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Physician-Hospital Collaboration Demonstration

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Centers for Medicare & Medicaid Services (CMS), HHS.




This notice is to inform interested parties of an opportunity to apply to participate in a demonstration under section 646 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), the Medicare Health Care Quality Demonstration, to examine the effects of gainsharing aimed at improving the quality of care in a health delivery system. More specifically, the demonstration will determine if gainsharing is an effective means of aligning financial incentives to enhance quality and efficiency of care across an entire system of care. In contrast to traditional models of gainsharing, which focus on the inpatient stay, this demonstration will examine approaches that involve long-term follow-up to assure both documented improvements in quality and reductions in the overall costs of care. Projects must also be of sufficient size to ensure statistical robustness of the results. CMS is particularly interested in demonstration designs that track patients well beyond a hospital episode, to determine the impact of hospital-physician collaborations on preventing short- and longer-term complications, duplication of services, coordination of care across settings, and other quality improvements that hold great promise for eliminating preventable complications and unnecessary costs.

From the perspective of implementing and evaluating the demonstration, we also require some standardization of gainsharing approaches, physician payments, and hospital savings measurement across sites. Therefore, for the Section 646 Gainsharing Demonstration, CMS will operate projects submitted by consortia, comprising of health care groups and their affiliated hospitals. A limited number of projects will be operated in various geographic areas; no more than 72 hospitals can be included across all projects.


Applications for the demonstration under MMA section 646 will be considered timely if we receive them no later than 5 p.m., Eastern Standard Time (e.s.t.), on January 9, 2007.

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Lisa Waters at (410) 786-6615 or Interested parties can obtain a complete solicitation, application, and supporting information on the following CMS Web sites at​DemoProjectsEvalRpts/​MD/​itemdetail.asp?​filterType=​none&​filterByDID=​-99&​sortByDID=​3&​sortOrder=​ ascending&itemID=CMS1186653.

Paper copies can be obtained by writing to Lisa Waters at the address listed in the ADDRESSES section of this notice.

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Mail or deliver applications to the following address: Centers for Medicare & Medicaid Services, Attention: Lisa Waters, Mail Stop: C4-17-27, 7500 Security Boulevard, Baltimore, Maryland 21244.

Because of staff and resource limitations, we cannot accept applications by facsimile (FAX) transmission or by e-mail.

Eligible Organizations for MMA 646: As stipulated in the enabling legislation, physician groups, integrated delivery systems, or an organization representing regional coalitions of physician groups or integrated delivery systems are eligible to apply. A comprehensive list of all eligibility requirements can be found in the “Eligible Organizations” section of the solicitation. We envision projects that seek to improve quality and efficiency in several areas of each participating organization.

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I. Background

Section 646 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173) amends title XVIII (42 U.S.C. 1395 et seq.) of the Social Security Act to establish the Medicare Health Care Quality (MHCQ) Demonstration Programs.

The MHCQ demonstration will test major changes to improve quality of care while increasing efficiency across an entire health care system. Broadly stated, the goals of the Medicare Health Care Quality demonstration are to:

  • Improve patient safety;
  • Enhance quality of care by increasing efficiency; and
  • Reduce scientific uncertainty and the unwarranted variation in medical practice that results in both lower quality and higher costs.

II. Provisions of the Notice

This notice solicits applications to participate in the MMA Section 646 Medicare Hospital Gainsharing Demonstration that will assist in determining if gainsharing can align incentives between hospitals and physicians to improve the quality and efficiency of care provided to beneficiaries over episodes of care and across settings. The focus of each demonstration will be to link physician incentive payments to improvements in quality and efficiency. This demonstration will provide measures to ensure that the quality and efficiency of care provided to beneficiaries is monitored and improved. We envision projects that seek to improve quality and efficiency in several areas of each participating organization.

Overall, we seek demonstration models that result in savings to Medicare. We will assure this 3-year demonstration is budget neutral.

III. Collection of Information Requirements

This information collection requirement is subject to the Paperwork Reduction Act of 1995 (PRA); however, the collection is currently approved under OMB control number 0938-0880 entitled “Medicare Demonstration Waiver Application.”

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Authority: Section 646 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Public Law 108-173.

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(Catalog of Federal Domestic Assistance Program No. 93.778, Medical Assistance Program; No. 93.773 Medicare—Hospital Insurance Program; and No. 93.774, Medicare—Supplementary Medical Insurance Program)

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Dated: August 7, 2006.

Mark B. McClellan,

Administrator , Centers for Medicare & Medicaid Services.

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[FR Doc. 06-7574 Filed 9-6-06; 1:59 pm]