GAO-16-31, Medicare And Medicaid: Additional Oversight Needed . - Nevada

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United States Government Accountability OfficeReport to Congressional RequestersDecember 2015MEDICARE ANDMEDICAIDAdditional OversightNeeded of CMS’sDemonstration toCoordinate the Careof Dual-EligibleBeneficiariesGAO-16-31

December 2015MEDICARE AND MEDICAIDAdditional Oversight Needed of CMS’s Demonstrationto Coordinate the Care of Dual-Eligible BeneficiariesHighlights of GAO-16-31, a report tocongressional requestersWhy GAO Did This StudyWhat GAO FoundThe Medicare and Medicaid programsspent an estimated 300 billion ondual-eligible beneficiaries—thoseindividuals who qualify for bothprograms—in 2010. Thesebeneficiaries often have complexhealth needs, increasing the need forcare coordination across the twoprograms. In 2013, CMS began theFinancial Alignment Demonstration,with the goal of integrating Medicareand Medicaid services and financingand improving care coordination.Thirteen states are participating.Due to the flexibility that states have in designing their Financial AlignmentDemonstrations, the integrated care organizations that GAO interviewed inCalifornia, Illinois, Massachusetts, Virginia, and Washington implemented carecoordination for dual-eligible Medicare and Medicaid beneficiaries in a variety ofways. For example, these organizations assigned care coordinators tobeneficiaries using different approaches, such as assigning them by geographicproximity to the beneficiary or to the beneficiary’s primary care provider. Carecoordinators also used a range of interactions with beneficiaries in order tocoordinate care, including by mail, e-mail, telephone, or in person.GAO was asked to examine carecoordination under the demonstration.GAO examined (1) how integrated careorganizations—which are health plansor other entities—are implementingcare coordination and (2) what, if any,challenges organizations haveencountered in implementing carecoordination and the extent to whichCMS oversees these care coordinationactivities. GAO interviewed officialsfrom CMS and, during site visits to anongeneralizable sample of the firstfive states to implement thedemonstration, interviewed stateofficials, organizations, advocacygroups, and providers. GAO alsoreviewed CMS guidance outliningCMS’s oversight role and themeasures it uses to monitor thedemonstration.What GAO RecommendsGAO recommends that CMS developnew comparable measures and alignexisting measures to strengthenoversight of care coordination. HHSproposed actions that it plans to take inresponse to GAO’s recommendations,as discussed in the report.View GAO-16-31. For more information,contact Kathleen M. King at (202) 512-7114 orkingk@gao.gov.The organizations GAO interviewed described facing challenges that affectedtheir ability to coordinate care, such as difficulties in locating beneficiaries.Specifically, organizations noted that certain characteristics of dual-eligiblebeneficiaries, such as high levels of transience, can make it challenging tocoordinate their care—one of the key goals of the demonstration. GAO’sinterviews with beneficiary advocacy groups and providers raised questionsabout the extent to which care coordination is actually occurring.The Centers for Medicare & Medicaid Services (CMS), an agency within theDepartment of Health and Human Services (HHS), collects information thatassesses the extent to which care coordination is occurring, but not all of thisinformation is comparable across the states. To inform its oversight, CMS hasestablished a framework of monitoring activities, and one key component of thisoversight is the monitoring of core and state-specific measures for each of thetwo demonstration models that states can implement: (1) the capitated model,where organizations receive a capitated payment to provide integrated care, and(2) the managed fee-for-service (MFFS) model, where states are eligible forretroactive savings resulting from initiatives to integrate care with existing fee-forservice providers. CMS collects different sets of core measures from thecapitated and MFFS model states. Two out of 10 core measures in the capitatedmodel provide information on the extent to which care coordination is occurring,while no core measures in the MFFS model examine this area. The states in ourreview had state-specific measures that explored aspects of care coordination,but they were not comparable across the states or both demonstration models. Inaddition, CMS added comparable, demonstration-specific questions to theConsumer Assessment of Healthcare Providers and Systems, a survey that CMSrequires all organizations for the capitated model, and states for the MFFSmodel, to complete annually. While the results of the surveys are stillforthcoming, information from these questions may be able to provide CMS withimportant information about whether beneficiaries are meeting with their carecoordinators across both models. Federal internal control standards state thatmonitoring should be designed to help an agency accomplish its goals. Becausenot all of the information that CMS collects to examine the extent to which carecoordination is occurring is comparable, CMS does not fully know whether it hasachieved its goal of providing coordinated care to dual-eligible beneficiaries.Establishing additional measures that would allow CMS to obtain these datacould help it better understand the reasons why care coordination is or is notoccurring and thus help the agency to strengthen the demonstration.United States Government Accountability Office

