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                                                      Calendar No. 206
115th Congress     }                                    {       Report
                                 SENATE
 1st Session       }                                    {      115-146

======================================================================



 
  THE CREATING HIGH-QUALITY RESULTS AND OUTCOMES NECESSARY TO IMPROVE 
                   CHRONIC (CHRONIC) CARE ACT OF 2017

                                _______
                                

                 August 3, 2017.--Ordered to be printed

                                _______
                                

   Mr. Hatch, from the Committee on Finance, submitted the following

                              R E P O R T

                         [To accompany S. 870]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Finance, to which was referred the bill 
(S. 870) to amend title XVIII of the Social Security Act to 
implement Medicare payment policies designed to improve 
management of chronic disease, streamline care coordination, 
and improve quality outcomes without adding to the deficit, 
having considered the same, reports favorably thereon with an 
amendment in the nature of a substitute and recommends that the 
bill, as amended, do pass.

                                CONTENTS

                                                                   Page
 I. LEGISLATIVE BACKGROUND............................................1
II. EXPLANATION OF THE BILL...........................................3
        A. Amend title XVIII of the Social Security Act to 
            implement Medicare payment policies designed to 
            improve management of chronic disease, streamline 
            care coordination, and improve quality outcomes 
            without adding to the deficit........................     3
III.BUDGET EFFECTS OF THE BILL.......................................20

IV. VOTES OF THE COMMITTEE...........................................28
 V. REGULATORY IMPACT AND OTHER MATTERS..............................28
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED............29

                       I. LEGISLATIVE BACKGROUND

    The Committee on Finance, having considered S. 870, as 
modified, a bill that would amend title XVIII of the Social 
Security Act to implement Medicare payment policies designed to 
improve management of chronic disease, streamline care 
coordination, and improve quality outcomes without adding to 
the deficit, reports favorably thereon that the bill as 
modified by the Committee and reported with an amendment do 
pass.

Background and need for legislative action

    Over the past two years, the Senate Finance Committee has 
prioritized work on a key challenge facing the nation's health 
care system: how to effectively deliver high quality, 
coordinated medical care to Medicare beneficiaries living with 
multiple chronic conditions. Chronically ill patients account 
for a large percentage of overall Medicare spending, which is 
expected to rise as an increasing number of adults with chronic 
conditions age into the Medicare program. If not addressed, 
this could result in worse health outcomes for those with 
chronic disease as well as higher costs for both beneficiaries 
and the Medicare program.
    On May 22, 2015, Finance Committee Chairman Orrin Hatch (R-
UT) and Ranking Member Ron Wyden (D-OR) formed a bipartisan, 
full committee chronic care working group (CCWG), co-chaired by 
Senator Johnny Isakson (R-GA) and Senator Mark Warner (D-VA). 
The working group was tasked with analyzing current law, 
discussing alternative policy options, and developing 
bipartisan legislative solutions. To meet this goal, the 
working group invited all interested stakeholders to submit 
their best ideas, based on real world experience and data-
driven evidence, to improve health outcomes for Medicare 
beneficiaries with chronic conditions.
    After reviewing a first round of 530 comments submitted by 
the health care community, and subsequently meeting with 80 
individual stakeholder groups, the CCWG produced a 
comprehensive policy options document, which was released on 
December 18, 2015. Release of the options document was intended 
to generate further input from Members of Congress and 
stakeholders as the CCWG refined the policies it believed had 
the greatest potential to improve care coordination, increase 
value, and lower costs in the Medicare program without adding 
to the deficit.
    After soliciting a second round of 327 stakeholder 
comments, the CCWG issued a legislative discussion draft on 
October 27, 2016. Soon after, the Centers for Medicare & 
Medicaid Services (CMS), in its calendar year (CY) 2017 
Medicare Physician Fee Schedule Rule, finalized four policies 
proposed in the policy options document. Additionally, two 
provisions included in the discussion draft--one to improve 
risk adjustment in the Medicare Advantage (MA) program and 
another to ensure access to MA plans for Medicare-eligible 
individuals with end-stage renal disease (ESRD)--were adopted 
as part of the 21st Century Cures Act (P.L. 114-255), which was 
signed into law on December 13, 2016.
    The Creating High-Quality Results and Outcomes Necessary to 
Improve Chronic (CHRONIC) Care Act (S. 870), as modified, 
offers additional solutions to improve health outcomes through 
policies targeting traditional fee-for-service (FFS), Medicare 
Advantage (MA), and Accountable Care Organizations (ACOs). The 
CHRONIC Care Act includes:
           Expansion and extension of the successful 
        Independence at Home (IAH) program, expansion of 
        telehealth services available to home dialysis 
        patients, and greater availability of telehealth 
        services to help ensure individuals presenting with 
        stroke symptoms receive the best course of treatment;
           Improved flexibility and predictability for 
        MA plans to better serve chronically ill beneficiaries 
        through increased access to value-based insurance 
        design, permanent authorization of special needs plans 
        (SNPs), greater incentives to offer telehealth 
        services, and an expansion of supplemental benefits; 
        and
           Greater flexibility for certain ACOs to 
        provide telehealth services, the option for certain 
        ACOs to provide incentive payments to help patients 
        afford primary care services, and the choice to have 
        beneficiaries assigned to an ACO prospectively instead 
        of retrospectively.

                      II. EXPLANATION OF THE BILL


A. Amends Title XVIII of the Social Security Act To Implement Medicare 
  Payment Policies Designed To Improve Management of Chronic Disease, 
  Streamline Care Coordination, and Improve Quality Outcomes Without 
                         Adding to the Deficit


            TITLE I--RECEIVING HIGH-QUALITY CARE IN THE HOME


 Section 101. Extending the Independence at Home Demonstration Program


                              PRESENT LAW

    The Patient Protection and Affordable Care Act (ACA, P.L. 
111-148) created the Independence at Home (IAH) demonstration 
under the Medicare program (Section 1866E of the Social 
Security Act (SSA), 42 U.S.C. 1395cc-5) to test a payment 
incentive and service delivery model that uses physician- and 
nurse practitioner-directed home-based primary care teams 
designed to reduce expenditures and improve health outcomes in 
the provision of items and services to certain chronically ill 
Medicare beneficiaries. Qualifying IAH medical practices are 
physician or nurse practitioner-led legal entities that may 
also include physician assistants, pharmacists, and other 
health and social services staff. Such practice staff are to 
have experience providing home-based primary care services to 
applicable beneficiaries. Practice staff are required to make 
in-home visits and to be available 24 hours per day, 7 days per 
week to implement care plans tailored to the individual 
beneficiary's chronic conditions. Qualifying medical practices 
are eligible to receive incentive payments, subject to meeting 
an expenditure target and performance standards on quality 
measures. The Centers for Medicare & Medicaid Services (CMS) 
Innovation Center (CMMI) initially selected a total of 15 
individual practices, later supplemented by three consortia, to 
participate in the IAH demonstration. The demonstration began 
on June 1, 2012, and is to end on September 30, 2017.

                        EXPLANATION OF PROVISION

    The reported bill makes modifications that would extend and 
expand the IAH demonstration: (1) the maximum length of an 
agreement with an IAH medical practice under the demonstration 
program would increase from 5 to 7 years, effectively extending 
the demonstration by 2 years; (2) the limit on the total number 
of beneficiaries across all selected IAH medical practices 
participating in the demonstration would be increased from 
10,000 to 15,000; and (3) the mandatory termination provision 
is modified so that it would apply only to practices that fail 
to generate savings against their spending targets for three 
consecutive years. Currently, a practice is to be terminated if 
it does not receive an incentive payment for spending at least 
5 percent less than its target for two consecutive years. The 
reported bill also clarifies that the required independent 
evaluation of the IAH demonstration would include an assessment 
of IAH medical practice use of electronic health information 
systems, including remote monitoring, to the extent information 
is available.

         Section 102. Expanding Access to Home Dialysis Therapy


                              PRESENT LAW

    Medicare regulations require that beneficiaries with End 
Stage Renal Disease (ESRD) undergoing home-based dialysis 
treatment receive monthly face-to-face assessments from a 
qualified physician or practitioner. ESRD beneficiaries may 
receive the required monthly assessment via approved telehealth 
services only if (1) the telehealth assessment occurs in a 
Medicare-authorized originating site (such as a physician's 
office or hospital-based dialysis facility), and (2) the site 
is located in a rural Health Professional Shortage Area (HPSA) 
or a county not included in a Metropolitan Statistical Area 
(MSA).
    Telehealth is the use of electronic information and 
telecommunications technologies to support remote clinical 
health care, patient and professional health-related education, 
and other health care delivery functions. While Medicare 
beneficiaries may receive telehealth services in a variety of 
settings, under current law (SSA Section 1834(m)), the Medicare 
program recognizes and pays for only certain Part B telehealth 
services. The services must be either (1) remote patient and 
physician or practitioner face-to-face services delivered via a 
telecommunciations system, or (2) non face-to-face services 
conducted through live video conferencing (or via store and 
forward telecommunication services in the case of any Federal 
telemedicine demonstration program in Alaska or Hawaii). 
Typically, Medicare coverage for remote face-to-face services 
includes payments (1) to physicians or other professionals (at 
the distant site) for the telehealth consultation, and (2) to 
the facility where the patient is located (the originating 
site).The originating site must be in a rural HPSA, a county 
not included in a MSA, or from an entity that participates in a 
Federal telemedicine demonstration project. Qualifying 
originating sites include an office of a physician or 
practitioner, a critical access hospital (CAH), a rural health 
clinic, a Federally qualified health center, a hospital, a 
hospital- or CAH-based renal dialysis center, a skilled nursing 
facility, or a community mental health center.

