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Suggested Citation:"Executive Summary." Institute of Medicine. 2003. Fostering Rapid Advances in Health Care: Learning from System Demonstrations. Washington, DC: The National Academies Press. doi: 10.17226/10565.
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Suggested Citation:"Executive Summary." Institute of Medicine. 2003. Fostering Rapid Advances in Health Care: Learning from System Demonstrations. Washington, DC: The National Academies Press. doi: 10.17226/10565.
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Suggested Citation:"Executive Summary." Institute of Medicine. 2003. Fostering Rapid Advances in Health Care: Learning from System Demonstrations. Washington, DC: The National Academies Press. doi: 10.17226/10565.
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Suggested Citation:"Executive Summary." Institute of Medicine. 2003. Fostering Rapid Advances in Health Care: Learning from System Demonstrations. Washington, DC: The National Academies Press. doi: 10.17226/10565.
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Suggested Citation:"Executive Summary." Institute of Medicine. 2003. Fostering Rapid Advances in Health Care: Learning from System Demonstrations. Washington, DC: The National Academies Press. doi: 10.17226/10565.
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Suggested Citation:"Executive Summary." Institute of Medicine. 2003. Fostering Rapid Advances in Health Care: Learning from System Demonstrations. Washington, DC: The National Academies Press. doi: 10.17226/10565.
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Suggested Citation:"Executive Summary." Institute of Medicine. 2003. Fostering Rapid Advances in Health Care: Learning from System Demonstrations. Washington, DC: The National Academies Press. doi: 10.17226/10565.
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Suggested Citation:"Executive Summary." Institute of Medicine. 2003. Fostering Rapid Advances in Health Care: Learning from System Demonstrations. Washington, DC: The National Academies Press. doi: 10.17226/10565.
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Suggested Citation:"Executive Summary." Institute of Medicine. 2003. Fostering Rapid Advances in Health Care: Learning from System Demonstrations. Washington, DC: The National Academies Press. doi: 10.17226/10565.
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Suggested Citation:"Executive Summary." Institute of Medicine. 2003. Fostering Rapid Advances in Health Care: Learning from System Demonstrations. Washington, DC: The National Academies Press. doi: 10.17226/10565.
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Suggested Citation:"Executive Summary." Institute of Medicine. 2003. Fostering Rapid Advances in Health Care: Learning from System Demonstrations. Washington, DC: The National Academies Press. doi: 10.17226/10565.
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Suggested Citation:"Executive Summary." Institute of Medicine. 2003. Fostering Rapid Advances in Health Care: Learning from System Demonstrations. Washington, DC: The National Academies Press. doi: 10.17226/10565.
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Suggested Citation:"Executive Summary." Institute of Medicine. 2003. Fostering Rapid Advances in Health Care: Learning from System Demonstrations. Washington, DC: The National Academies Press. doi: 10.17226/10565.
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Suggested Citation:"Executive Summary." Institute of Medicine. 2003. Fostering Rapid Advances in Health Care: Learning from System Demonstrations. Washington, DC: The National Academies Press. doi: 10.17226/10565.
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Suggested Citation:"Executive Summary." Institute of Medicine. 2003. Fostering Rapid Advances in Health Care: Learning from System Demonstrations. Washington, DC: The National Academies Press. doi: 10.17226/10565.
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Suggested Citation:"Executive Summary." Institute of Medicine. 2003. Fostering Rapid Advances in Health Care: Learning from System Demonstrations. Washington, DC: The National Academies Press. doi: 10.17226/10565.
