A top CMS official urged provider leaders, including hospital executives, to undertake the technology-driven changes in their systems that they hope will improve care and lower costs.

"We need to decide now whether to make the commitment to adopt innovation that will fundamentally change the way we operate, change the way we deliver care, change the way we think about these organizations that we run," Dr. Richard Gilfillan, acting director of the CMS' Center for Medicare and Medicaid Innovation, said Thursday at a summit on healthcare innovation in Washington. "This is not an abstract notion; this is a very concrete question that each of us will have to answer."

Gilfillan, before being named to his CMS post, was president and CEO of Geisinger Health Plan and executive vice president for system insurance operations at Geisinger Health System. He was at the top of Modern Healthcare's list of the 50 Most Influential Physician Executives in 2011.

Healthcare leaders who choose to undertake such an overhaul in their care delivery will likely find that the biggest obstacle is in changing how they are paid, Gilfillan said.

"We can ask people to keep folks from going back to the hospital, but if we pay health systems for putting more people in the hospital, we'll get what we have today: a lot of hospital care," he said.

Medicare will try to spur private payers to change those payment approaches by undertaking its own changes in the next few years. Specifically, Gilfillan said, once his office identifies payment practices that result in improved clinical outcomes and lowered spending, the HHS secretary will be authorized to implement those throughout Medicare administratively.

"As you can see, this is a powerful tool for changing the way we deliver care," Gilfillan said.

Also on Thursday, President Barack Obama's administration released a report (PDF) touting the Center for Medicare and Medicaid Innovation's work in the year since it was launched. Among the listed highlights is the participation of more than 3,200 hospitals in the public-private Partnership for Patients initiative and the launch last November of the Health Care Innovation Challenge, which will award up to $1 billion in grants to applicants that have implemented strategies to promote high-value care.