                        EXPLANATION OF PROVISION

    The reported bill would allow Medicare ESRD beneficiaries 
undergoing home dialysis to receive required monthly clinical 
assessments by physicians or practitioners using telehealth 
services, beginning on January 1, 2019, so long as the 
individual receives a face-to-face clinical assessment, without 
the use of telehealth, at least once every three consecutive 
months. The section would expand the current list of allowable 
originating sites for a telehealth assessment to include 
freestanding renal dialysis facilities and beneficiary homes. 
The provision would also eliminate geographic limits that now 
require an originating site to be located in a HPSA or a county 
not included in an MSA. A separate facility fee would not be 
provided if the originating site is the beneficiary's home.

                  TITLE II--ADVANCING TEAM-BASED CARE


 Section 201. Providing Continued Access to Medicare Advantage Special 
                 Needs Plans for Vulnerable Populations


                              PRESENT LAW

    The Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (MMA, P.L. 108-173) established a new 
type of Medicare Advantage (MA) coordinated care plan to focus 
on individuals with special needs. Special needs plans (SNPs) 
are allowed to target enrollment to one or more types of 
special needs individuals including (1) institutionalized (I-
SNPs), (2) dually eligible--low-income Medicare beneficiaries 
who also are eligible for Medicaid--(D-SNPs), and/or (3) 
individuals with severe or disabling chronic conditions (C-
SNPs).
    In general, SNPs are required to meet all applicable 
statutory and regulatory requirements that apply to MA plans, 
including: state licensure as a risk-bearing entity, MA 
reporting requirements that are applicable depending on plan 
size, and Part D prescription drug benefit requirements. SNPs 
prepare and submit bids to CMS like other MA plans and are paid 
using the same methodology as for other MA plans, based on the 
plan's enrollment after risk adjusting payments for beneficiary 
characteristics.
    Among other changes, the Medicare Improvements for Patients 
and Providers Act of 2010 (MIPPA, P.L. 110-275) required that 
all SNPs have evidenced-based models of care (MOC). MIPPA 
required Medicare advantage organizations offering SNPs to 
tailor separate MOCs to meet the special needs of SNP target 
populations. MOCs must have goals and objectives for the 
targeted population, a specialized provider network, use 
nationally-recognized clinical practice guidelines, conduct 
health risk assessments to identify the special needs of 
beneficiaries, and add services for the most vulnerable 
beneficiaries including those beneficiaries who are frail, 
disabled, or near the end-of-life.
    The ACA extended SNP authority through December 31, 2013. 
Since ACA enactment, SNPs have been extended a number of times, 
most recently through December 31, 2018 by the Medicare Access 
and CHIP Reauthorization Act of 2015 (MACRA, P.L. 114-10). ACA 
also expanded the D-SNP category by authorizing fully-
integrated dual-eligible SNPs (FIDE-SNPs). FIDE-SNPs are a 
subset of D-SNPs that meet additional requirements such as 
fully integrating Medicare and Medicaid benefits under a single 
managed care entity; having an approved risk-based Medicaid 
contract; coordinating care, including long-term care services; 
using a specialty care network for high-risk beneficiaries; and 
employing approved policies and procedures to coordinate or 
integrate enrollment, member materials, communications, 
grievances and appeals, and quality improvement activities. 
Other SNP-related ACA provisions made the following changes:
     Required all SNPs to comply with an approval 
process based on CMS standards and executed by the National 
Committee for Quality Assurance (NCQA) beginning January 1, 
2012.
     Authorized CMS to make a frailty adjustment 
payment to FIDE-SNPs.
     Required CMS to implement new quality-based 
payment procedures for all MA plans by 2012.
     Required the Secretary to establish the Federal 
Office of (Medicare and Medicaid) Coordinated Health Care 
(MMCO) within CMS to facilitate Medicare and Medicaid 
coordination, dual eligible beneficiary care, and other 
activities.
    CMS's monthly enrollment data shows that SNP enrollment has 
increased from 670,500, in May 2007 to approximately 2.36 
million in April 2017. SNP enrollment is concentrated in D-
SNPs, which account for approximately 83% of the total 2.36 
million April 2017 enrollment (D-SNPs, 1.96 million, C-SNPs, 
335,000, and I-SNPs, 63,500). Moreover, SNP enrollment also is 
concentrated geographically, with 9 states and Puerto Rico 
accounting for approximately 79% of January 2015 enrollment. In 
April 2015, there were 37 FIDE-SNPs operating in 9 states with 
total enrollment of approximately 107,800. Approximately 65% of 
that January 2015 FIDE-SNP enrollment (about 70,000) was in 
Massachusetts and Minnesota.

