiative. CCC health plans receive capitation payments combining funding from the state based on historical fee-for-service payments and from CMS for all Medicare Parts A, B, and D services, which are adjusted for a plan member’s health status. Payments are reduced each year by an agreed upon percentage designed to capture the savings that should be achieved by coordination of services. A percentage of the capitation payments are also withheld, to be repaid to plans retrospectively if certain quality measures are met each year.

Initial enrollment took place in phases to allow the state to make improvements along the way and began with voluntary enrollment followed by rounds of automatic enrollment. Beneficiaries can opt in or out of the program or switch plans at any time. Under program rules, automatic enrollment cannot take place in a region unless beneficiaries have a choice of plans. Although Medicare data was not available at the beginning of the program, CCC was designed to use an “intelligent assignment” process for automatic enrollment that takes each beneficiary’s prior providers into account in order to promote continuity of care. Plans must allow new CCC enrollees to maintain their current providers and preauthorized services for 180 days from the date of initial enrollment. As of January 2015, 42% of the eligible population was enrolled in the CCC program, and the state projects $28 million in savings if enrollment reaches 50%.


Doug McLaren spent 31 years as an engineer and business analyst with Boeing and 20 years living with chronic pulmonary disease. Though his disease is well-controlled, managing his health is a constant burden on Doug, his wife, and their family. That is, until Doug enrolled in a Boeing pilot program aimed at coordinating care and reducing costs for high-cost employees with high utilization patterns. Connie Horton, Doug’s nurse case manager, worked with Doug for two years, managing his care and helping Doug and his wife become more confident in his treatment plan. The Intensive Outpatient Care Program used predictive modeling to identify high-risk, high-cost patients, and then convinced them to enroll by making the transition as seamless as possible. The pilot program was launched with medical groups that already treated lots of Boeing employees so that they would not have to switch doctors. Nurse case managers, in particular, focused on behavioral health issues which the study uncovered to be very prevalent among this chronically ill population. Participating provider groups receive a risk-adjusted monthly fee for each enrolled patient which is intended to cover the cost of the nurse case manager. The pilot program achieved a 20% reduction in per capita costs, primarily attributable to reduced emergency room visits and hospitalizations.

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