ContentsLetter1BackgroundOrganizations Participating in CMS’s Financial AlignmentDemonstration Implemented Care Coordination in a Variety ofWaysOrganizations Described Challenges in Coordinating Care, andthe Extent to Which Care Coordination Occurs in theDemonstration Is Not Fully KnownConclusionsRecommendations for Executive ActionAgency Comments and Our Evaluation17303132Centers for Medicare & Medicaid Services’ (CMS) State-SpecificMeasures for the Financial Alignment Demonstration, by State35Appendix IIComments from the Department of Health and Human Services39Appendix IIIGAO Contact and Staff Acknowledgments43Appendix I513TablesTable 1: Required Care Coordination Components for the Centersfor Medicare & Medicaid Services’ (CMS) FinancialAlignment Demonstration for Dual-Eligible BeneficiariesTable 2: Core Measures for Capitated and Managed Fee-forService (MFFS) Models Required by the Centers forMedicare & Medicaid Services’ (CMS) FinancialAlignment Demonstration for Dual-Eligible Beneficiaries1223FiguresFigure 1: Dual-Eligible Beneficiaries as a Share of Medicare andMedicaid Enrollment and Spending, Calendar Year 2010Figure 2: Status of the Centers for Medicare & Medicaid Services’(CMS) Financial Alignment Demonstration for DualEligible Beneficiaries, as of September 2015Page i611GAO-16-31 Dual-Eligible Demonstration

AbbreviationsCAHPSConsumer Assessment of Healthcare Providers andSystemsCMSCenters for Medicare & Medicaid ServicesCMTcontract management teamD-SNPdual-eligible special needs plansEDCDElderly or Disabled with Consumer DirectionHEDISHealthcare Effectiveness Data and Information SetHHSDepartment of Health and Human ServicesHOSHealth Outcomes SurveyICPindividualized care planICTinterdisciplinary care teamMACPACMedicaid and Children’s Health Insurance ProgramPayment and Access CommissionMFFSmanaged fee-for-serviceSNPspecial needs plansThis is a work of the U.S. government and is not subject to copyright protection in theUnited States. The published product may be reproduced and distributed in its entiretywithout further permission from GAO. However, because this work may containcopyrighted images or other material, permission from the copyright holder may benecessary if you wish to reproduce this material separately.Page iiGAO-16-31 Dual-Eligible Demonstration

Letter441 G St. N.W.Washington, DC 20548December 18, 2015Congressional RequestersAbout 10 million of Medicare’s approximately 50 million beneficiaries arealso eligible for Medicaid, a joint federal-state program that financeshealth insurance coverage for certain categories of low-income ordisabled people. 1 Dual-eligible beneficiaries accounted for less than onefourth of each program’s population but over one-third of each program’sspending—more than 300 billion—in 2010, the most recent yearavailable. 2 Dual-eligible beneficiaries are often in poorer health andrequire more care compared with other Medicare and Medicaidbeneficiaries. They typically receive their benefits through each programseparately, which can lead to fragmented care because the programshave different rules for provider reimbursement and benefits and mayhave conflicting financial incentives. For example, incentives may exist forproviders to shift beneficiaries from one type of service to another toincrease their payments. These types of program misalignments canresult in unnecessary hospitalizations, which can reduce quality of careand increase costs. Recently, the federal government, states,researchers, and advocates have focused increased attention on carecoordination for dual-eligible beneficiaries as a key strategy for improvingthe quality of care while simultaneously reducing costs. 31Medicare is the federally financed health insurance program for persons 65 years of ageor over, certain individuals with disabilities, and individuals with end-stage renal disease.Medicare fee-for-service includes Medicare Parts A and B. Medicare Part A covershospital and other inpatient stays. Medicare Part B is optional insurance, which covershospital outpatient, physician, and other services and requires a monthly premium.Medicare Part B beneficiaries have the option of enrolling in a Medicare Advantage plan—a private plan alternative to Medicare fee-for-service that operates under Medicare PartC—to receive their Parts A and B benefits. In addition, all Medicare beneficiaries may optto receive prescription drug coverage under Medicare Part D either through a separatePart D plan or through a Medicare Advantage plan.2Medicare Payment Advisory Commission and Medicaid and Children’s Health InsuranceProgram Payment and Access Commission, Data Book: Beneficiaries Dually Eligible forMedicare and Medicaid (Washington, D.C.: January 2015).3Care coordination is the process of integrating all medical, behavioral health, and longterm services and supports to ensure the proper providers and services are in place tomeet the beneficiaries’ needs.Page 1GAO-16-31 Dual-Eligible Demonstration