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. . ~ ~ 1l Executive Summary ABSTRACT In response to a request from the Secretary of the Department of Health and Human Services, the Institute of medicine convened a committee to identify possi- ble demonstration projects that might be implemented in 2003, with the hope of yielding models for broader health system reform within a few years. The commit- tee is recommending a substantial portfolio of demonstration projects: 10-12 chronic care demonstrations, a primary care demonstration with 40 participating sites, 8-10 information and communications technology infrastructure demonstra- tions, 3-5 state health insurance coverage demonstrations, and 4-5 state liability demonstrations. As a set the demonstrations address key aspects of the health care delivery system and the financing and legal environment in which health care is provided. The launching of a carefully crafted set of demonstrations is viewed as a way to initiate a "building block" approach to health system change. UP The American health care system is confronting a crisis. The cost of private health insurance is now increasing at an annual rate in excess of 12 percent, while at the same time individuals are paying more out of pocket and receiving fewer benefits (Edwards et al., 2002; Kaiser Family Foun- dation and Health Research and Educational Trust, 2002~. One in seven Americans is uninsured, and the number of uninsured is on the rise (U.S. Census Bureau, 2001, 2002~. Many states are confront- ing serious financial constraints that are likely to result in a narrowing of the eligibility criteria and benefits of public insurance programs (Desonia, 2002~. Tens of thousands die from medical errors each year, and many more are injured (Institute of Medicine, 2000~. Quality problems, includ- ing underuse of beneficial services and overuse of medically unnecessary procedures, are widespread (Leatherman and McCarthy, 2002; Schuster et al., 2001~. And disturbing racial and ethnic disparities in access to and use of services call into question our fundamental values of equality and justice for all (Institute of Medicine, 2002e). The health care delivery system is incapable of meeting the present, let alone the future needs of the American public (Institute of Medicine, 200Ib). The vast majority of the nation's health care resources is now devoted to the ongoing management of chronic conditions (Anderson and Knick- man, 2001a). Yet despite some laudable examples of integrated care, the delivery system consists of silos, often lacking even rudimentary information capabilities to exchange patient information, coor-

Executive Summary dinate care across settings and multiple provid- ers, and ensure continuity of care over time (Gandhi et al., 2000~. Fixing the personal health care delivery system must be a high priority, but will not be enough. It recent years, it has be- come increasingly apparent that health out- comes are determined to a great extent by fac- tors in addition to health care, including behavioral patterns, genetic predispositions, social circumstances, and environmental expo- sures (McGinnis et al., 2002~. In the 21St century, the health care system must focus greater attention on helping people improve their hearth-related behaviors, including cliet, exercise, and use of nicotine and alcohol. As health care providers struggle to address these concerns, they confront sizable obstacles in the external environment, including regula- tory, payment, and legal barriers, among others. The patchwork of federal and state regulatory requirements that has evolved over several dec- ades is organized around various types of insti- tutions (e.g., hospitals, nursing homes, home health agencies) and professionals (e.g., physi- cians, nurses, pharmacists). Many insurance programs fait to provide coverage for services that are critical to the care of the chronically ill, such as outpatient prescription drugs, patient education and support services, and interactions between health professionals and patients via e-mail and telephone (Anderson and Knickman, 200 lb). The legal liability system floes not adequately fulfill either of its two main objec- tives to encourage enhances} safety anal qual- ity, and to provide timely and fair compensation to injured patients. Not surprisingly, the frustra- tion of health care professionals is at a high level, further exacerbating the tight labor market, especially in nursing (Health Resources and Services Administration, 2000, 20021. STUDY PURPOSE It was in this context that the Secretary of Health and Human Services asked The National Academies to identify possible demonstration projects that could be implemented in 2003, with the hope of yielding viable models for broader health care system reform within a few years. In response to this request, the Institute of Medicine (IOM) initiated the Rapid Advance Demonstration Project in June 2002 to identify demonstration projects that have the potential to be transformative. ~ carrying out its charge, the committee has striven to identify a set of demonstration projects that would be ground- breaking and yield a very high return on invest- ment in terms of dollars or health. Like all demonstrations, these projects should be viewed as experiments, with carefully designed evalua- tion components to test the effects of different interventions. AMERICANS DESERVE SO MUCH MORE In an earlier report, Crossing the Quality Chasm: A New Health System for the 2lSt Century, the IOM called for a health system that would achieve six major aims or dimensions of quality health care should be safe, effective (i.e., science-based), patient-centered, timely, efficient, and equitable (Institute of Medicine, 2001b). The current system falls far short with regard to each of these aims. The country that put the first man on the moon and invented the microchip is surely capable of ensuring that children are immu- nized, that patients who suffer heart attacks receive life-saving drugs, that diabetics receive the education and support they need to manage their insulin levels, that terminally ill patients receive adequate pain management, and that patients who smoke tobacco receive the coun- seling and assistance they need to quit. Nevertheless: More than one-quarter of American children aged 19 to 35 months are deficient in immu- nizations (Centers for Disease Control and Prevention, 2001~. . An estimated 18,000 people die each year from heart attacks because they were eligi- ble for but did not receive medication to

