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Over the past decade, many private health plans and organizations have begun to offer disease management as a model of care for chronically ill patients, in an attempt both to improve the quality of care that enrollees receive and to slow the growth of their health care costs. Disease management programs vary widely in the specific techniques and tools chey use, but they share some common components that arc designed to address several perceived shortcomings of current medical practice. One component is to educate patients about their disease and how they can better manage it. The goal is to encourage patients to use medication properly, to understand and monitor their symptoms more effectively, and possibly to change their behavior. A second component is to actively monitor pacients' clinical symptoms and treatment plans, following evidence-based guidelines. A third component is to coordinate care among providers, including physicians, hospitals, laboratories, and pharmacies. A discase management program can provide feedback and support to physicians about patients' status berween office visits as well as up-to-date information on best practices as they apply to the specific patient. Although disease management is a term sometimes used as a catchall chat addresses any and all limitations of fee-for-service care, it does not encompass general care coordination or general preventive services, such as flu shots. 13

largest decline in spending from 1997 (the year of the hospitalization) to 1998, with its share of total Medicare spending falling by over 20 percentage points, or by more than one-third. In contrast, the share of spending by beneficiaries with chronic conditions, as with those in the reference group, barely fell at all.

In terms of subsequent spending, beneficiaries in each of the three selection groups used more than $46,000 in Medicare-covered services over the next four years, compared with $27,000 for beneficiaries in the reference group. The previously high-cost group accounted for 29 percent of total Medicare spending over those four years, compared with 28 percent for beneficiaries with a prior hospitalization and 28 percent for those diagnosed with multiple chronic conditions. Those levels of aggregate spending occurred despite the fact that nearly half of the members in each group died before the end of the fouryear period.

Various demonstration projects and initiatives by the Centers for Medicare and Medicaid Services also focus on strategies to improve care for beneficiaries who account for large amounts of Medicare spending. For example, the Chronic Care Improvement Program was created by the Medicare Prescription Drug, Improvement, and Modernizacion Act of 2003 to improve clinical care for

13. See Congressional Budget Office, An Analysis of the Literature on

Disease Management Programs (October 2004).

HIGH-COST MEDICARE BENEFICIARIES

Figure 4.
Distribution of High-Cost Months Over the 1997-2001 Period
(Percentage of beneficiaries in the top 25 percent)

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Number of High-Cost Months Incurred by Cumulatively High-Cost Beneficiaries

Source: Congressional Budget Office based on data from the Centers for Medicare and Medicaid Services.

and implement effective intervention strategies, clinical or otherwise, to change beneficiaries' use of medical services.

beneficiaries with advanced congestive heart failure and! or diabetes with significant comorbidities. 14 The more recent Care Management for High-Cost Bencficiaries Demonstration is designed to develop and test strategies to improve the coordination of Medicare services for high-cost FFS beneficiaries.

Identifying individuals likely to be responsible for a large
share of Medicare spending merely points out the possi-
bilicy of focusing on high-cost beneficiaries as a way to re-
duce the program's costs. Realizing those reductions in
spending would ultimately rest on the ability to devise

Initial results from disease management programs and
other efforts indicate the difficulty of reducing the use of
carc. In certain cases, the health conditions underlying
high spending may not be amenable to effective interven-
tions. Moreover, although interventions may improve
health outcomes for high-cost beneficiaries, they may
lead to increases in the use of medical care. It is important
to note that improving the care received by high-cost
beneficiaries in itself may be a worthwhile objective, even
if it fails to reduce costs.

14. Nine sices have been selected for the pilot phase of the program.

HIGH-COST MEDICARE BENEFICIARIES

Table 6.
Percentage and Number of Medicare Beneficiaries in High- and
Low-Cost Spending Groups with Selected Chronic Conditions, 2001

High Cost (Top 25 Percent)

Low Cost (Bottom 75 Percent) Number

Number Chronic Condition

Percentage
(Millions)

Percentage (Millions)

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Source: Congressional Budget Office based on data from the Centers for Medicare and Medicaid Services.

Table 7.
Illustrative Criteria for Targeting Future Medicare Beneficiaries in High-Cost
Spending Groups

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Source: Congressional Budget Office based on data from the Centers for Medicare and Medicaid Services.
Notes: A chronic condition is a diagnosis of asthma, chronic obstructive pulmonary disease, chronic renal failure, congestive heart failure,

coronary artery disease, diabetes, or senility in at least one month. Multiple chronic conditions comprise two or more of those seven
conditions. Spending is reported in 2005 dollars.
n.a. = not applicable.

Senator KOHL. We will now call our second panel. The first witness on the second panel is from Arkansas, and so we would like to recognize Senator Lincoln to introduce her constituent.

Senator LINCOLN. Well, thank you, Mr. Chairman, and as our panelists are taking their seats, I have a real pleasure today to introduce Dr. William J. Evans, who is director of the Nutrition, Metabolism, and Exercise Laboratory in the Donald W. Reynolds Ínstitute on Aging at the University of Arkansas for Medical Sciences, UAMS, where he is also a professor of geriatric medicine, physiology, and nutrition.