Specifically, beginning in 2013, the Department of Health and HumanServices’ (HHS) Centers for Medicare & Medicaid Services (CMS) beganimplementing the Financial Alignment Demonstration through itsMedicare-Medicaid Coordination Office, which will integrate Medicare andMedicaid services and financing and improve care coordination for dualeligible beneficiaries. 4 Ultimately, CMS believes the Financial AlignmentDemonstration will reduce spending and improve the quality of care fordual-eligible beneficiaries. The demonstration allows states, throughcontracted integrated care organizations, to test models of care thatemphasize care coordination, including care coordinators, health riskassessments, individualized care plans (ICP), and interdisciplinary careteams (ICT). 5 CMS is required by law to evaluate the quality of carefurnished under these models. In addition, the Secretary of Health andHuman Services may, through rulemaking, expand the duration andscope of a model under specified conditions. As of August 2015, CMShad approved 13 states to participate in the 3-year demonstration, andthe agency estimates that approximately 441,000 beneficiaries areenrolled. 6You asked us to examine care coordination under CMS’s FinancialAlignment Demonstration. Specifically, we examined1. how integrated care organizations are implementing care coordinationfor beneficiaries in the Financial Alignment Demonstration and2. what, if any, challenges the organizations have encountered inimplementing care coordination and the extent to which CMSoversees these care coordination activities.4The Financial Alignment Demonstration is also sometimes referred to as the FinancialAlignment Initiative.5For this report, integrated care organizations—which we refer to as organizations—include health plans or other qualified entities participating in the Financial AlignmentDemonstration. In addition, for this report, a care coordinator is the person responsible forfacilitating the coordination of services for the beneficiary. A health risk assessmentexamines a beneficiary’s needs. The ICP is a plan of care that includes the beneficiary’sgoals and strategies toward meeting those goals. The ICT is a team of providers, includingthe care coordinator, that works closely with the beneficiary to implement and maintain hisor her ICP.6In July 2015, CMS gave states the option to extend their demonstrations for an additional2 years.Page 2GAO-16-31 Dual-Eligible Demonstration

To describe how integrated care organizations are implementing carecoordination for beneficiaries in the Financial Alignment Demonstration,we reviewed CMS guidance. We also selected a nongeneralizablesample of five states—California, Illinois, Massachusetts, Virginia, andWashington—and examined their demonstration planning documents. Weselected these states because they were the first five states to beginenrolling beneficiaries on or before September 1, 2014. 7 Because thedemonstration parameters are complex and involve many requirements,we focused our review on the four care coordination requirements for thedemonstration, which are specified in CMS and state guidance: (1) a carecoordinator, (2) a health risk assessment, (3) an ICP, and (4) an ICT. Wealso interviewed officials from CMS’s Medicare-Medicaid CoordinationOffice about the care coordination requirements in CMS guidance andhow these requirements were being implemented by states involved inthe demonstration. We conducted site visits to each state and interviewedstate agency officials; officials from the CMS regional office; staff atintegrated care organizations, including care coordinators; staff frombeneficiary advocacy groups; and primary care providers. We selected 11integrated care organizations to interview within the five states 8 (2 inIllinois, Massachusetts, Virginia, and Washington, and 3 in California) byidentifying organizations that had the highest level of enrollment in thedemonstration as of August 2014 (except for Washington, where we used7Of the five states we selected, the state with the earliest implementation date startedenrollment in July 2013 and the state with the latest implementation date startedenrollment in July 2014.8One of the organizations we interviewed in Massachusetts dropped out of thedemonstration early, on September 30, 2015, noting that its participation was noteconomically sustainable. In addition, while Washington’s 3-year demonstration wasinitially planned to end after December 31, 2016, the approved 2015-2017 Washingtonstate budget did not authorize any funding for the demonstration after December 31, 2015.However, as of November 2015, the state of Washington decided to continue participatingin the demonstration until at least June 2016.Page 3GAO-16-31 Dual-Eligible Demonstration