Executive Summary prevent recurrent heart attack (Chassin, 1 997~. Two in five diabetics do not receive an an- nual eye examination to check for signs of disease that can lead to blindness, and almost half do not get a foot examination to check for nerve damage (Centers for Disease Control and Prevention, 2000~. Among oncology patients, 56 percent report moderate to severe pain (don Roenn et al., 1993). . Patients who smoke do not receive smoking cessation counseling during three-quarters of all visits to physicians (Thorndike et al., 1998). This level of performance (Leatherman and McCarthy, 2002) is unworthy of the wealthiest nation in the world. DEMONSTRATION PROJECTS AS A STRATEGY FOR HEALTH SYSTEM REDESIGN . The committee views the demonstration projects proposed in this report as the first step in advancing a more substantial process of health system redesign. In other words, the committee is hopeful that its work will lead to much more than a few demonstration projects, and accordingly has attempted to identify demonstrations that, if pursued as a set, have the potential to sow the seeds of fundamental health reform. There is no accepted blueprint for redesign- ing the health care sector, although there is widespread recognition that fundamental changes are needed in heath care and the finan- ciai and legal environment that shape it. The sheer size and complexity of the health care sector, with tens of thousands of health care providers and a myriad of public and private insurance and delivery arrangements, makes wholesale change difficult. For many important issues, we have little experience with alterna- tives to the status quo. For these reasons, the committee sees the launching of a carefully crafted set of demon- strations as a way to initiate a "building block" approach to health system change. The recom- mended demonstration projects should as a group address the critical aspects of a reform strategy, including coverage, insurance benefits, provider payment incentives, and liability. The committee also believes that special attention should be focused on building stronger informa- tion and communications technology (ICT) infrastructures to support care delivery and many other important priorities, such as bioter- rorism surveillance, public health, and research (Institute of Medicine, 2001b, 20026; National Research Council, 2000~. All or nearly all of the demonstration projects should involve public and private partnerships and collaborative efforts, recognizing that the federal and state governments and pnvate-sector stakeholders all have important authorities and responsibilities, and that most health care markets are influenced by both competitive and cooperative forces. For this strategy to result in broad-based health system reform, however, we must both plant the seeds of innovation and create an envi- ronment that will allow success to proliferate. Steps must be taken to remove barriers to inno- vation and to put in place incentives that will encourage redesign and sustain improvements. For example, emphasis must be placed on fash- ioning payment policies that recognize methods of e-health delivery (e.g., virtual visits, tele- medicine) and reward high-quality care. [f the federal government fails to play a proactive role in creating an environment that nurtures change and success, the ambitious demonstration agenda proposed in this report will have mini- mal impact on the overall health care sector. PLANTING THE SEEDS The committee has striven to identify bold and transformational demonstration projects with the potential to contribute to a major redes- ign of health care processes. These demons~a- tion projects are intended to be the seeds of innovation, and to evolve into the first genera-

Executive Summary tion of 2ISt-century community health care systems. To guide the process of identifying the most promising demonstration projects, the commit- tee developed two sets of criteria: those related to the intended results of demonstrations, and those related to the likelihood of successful implementation (see Box ESPY. As a result of its deliberations, the commit- tee identified five major categories of demon- strations (see Box ES-2. For four of these categories—chronic care, ICT infrastructure, state health insurance, and liability- demonstration sites would likely be states, or in a few instances, sizable markets within states or multistate collaborations. The remaining cate- gory primary care focuses on the provision of stellar care at a subset of about 40 of the country's community health centers. In identifying the set of demonstration projects shown in Box ES-2, the committee assumed that there would be only modest, if any, increases in health care expenditures. With one exception, then—state health insurance— the demonstration projects are intended to be budget neutral over the Tong term (while substantially increasing the benefits derived from expenditures on health care). All of the projects have initial start-up costs, most of which will need to be assumed by the federal government. ~ the case of the ICT demons~a- tion projects, these initial capital investments will be sizable. Box ES!1 Criteria for Selecting Bold and Transformational Demonstrations Criteria related to intended results of demonstrations /mprovec/ health status of patients and popu/ations System improvements Rec/ucec! waste . Stimulus for continues/ innovation Criteria related to likelihood of successful implementation Resonates with public anc! policy makers Broad base of support Recognizes and addresses barri- ers Builds on existing competencies ~1 1~ Chronic Care: Reducing the Toll of Chronic Conditions Demonstration projects in this category are intended to improve the quality of care provided to the chronically ill and to reduce the burden of disease and disability in a community. Nav~gat- BOX ES-2 Five Categories of Demonstrations Chronic Care: Reducing the Toll of Chronic Conditions on Individuals and Communi- ties Primary Care: 40 Stellar Community Health Centers Information and Communications Technology Infrastructure: A "Paperless" Health Care System State Health Insurance: Making Affordable Coverage Available to All Americans Liability: Patient-Centered and Safety-Focused, Nonjudicial Compensation

i Executive Summary ing the health care system is often complex for individuals with chronic illnesses, who require ongoing treatment involving multiple providers and sites of care. For many people, chronic disease could have been avoided or delayed had educational and other supportive interventions been provided to assist them In mou~y~ng health behaviors. These demonstration projects would involve the following components: Coordinating structure- During the first year, the grant recipient would be responsi- ble for establishing a broad-based coordi- nating structure with participation from all stakeholders. This coordinating structure should have (or develop) the capability to provide strong leadership for the demonstra- tion, to create the needed TCT infrastructure, to provide knowledge support and sponsor learning collaboratives, and to sponsor . clinicians and patients, e-mail, telemedicine, access to patient records), chronic care registries, and medication order entry systems. Benefits, Copayments, Provider Payments, anal Accountabili~Demonstration sites should be given the flexibility under Medi- care and other insurance programs to inno- vate in such areas as benefits coverage, beneficiary copayments, provider payments, and accountability. Some of the current benefit