                        EXPLANATION OF PROVISION

    The reported bill would permanently authorize SNPs if 
certain additional policy requirements are met. Rather than 
expiring under current law on December 31, 2018, SNPs could 
continue to enroll qualifying Medicare beneficiaries so long as 
they adopt the requirements outlined in the bill into D-SNPs, 
C-SNPs, and I-SNPs, and new SNPs could be established.
    The Secretary of HHS (``the Secretary'') would be required 
to increase D-SNP integration of Medicare and Medicaid by 
designating MMCO as the dedicated CMS contact point to assist 
states in addressing D-SNP Medicare-Medicaid misalignments. In 
this role, MMCO would be required to establish a uniform 
process for disseminating Medicare contract information to 
state Medicaid agencies as well as to D-SNPs and to establish 
basic resources for states interested in exploring D-SNPs as a 
platform for integrating Medicare-Medicaid services for dual 
eligible beneficiaries.
    The Secretary, to the extent feasible, would be required to 
establish procedures by April 1, 2020 that would unify the 
Medicare and Medicaid fee-for-service (FFS) and managed care 
grievance and appeals procedures applicable to D-SNPs. In 
establishing unified Medicare-Medicaid grievance and appeals 
procedures, the Secretary would be required to solicit comments 
from states, plans, beneficiary representatives, and other 
relevant stakeholders. In addition, the Secretary would be 
required to ensure that unified grievance and appeals 
procedures would be included in D-SNP contracts and would:
           adopt current law provisions that would be 
        most protective of D-SNP enrollees and also would be 
        most compatible with Medicare and Medicaid unified 
        timeframes and consolidated access to external review 
        under an integrated process, as determined by the 
        Secretary;
           take into account Medicaid state plan 
        differences;
           be easily navigable by D-SNP enrollees; and
           include, if applicable, the following 
        elements:
            a single written notification of all applicable 
        Medicare and Medicaid grievance and appeal rights (the 
        Secretary would be authorized to waive certain 
        notification requirements when an item or service was 
        covered by Medicare or Medicaid);
            single pathway for resolution or appeal related to 
        a particular item or service covered by a D-SNP or 
        Medicaid;
            procedures written in plain language and available 
        in a language and format that is accessible to 
        enrollees, including non-English languages prevalent in 
        the D-SNP service area;
            unified Medicare and Medicaid timeframes for 
        grievance and appeal processes such as the enrollee's 
        filing of appeals or grievances, plan acknowledgement, 
        resolution of a grievance or appeal, and notification 
        of appeal or grievance decisions; and
            requirements for how D-SNP plans process, track, 
        and resolve appeals and grievances to ensure timely 
        beneficiary notification of decisions made throughout 
        the appeal and grievance process and for which the 
        appeal and grievance status would be easy to determine.
    The reported bill also would require that the unified 
grievance and appeals procedures for Medicare and Medicaid 
services established by the Secretary incorporate provisions 
under current law and further require the implementation of 
regulations that would continue enrollee benefits pending a 
grievance or appeal process. Beginning January 1, 2021 and for 
subsequent years, D-SNP plan contracts with state Medicaid 
agencies would be required to use the new unified Medicare-
Medicaid grievance and appeals procedures.
    D-SNP contracts with state Medicaid agencies in effect on 
or after January 1, 2021, would be required to meet one or more 
of the following requirements for integration of Medicare and 
Medicaid benefits, to the extent permitted under state law:
           Enter into a contract with a state Medicaid 
        agency and coordinate long-term services and supports 
        (LTSS), behavioral health services, or both by meeting 
        an additional minimum set of requirements determined by 
        the Secretary through the MMCO and based on input from 
        stakeholders. These requirements could include the 
        following and would have to be included in the D-SNP 
        contract with the state Medicaid agency:
            D-SNP notification for the state in a timely manner 
        of hospitalizations, emergency room visits, and 
        hospital or nursing home discharges of enrollees;
            assigning one primary care provider for each 
        enrollee; or
            sharing data that would benefit the coordination of 
        Medicare and Medicaid items and services.
           Satisfy the requirements of a FIDE-SNP, 
        except the requirement that the D-SNP have similar 
        average levels of frailty as the Program for All-
        inclusive Care for the Elderly (PACE) or enter into a 
        capitated contract with the state Medicaid agency to 
        provide LTSS, behavioral health, or both LTSS and 
        behavioral health.
           The parent organization must assume clinical 
        and financial responsibility for the Medicare and 
        Medicaid benefits provided to individuals who are 
        enrolled in a D-SNP and a Medicaid managed care 
        organization that provides LTSS or behavioral health 
        services, with the same parent organization.
    MMCO would be responsible for the following:
           the designated contact for state Medicaid 
        agencies in the integration of D-SNPs; and
           the development of regulations and guidance 
        to implement a unified grievance and appeals process.
    Effective for SNP contracts beginning January 1, 2020 and 
in subsequent years, the Secretary would add the following C-
SNP care management plan requirements:
           C-SNP interdisciplinary provider teams would 
        include providers with demonstrated expertise, 
        including training in an applicable specialty, in 
        treating individuals similar to the C-SNP targeted 
        population;
           enrolled individuals would receive face-to-
        face encounters with the C-SNP at least annually;
           the MOC would include the results of the 
        initial assessment as well as each annual reassessment, 
        and the results of those assessments would be addressed 
        in the enrollee's individualized care plan;
           the annual MOC evaluation and approval would 
        take into account whether or not the plan fulfilled the 
        goals identified in the previous year's MOC goals; and
           a C-SNPs MOC would only be approved if the 
        C-SNP achieved established minimum benchmarks for each 
        MOC element.
    Effective for C-SNP contracts beginning on or after January 
1, 2022, Section 201 would revise the definition of individuals 
eligible for C-SNPs to include Medicare beneficiaries who (i) 
have one or more comorbid and medically complex chronic 
conditions that is life threatening or that significantly 
limits overall health or function, (ii) have a high-risk of 
hospitalization or other adverse health outcome, (iii) require 
intensive care coordination, and (iv) is identified on the list 
of conditions approved by the panel of clinical advisors 
described below. The Secretary would be required to convene a 
clinical advisor panel to identify C-SNP conditions by December 
31, 2020, and every five years thereafter. The C-SNP condition 
clinical advisory panel would establish and update the list of 
severe or disabling chronic conditions that met the following 
criteria:
           Conditions that require prescription drugs, 
        providers, and models of care that are unique to the 
        specific population of enrollees of a C-SNP on or after 
        December 1, 2020 and:
            as a result of access to, and enrollment in, such a 
        specialized MA plan for special needs individuals, 
        individuals with such condition would have a reasonable 
        expectation of slowing or halting the progression of 
        the disease, improving health outcomes and decreasing 
        overall costs for individuals diagnosed with such 
        condition compared to available options of care other 
        than through such a specialized MA plan for special 
        needs individuals; or
            Conditions that have a low prevalence in the 
        general population of Medicare beneficiaries or a 
        disproportionally high per-beneficiary cost.
    In establishing and updating the C-SNP condition list, the 
clinical advisory panel would be required to take into account 
the availability of varied benefits, cost-sharing, and 
supplemental benefits described in Section 301 of the reported 
bill.
    The Secretary could require quality data reporting and 
apply those ratings to SNPs at the plan level instead of the 
contract level. Prior to applying quality measurement at the 
plan level, the Secretary would be required to:
           consider the minimum number of SNP enrollees 
        to determine if a statistically significant or valid 
        measurement of quality at the plan level would be 
        possible;
           consider the impact of such a change on MA 
        plans that serve a disproportionate number of dually-
        eligible beneficiaries;
           ensure that if plan level quality measures 
        are reported, that MA plans would not be required to 
        report duplicative information; and
           ensure that plan level quality reporting 
        would not interfere with the collection of encounter 
        data submitted by MA organizations or the 
        administration of any changes to the program as a 
        result of the plan level data collection.
    If the Secretary applies quality measurement at the plan 
level, the specific quality measurement could include measures 
from the Medicare Health Outcomes Survey (HOS), the Healthcare 
Effectiveness Data Information Set (HEDIS), and the Consumer 
Assessment of Healthcare Providers and Systems (CAHPS) as well 
as quality measures under Medicare Part D. The Secretary would 
determine the feasibility of requiring all MA plans to report 
quality measures at the plan level and would consider applying 
this requirement following this assessment.
    The Comptroller General would conduct a study on state-
level integration between SNPs and Medicaid that would include 
analyses of the following:
           the characteristics of states where the 
        state Medicaid agency has a contract with D-SNPs that 
        delivers LTSS through a managed care program, including 
        state plan LTSS requirements;
           the various types of SNPs, which may include 
        the following: (1) a FIDE-SNP; (2) a D-SNP that has a 
        contract with a state Medicaid agency, which may 
        include LTSS; and (3) a D-SNP that has a contract with 
        a state Medicaid agency that meets additional 
        requirements established by the state;
           the characteristics of individuals enrolled 
        in D-SNPs;
           as practicable, the following with respect 
        to state programs for the delivery of LTSS through 
        Medicaid managed care plans:
            the populations eligible to receive LTSS, and
            the SNPs where LTSS are provided on a capitated 
        basis or, where LTSS are carved out and provided 
        through FFS Medicaid, if any; and
           the integration arrangements of D-SNPs 
        offered across states and how their availability and 
        variation affect expenditures, service delivery 
        options, access to community care, and the utilization 
        of care; and
           the efforts of state Medicaid programs to 
        transition dually-eligible beneficiaries receiving LTSS 
        from institutional settings to home and community based 
        settings and related financial impacts of these 
        transitions.
    The Comptroller General would submit the report to Congress 
within two years of the date of enactment, including 
recommendations for legislation and administrative action as 
determined appropriate.

             TITLE III--EXPANDING INNOVATION AND TECHNOLOGY


  Section 301. Adapting Benefits to Meet the Needs of Chronically Ill 
                      Medicare Advantage Enrollees


                              PRESENT LAW

    Under Medicare Advantage, private health plans are paid a 
per person monthly amount to provide all Medicare-covered 
benefits (except hospice) to beneficiareis who enroll, 
regardless of how many or how few services a beneficiary 
actually uses. The plan is at-risk if aggregate costs for its 
enrollees exceed program payments and beneficiary cost sharing. 
Conversely, in general, the plan can retain savings if 
aggregate enrollee costs are less than program payments and 
cost sharing. Currently, an MA plan must offer the same benefit 
package to all of its enrollees. CMMI is currently testing a 
model to allow greater flexibility for an MA plan to meet the 
needs of chronically ill enrollees. Under the model, plans are 
allowed to propose and design offerings that vary the benefits, 
cost-sharing, and supplemental benefits offered to enrollees 
with specific conditions. The first year of the model, which 
began January 1, 2017, is being conducted in seven states. The 
second year of the model, beginning January 1, 2018, will add 
three additional states.

                        EXPLANATION OF PROVISION

    The reported bill would expand the testing of the CMMI 
Value-Based Insurance Design (VBID) Model to allow an MA plan 
in any state to participate in the model by 2020. The section 
would delay until January 1, 2022 the authority for the 
Secretary to terminate or modify the model. The model would be 
permitted to continue after January 1, 2022 if it can be shown 
that the model is expected to (a) improve quality of care 
without increasing spending, (b) reduce spending without 
reducing quality of care, or (c) improve the quality of care 
and reduce spendig. Funding for the desgn, implementation, and 
evaluation of the expanded model is to be allocated by the 
Secretary from appropriations applied to CMMI.

   Section 302. Expanding Supplemental Benefits to Meet the Needs of 
              Chronically Ill Medicare Advantage Enrollees


                              PRESENT LAW

    All MA plans must offer required Medicare benefits (except 
hospice) and may offer additional or supplemental benefits. 
Mandatory supplemental benefits are covered by the MA plan for 
every person enrolled in the plan and are paid for either 
through plan rebates, a beneficiary premium, or beneficiary 
cost sharing. Optional supplemental benefits must be offered to 
all plan enrollees, but the enrollees may choose whether to pay 
an additional amount to receive coverage of the optional 
benefit. Optional benefits cannot be financed through plan 
rebates.
    An MA plan must adhere to specific rules regarding the 
supplemntal benefits that it can offer. First, the MA plan 
cannot design a benefit plan that is likely to substantially 
discourage enrollment by certain MA-eligible individuals. 
Further, supplemental benefits (a) may not be Part A or Part B 
required services, (b) must be primarily health related with 
the primary purpose to prevent, cure, or diminish an illness or 
injury, and (c) the plan must incur a cost when providing the 
benefit. Items that are primarily for comfort or are considered 
social services would not qualify as supplemental benefits. 
Examples of supplemental benefits include the following:
          1. Additional inpatient hospital days in an acute 
        care or psychiatric facility,
          2. Acupuncture or alternative therapies,
          3. Counseling services,
          4. Fitness benefit,
          5. Enhanced disease management, and
          6. Remote Access Technologies (including Web/Phone 
        based technologies).

