Coordinated Care Model for Medicare Beneficiaries with Chronic Conditions Proposed

Senators Ron Wyden (D-Ore) and Johnny Isakson (R- Ga) have introduced a bill that would allow health care providers to receive one capitated payment for providing integrated care to Medicare beneficiaries who suffer from multiple chronic conditions. The Better Care, Lower Cost Act would reward providers who improve the overall health of the beneficiaries enrolled in their better care plan (BCP) instead of reimbursing multiple providers for each service they provide. Senators Wyden and Isakson see this as a way to provide better care and reduce the amount of money that is spent on Medicare beneficiaries with chronic conditions.

Chronic Conditions

In 2010, 68 percent of Medicare beneficiaries had at least two or more chronic conditions that accounted for $487 billion, or 93 percent of Medicare spending, according to data from CMS’ “Chronic Conditions Among Medicare Beneficiaries, Chartbook: 2012 Edition.” Beneficiaries with multiple chronic conditions are far more likely to be hospitalized and readmitted to a hospital within 30 days of discharge, according to the report. Nearly 98 percent of all hospital readmissions involved beneficiaries with multiple chronic conditions. “Medicare is now dominated by cancer, diabetes, and heart conditions,” said Senator Wyden. “Medicare reform must be built around offering better quality, more affordable care for these seniors,” he continued.


A BCP would be any health plan, provider of service, or group of providers of services and supplies that is responsible for the full continuum of care for a Medicare beneficiary, with the exception of long-term care services. The BCP is to coordinate the provision of all covered Medicare Part A, Part B and Part D services. A BCP would receive a monthly capitated payment for each beneficiary. The payment amount will be determined in the same manner as payment amounts are determined for Medicare Advantage Organizations. Payments will be adjusted for health risks of the BCP compared to the health risks of the Medicare population in the counties served by the BCP, as well as the health status of beneficiaries enrolled in the BCP.

Risk Sharing

During the first three years, BCPs and the Medicare will share the risk and rewards of the operation. If a qualified BCP has a gain or loss of more than 5 percent, the BCP will be responsible for all of the loss or be able to retain all of the gains. If the BCP has a loss or gain between 2 and 5 percent, the BCP would be responsible for 80 percent of the loss or would be able to keep 80 percent of the savings. If the BCP has a loss or gain of less than 2 percent, the BCP would be responsible for 50 percent of the loss or would be able to retain 50 percent of the excess. BCPs would have to demonstrate fiscal solvency to participate in this program. A bonus payment would also be made to BCPs that meet certain quality measures. The sponsors of the legislation hope that these provisions will help incentivize providers to find savings through the coordination of care.


Medicare beneficiaries could voluntarily join a BCP. Beneficiaries will be notified of the option to enroll when they are diagnosed with a chronic condition, during each annual, coordinated election period, or during their Welcome to Medicare initial preventive physical examination. The BCP is to provide each beneficiary with a care team that is to develop a care plan for each Medicare beneficiary in the BCP. The care plan should include strategies that prevent, delay, or minimize the progression of the beneficiary’s chronic condition.

The BCP can alter beneficiary co-payments and cost sharing requirements to encourage beneficiaries to pursue certain care options. Any alteration, though, shall not exceed what would have otherwise been paid for an item or service under fee-for-service Medicare.

The bill was introduced on January 15, 2104 and was assigned to the Senate’s Committee on Finance.