packages fail to provide coverage for certain services needed by the chroni- cally ill (e.g., prescription drugs, educa- tional and support services), and in some instances, copayments may be prohibitively high (Montenegro-Torres et al., 2001~. The Medicare fee-for-service payment system provides compensation for face-to-face encounters, but does not recognize services such as e-mail or patient educational and support services, which in certain circum- stances may be more beneficial to the patient and more cost-effective. Demonstra- tion sites should be encouraged to experi- ment with provider payment methods that reward performance achievement and bene- ficiary copayment designs that encourage self-management. Learning collaboratives and community- wide educational efforts Each demonstra- tion site, with assistance from the National Library of Medicine and the Agency for Healthcare Research and Quality (AHRQj, should engage in efforts to assist clinicians and patients in gaining access to scientific knowledge, practice guidelines, certified protocols, identified best practices, and decision support tools. community-wide educational and other efforts. Chronic care management programs Each demonstration site would establish chronic care ~ management programs that would provide evidence-based treatment of chronic diseases. services to detect and minimize the consequences of common geriatric syndromes, services to meet the preventive and acute care needs of the enrolled chronically ill population, and extended outreach and coordination with social and environmental services. Effective chronic care programs employ systematic approaches, make extensive use of multidis- ciplinary teams having ready access to clini- cal knowledge and specialists, and provide information and other support to patients to encourage self-management. Information and communications technol- ogy A major component of these demon- strations should be the expanded use of ICT to improve care for the chronically ill. All demonstration projects should involve major advances in Internet-based communi- cation (e.g., dissemination of information to From among the responses to a Request for Proposals (RFP) issued by the Department of Health and Human Services (DHHS), a limited number of demonstration sites (10-12) would be selected. Demonstration sites would receive a 1-year planning grant, followed by a 3-year implementation grant. As noted, these demon-

Executive Summary strations are intended to be budget neutral over the long term (exclusive of up-front federal capital investments in ICT). It is anticipated that the demonstration projects would initially be limited to Medicare beneficiaries, but over time would likely expand to include all payers and possibly even the unin- sured. About one of six of Medicare beneficiar- ies qualifies for Medicaid, so state participation would also be important (Gluck and Hanson, 2001). Primary Care: 40 Stellar Community Health Centers Well-organized and accessible primary care settings are an essential part of an effective health care system. The majority of patients enter the health system through primary care settings and receive the bulk of their care there, making such settings critical for achieving preventive, health promotion, and chronic care goals (Institute of Medicine, 1996~. Demonstration projects in this category are intended to reinvent and substantially enhance primary care. A subset of the nation's commu- nity health centers (CHCs) would be selected to participate in this program aimed at constructing model primary care practices. CHCs already have a strong track record in chronic care management, electronic patient registries, and performance measurement. These demonstra- tions would build on existing competencies to: . ~ B Implement new morels of care ~le1tivery Demonstration sites would be encouraged to experiment with systemic approaches to care delivery that would make use of inter- disciplinary teams, ICT support, enhanced communication, lay health workers, new roles for patients and their families, and enhanced coordination across other health care settings and with social and other community-based services (e.g., mental health, housing, education and training, and employment). . . . . Create sustained partnerships between patients and clinicians Through frequent communication by e-maiT, telephone, and visits, patients should establish ongoing and supportive relationships with clinicians. Provide support for patient self- management Patients should have access to tailored care guides (in either hart/copy or electronic form) including their treatment plan, reminders and monitoring charts, and educational materials. In leading-edge CHCs, Internet-based communication should also be available for e-visits, prescription refills, and scheduling of appointments (including same-day appoint- ments). Build a robust ICT infrastructure The most ICT-advanced CHCs should, over a period of a few years, become "paperless." Electronic medical records should be read- ily accessible to CHC clinicians at the point of care, and eventually to all of a patient's providers in the community as broader ICT platforms develop (see the discussion below of ICT infrastructure projects). Scientifi- cally based protocols and decision support systems should support decisions by patients (e.g., Internet-based tools to assist patients in tracking key indicators, such as blood pressure and hemoglobin A1c for diabetics) and clinicians. Enhance care system design and supports- Improvements in safety and effectiveness should be achieved through the conscious design of care processes to apply knowI- edge and tools from the human factors and . . . engmeenng sciences. Provide supportive financing Flexible payment modalities would be needed to allow CHCs (which currently receive primarily visit-based payments) to offer group counseling and education visits, l~ternet-based communication and care delivery, and more extensive care coordina- tion. Demonstration sites should establish robust cost accounting systems capable of quantifying ongoing costs and savings