enrollment data as of February 2015). 9 At most of the organizations in ourreview, we also observed ICT meetings conducted by organization staff.To obtain the perspective of beneficiaries, we asked officials from the fivestates to identify one beneficiary advocacy group that was a stakeholderin developing each state’s demonstration, and we interviewed staff at thatgroup. In addition, we spoke with seven primary care providers located inCalifornia, Illinois, and Massachusetts about their experiences with thedemonstration. 10 We developed structured interview protocols to gatherconsistent information from CMS, the states, integrated careorganizations, beneficiary advocacy groups, and primary care providersabout their perspectives in implementing care coordination in thedemonstration. Our findings are limited to the five states in our review andare not representative of all states and integrated care organizationsparticipating in the Financial Alignment Demonstration.To determine what, if any, challenges the organizations haveencountered in implementing care coordination and the extent to whichCMS oversees these care coordination activities, we interviewed staff atintegrated care organizations located in the five states in our review aboutchallenges they have encountered. We also interviewed CMS officialsfrom the Medicare-Medicaid Coordination Office about the agency’soversight and monitoring of selected states’ demonstrations. In addition,we reviewed CMS guidance about the agency’s role and responsibility fordemonstration oversight, as well as CMS guidance describing the9Unlike the other state demonstrations in our review, after beneficiaries in Washington areautomatically enrolled in the state’s demonstration, care coordination services are notprovided unless an enrollee elects to receive them. If an enrollee elects to receiveservices, Washington’s demonstration considers the beneficiary to be “engaged.” Sincethe enrollment numbers reported by the organizations in Washington only reflected thetotal number of beneficiaries enrolled and not the number of engaged beneficiaries whowere actually receiving services, we also examined the total number of engagedbeneficiaries to inform our selection of organizations in that state. We found that the twoorganizations with the highest number of enrollees as of February 2015 also had thehighest number of engaged enrollees. In the other state demonstrations in our review,care coordination services were included among the services provided under thedemonstration upon a beneficiary’s effective enrollment date.10The staff we interviewed at organizations in California, Illinois, Massachusetts, andVirginia gave us a list of primary care providers in their respective networks that cared forenrollees in the demonstration. We contacted several providers in each state—18 in all. Ofthese, 7 responded to our requests for an interview. We did not contact providers inWashington because, unlike the other state demonstrations in our review, the providers inWashington’s demonstration provide care to beneficiaries on a fee-for-service basisthrough existing Medicare and Medicaid service delivery systems.Page 4GAO-16-31 Dual-Eligible Demonstration

measures that CMS regularly requires organizations and states to reportas part of the agency’s monitoring. We determined whether thesemeasures assessed the extent to which care coordination is occurring inthe demonstration—that is, whether care coordinators are meeting withbeneficiaries, health risk assessments are being completed, ICPs arebeing developed, and ICT meetings are occurring. We compared theseoversight activities to CMS’s goals for the demonstration and thestandards described in Standards for Internal Control in the FederalGovernment. 11 We did not evaluate whether the demonstration hadachieved cost savings or improved the quality of care.We conducted this performance audit from June 2013 to December 2015in accordance with generally accepted government auditing standards.Those standards require that we plan and perform the audit to obtainsufficient, appropriate evidence to provide a reasonable basis for ourfindings and conclusions based on our audit objectives. We believe thatthe evidence obtained provides a reasonable basis for our findings andconclusions based on our audit objectives.BackgroundCharacteristics of DualEligible BeneficiariesDual-eligible beneficiaries are a particularly vulnerable group. In general,these individuals are among the poorest and sickest beneficiariesenrolled in Medicare and Medicaid. For example, compared to otherMedicare beneficiaries, they are more likely to be disabled; report poorhealth status and limitations in their activities of daily living, such asbathing and toileting; and have cognitive impairments, mental disorders,and certain chronic conditions, such as diabetes and pulmonary disease.Therefore, dual-eligible beneficiaries tend to have higher rates of serviceuse and consequently, higher spending, compared to other Medicare andMedicaid beneficiaries. (See fig. 1.)11GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1(Washington, D.C.: November 1999).Page 5GAO-16-31 Dual-Eligible Demonstration