Dr. Evans, I just have to say I routinely bring up the Don Reynolds Institute on Aging and ŬAMS in this Committee and in the Finance Committee, so I am so pleased that I now have a representative from there who can speak to the tremendous work that's going on in terms of the dealings with multiple disease diagnosis and coordination of care.

Dr. Evans is also a research scientist in the Geriatric Research, Education, and Clinical Center in the Central Arkansas Veterans' Health Care System. He is author or co-author of more than 190 publications and scientific journals. His research has examined the powerful interaction between diet and exercise in elderly people. Along with Dr. Erwin Rosenberg, Evans is the author of Biomarkers: The Ten Determinants of Aging That You Can Control, and the author of Astrofit.

His work has been featured in numerous newspapers, including the New York Times, the Boston Globe, the Chicago Tribune, as well as the CBS Evening News, CBS Morning Show, 20/20, CNN, and the PBS Series, the Infinite Voyage.

His landmark studies have demonstrated the ability of older men and women to improve strength, fitness, and health through exercise, which we all want information for, even into the 10th decade of life. I am not sure that he has met my husband's grandmother, who is 108 this year, living out in Parkway Village, Dr. Evans, so she is a great one to consult.

Dr. Evans receives grant support from the National Institute of Health, the Veterans Administration, NASA, private industry, and other sources. He is a fellow of the American College of Sports Medicine, and the American College of Nutrition, and an honorary member of the American Dietetic Association.

I am enormously proud to be here to introduce you to Dr. Evans and to share your wealth of knowledge with this Committee and I thank the Chairman and the two Senators here, Chairman Smith and Chairman Kohl.

Dr. Evans. Thank you Senator Lincoln. It is a real honor and pleasure Senator Kohỉ. Thank you, and we will just go through it, and then we will get to your testimony.

Senator LINCOLN. Oh, good.

Senator KOHL. Our next will be Bill Herman who is vice president of Human Resources at High Smith in Fort Atkins in Wisconsin.

Highsmith has been nationally recognized for its innovative employee wellness programs, and so we are pleased that Mr. Herman is here today to share the keys to the success of his company. Thank you so much for being here.

Senator Smith, would you like to welcome your guest?

The CHAIRMAN. Thank you, Mr. Chairman. It is my privilege to welcome our next witness as well, Mr. Stephen J. Brown, president and CEO of Health Hero Network, founded in 1988. His company is a recognized leader in the development and implementation of innovative technologies used to monitor or manage traditionally high-cost patients.

Their technology is currently being used by a number of institutional health care providers, including the Veterans' Administration, to more efficiently manage patients with heart failure, pulmonary cardiovascular disease, diabetes, asthma, post acute care, mental health, and many other chronic conditions.

Additionally, Health Hero Network and Bend Memorial Clinic in Bend, OR, are partnering to see how this technology can be used to coach and monitor Medicare patients with severe chronic illness and prevent them from going to the hospital and developing further complications.

So we thank you, Stephen for being here, and I look forward to hearing more about your technologies.

Senator KOHL. Our final witness on this panel will be Dr. Steven Woolf, professor of the Departments of Family Medicine, Epidemiology, and Community Health at Virginia Commonwealth University.

Dr. Woolf's career has focused on preventive medicine, and he is a senior advisor to the Partnership for Prevention.

We welcome you all, and Mr. Evans we will start with your testimony. STATEMENT OF DR. WILLIAM EVANS, DIRECTOR OF NUTRI

TION, METABOLISM, AND EXERCISE LABORATORY, DONALD
W. REYNOLDS INSTITUTE ON AGING, UNIVERSITY OF
ARKANSAS FOR MEDICAL SERVICES, LITTLE ROCK, AR
Dr. EVANS. Thank you very much. It is a real honor to be here.

I am in only the second department of geriatrics in the United States, which is an indication of the relative lack of attention toward geriatrics in this country, and it is only now changing, and so we are very fortunate to be in this wonderful new center.

As we know, attitudes toward aging have been around a very long time. As Shakespeare describes the ages of man, he says the second childishness and mere oblivion, sans teeth, sans eyes, sans tastes, sans everything.

This attitude toward aging I think is now beginning to change. I think we are at the beginning of a revolution in how we think about aging, because for the first time, we can actually separate what is biological aging from how we go about living our lives, as we have just talked about.

One of the features of aging we know is a loss of muscle. We think that that is critical. These are data from the Baltimore Longitudinal Study on Aging. The yellow line happens to be loss of muscle. This is a lifelong process. We have coined a term for it. We call it sarcopenia, and that simply means the age-related loss of skeletal muscle mass.

We think that this is an enormous problem. It leads to reduced protein reserves, the decreased ability of elderly people to respond

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