Executive Summary (associated with improvements in care proc- esses and efficiency) for patients with vari- ous conditions, combinations of conditions, or specific health care needs. DHHS would issue an REP to the nation's approximately 859 CHCs and select about 40 to participate in projects in this category. Demon- strations would be 3 years in duration, with the expectation that measurable improvements in care processes would be achieved within 18 months. Demonstrations in this category are intended to be budget neutral over the Tong term, although federal support would be neces- sary to invest in ICT, establish and support the learning collaborative, and develop cost accounting systems. By 2006, the demonstration sites should open their doors to health care professionals from across the United States and even worldwide who would like to see primary care at its best. ICT Infrastructure: A "Paperless" Health Care System The-establishment of an information and communications technology (ICT) infrastruc- ture is fundamental to achieving the six quality aims enumerated earlier (Institute of Medicine, 2001b): . In the area of safety, the availability of com- puter-based clinical information at the time of care delivery, together with clinical deci- sion support systems, such as those for medication order entry, can prevent many errors from occurring (Bates et al., 1997, 199S, 1999) Care can be made more effective through the use of computer-based reminder systems that facilitate adherence to protocols (Bales et al., 2000) and computer-assisted diagno- sis and management programs that improve clinical decision making (Durieux et al., 2000; Evans et al., 1998; Intermountain Health Care, 1996). With regard to patient-centeredness, the Internet has opened up many opportunities to assist consumers in playing a more active role in staying healthy and in making health care decisions by providing access to clini- caT knowledge through understandable and reliable Web sites, online support groups, customized health education' and disease management messages (Cain et al., 2000; Goldsmith, 2000). . . Internet-based communication (e.g., e-mail, telemedicine) between patients and cTini- cians and among clinicians can make care less episodic and more timely. More immediate access to computer-based clinical information, such as the results of laboratory and radiology tests, can reduce redundancy and improve both effectiveness and efficiency. There are also opportunities to improve equity, for example, through the use of elec- tronic insurance enrollment programs that facilitate the enrollment of uninsured chil- dren eligible for coverage under the State Children's Health Insurance Program (SCHIP). ICT is also a matter of national security (Tang, 2002~. Computer-based clinical records, combined with Internet-based communication, can enable the following: Early detection and rapid response to bioter- rorism attacks. Dissemination of up-to-date information to clinicians and patients on the clinical pres- entation of various chemical and biological threats, as well as practice guidelines for responding. Organization and execution of large-scare inoculation campaigns. Ongoing monitoring, detection, and treat- ment of complications arising from 1[:

i Executive Summary exposure to biochemical agents or from preventive measures, such as immuniza- tions. The federal government has provided support for infrastructure development in the past. Following World War II, the federal government supported the development of the Interstate highway system, and years later, the Defense Advanced Research Projects Agency funded the work that led to the modern Internet (National Research Council, 1999; Weingroff, 1996~.. Similar to these prior national efforts, an ICT infrastructure is needed to enable funda- mental reform of the public health and health care delivery systems, and the federal govern- ment will need to play a role in providing the necessary capital investment. Demonstration projects in this category are intended to result in the establishment of a state- of-the-art health care ICT infrastructure in a state, sizable market, or multistate region that interconnects all providers and consumers. The ICT infrastructure would support the following: ; - Communication Internet-based communi- cation between patients and clinicians and among clinicians, including e-mail, home monitoring, and teleconsulting. · Access to patient information For each patient, computer-based health and clinical information that is complete, organized, and available in real time to the patient and the patient's providers, while at the same time being confidential and secure. . 11 Knowledge management Access to reli- able, up-to-date information from the science base in forms that are useful to cli- nicians and patients. Decision support~omputer-aided deci- sion support tools for patients and cTini- cians, such as reminder systems, prompts, medication order entry systems, and chronic disease management systems. All demonstration projects in this category would involve three phases: A planning phase (months 1-6)—formation of a public-private partnership and develop- ment of an operational plan. An infrastructure building phase (months 7-24)—establishment of a secure platform for communication and sharing of clinical and other data between patients and provid- ers and among providers. Expansion of applications (months 7-ongoing) steady migration of adminis- trative and business processes to the plat- form, development and application of knowledge management and decision support tools, and development of new e-health delivery modes. These demonstration projects are intended to provide the initial nodes of a national health information infrastructure. A total of ~ to 10 demonstration projects should be funded in this category, with the expectation that a second generation would be funded in 2005. One-time-only federal financial support would be required to establish the public- private partnership and the infrastructure. Health care providers should commit to making the necessary financial investments in support of ongoing maintenance and enhancement of the ICT infrastructure, and to redesigning care proc- esses to take maximal advantage of this infra- structure. Public and private purchasers should offer the appropriate financial incentives to encourage and reward providers for making ongoing investments in ICT (e.g., higher fee- for-service payments or reduced regulatory bur- den for providers with computer-based records) and redesigning care processes. Some combined federal and state assistance to safety net provid- ers would be needed to enable their full partici- pation in the ICT infrastructure. The transition to computer-based clinical and other informa- tion would also have ripple effects through vari- ous administrative systems (e.g., enhancements

Executive Summary in coding and classification systems, utilization management processes), and these effects should be anticipated. Demonstration projects in this category would be greatly facilitated by an immediate emphasis on the development of national data standards. All demonstrations should be required to conform to national standards where they exist. There should also be an expectation that these projects would lend their expertise to and share their technology with other states, and would provide valuable feedback on the robust- ness of national standards. State Health Insurance: Making Affordable Coverage Available to All Americans Contrary to popular belief, those without health insurance do not receive the medical care they need (Institute of Medicine, 2001a). The uninsured are less likely to receive preventive and screening services, are less likely to receive appropriate care to manage their chronic health conditions, exhibit consistently worse clinical outcomes, and are at increased risk of dying prematurely (institute of Medicine, 2002a). Having one or more uninsured members in a family can have adverse consequences