                        EXPLANATION OF PROVISION

    The reported bill would allow an MA plan to offer a wider 
array of supplemental benefits to chronically ill enrollees 
beginning in 2020. These supplemental benefits would be defined 
as those that have a reasonable expectation of improving or 
maintaining the health or overall function of the chronically 
ill enrollee and would not be limited to primarily health-
related services. For purposes of this section, a chroniclly 
ill enrollee would be defined as those who have one or more 
comorbid and medically complex chronic conditions that are life 
threatening or significantly limit the overall health or 
functioning of the enrollee, have a high risk of 
hospitalization or other adverse health outcomes, and require 
intensive care coordination. The section would allow an MA plan 
the flexibility to provide targeted supplemental benefits to 
specific chronically ill enrollees.
    The reported bill would require the Comptroller General to 
conduct a study on the supplemental benefits provided by MA 
plans. The study, to the extent data are available, would be 
required to include specified analyses on topics including the 
availability, utilization, and cost of the supplemental 
benefits, the impact on quality, health, utilization of other 
services, and the savings resulting from the supplemental 
benefits. The study would include recommendations for 
legislative and administrative actions as the Comptroller sees 
fit. The Comptroller General would submit the report to 
Congress not later than five years after the date of enactment.

 Section 303. Increasing Convenience for Medicare Advantage Enrollees 
                           Through Telehealth


                              PRESENT LAW

    MA plans are paid a per person monthly amount. The 
Secretary determines a plan's payment by comparing its bid to a 
benchmark. A bid is the plan's estimated cost of providing 
Medicare-covered services (excluding hospice but including the 
cost of medical services, administration, and profit). In 
general, the Secretary has the authority to review and 
negotiate plan bids to ensure that they reflect revenue 
requirements. A benchmark is the maximum amount the federal 
government will pay for providing those services in the plan's 
service area. If a plan's bid is less than the benchmark, the 
plan's payment equals its bid plus a rebate. The rebate must be 
returned to enrollees in the form of additional benefits, 
reduced cost sharing, reduced Medicare Part B or Part D 
premiums, or some combination of these options.
    An MA plan may provide basic telehealth benefits as part of 
the standard benefit. For example, telemonitoring and web-based 
and phone technologies can be used to provide telehealth 
services. Medicare Advantage Prescription Drug (MAPD) plans may 
choose to include telehealth services as part of their plan 
benefits, for instance, in providing medication therapy 
management (MTM). However, MA plans that want to provide 
telemedicine or other technologies that they believe promote 
efficiences beyond what is covered in the traditional Medicare 
program must receive approval to provide them as a supplemental 
benefit, and must use their rebate dollars to pay for those 
services.

                        EXPLANATION OF PROVISION

    The reported bill would allow an MA plan to offer 
additional, clinically appropriate, telehealth benefits in its 
annual bid amount beyond the services that currently receive 
payment under Part B beginning in 2020. The Secretary would be 
required, no later than November 30, 2018, to solicit comments 
on what types of items and services (including those provided 
through supplemental health care benefits) should be considered 
to be additional telehealth benefits and the requirements for 
the provision or furnishing of such benefits (such as 
licensure, training, and coordination requirements). The costs 
of telehealth benefits included in the bid would not include 
capital and infrastructure related costs or investments. If an 
MA plan provides a service as an additiontal telehealth 
service, the MA plan must also provide access to the service 
through an in-person visit (and not only as an additional 
telehealth visit), and the beneficiary would have the ability 
to decide whether or not to receive the services via 
telehealth. This section would not affect the requirement that 
MA plans must provide enrollees with all benefits under Parts A 
and B of Medicare (except hospice).

 Section 304. Providing Accountable Care Organizations the Ability to 
                      Expand the Use of Telehealth


                              PRESENT LAW

    While Medicare beneficiaries may receive telehealth 
services in a variety of settings, under current law (SSA 
Section 1834(m)), the Medicare program restricts telehealth 
payments by the type of services provided, the geographic 
location where the services are delivered, the type of 
institution delivering the services, and the type of health 
provider. In order to be eligible for Medicare payment, 
telehealth services must be provided at a qualifying site in a 
rural health professional shortage area (HPSA), a county not 
included in a Metropolitan Statistical Area (MSA), or from an 
entity that participates in a Federal telemedicine 
demonstration project. Qualifying ``originating sites'' include 
an office of a physician or practitioner, a critical access 
hospital (CAH), a rural health clinic, a Federally qualified 
health center, a hospital, a hospital- or CAH-based renal 
dialysis center, a skilled nursing facility, or a community 
mental health center.
    Medicare accountable care organizations (ACOs) were 
authorized in the Affordable Care Act, and initial models 
included the fee-for-service based Medicare Shared Savings 
Program (MSSP) and the Pioneer ACOs, which received population-
based payments or capitation. While current laws and rules do 
not preclude ACOs from providing telemedicine or other 
technologies that they believe promote efficiencies to their 
patients, ACOs do not receive additional Medicare payment for 
furnishing those services and technologies. In December 2016, 
CMS announced the Next Generation ACO Model, with modified 
benchmarking methods, additional payment mechanisms (including 
capitation), and various ``benefit enhancements,'' including 
better access to (and payment consideration for) telehealth 
services.

                        EXPLANATION OF PROVISION

    The reported bill would expand the ability of certain MSSP 
ACOs and ACOs tested or expanded through the CMS Center for 
Medicare and Medicaid Innovation (CMMI) to furnish and receive 
payments for telehealth services by applying the Next 
Generation ACO telehealth waiver, beginning January 1, 2020. As 
a result, the reported bill would (1) eliminate the geographic 
component of the originating site requirement, (2) allow 
beneficiaries assigned to the approved MSSP and ACO programs to 
receive currently allowable telehealth services in the home, 
and (3) ensure that MSSP and ACO providers are only allowed to 
furnish telehealth services as currently specified under 
Medicare's physician fee schedule, with limited exceptions.
    In order for an ACO to be eligible to receive these 
telehealth payments, it must also be an ACO to which 
beneficiaries are prospectively assigned and it must accept 
two-sided risk for both bonuses rewarded for realized savings 
as well as penalties associated with some cost overages. When 
the home of a beneficiary receiving the services is the 
originating site, then no facility fee would be paid. There 
would also be no payment for services that are inappropriate 
for the home setting, such as those typically furnished to 
hospital inpatients.
    No later than January 1, 2026, the Secretary would submit a 
report to Congress on the implementation of this section that 
would include an analysis of the utilization of, and 
expenditures for, telehealth services provided by ACOs, 
together with recommendations for legislation and 
administration action as the Secretary determines appropriate.

   Section 305. Expanding the Use of Telehealth for Individuals with 
                                 Stroke


                              PRESENT LAW

    Patients who have stroke symptoms or have had a stroke may 
receive care in a number of sites and across different 
providers. In addition to physician services, stroke patients 
may require care at an acute care hospital (inpatient and/or 
outpatient), inpatient rehabilitation facility (IRF), or 
skilled nursing facility (SNF). For covered Medicare services 
provided to stroke patients, physicians are paid according to 
the Medicare Physician Fee Schedule (MPFS), hospitals according 
to the inpatient prospective payment system (IPPS) or 
outpatient prospective payment system (OPPS), IRFs under the 
IRF PPS, and SNFs under the SNF PPS. Under current law, 
telehealth restrictions (due to SSA Section 1834(m)) apply to 
all such services. In the case of telehealth services for the 
evaluation of acute stroke, the originating site hospital must 
be in a rural health professional shortage area (HPSA), a 
county not included in a Metropolitan Statistical Area (MSA), 
or an entity that participates in a Federal telemedicine 
demonstration project.

                        EXPLANATION OF PROVISION

    The reported bill would eliminate the originating site 
geographic restrictions for telehealth services furnished for 
the purpose of evaluating an acute stroke (as determined by the 
Secretary), beginning January 1, 2021. Removing this 
restriction would provide payment to the distant consulting 
physician regardless of the originating site hospital's 
location. In the case where a hospital is newly eligible to 
serve as an originating site, that hospital would not receive 
an originating site telehealth facility fee.

          TITLE IV--IDENTIFYING THE CHRONICALLY ILL POPULATION


 Section 401. Providing Flexibility for Beneficiaries to Be Part of an 
                     Accountable Care Organization


                              PRESENT LAW

    Initially, Medicare fee-for-service beneficiaries were 
assigned to an ACO based on their utilization of primary care 
services provided by a physician who participated in an ACO. 
Under these original models, beneficiaries do not have the 
option of choosing to participate directly in an ACO (aside 
from seeking care from a particular provider) but are notified 
if their primary care provider is an ACO participant. 
Beneficiaries who receive at least one primary care service 
from a primary care physician within the ACO are assigned to 
that ACO if the beneficiary receives the plurality of his or 
her primary care services from primary care physicians within 
the ACO. Primary care physicians are defined as those with one 
of four specialty designations: internal medicine, general 
practice, family practice, and geriatric medicine or for 
services furnished in a federally qualified health center 
(FQHC) or rural health clinic (RHC), a physician included in 
the attestation provided by the ACO as part of its application. 
Beneficiaries who have not had a primary care service furnished 
by any primary care physician either inside or outside the ACO 
but who receive at least one primary care service from any 
physician within the ACO are assigned to that ACO if the 
beneficiary receives a plurality of his or her primary care 
services from specialist physicians and certain non-physician 
practitioners (nurse practitioners, clinical nurse specialists, 
and physician assistants) within the ACO. Medicare 
beneficiaries enrolled in a Medicare Advantage plan cannot be 
enrolled in an ACO.
    The manner in which Medicare fee-for-service beneficiaries 
are assigned to an ACO affects how the ACO can tailor care for 
its beneficiaries and how the ACO is evaluated. Under current 
CMS rules, Medicare determines the method of beneficiary 
attribution, rather than giving ACOs the option to choose the 
assignment methodology that best fits their model of care. 
Medicare fee-for-service beneficiaries can be assigned to an 
ACO either retrospectively or prospectively depending on the 
ACO's track. The initial implementation of MSSP ACOs (Tracks 1 
and 2) retrospectively assigned beneficiaries to ACOs. 
Retrospective assignment ensures that ACOs are held accountable 
for the spending only of those beneficiaries who receive most 
of their primary care services from ACO providers, but they may 
not know who those beneficiaries are until the end of the year. 
The introduction of Track 3 MSSP ACOs allows prospective 
beneficiary assignment (along with other changes in the 
assumption of risk and rewards). Prospective assignment allows 
ACOs to identify beneficiaries for whom they will be held 
accountable and proactively take steps to connect these 
beneficiaries to appropriate care, but also holds ACOs 
accountable for the spending for these beneficiaries even if 
the ACO providers do not provide the care.

