DSM providers uncertain of CMS demo project

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Sunday, March 31, 2002

WASHINGTON - Providers say they're hesitant to submit proposals for CMS's disease management (DSM) demonstration project because the recently released RFP includes full prescription drug coverage.

"It's not pure disease management, and if we're going to do it, we're going to have to find some sort of partner to provide the drugs," said Bob Stone, executive v.p. of the Nashville, Tenn.-based American Healthways. "We're trying to figure how well that's going to work."

In the Feb. 22 Federal Register, CMS announced that, per the Benefits Improvement and Protection Act (BIPA) of 2000, it would hold a three-year demonstration project for the disease management of the chronically ill. Providers have until May 23 to submit proposals for the project, which will include up to three organizations and cover up to 30,000 beneficiaries at a time.

American Healthways may still be hunting for a way to comply with the drug coverage component of CMS's project, but Matria Healthcare has already decided to pass on the opportunity, according to Jean Bisio, the company's senior v.p. of DSM.

"We've talked to several large pharmacies, and they're not interested in undertaking this kind of project," she said.

Industry sources say while providers are accustomed to being at risk, pharmacies are not.

So, why is the drug coverage component included in the project, anyway?

According to CMS: Beneficiaries with congestive heart failure (CHF), coronary heart disease or diabetes "receive fragmented health care across multiple providers and multiple sites of care, and they often require repeated, costly hospitalizations. Compounding these problems for people with Medicare is that Medicare does not generally cover outpatient prescription drugs." Beneficiaries who want drug coverage must purchase supplemental insurance.

Warren Todd, executive director of the Disease Management Association of America, which helped CMS develop the RFP, downplayed the difficulties providers are having complying with the drug coverage component. He said the number of beneficiaries without drug coverage is "relatively small," anyway.

"It's not as all encompassing as people think," he said. "I think some successful partnerships between providers and pharmacies will arise."

Providers said that mandate or no mandate, drug coverage or no drug coverage, it's a good sign that CMS is taking its hardest look at DSM yet. CMS acknowledges that DSM has "great potential" for improving health and cutting costs for chronic illnesses accounting for a disproportionate share of Medicare expenditures. But it needs proof that these programs work.

Stone said this project, unlike those of the past, should give CMS what it's looking for, thanks to its scope. Applicants must submit evidence of their ability to recruit and serve a study population of at least 5,000 beneficiaries.

"CMS is desperately trying to understand whether disease management is scalable for the fee-for-service population," Stone said. "It's a critical question, and I think studying 5,000 beneficiaries will provide the answer." HME

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