Figure 1: Dual-Eligible Beneficiaries as a Share of Medicare and MedicaidEnrollment and Spending, Calendar Year 2010Although dual-eligible beneficiaries have a higher rate of service usecompared to other Medicare and Medicaid beneficiaries, as a group, theyvary in terms of their need for health care services, reflecting differencesin the prevalence of disabilities and other health conditions. UnderMedicare, dual-eligible beneficiaries have coverage for most acute careservices, such as care provided by physicians or inpatient hospitals, postacute skilled nursing facility care, and prescription drugs. Under stateMedicaid programs, dual-eligible beneficiaries also have coverage forlong-term nursing facility care and home and community-based services.These beneficiaries may also qualify for payment of Medicare premiumsand cost sharing. Medicaid is the health care payer of last resort,meaning that Medicare pays to the extent of its liability before Medicaidmakes any payments. Because dual-eligible beneficiaries receive carethrough separate programs with different benefits and paymentprocesses, they are likely to be treated by many different health careproviders that may not coordinate their care, which can lead to increasedcosts and poorer patient outcomes.Page 6GAO-16-31 Dual-Eligible Demonstration

Past Initiatives toCoordinate Care for DualEligible BeneficiariesPrior to the implementation of the Financial Alignment Demonstration in2013, the Medicare and Medicaid programs were separately responsiblefor covering certain services for most dual-eligible beneficiaries, and theremay not have been an incentive for one program to help control costs inthe other program. As we previously reported, any savings that wereachieved often resulted from services that were largely paid for byMedicare, such as reductions in the number and length of hospital stays,and therefore accrued to the Medicare program. 12 Therefore, stateMedicaid programs did not have an incentive to better coordinate care orreduce spending since they did not benefit from any savings that wereachieved. However, increasingly there have been efforts to try to improveintegration of care between these two programs. For example, onespecific effort to integrate care for dual-eligible beneficiaries was theestablishment of dual-eligible special needs plans (D-SNP) in 2003. 13 DSNPs are a type of Medicare Advantage plan exclusively for dual-eligiblebeneficiaries that provide specialized services targeted to the needs oftheir beneficiaries, including a health risk assessment and an ICT foreach enrolled beneficiary. About 1.9 million of the dual-eligible populationwas enrolled in D-SNPs in 2014. 14Financial AlignmentDemonstration: Designand Implementation, CareCoordination, and Sourcesof Potential SavingsDesign and Implementation ofthe DemonstrationCMS’s goal for the Financial Alignment Demonstration is to integrateMedicare and Medicaid services and financing and improve carecoordination for beneficiaries, therefore resulting in improved care and12See GAO, Medicare Special Needs Plans: CMS Should Improve Information Availableabout Dual-Eligible Plans’ Performance, GAO-12-864 (Washington, D.C.: Sept. 13, 2012).13Special needs plans (SNP), including D-SNPs, have been reauthorized several timessince their establishment was first authorized in 2003. Dual-eligible beneficiaries may alsochoose to enroll in other types of SNPs for which they are eligible, including institutionalSNPs for individuals residing in nursing facilities or institutions, and chronic conditionSNPs for individuals with severe or disabling chronic conditions.14See GAO-12-864.Page 7GAO-16-31 Dual-Eligible Demonstration