                        EXPLANATION OF PROVISION

    The reported bill would allow MSSP ACOs the choice of 
prospective assignment, beginning with agreements entered into 
or renewed on or after January 1, 2020. In addition, 
beneficiaries would be able to voluntarily identify an ACO 
professional as their primary care provider and be assigned to 
that ACO beginning with the 2018 performance year. The 
Secretary would establish a process to notify Medicare 
beneficiaries of their ability to make such a voluntary 
identification, and how to make or change this designation. The 
beneficiary's voluntary identification would supersede any 
other claims-based assignment to an ACO.

    TITLE V--EMPOWERING INDIVIDUALS AND CAREGIVERS IN CARE DELIVERY


     Section 501. Eliminating Barriers to Care Coordination under 
                     Accountable Care Organizations


                              PRESENT LAW

    ACOs were conceived as collaborations that integrate groups 
of providers, such as physicians (particularly primary care 
physicians), hospitals, and others around the ability to 
receive shared-saving bonuses or losses from a payer by 
achieving measured quality targets and demonstrating real 
reductions in overall spending growth for a defined population 
of patients. Beneficiaries who are assigned to or voluntarily 
elect to be identified with an ACO continue to have standard 
Medicare Part A and B cost-sharing responsibilities, including 
deductibles and coinsurance payments.

                        EXPLANATION OF PROVISION

    The reported bill would authorize the Secretary to create 
an ACO Beneficiary Incentive Program, intended to encourage 
beneficiaries to obtain medically necessary primary care 
services by permitting incentive payments to beneficiaries. The 
program would be established no earlier than January 1, 2019 
and no later than January 1, 2020. The Secretary could 
terminate the program at any time.
    Current and future ACOs that have agreed to two-sided risk/
reward models could apply to establish a program that would 
provide incentive payments to beneficiaries assigned to the ACO 
who receive primary care services from (i) a physician who has 
a primary care specialty designation, or (ii) a physician 
assistant, nurse practitioner, or clinical nurse specialist 
participating in the ACO, or (iii) a Federally qualified health 
center or rural health clinic. The program would continue for 
at least one year. The incentive payment could be up to $20, 
with the maximum amount to be updated annually by the 
percentage increase in the consumer price index. The incentive 
payment would be made regardless of whether or not the 
beneficiary is enrolled in a Medicare supplemental policy 
(Medigap), a Medicaid plan or waiver, or any other health 
insurance policy or health benefit plan, and would be made for 
each qualifying (primary care) service. The payment would be 
made no later than 30 days after the service is furnished. The 
Secretary would not make any payments to the ACOs for the costs 
associated with the implementation of the ACO Beneficiary 
Incentive Program. The incentive payments would be disregarded 
for purposes of calculating ACO benchmarks, estimated average 
per capita Medicare expenditures, and shared savings. ACOs 
would be required to report to CMS the amount and frequency of 
the incentive payments made and the number of beneficiaries 
receiving the payments.
    Incentive payments made under an ACO Beneficiary Incentive 
Program would not be considered income or resources or 
otherwise be taken into account for purposes of determining 
eligibility for benefits or assistance under any Federal 
program or under any State or local program financed in whole 
or in part with Federal funds, or for any Federal or State tax 
laws.
    The Secretary would conduct an evaluation of the ACO 
Beneficiary Incentive Program that would include an analysis of 
the impact of the implementation of the program on Medicare 
expenditures and beneficiary health outcomes. A report would be 
due to Congress no later than October 1, 2023, containing the 
results of the evaluation together with recommendations for 
such legislation and administrative action as the Secretary 
were to determine appropriate.

 Section 502. GAO Study and Report on Longitudinal Comprehensive Care 
                Planning Services under Medicare Part B


                              PRESENT LAW

    No present law.

                        EXPLANATION OF PROVISION

    The reported bill would require the Comptroller General to 
conduct a study on the establishment of a payment code, under 
Medicare Part B, for a beneficiary visit with an applicable 
provider for longitudinal comprehensive care planning services. 
In this section the term, ``longitudinal comprehensive care 
planning services'' would mean ``a voluntary shared decision-
making process that is furnished by an applicable provider 
through an interdisciplinary team and includes a conversation 
with Medicare beneficiaries who have received a diagnosis of a 
serious or life-threatening illness.'' The term ``applicable 
provider'' would mean a hospice program or other provider of 
services (e.g., hospital, skilled nursing facility, home health 
agency), that furnishes longitudinal comprehensive care 
planning services through an interdisciplinary team, and meets 
such other requirements as the Secretary might determine to be 
appropriate. The term ``interdisciplinary team'' would mean a 
group that includes at least one physician, one registered 
professional nurse, and one social worker, and could include a 
chaplain, minister, or other clergy, and other direct care 
personnel. The purpose of such services would be ``to discuss a 
longitudinal care plan that addresses the progression of the 
disease, treatment options, the goals, values, and preferences 
of the beneficiary, and the availability of other resources and 
social supports that may reduce the beneficiary's health risks 
and promote self-management and shared decision making.''
    The study would include analyses of a number of issues 
related to long-term comprehensive care planning, including the 
availability, use, and efficiency of existing services, and an 
examination of the barriers to and quality metrics for such 
care. The report would include many stakeholder views and 
concerns. The Comptroller General would submit the report to 
Congress no later than 18 months after the date of the 
enactment, together with recommendations for such legislation 
and administrative action as the Comptroller General sees fit.

    TITLE VI--OTHER POLICIES TO IMPROVE CARE FOR THE CHRONICALLY ILL


   Section 601. Providing Prescription Drug Plans with Parts A and B 
 Claims Data to Promote the Appropriate Use of Medications and Improve 
                            Health Outcomes


                              PRESENT LAW

    Under current law, standalone prescription drug plans 
(PDPs) provide Medicare's prescription drug benefit to fee-for-
service (FFS) beneficiaries. Certain Medicare beneficiaries who 
meet criteria described in section 1860D-4(c)(2)(a)(ii) of the 
Social Security Act are eligible to enroll in medication 
therapy management (MTM) programs offered by PDPs. MTM's 
purpose is to coordinate prescription drugs for high-cost 
beneficiaries. However, PDPs do not have access FFS utilization 
data that may aid the PDP in coordination efforts. This differs 
from MA-PDs which are responsible for providing both Medicare's 
prescription drug benefit but also Medicare Part A and Part B's 
medical benefits and has access to all relevant data.

                        EXPLANATION OF PROVISION

    The reported bill would require the Secretary of HHS to 
establish a process, beginning in plan year 2020, by which a 
Part D plan sponsor may submit a request to HHS to receive 
claims data under Parts A and B. These data, which would 
include the most recent possible claims, would be for the 
purposes of: optimizing therapeutic outcomes through improved 
medication use; improving care coordination as to prevent 
adverse health outcomes; and other purposes determined by the 
Secretary. Plan sponsors would be prohibited from using these 
data to: inform Part D coverage determinations, conduct 
retroactive review of coverage indications, facilitate 
enrollment changes to a different PDP or an MA-PD offered by 
the same parent organization, market benefits, and for other 
purposes determined by the Secretary to protect the identity of 
Medicare beneficiaries and to protect the security of personal 
health information.

Section 602. Government Accountability Office (GAO) Study and Report on 
                  Improving Medication Synchronization


                              PRESENT LAW

    Individuals with chronic conditions are often prescribed 
multiple prescriptions by different clinicians. Because many 
prescriptions are for a standard period of time (i.e., 30 days) 
but may be prescribed at separate points during a course of 
treatment, a patient might have to fill a number of 
prescriptions at different times each month. There is a move 
toward prescription synchronization to enable patients to fill 
multiple prescriptions from various providers at the same time 
each month in an effort to improve prescription adherence. In 
2012, CMS announced a regulatory change making it easier for 
Medicare Part D enrollees and their prescribers to synchronize 
prescriptions (42 CFR Sec. 423.153(b)(4)). Under the rule, 
which took effect at the beginning of 2014, Part D plans must 
apply a pro-rated daily cost-sharing rate to prescriptions for 
less than a 30-days' supply of a drug dispensed in an oral 
form, with some exceptions. The change means that a Part D 
enrollee must no longer pay a full month's co-payment or 
coinsurance for drugs dispensed for less than a 30-day period. 
The pro-rating applies regardless of the setting where a drug 
is dispensed.