for everyone in the household and can negatively affect the financial, physical, and emotional weil-being of all family members (Institute of Medicine, 2002c). As the numbers of uninsured grow, the effects, in terms of poorer overall health status, reduced productivity, increased disability, and possibly increased social services expenditures, are likely felt at the community level. Demonstration projects in this category are intended to result in the availability of afford- able insurance coverage to all Americans in a state. Each demonstration would involve two components: Coverage expansions Demonstration projects might expand insurance coverage through either tax credits to be applied to an insurance plan, expanded eligibility for public insurance programs, or a combina- tion of the two. Under the tax credit approach, the federal government would provide support to a demonstration site to be used for premium assistance, and the state would provide state tax credits to unin- sured individuals. The state tax credit would likely be based on a sliding scale tied to income, and would need to be adequate to enable the individual to purchase a good insurance package. Under the approach of expanded eligibility for public insurance programs, the federal government would provide federal matching support for a significantly expanded eligibility program under a state Medicaid or SCHIP program. Statewide electronic enrollment clearing- house During the first 18 months of a project, state governments would work in partnership with private insurers, DWIS, and others to establish an electronic clear- . ~ · ~ . ~ . 1ng nouse for ver1~1cat1on of Insurance program eligibility and immediate enroll- ment of uninsured individuals. Although one of the principal objectives of establish- ing the clearinghouse would be to allow for immediate enrollment of uninsured indi- viduals in one of the insurance programs developed through coverage expansion, the clearinghouse should yield benefits to all insured individuals and providers in a community. For example, in years 2-3, this electronic clearinghouse might be used for billing and payment of providers. DHHS would issue an REP to state govern- ments, and a limited number of demonstration sites (three to five) would be selected. Demon- stration projects should be 10 years in duration. DHHS would need to make this extended commitment to encourage states to undertake the very significant efforts envisioned in the areas of building public-private partnerships, developing ICT infrastructure, and redesigning public insurance programs.

~ Executive Summary Demonstration projects in this category are not budget neutral. Sustained funding would be required indefinitely, and both the federal and state governments would be expected to contrib- ute resources. Recognizing the currently severe financial constraints of many states (Desonia, 2002), the federal government may need to provide the majority of additional resources necessary to conduct these demonstrations at least in the near term. There may be some offsets to the insurance expansion program, such as reduced need for Medicare dispropor- tionate-share hospital payments and Tower uncompensated care tax wr~te-offs for for-profit providers. Liability: Patient-Centered and Safely- Focused, Nonjudicial Compensation The current liability system hampers efforts to identify and learn from errors, and likely encourages "defensive medicine." . , ~ .. . . · . Many Instances ot negligence co not give rise to law- suits, and many legal claims do not relate to negligent care (Bovbj era et al., 200i). Judg- ments are sometimes inconsistent with the medical . evidence base (Eisenberg, 2001; Havighurst et al., 2001; Rosoff, 2001), and compensation is highly variable (Urban Insti- tute, 1995~. Legal fees and administrative expenses consume upwards of half the cost of liability insurance premiums (Cantor et al., 1997; KakaTik and Pace, 1986~. Volatility in liability insurance markets has led to escalating malpractice premiums in certain geographic areas, precipitating closure of practices and shortages of certain types of specialists and services (American Hospital Association, 2002; Hopper, 2002; Price, 2002~. The committee believes that changes in the liability system are a critical component of health care system redesign. Medical liability issues are technically complex, and policy debates have been domi- nated by powerful stakeholders. State-level demonstrations offer an opportunity to experi- ment with alternative models to the current judicial system. ., ;P Demonstration projects in this category would create injury compensation systems outside of the courtroom that would provide timely, fair compensation to injured patients and promote apologies and nonadversarial discus- sions between patients and clinicians. The dem- onstrations are also intended to create an envi- ronment that encourages providers to report and analyze medical errors and to involve patients in safety improvement activities. The financial exposure of providers would also be limited, thus contributing to stabilization of malpractice insurance premiums. This approach would replace the existing tort liability system with an alternative system for compensating patients who have experienced avoidable injures, allow quicker payments to be made to many more injured patients, and reward providers who put effective programs in place to reduce medical . . . Injuries. DHHS would issue an REP to states, and a limited number of demonstration sites (four to five) would be selected. States would choose one of two nonjudicial claims resolution systems: . . Provi~ler-based early payments Offers predetermined limits on noneconomic dam- ages, including pain and suffering, and federally subsidized reinsurance to self- insured provider groups that promptly iden- tify and compensate patients for avoidable . . . injuries. Statewide administrative resolution— Grants all health care professionals and facilities, however organized, immunity from tort liability under most circumstances in exchange for mandatory participation in a state-sponsored, administrative system for compensating avoidable injuries. Demonstration projects would likely build on existing liability reform proposals, such as "avoidable classes of events" (Tancredi and Bovbjerg, 1991, 1992), "early offers of settle- ment" (O'Connell, 1982), and "scheduled ranges

