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Innovation expedition

As the CMS gears up its new laboratory for payment and quality control, excitement is mixed with anxiety


By Maureen McKinney
Posted: June 14, 2010 - 12:01 am ET
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The full-scale launch of the CMS’ new Center for Medicare and Medicaid Innovation is only six months away, and excitement among providers and experts is tempered with uncertainty about how the center will effectively manage so many quality and cost-control initiatives.

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Established by the Patient Protection and Affordable Care Act of 2010, the Center for Medicare and Medicaid Innovation is charged with developing innovative healthcare and delivery models that slow cost growth and improve quality. When the CMI begins its operations in January 2011, it will develop pilot projects—or join existing pilots in the private sector—to determine which approaches prove to be the most effective.

The reform law listed 18 delivery and payment models to be tested initially by the CMI including patient-centered medical homes, care coordination using health information technology, promotion of patient self-management, use of telehealth services and care coordination using salary-based payment. The CMI was allotted $10 billion over the course of the next 10 years and $5 million to get ready for the launch.

According to Tony Rodgers, who was appointed CMS’ deputy administrator for strategic planning this year and will lead the CMI, the goal is to work with payers and providers to find and refine successful payment and delivery models, and then translate results from those pilots into broader policy changes.

“I believe that Congress recognized going forward that CMS will have a significant effect on healthcare, and in order to improve costs and coordinate care, we need innovative new models,” Rodgers said. “My job will be to put that infrastructure in place, which means building collaborative relationships with stakeholders who are interested in working together to find those models.”

For instance, Rodgers said, the CMI might decide to tackle the issue of patient self-management and engagement in healthcare by conducting a pilot involving Web-based learning tools. After investing in a small prototype and assessing whether the tool improves health outcomes and reins in costs, they can then scale it up to a larger demonstration and eventually make it into an across-the-board policy.

And that vastly expanded authority is what makes the CMI so different from CMS’ current demonstration projects, said Stuart Guterman, assistant vice president of the Commonwealth Fund’s program for payment reform. Provisions in the reform law give HHS the authority, if they see that an approach is working, to bypass Congress and extend the model to a larger population, he explained.

“As long as there is the promise of long-term cost savings and quality improvement, they have the authority to say, ‘We found something that works and we want to do it more broadly,’ ” said Guterman, who co-authored an article in the June issue of Health Affairs about innovation in Medicare and Medicaid.

Having that extraordinary level of authority and flexibility means that the CMS could conceivably make major changes in the name of innovation, said Sara Rosenbaum, chair of the department of health policy and a law professor at George Washington University. That could entail altering the definition of a hospital, changing the benefits package or even patients’ freedom of choice. It’s unclear how they’ll exercise that power, she added, but she said the CMS will probably move slowly in the beginning.

The reform law also addressed other historical barriers to innovation when it created the CMI, said Robert Mechanic, a senior fellow at the Heller School for Social Policy and Management at Brandeis University. He called the provision that authorizes the CMI to aggressively expand the scope of projects “critical” because the need for congressional approval has been a difficult obstacle for many initiatives to overcome. Additionally, he said, the reform law does not require projects to be budget-neutral right out of the gate—a change he says will likely spur more new projects that have initial startup costs. Finally, the law provides a significant amount of funding to a chronically underfunded agency, he said.

“The way the center is funded is important because there is no rigidity about when and how it allocates the $10 billion,” Guterman agreed. “It is their pot of money and they can decide how to spend it, whether that means $2 billion one year and $1 million the next. That is a lot of power.”

But for all of the CMI’s new authority and funding, there are plenty of challenges that it will face, too. First, the CMI needs to prioritize and choose its initial projects carefully, Guterman said. They can’t do everything right off the bat, but he predicted they would go for some quick wins on hot issues like hospital readmissions so they can get people on board early on.

The CMI will also need to figure out a way to reduce cycle time in order to get projects evaluated faster and speed up expansion, Mechanic said. Historically, that process has taken years and it will be interesting to see how the center plans to monitor pilots’ progress and implement broader demonstrations, he said.

The biggest challenge for the new center, experts say, will be whether an organization that is under the large bureaucratic umbrella of the CMS can act as a real partner with other stakeholders. Rodgers, who will lead the CMI, said he is looking forward to working alongside private payers and providers.

“There really need to be top-down and bottom-up approaches to these projects,” he said. “Some areas like Massachusetts have already taken the bull by the horns while other states will need more help. The center needs to move away from ‘testing,’ which connotes standing there with your arms folded, waiting for something to happen, and move toward really trying to help their partners succeed.”

Having the CMS at the table would do a great deal to propel existing projects forward, said Jim Hester, director of the Vermont Legislature’s Health Care Reform Commission. One of the commission’s current projects includes three medical home pilots covering 10% of the state’s population. Several major insurance carriers are participating in the pilots, but because Medicare is not involved, the state stepped in to make up those payments to providers. That might be sustainable now, Hester said, but it won’t be viable as the project expands.

“The short answer is that all-payer frameworks are essential to get things done,” Hester said. “We have mandated payers participate, but we obviously could not mandate federal participation so we are very excited that they are moving in that direction.”

Government participation could also allow the Hudson Valley Initiative, a joint quality-improvement effort involving several organizations in the Hudson Valley region of New York state, to expand even further. The initiative has 237 physicians enrolled in a medical home pilot project, and CMS involvement would likely allow them to enlist many more, said Susan Stuard, executive director of the Taconic Health Information Network and Community, a not-for-profit organization involved in the initiative.

Rhonda Medows, chief medical officer of UnitedHealth Group’s public and senior markets group, said in an e-mail that cost control and quality improvement in Medicare and Medicaid are “a shared goal” and she expressed optimism that the new center would encourage collaboration and active involvement by private payers.

And the American Medical Association is also in favor of the center, according to a spokeswoman, who added that the organization is cautiously waiting to see how it will look after operations begin. The AMA plans to be actively engaged in new projects, she said.

The CMI’s timeline and initial projects are still very much uncertain, but Rodgers did say the center is taking the necessary steps now to be up and running in January. “This is probably the most energized I have ever seen hospitals and physicians,” Rodgers said. “Everyone wants to participate because they know the system doesn’t work the way it is, and they know we have to work together to solve the problems of cost and quality.”

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