                        EXPLANATION OF PROVISION

    The reported bill would require the Comptroller General to 
submit a report to Congress, within 18 months of enactment, 
examining the extent to which Medicare Part D and private 
payers use programs that synchronize pharmacy dispensing 
schedules so that individuals who are prescribed multiple drugs 
may receive their medications on the same day to facilitate 
counseling services and promote medication adherence. The 
Comptroller would be required to recommend legislative and 
administrative actions as the Comptroller sees fit.
    The report would evaluate the extent to which pharmacies 
have adopted synchronization programs; look at the common 
characteristics of the programs, including how pharmacies 
structure counseling sessions under such programs as well as 
payment and other arrangements to support pharmacy 
synchronization efforts; and compare the Medicare programs to 
private programs. The report would also assess the programs' 
impact on medication adherence, health outcomes, and patient 
satisfaction; assess the extent to which Medicare rules support 
medication synchronization; and examine whether there are 
barriers to such programs in Medicare.

  Section 603. GAO Study and Report on the Impact of Obesity Drugs on 
                      Patient Health and Spending


                              PRESENT LAW

    Under existing law (Section 1860D-(e)(2)(A) of the Social 
Security Act) Medicare Part D excludes coverage of certain 
drugs or classes of drugs, or their medical uses. Among the 
excluded drugs are agents used to treat anorexia, weight loss, 
or weight gain (even if used for a non-cosmetic purpose such as 
a treatment for morbid obesity).

                        EXPLANATION OF PROVISION

    The reported bill would direct the Comptroller General to 
submit a report to Congress within 18 months of enactment 
providing information, to the extent data are available, on the 
use of prescription drugs to control the weight of obese 
patients and the impact of coverage on health and spending and 
to recommend legislative and administrative actions as the 
Comptroller sees fit. The report would examine use of the drugs 
in the non-Medicare population and for Medicare beneficiaries 
who have coverage for weight-loss drugs as a Medicare Advantage 
supplemental benefit.
    The Comptroller General would analyze the prevalence of 
obesity in the population; the utilization of weight-loss 
drugs; the distribution of body mass index by those taking 
weight-loss drugs; and the available information on the use of 
obesity drugs in conjunction with other health care items or 
services, such as counseling, and how that compares with the 
use of other items and services by obese individuals who do not 
use weight loss drugs.
    The Comptroller General also would examine physician 
considerations in prescribing weight-loss drugs; the prevalence 
of processes to discontinue use of the drugs for patients who 
do not benefit; the available information on patient adherence 
and maintenance of weight loss, and the subsequent impact of 
obesity drugs on other medical services directly related to 
obesity; and what is known about the spending associated with 
the care of individuals who use weight loss drugs compared to 
those who do not.

Section 604. HHS Study and Report on Long-Term Risk Factors for Chronic 
                Conditions Among Medicare Beneficiaries


                              PRESENT LAW

    No present law.

                        EXPLANATION OF PROVISION

    The reported bill would require the Secretary of Health and 
Human Services (HHS) to conduct a study to evaluate long-term 
cost drivers to the Medicare program, including obesity, 
tobacco use, mental health conditions, and other factors that 
may contribute to the deterioration of health conditions among 
individuals with chronic conditions. The study would identify 
any barriers to collecting and analyzing the information needed 
to conduct this evaluation and make legislative and regulatory 
recommendations for removing such barriers. The Secretary would 
be required to post the resulting report on the HHS public 
website no later than 18 months after the enactment.

                           TITLE VII--OFFSETS


  Section 701. Rescission of Funding in the Medicare Improvement Fund


                              PRESENT LAW

    Section 188 of the Medicare Improvements for Patient and 
Providers Act (MIPPA) established the Medicare Improvement Fund 
(MIF), available to the Secretary to make improvements under 
the original fee-for-service program under Parts A and B for 
Medicare beneficiaries. Under current law, $270 million is 
available for services furnished during and after FY2021.

                        EXPLANATION OF PROVISION

    The reported bill would eliminate the funding in the 
Medicare Improvement Fund.

  Section 702. Rescission of Funding in the Medicaid Improvement Fund


                              PRESENT LAW

    The Supplemental Appropriations Act, 2008 (P.L. 110-252) 
amended the Social Security Act established, the Medicaid 
Improvement Fund, available to the Secretary to improve the 
management of the Medicaid program. Under current law, $5 
million is available for FY2021 and after.

                        EXPLANATION OF PROVISION

    The reported bill would eliminate the funding in the 
Medicaid Improvement Fund.

                    III. BUDGET EFFECTS OF THE BILL


                         A. Committee Estimates

    The Committee adopts as its own the preliminary cost 
estimate prepared by the Director of the Congressional Budget 
Office pursuant to section 402 of the Congressional Budget Act 
of 1974.

                          B. Budget Authority

    In compliance with section 308(a)(1) of the Budget Act, the 
Committee states that the extent to which the provisions of the 
bill as reported involve new or increased budget authority or 
affect levels of tax expenditures will be included in the 
statement from the Congressional Budget Office that will be 
provided separately, as described in Part C below.

            C. Consultation with Congressional Budget Office

    In accordance with section 403 of the Congressional Budget 
and Impoundment Control Act of 1974 (P.L. 93-344), the 
Committee advises that the Congressional Budget Office has 
submitted a cost estimate on the bill. The following is the 
cost estimate provided by the Congressional Budget Office 
pursuant to section 402 of the Congressional Budget Act of 
1974.

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, August 1, 2017.
Hon. Orrin G. Hatch,
Chairman, Committee on Finance,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 870, the Creating 
High-Quality Results and Outcomes Necessary to Improve Chronic 
(CHRONIC) Care Act of 2017.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Lori Housman.
            Sincerely,
                                             Mark P. Hadley
                                        (For Keith Hall, Director).
    Enclosure.

S. 870--Creating High-Quality Results and Outcomes Necessary to Improve 
        Chronic Care Act

    Summary: S. 870 would affect the Medicare and Medicaid 
programs in several ways. Specifically, the bill would:
           Modify and extend programs that provide 
        services to beneficiaries with chronic conditions or 
        other special needs,
           Expand use of remote (telehealth) services, 
        and
           Rescind funding dedicated to improving the 
        Medicare fee-for-service program and the management of 
        the Medicaid program.
    CBO estimates that enacting S. 870 would not affect direct 
spending in fiscal year 2018; would reduce direct spending for 
the Medicare and Medicaid programs by $217 million over the 
2018-2022 period; and would have no significant effect on total 
direct spending over the 2018-2027 period. Pay-as-you-go 
procedures apply because enacting S. 870 would affect direct 
spending. Enacting the bill would not affect revenues.
    CBO estimates that enacting the legislation would not 
increase net direct spending or on-budget deficits by more than 
$5 billion in any of the four consecutive 10-year periods 
beginning in 2028.
    The bill contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
    Estimated cost to the Federal Government: The estimated 
budgetary effect of S. 870 is shown in the following table. The 
effects of this legislation fall within budget functions 550 
(health) and 570 (Medicare).

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               By fiscal year, in millions of dollars--
                                            ------------------------------------------------------------------------------------------------------------
                                              2017   2018   2019   2020     2021     2022    2023    2024    2025    2026    2027   2017-2022  2017-2027
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                  INCREASES OR DECREASES (-) IN DIRECT SPENDING OUTLAYS
 
Independence at Home Demonstration.........      0      0      2       7        7        0       0       0       0       0       0        16         16
Special Needs Plans........................      0      0      6      13       13       14      14      15      15      16      17        46        123
Value-based Insurance Design Demonstration.      0      0      0      40       50        0       0       0       0       0       0        90         90
Telehealth Costs in Medicare Advantage Bids      0      0      0     -10      -10      -10     -10     -10     -10     -10     -10       -30        -80
Telehealth in ACOs.........................      0      0      0       5        5        5       5       5       5      10      10        15         50
Telehealth Services for Stroke Patients....      0      0      0       0       10       15      20      25      30      35      45        25        180
Assignment of Beneficiaries to ACOs........      0      0      0       5        5        5       5       5       5      10      10        15         50
Use of In-network Providers by ACO               0      0      0      -5       -7       -7      -7      -7      -7      -7      -7       -19        -54
 Beneficiaries.............................
Rescissions:
    Medicare Program.......................      0      0      0       0     -235     -135       0       0       0       0       0      -370       -370
    Medicaid Program.......................      0      0      0       0       -5        0       0       0       0       0       0        -5         -5
                                            ------------------------------------------------------------------------------------------------------------
Total Changes..............................      0      0      8      55     -167     -113      27      33      38      54      65      -217          0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: Budget authority is equal to outlays.
ACO = accountable care organization.