Executive Summary of allowable noneconomic damages (Bovbj era et al., 1989~. States should engage in efforts to educate the public about trade-offs involved in liability reform, and help providers communi- cate more effectively with patients when errors occur. Demonstration projects in this category would require modest federal start-up funds and appropriate state legislation. Within 1-2 years, benefits in terms of administrative efficiency should be realized. Longer-term benefits should include improvements in patient safety and malpractice insurance market stabilization. NURTURING SUCCESS The nation's mounting health care prob- lems rapidly rising costs, growing numbers of uninsured, safety and quality gaps, workforce shortages—threaten to destabilize the system. making it imperative to move expeditiously to achieve quality improvements. This is one of the reasons the committee is proposing a substantial portfolio of demonstration projects: 10-12 chronic care demonstrations, a primary care demonstration with 40 participating sites, 8-10 ACT infrastructure demonstrations, 3-5 state insurance coverage demonstrations, and 4-5 state liability demonstrations. The demonstrations involved in this initiative should reach out to large numbers of communities from all geographic regions and rural and urban areas, and engage them in finding solutions to these varied and complex challenges. Efforts should also be made to identify and include in the demonstrations those sites that are today at the cutting edge in use of ICT infra- structure, adherence to 21St-century care deliv- ery models, and administrative and clinical effi- ciency, and to spur them to evolve to higher levels of excellence. Communities that are currently more advanced in terms of ICT infra- structure might be ideal locations for multiple demonstrations, such as a hybrid demonstration encompassing the chronic care and uninsured categories, aimed at establishing highly effec- tive e-health rechanneling these resources to cover the uninsured. The committee envisions that by 2005, the nation should have instituted the first generation of 2ISt-century community health systems, and by the end of the decade, should have made a decisive advance in reinventing health care delivery. For this to happen, the federal and state governments will need to do much more than plant seeds. Rather, the federal and state governments must work collaboratively with leaders from the private sector to nurture inno- vation and disseminate new discoveries. Learning ColIaboratives chronic care management programs, removing waste from the system, and To speed the process of change, DHHS should provide support to appropriate private or public organizations to establish learning collaboratives. The committee encourages L)titi~ to consider esta0~sn~ng demonstration- specific coliaboratives given the complexity of the issues being addressed. The collaboratives would provide support to demonstration sites, in such forms as the following: . . Sponsoring forums for the exchange of information and joint problem solving across demonstration sites (e.g., traditional meetings and a full array of Internet-based audiovisual communication techniques). Providing access to knowledge and litera- ture syntheses on the effectiveness of vari- ous services in support of local efforts to make evidence-based coverage and care delivery decisions. Once demonstration projects were under way and knowledge and experience had begun to accumulate, the collaboratives would be respon- sible for disseminating what had been learned so that all could benefit.

Executive Summary Reshaping the Health Care Environment In tanclem with the demonstrations, federal ant! state efforts to reshape the broader health care environment would be essential. The cur- rent health care environment often confounds efforts to redesign health care. Nowhere is this more apparent than in the area of {CT. Many environmental forces including regulation, benefit and payment policies, and legal liability—fait to facilitate and sometimes block the adoption of 21 St-century ICT (Overhage et al., 2002~. For example, regula- tions stand in the way of progress when the fed- eral and state governments fait to adapt oict rules (e.g., state-basect licensure of health profession- als) to accommodate innovations (e.g., the prac- tice of telemedicine across state borders). But perhaps even more important than barriers stem- ming inadvertently from outdated regulatory structures is the failure to put in place new ground! rules for the emerging marketplace. Many believe that the absence of a strong federal role in establishing national data stan- dards for health information has contributed to the sluggish pace of adoption of ICT in the health care sector (National Committee on Vital ., and Health Statistics, 2000~. Another IOM committee addressing the issue of data stan- ciards will be releasing a report in fall 2003 (Institute of Medicine, 2002b). Similar impediments to ICT exist in other areas. As noted, the benefit and payment poli- cies of many health insurance programs fait to recognize and provide compensation for various e-hearth delivery modes (e.g., e-visits, e-consultations, remote monitoring of intensive care units). Moreover, uncertainty about liabil- ity implications has raised some concern about the use of e-mai] communication between patients and clinicians (American Medical Association, 20011. There is a critical need to examine existing environmental structures with an eye to remov- ing such barriers, aligning incentives, and estab- fishing new policies that would enable a rapid transition to a 21 St-century ICT infrastructure. This work shouic3 proceed expeditiously in n parallel with the conduct of demonstrations. If it does not, rapid upscaTing from the initial set of demonstration projects would be impossible. Evaluation, Transparency, and Accountability As the country embarks on a radical trans- formation of what comprises one-seventh of the national economy (Levis et al., 2002), there should be a steadfast commitment to transpar- ency and accountability. Although the commit- tee strove to apply sound principles in identify- ing the demonstrations proposed in this report, the nation is embarking on a period of experi- mentation in health care delivery, and there will be a need to adjust course from time to time. Ongoing evaluation is critical to under- standing what does and does not work and why. Indicators of success should be defined before the demonstration projects begin. Planning for evaluation must begin in parallel with planning for the demonstrations. The evaluative effort should identify which of the demonstrations within a given category are most successful and why. In addition, there should be an evaluation across the five demon- stration categories. This global evaluation would help participating organizations, policy makers, researchers, and the broader practice community determine which demonstrations should be selected, and in what order, for rapid replication across the country. Another objec- tive of the overall evaluation initiative should be to identify synergies among the various demon- stration categories and strategies for combining the demonstration "building blocks" to achieve the strongest 2 ~ St-century health system. Transparency the sharing of information on strategies, tools, and techniques and their impact on performance—encourages the rapid spread and adoption of innovative technologies. Breakthrough knowledge and technology are rarely initiated on the first attempt. Important knowledge can also be gained from the sharing of information on community-based interven- tions that were less successful than expected.