savings to Medicare and Medicaid. CMS gave the states flexibility indesigning their demonstrations because of the different needs of theirtarget populations, the geographic coverage areas, and the number ofeligible beneficiaries. For example, while Massachusetts chose to limit itstarget population to dual-eligible beneficiaries from age 21 through 64,California, Illinois, and Virginia chose to include all dual-eligiblebeneficiaries aged 21 and older as their target populations. CMS requiredstates to involve dual-eligible beneficiaries and other stakeholders, suchas beneficiary advocacy groups, in the development of theirdemonstrations to help design a person-centered system of care.Before any state’s demonstration becomes operational, CMS oversees amultistep approval process of the state’s demonstration design. First,states interested in participating in the demonstration submit proposals toCMS that provide a description of the demonstration’s design. CMS thenreviews the proposals and works with the states to develop amemorandum of understanding that further outlines the parameters of thedemonstration, which both the state and CMS sign.As part of their proposals, states generally opted to test one of twomodels—the capitated or managed fee-for-service (MFFS) models. 15Under the demonstration’s capitated model, following CMS approval ofthe memorandum of understanding, the states work with CMS to selectqualified integrated care organizations to participate in the demonstration.Then, the state, CMS, and an integrated care organization enter into athree-way contract, and the integrated care organization receives aprospective blended capitated payment, which includes both Medicareand Medicaid payments, to provide coordinated care across bothprograms. CMS reduces payment rates to organizations up front eachyear based on a predetermined Medicare and Medicaid savings estimate,with the amount of savings increasing each year, typically from 1 percentin the first year to 4 percent in the third year of the demonstration. Forexample, in Massachusetts, contracted managed care health plansprovide care coordination services and integrate care between the two15Four of the five states in our review—California, Illinois, Massachusetts, and Virginia—are implementing a capitated model that will rely on qualified organizations, such as healthplans, to provide integrated care to dual-eligible beneficiaries under the demonstration.The remaining state—Washington—is implementing an MFFS model that will rely onhealth homes, which are the organizations responsible for integrating care under thedemonstration.Page 8GAO-16-31 Dual-Eligible Demonstration

programs and receive one combined payment from both Medicare andMedicaid for each enrollee. For states opting for the MFFS model,following CMS approval of the memorandum of understanding, the stateand CMS enter into an agreement by which providers continue to receivefee-for-service reimbursement for both Medicare and Medicaid services.The state is then eligible for a portion of any retroactive savings resultingfrom state initiatives designed to improve quality and reduce spending fordual-eligible beneficiaries. One state, Washington, is using Medicaidhealth home agencies to coordinate Medicare and Medicaid servicesamong existing fee-for-service providers for dual-eligible beneficiaries.The organizations in the capitated model, and the states in the MFFSmodel, then undergo a CMS review to ensure they are prepared to beginenrolling dual-eligible beneficiaries. Once they have passed CMS’sreview, they can begin enrolling beneficiaries. In general, under thecapitated model, eligible beneficiaries—those dual-eligible beneficiarieswho meet the state’s age, geographic residency, and other requirementsfor the demonstration—can enroll voluntarily into the demonstration andchoose a participating integrated care organization. Dual-eligiblebeneficiaries who choose not to enroll voluntarily can be assigned by thestate Medicaid agency to a participating organization, in a process knownas “passive enrollment.” Once a beneficiary is enrolled into thedemonstration, the state will send the beneficiary’s contact information tothe relevant integrated care organization. The state or CMS may alsoprovide Medicaid or Medicare claims data, medical history,hospitalizations, and pharmacy use for the beneficiaries. The organizationthen typically assigns a care coordinator and begins coordinating thebeneficiary’s care. In the MFFS model, beneficiaries are automaticallyenrolled in the demonstration, and following enrollment, the carecoordinator will perform outreach to the beneficiary and give thebeneficiary the option to elect to receive care coordination services.Under both models, beneficiaries can opt out of the demonstration at anytime.Implementation of the Financial Alignment Demonstration began in July2013 when the first state, Washington, began enrolling beneficiaries.Since then, CMS has approved 12 other state demonstrations and all butone of these states has begun enrolling beneficiaries. Two states—Connecticut and New York—had proposals pending approval from CMSPage 9GAO-16-31 Dual-Eligible Demonstration

as of September 2015. 16 (See fig. 2 for a demonstration map.) Theagency is no longer accepting new proposals from states.16CMS has approved New York’s capitated demonstration model, which targets dualeligible beneficiaries over the age of 21 who are receiving nursing facility or communitybased long-term services and supports, but its second demonstration proposal, whichtargets dual-eligible beneficiaries with developmental disabilities, is pending approval fromCMS. In addition to New York, California, Illinois, Massachusetts, Michiga

and Medicaid services and financing and improving care coordination. Thirteen states are participating. GAO was asked to examine care coordination under the demonstration. GAO examined (1) how integrated care organizations—which are health plans or other entities—are implementing care coordination and (2) what, if any,

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