    Basis of estimate: For this estimate, CBO assumes that S. 
870 will be enacted near the end of fiscal year 2017.
    CBO estimates that enacting S. 870 would affect direct 
spending in each year, beginning in 2019, by a significant 
amount, but would have no significant net effect on total 
direct spending over the 2018-2027 period. The provisions that 
would affect direct spending are discussed below.
    Independence at Home Demonstration. The bill would extend 
the Independence at Home (IAH) program for two years, through 
late fiscal year 2019, and would increase the aggregate cap on 
the number of Medicare beneficiaries served by participating 
providers from 10,000 to 15,000.
    Primary care services provided in a number of settings, 
including a patient's home, are covered by the Medicare 
program. The IAH program was established to test whether 
providing a financial incentive--bonus payments--for providers 
to deliver primary care services in a patient's home would 
reduce Medicare spending and improve the quality of care. 
Providers participating in the IAH program receive a bonus 
payment if their practice meets quality standards and the 
average cost of Medicare benefits for its patients is less than 
95 percent of the average cost of such benefits for similar 
patients in the community.\1\
---------------------------------------------------------------------------
    \1\Measuring the cost of similar patients in the community has 
proved to be a very difficult technical challenge. As a result, each 
time the evaluators have analyzed the data for a performance year, they 
have recommended making substantial changes to how those costs will be 
estimated for a subsequent performance year. Participating providers 
have been given the choice of continuing to use the existing method or 
switching to the newly developed method.
---------------------------------------------------------------------------
    Those bonus payments would add to federal costs. The 
ultimate budgetary effect would depend on whether they resulted 
in offsetting reductions in Medicare spending. However, 
determining that the patients served by participating providers 
have Medicare costs that, on average, are below that 95 percent 
level does not necessarily indicate that the IAH program 
reduces Medicare spending, because it does not indicate that 
the program has changed Medicare's costs for beneficiaries 
served by participating providers. Expanding the use of home-
based services through the IAH program would probably increase 
the use of certain services, but would ultimately reduce 
Medicare spending if the resulting change in practice patterns 
lowered health care costs or if the IAH program shifted market 
share from higher-cost to lower-cost providers, as long as the 
resulting savings amounted to more than the bonuses paid 
through the program. To date, interim evaluations of the IAH 
program have not assessed whether such changes have occurred. 
In the absence of such information, CBO has no basis for 
concluding whether the bonus payments offered through the IAH 
program have spurred participating providers to make changes 
affecting Medicare spending.
    Further, the bonus payments, as designed, are not targeted 
exclusively at inducing changes to reduce spending. Instead, 
providers with relatively low costs would qualify for bonuses 
whether they make any changes in the way they provide care or 
not. Similarly, providers who do make changes, but do not lower 
spending by enough to qualify for a bonus would not receive 
one. On the basis of the bonus payments made to date, CBO 
estimates that Medicare would make annual bonus payments to 
participating providers that average about $5 million per 
10,000 beneficiaries for each additional year of the 
demonstration. Taking into account both the 5,000 increase in 
the cap on the number of participating beneficiaries and the 
effect of interactions between changes in spending in the fee-
for-service sector and payment rates in the Medicare Advantage 
(MA) program, CBO estimates that the bill's changes to the IAH 
program would increase Medicare spending by $16 million over 
the 2018-2027 period.
    Special Needs Plans. Special needs plans (SNPs) are private 
health insurance plans in the Medicare Advantage program that 
limit enrollment to beneficiaries who require an institutional 
level of care, have certain chronic conditions, or are enrolled 
in both Medicare and Medicaid (dual eligibles). Under current 
law, the authority for an MA plan to operate as a SNP will 
expire at the end of calendar year 2018.
    S. 870 would permanently authorize SNPs if certain 
requirements are met. In particular, SNPs that limit enrollment 
to dual eligibles (D-SNPs) would be required to establish 
formal agreements with state Medicaid programs by January 1, 
2021, to coordinate the provision of Medicaid-covered long-term 
services and supports (LTSS) or behavioral health services. 
Feedback from stakeholders indicates that state Medicaid 
programs find that D-SNPs offer an attractive option for 
identifying and contracting with private insurers to provide 
LTSS. Therefore, CBO expects that authorizing D-SNPs beyond 
2018 would increase the number and the scope of managed LTSS 
programs covered by state Medicaid programs.
    Based on analysis of information from stakeholders, CBO 
concludes that managed LTSS plans enroll a small number of 
individuals who otherwise would receive informal, non-federally 
financed care in the community. Once those individuals are 
enrolled in a managed LTSS plan, they would receive Medicaid-
financed LTSS for the first time. Compared to current law, CBO 
estimates that the number of people who would receive Medicaid-
financed LTSS under S. 870 would grow over time. That increase 
would rise to about 1,300 by 2027. CBO estimates that expansion 
of participation in Medicaid-financed LTSS would increase 
federal Medicaid outlays by $123 million over the 2018-2027 
period. CBO further estimates that permanently authorizing SNPs 
would not have a significant effect on Medicare spending 
because CBO estimates that Medicare payments to SNPs, on 
average, are comparable to Medicare's payments to other MA 
plans or to providers in the fee-for-service sector.
    Value-based Insurance Design (VBID) demonstration. The 
Center for Medicare and Medicaid Innovation (CMMI) began 
conducting a demonstration program in January 2017 to test the 
effectiveness of permitting private health insurance plans 
participating in the MA program to vary cost-sharing and 
benefits for Medicare beneficiaries with certain conditions in 
order to encourage the use of certain services and providers. 
As with other models tested through the CMMI, the Secretary 
will be permitted to expand the program if, after evaluating 
the results of the demonstration program, the Chief Actuary of 
the Centers for Medicare and Medicaid Services certifies that 
expansion would not increase Medicare spending and the 
Secretary determines that the expansion would not reduce 
quality of care. S. 870 would modify that demonstration project 
to make VBID available in all 50 states in 2020 and 2021.
    Expanding to all 50 states during testing would limit the 
Secretary's flexibility to design and modify the demonstration. 
For example, it would be more difficult to focus on elements of 
the experiment that an initial evaluation suggests might be 
most promising or to ensure that the demonstration involves a 
control group that is adequate for the evaluation to produce 
meaningful conclusions. CBO expects that limiting that 
flexibility would be unlikely to result in greater savings than 
a similar model designed and refined under the existing CMMI 
program but could result in greater costs. Based on that one-
sided effect on potential savings, CBO estimates that this 
provision would increase Medicare spending by a total of $90 
million 2020 and 2021. That estimate is in the middle of the 
range of possible outcomes.
    Telehealth costs in Medicare Advantage bids. Under current 
law, MA plans may provide some telehealth services as part of 
the standard benefit, mirroring what is covered for 
beneficiaries enrolled in Medicare's fee-for-service (FFS) 
program. However, if an MA plan wants to provide telehealth 
services that go beyond what is covered in the FFS program, the 
plan must receive approval to provide those services as 
supplemental benefits and use its ``rebate'' to pay for those 
services.\2\ S. 870 would allow MA plans to include the cost of 
additional telehealth services in their bids for contracts that 
cover 2020 or subsequent years. The costs included in the bid 
would not include capital or infrastructure expenses. 
Telehealth services would not count toward meeting network-
adequacy requirements, and plans could not use the availability 
of telehealth services to limit access to in-person services.
---------------------------------------------------------------------------
    \2\The rebate is a portion of the amount by which the ``benchmark'' 
amount for the geographic area covered by the plan exceeds the MA 
plan's bid for services it is required to cover. The benchmark is based 
on estimated spending per beneficiary in the fee-for-service sector in 
that geographic area. The rebate portion is between 50 percent and 70 
percent, based on the plan's score on certain measures of quality of 
care. MA plans are required to use the rebate to pay for benefits not 
covered in the fee-for-service sector.
---------------------------------------------------------------------------
    Based on a review of the literature and discussions with 
experts, CBO concluded that coverage of telehealth services by 
private payers sometimes results in higher spending and 
sometimes results in savings; in either case, the effects on 
spending tend to be small. For MA plans that offer telehealth 
services as supplemental benefits, this provision would 
increase spending, because Medicare's payment would reflect the 
full cost of those benefits instead of the 50 percent to 70 
percent of the cost that is covered by the rebate. (The other 
30 percent to 50 percent is covered by displacing other 
supplemental benefits that would be attractive to potential 
enrollees.)
    In general, CBO expects that an MA plan that begins or 
expands coverage of telehealth benefits under S. 870 would do 
so based on the plan's expectation that it could manage 
telehealth services in a manner that would enable it to lower 
its bid. Because coverage of telehealth benefits as a 
supplemental benefit is very limited, CBO estimates that the 
savings from plans that begin or expand telehealth services 
would slightly exceed the increased cost for plans that already 
offer telehealth services as a supplemental benefit. On net, 
CBO estimates that enactment of this provision would reduce 
direct spending by $80 million over the 2018-2027 period.
    Telehealth in Accountable Care Organizations. The bill 
would expand the ability of certain ACOs to receive Medicare 
payment for telehealth services beginning January 1, 2020. 
Under current law, Medicare only pays for telehealth services 
delivered in rural locations, with the remote provider paid 
under the physician fee schedule and the originating site 
receiving a facility fee. Nevertheless, an ACO has an incentive 
to provide noncovered telehealth services if it expects those 
services to reduce the total cost of care for the ACO's 
beneficiaries and to result in larger bonus payments from 
Medicare.
    S. 870 would eliminate the geographic component of the 
originating site requirement for ACOs and allow those programs 
to receive Medicare payment for certain telehealth services 
furnished to the ACO's beneficiaries in their homes. No 
facility fee would be paid for services provided in the home of 
a beneficiary. CBO estimates that change would increase direct 
spending for Medicare by $50 million over the 2018-2027 period.
    Telehealth Services for Stroke Patients. Under current law, 
coverage of telehealth services is restricted to Medicare 
beneficiaries in rural areas. Beginning on January 1, 2021, S. 
870 would remove that geographic restriction for telestroke 
services (a subset of telehealth services that involves 
consultation with a neurologist for a patient suspected of 
having had a stroke).
    There are two types of stroke: bleeding in the brain 
(hemorrhagic) and clotting in the brain (ischemic). Use of a 
clot-dissolving drug to treat clotting strokes within three to 
four-and-a-half hours of the onset of symptoms substantially 
improves outcomes, both by increasing survival rates and by 
reducing the likelihood that a stroke patient will be 
moderately or severely disabled. However, administering the 
clot-dissolving drug to a patient with a bleeding stroke is 
likely to cause death. Therefore, a timely neurological 
evaluation is essential to determine whether to administer the 
clot-dissolving drug to a patient with stroke symptoms.
    Emergency medical services in most urban and suburban areas 
have protocols to identify patients with stroke symptoms and 
transport those patients directly to a hospital that is a 
``stroke center.'' As a result, a large majority of stroke 
patients in those areas are taken directly to a stroke center. 
Such a facility always has a neurologist available--either 
onsite or via telehealth--to determine which drugs to 
administer to a stroke patient, so enacting S. 870 would not 
affect outcomes for such patients.
    On the basis of an analysis of Medicare claims data, a 
review of the relevant literature, and discussions with 
experts, CBO estimates that about 550,000 strokes occur in the 
Medicare population in nonrural settings each year. Under S. 
870, by CBO's estimates, the proportion of those cases that is 
handled using telestroke services would increase from about 6 
percent in 2021 to 14 percent in 2027.
    To develop spending estimates for the bill's extension of 
telestroke services, CBO focused on cohorts of Medicare 
patients who receive a telestroke consultation in a given year. 
That approach, which tracks groups of patients over a span, is 
particularly appropriate when spending is changeable over time. 
On the basis of a review of the relevant literature and 
discussions with experts, CBO concluded that spending--by the 
federal government and nonfederal providers combined--for a 
cohort would increase in the year in which the telestroke 
consultation occurs and then decline in subsequent years.
    Higher spending in the first year would be the result of: 
additional consultations, more medications, additional 
treatment, and--for patients who otherwise would not have 
survived--more spending for post-acute-care services during the 
90 days after a hospital stay. Annual spending would be lower 
in subsequent years largely because the number of patients who 
are discharged from the hospital with moderate or severe 
disability would decline significantly as would spending for 
long-term care.
    Because Medicare does not cover long-term care services 
such as nursing home care, much of the savings from avoided 
long-term-care services would accrue to beneficiaries, other 
private payers, and state Medicaid programs--and not to the 
federal government. The federal government would share in the 
savings that accrue to state Medicaid programs.
    For a given cohort, CBO estimates that cumulative 
spending--including spending by nonfederal payers--would be 
reduced beginning in the fourth year after the telestroke 
consultation. Federal spending would follow the same basic 
pattern but with a lag because much of the savings would accrue 
to nonfederal payers. CBO estimates that federal spending would 
be reduced beginning in the sixth year after the telestroke 
consultation.
    Taking into account that pattern of an initial increase in 
spending and a reduction over time for each cohort of patients 
each year, CBO expects that expanding Medicare coverage of 
telestroke services ultimately would reduce Medicare spending. 
Over the 2018-2027 period, however, CBO estimates the expansion 
of telestroke services would increase direct spending by $180 
million.
    Assignment of beneficiaries to accountable care 
organizations. In general, Medicare beneficiaries are assigned 
to an ACO when they receive much of their primary care from 
providers affiliated with a particular ACO. For most ACOs, 
assignment of their beneficiaries is retrospective--that is, 
final assignment of a beneficiary occurs after analysis of the 
beneficiary's claims for a year. S. 870 would allow ACOs to 
have beneficiaries assigned to them prospectively beginning in 
2020. CBO estimates that this provision would increase federal 
spending by $50 million over the 2018-2027 period. That 
conclusion is based on two factors: First, prospective 
assignment would result in some beneficiaries being assigned to 
an ACO who would not be assigned to any ACO under current law. 
That increase in assignment rates would result in an increase 
in the number of beneficiaries for whom Medicare makes a 
``shared-savings'' payment to an ACO. Second, it would also 
weaken the incentive for an ACO to lower costs for 
beneficiaries who are not assigned to it.
    Use of in-network providers by AOC beneficiaries. Under 
current law, health care providers generally are prohibited 
from offering financial incentives to Medicare beneficiaries to 
patronize the provider. S. 870 would waive that prohibition 
with respect to financial incentives offered by certain ACOs to 
beneficiaries who receive primary care services from a provider 
within the ACO's network. CBO estimates that enacting that 
provision of S. 870 would reduce direct spending for Medicare 
by $54 million over the 2018-2027 period.
    Eligible ACOs would have two potential reasons to offer 
financial incentives for patients to use primary care providers 
in their networks. The first would be to increase volume at the 
expense of providers that are not part of the ACO's network, 
which would affect providers' incomes, but would not have a 
significant effect on Medicare spending. The second reason is 
because the ACO would expect that, on average, a dollar spent 
on financial incentives would be more than offset by higher 
``shared-savings'' payments. Because shared-savings payments 
would increase only if Medicare spending was lower, CBO expects 
that eligible ACOs would use those incentive payments in ways 
that would result in lower Medicare spending relative to 
current law.
    Rescissions. S. 870 would rescind amounts earmarked for 
making improvements to the Medicare fee-for-service program and 
to managing the Medicaid program. CBO estimates those 
rescissions would reduce direct spending for Medicare by $370 
million and would reduce federal spending for Medicaid by $5 
million.
    Pay-As-You-Go considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget-reporting and enforcement 
procedures for legislation affecting direct spending or 
revenues. The net changes in outlays that are subject to those 
pay-as-you-go procedures are shown in the following table.

                CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR S. 870, AS ORDERED REPORTED BY THE SENATE COMMITTEE ON FINANCE ON MAY 18, 2017
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  By fiscal year, in millions of dollars--
                                                  ------------------------------------------------------------------------------------------------------
                                                    2017   2018   2019   2020    2021     2022    2023   2024   2025   2026   2027  2017-2022  2017-2027
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       NET INCREASE OR DECREASE (-) IN THE DEFICIT
 
Statutory Pay-As-You-Go Impact...................      0      0      8     55     -167     -113     27     33     38     54     65      -217          0
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Increase in long-term direct spending and deficits: CBO 
estimates that enacting the legislation would not increase net 
direct spending or on-budget deficits by more than $5 billion 
in any of the four consecutive 10-year periods beginning in 
2028.
    Intergovernmental and private-sector impact: S. 870 
contains no intergovernmental or private-sector mandates as 
defined in UMRA. CBO estimates that the state share of 
increased Medicaid spending for higher enrollment in LTSS plans 
would total $93 million over the 2018-2027 period. Because 
states have significant flexibility to adjust their financial 
and programmatic responsibilities, such additional expenditures 
would not result from an intergovernmental mandate as defined 
in UMRA.
    Estimate prepared by: Federal costs: Alice Burns, Lori 
Housman, Jamease Kowalczyk, Kevin McNellis, Andrea Noda, Lisa 
Ramirez-Branum, Lara Robillard, Colin Yee, Rebecca Yip; impact 
on state, local, and tribal governments: Zachary Byrum; impact 
on the private sector: Amy Petz.
    Estimate approved by: Holly Harvey, Deputy Assistant 
Director for Budget Analysis.

                       IV. VOTES OF THE COMMITTEE

    In compliance with paragraph 7(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee states that, with a 
majority present, the Creating High-Quality Results and 
Outcomes Necessary to Improve Chronic (CHRONIC) Care Act of 
2017 was ordered favorably reported by a roll call vote of 26 
ayes and 0 nays on May 18, 2017.

                 V. REGULATORY IMPACT AND OTHER MATTERS


                          A. Regulatory Impact

    Pursuant to paragraph 11(b) of rule XXVI of the Standing 
Rules of the Senate, the Committee makes the following 
statement concerning the regulatory impact that might be 
incurred in carrying out the provisions of the bill.

Impact on individuals and businesses, personal privacy and paperwork

    In carrying out the provisions of the bill, there is no 
expected imposition of additional administrative requirements 
or regulatory burdens on individuals or businesses. The 
provisions of the bill do not impact personal privacy.

                     B. Unfunded Mandates Statement

    The Committee adopts as its own the estimate of federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act of 1995 (P.L. 104-4). The Congressional Budget Office 
estimates the bill would not impose intergovernmental or 
private-sector mandates as defined in the Unfunded Mandates 
Reform Act and would impose no costs on state, local, or tribal 
governments.

       VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    In the opinion of the Committee, it is necessary in order 
to expedite the business of the Senate, to dispense with the 
requirements of paragraph 12 of rule XXVI of the Standing Rules 
of the Senate (relating to the showing of changes in existing 
law made by the bill as reported by the Committee).

                                  [all]