Executive Summary Lastly, the sharing of cross-sectional and Tongituclinal performance information is the bottom line. It is through the ongoing tracking of the impact of various demonstrations on the six quality aims safety, effectiveness, patient- centereciness, timeliness, efficiency, anct equity that policy makers, health care profes- sionals, ant! others would be able to determine whether their efforts to retool health care systems have been successful. And ultimately, the health system must be heic! accountable for demonstrating that resources are being usec] wisely to recluce the burden of illness, injury, anc} clisability anc! to improve the health anc! functioning of the American people. With both evaluation ant! accountability activities, there is a vital role for dissemination through formal anc! informal channels, ant! adequate financial support must be proviclec! for these activities. Researchers shouicI communi- cate their findings through journals and other publications. Presentations, speeches, and com- munication by means of policy-oriented briefs can provide a winclow into these demonstrations before they appear in scholarly journals. ., WHAT SHOULD PATIENTS EXPECT? In identifying a set of demonstration projects, the committee has been guidecl by a common vision of what care in the 2ISt cen - T shouic! be like from the perspective of patients. These demonstrations shouic! lead to a health care system in which patients' experi- ences wouic! be very different from today's norm. For a typical patient with one or more 1 . . . . cad ironic cone actions requiring ongoing manage- ment9 as well as preventive and acute care needs, the system should provide a continuous relationship with a personal clinician who func- tions with the support of a multicTisciplinary team. Patients should be able to access care over the Internet, by telephone, and by other means in aciclition to face-to-face visits. There should be few concerns about safety, but in the event that a patient is harmed, the clinician should inform the patient immediately, apologize, and take action to mitigate the consequences. Care should not vary illogically from clinician to clinician or place to place. Each patient should receive the best that science has to offer, whether for ongoing treatment of a chronic condition or care for an acute episode. This does not imply one-size-fits-all care. Patients will have different preferences (e.g., watchful wait- ing versus surgical intervention for prostate cancer), differing needs for education and support, and differing constraints (e.g., a need for home care with family support versus short- term rehabilitative care). Perhaps the greatest difference between the envisioned future system and the present reality is the role of patients themselves (Courter, 2002~. Profound cultural changes are necessary to allow patients to play as active a role in treat- ment decisions as they desire and to engage in effective self-management of chronic condi- tions. Such involvement will require a suppor- tive environment—one that offers ready access to reliable and understandable sources of cTini- cal knowledge and actively encourages health literacy by providing relevant information to patients (e.g., a primary care practice that forwards the most up-to-date information on practice guidelines, medication options and risks, and self-management to its patients with asthma). In short, the 2ISt-century health care system should deliver far greater value than is currently the case. Patients have a right to demand and health care leaders have an obligation to act now to ensure that they receive—care that is safe, effective, patient-centered, timely, effi- cient, and equitable. The committee believes the proposed demonstration projects would repre- sent a substantial step in that direction.

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In response to a request from the Secretary of the Department of Health and Human Services, the Institute of Medicine convened a committee to identify possible demonstration projects that might be implemented in 2003, with the hope of yielding models for broader health system reform within a few years. The committee is recommending a substantial portfolio of demonstration projects, including chronic care and primary care demonstrations, information and communications technology infrastructure demonstrations, health insurance coverage demonstrations, and liability demonstrations. As a set, the demonstrations address key aspects of the health care delivery system and the financing and legal environment in which health care is provided. The launching of a carefully crafted set of demonstrations is viewed as a way to initiate a "building block" approach to health system change.

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