exponentially greater. It is vital that chronic care improvement programs employ electronic or Internet-based technologies integrated with clinical information tools, to easily provide a flow of relevant clinical information that designated care coordinators can use to facilitate collaboration among a patient's health care providers.

Quality improvement. An integrated system of electronic communication devices, decision-support tools, and clinical information databases is the best way to ensure and monitor the implementation of evidence-based practice guidelines to increase quality and reduce medical errors.

Accountability. Electronic systems that guide and educate patients and decision-support tools should be integrated with clinical information databases to ensure that CMS can measure chronic care improvement program outcomes and the performance of chronic care improvement organizations.

Section 649 of the Medicare bill makes explicit the connection between deploying information technology and successfully managing care of chronic illness, and between monitoring patients and evaluating outcomes. This section of the law allows physicians in the demonstration areas to participate if they agree to "the use of health information technology to manage the clinical care of eligible beneficiaries ..." and "the electronic reporting of clinical quality and outcomes measures Summarizing what Section 649 hopes to accomplish, CMS recently stated, "This demonstration aims to promote continuity of care, to help stabilize medical conditions, to prevent or minimize acute exacerbations of chronic conditions, and to reduce adverse health outcomes, such as adverse drug interactions."

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communications technologies revolutionize health care in the same way that they have transformed other sectors of the U.S. economy. The health care sector lags every other major service industry in its investment in information technology. For instance, financial-services companies invest 11 percent of their revenues in information technology to improve the quality of their services, the diversity of their products, and efficiency by moving the point of service closer to the consumer. The health care industry invests 2 percent." The vicious cycle of health care cost increases is one reason for this underinvestment, as it diverts funds from strategic information-technology investments to providing current services in a continuous crisis mode. Technology investment in health care has focused on high-tech diagnostic devices that reinforce an acute care model. The more routine, day-to-day management of chronic conditions calls for a different breed of information and communications technologies that facilitate ongoing monitoring, patient education, and care coordination to improve outcomes and reduce costs.

Proven Models of Technology-Based Chronic Care Improvement

The VA is a model of technology-based chronic care improvement in action, and shows the impact of such programs in

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improving quality and patient satisfaction and lowering the utilization of expensive in-patient hospital services. The VA is directly responsible for the health care of 6 million veterans. That number has grown rapidly in recent years because of eligibility expansion that has outpaced the agency's mismatch between

budget. The responsibilities and resources has forced the VA to transform its model of care, with an emphasis on reducing spending associated

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with the highest cost beneficiaries - typically patients with chronic diseases.

communication with the patient through the use of technology. With that also comes an increase in the patient's involvement in their health status. Through technology, we can provide care on an 'as needed,' 'just in time" basis. 18

In April 2000, the Veterans Integrated Services Network in Florida started programs to maintain veterans with high-risk chronic conditions in their homes under a technology

Technology-based chronic care improvement has been a linchpin of the VA's transformation effort. Patients with chronic conditions who are at risk of hospitalization receive in-home monitoring devices which require no computer skills and hook up to an ordinary phone line - upon being discharged from the hospital. The devices enable those veterans to manage their own illnesses, providing guidance and feedback based on the information they provide, while keeping them connected on to care providers at a VA hospital or clinic. Each day, these patients and their devices engage in what amounts to a conversation an automated program of scripted communications that is personalized to their needs. The device advises patients to contact the VA if one or more of their responses indicate that their conditions are deteriorating. The dialogue varies each day based on a patient's progress in the educational program and to ensure that the interaction stays fresh and interesting.

VA nurse care managers review patient responses each day to identify and respond to potential problems. Care managers log on to a Web-based application that tracks the data generated by patients using their in-home monitoring devices. Responses from patients are assigned color codes - green, yellow, and red-associated with a risk level that reflects their health status, based on the information the patient provided. They follow up by phone with patients whose conditions have been flagged as red for high risk or yellow for medium risk, and who may not have called in upon being prompted by the device.

based model. The VA in 2002 released an analysis of these programs that showed a 40 percent reduction in emergency room visits, a 63 percent decrease in hospital admissions, a 60 percent drop in bed days of care, a 64 percent decrease in nursing home admissions, and an 88 percent reduction in nursing home bed days of care. Patient satisfaction rates topped 90 percent." The VA has achieved similar results in expanding the programs to 10 other states and territories.

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programs.22 The Centers for Medicare and Medicaid Services in February 2004 sent a letter to state Medicaid directors urging further adoption of chronic care improvement initiatives, with the incentive of federal matching funds.23 The letter specifically defines chronic care improvement as a covered medical service that can be provided by nurses, pharmacists, or physicians. While chronic care improvement programs have realized their earliest successes primarily in integrated delivery systems such as the VA, the letter notes that a variety of approaches are now being developed for implementing such programs in a fee-forservice environment, including contracting with diseasemanagement organizations or individual fee-for-service physicians.

and

Examples of success at the VA and private organizations such as PacifiCare demonstrate that a chronic care improvement program built on an integrated technology solution is appropriate necessary to provide high quality chronic care at home that also saves money by preventing hospitalizations. These programs incorporate the major elements and requirements of chronic care improvement that the new Medicare law prescribes, including:

to

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and/or developing complications, embrace proven approaches that integrate in-home monitoring and communication devices, decisionsupport tools, and clinical information databases for evaluation of outcomes and program performance.

Using the authority granted by the Medicare bill to push for faster, more wide-ranging roll-outs of proven chronic care improvement strategies. Using CMS' power as the world's largest payer for health care services to push the U.S. health care delivery system to adopt the chronic care improvement model, through increased education for physicians, and hospitals, and patients about chronic care improvement approaches with proven effectiveness.

Chronic care improvement programs that save lives and save money offer the U.S. a nonzero-sum solution to one of its biggest policy conundrums - providing quality health care to Americans at a cost the nation can afford amid the aging of the population. In the absence of that understanding, the policy debate continues to focus on the zero-sum game of shifting costs; raising taxes, premiums, and co-payments; and cutting benefits.

Federal

most typically afflict the elderly - is an issue that confronts governments in advanced postindustrial societies around the world. The Japanese government and European Union increasingly are looking at technology-based chronic care improvement programs as a nonzero-sum proposition that can improve the lives of citizens and keep health care budgets under control.

Japan and the European Union also see chronic care improvement technologies as a promising direction for economic growth. A September 2002 European Commission report noted, "On the economic side, the health telematics market is expected to grow from less than 1 percent of the health expenditure in Europe to some 5 percent by 2005. This would make it a major industrial sector comparable to the pharmaceutical industry. More significantly, this will be achieved while containing the total cost of health."25

The US government has identified the opportunity for American leadership in technologies for chronic care improvement.

Reserve Chairman Alan Greenspan reflected that strain of thinking in recently recommending that Congress consider steps, such as raising the retirement age for Baby Boomers, to decrease pressure on Medicare and avert a crippling increase in taxes. "In view of this upward ratchet in government programs and the enormous uncertainty about the upper bounds of future demands for medical care, I believe that a thorough review of our spending commitments - and at least some adjustment in those commitments is necessary for prudent policy," Greenspan told the House Budget Committee in February."

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The aging of the population with the attendant increases in chronic illnesses that

24 Testimony before the U.S. House of Representatives Budget Committee, February 25, 2004.

The Department of Commerce in late February released a report on what it called the telehealth industry, calling it a huge potential market whose growth is currently impeded by domestic regulatory barriers, such as Medicare reimbursement practices and state licensing requirements." At a Capitol Hill briefing accompanying the release of the report, Commerce Undersecretary Phil Bond called telehealth a "global opportunity," adding, "It's the ultimate export opportunity with the expanding markets

overseas."

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economic growth. The chronic care improvement model shifts our thinking from raising taxes and cutting services to transforming health care to keep people healthier at a lower cost. Medicare is the world's largest payer for chronic disease - and has been paying dearly for the complications of unmanaged chronic illness. Medicare now has the chance to become the world's largest payer for chronic care improvement services and enabling technologies. In doing so, it can lead in creating a sustainable U.S. health care system for the 21st century, while spurring innovation in the information-technology industry answering the global need to improve the lives of aging populations.

About ITAA

With 380 member companies, the Information Technology Association of America (ITAA) is the leading trade association serving the information technology industry. Founded as the Association of Data Processing Service Organizations (ADAPSO) in 1961, ITAA has expanded its constituency over the years to include companies in every facet of the IT industry, including computer hardware, software, telecommunications, Internet, ebusiness, .e-education, outsourcing, computer services and more.

ITAA seeks to foster an environment that is conducive to the health, prosperity and competitive nature of the information technology industry and to help its members succeed in delivering the benefits of IT to their customers. The Association's industry development programs include advocacy on legislative and regulatory issues, studies and statistics, domestic and international market development and industry promotion. ITAA also provides extensive opportunities for business development, particularly for firms seeking to build market credibility, brand awareness, customer access and strategic partnerships.

ITAA's E-Health Committee engages in marketplace development and education and encourages the healthcare community, information

technology providers, employee groups, employers, payers, and government institutions to make better use of information technology resources.

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