Reform Update: CMS creates fund to seed state-based Medicaid innovation

The CMS is setting aside more than $100 million over the next five years to help states develop and test new Medicaid payment and delivery models.

The funds are part of an endeavor launched July 14, called the Medicaid Innovation Accelerator Program, or IAP, intended to identify and replicate ways to provide Medicaid beneficiaries with better care at lower costs. States can tap into the funds to strengthen their capabilities in technical areas such as data analytics, service delivery, financial modeling and quality measurement. Those endeavors, the CMS hopes, will give other states enough information to see what works and blueprints they can copy.

Most of the federal government's recent attempts to overhaul healthcare payment and delivery methods have focused on Medicare. The IAP reflects an increasing shift of the agency's attention toward Medicaid.

“They don't want the Medicaid program to be left behind,” said Adam Searing, senior research fellow at Georgetown's Center for Children and Families. “Medicare is one program, making it easier to change more broadly. Medicaid, on the other hand, is a program approached differently in 50 states.”

IAP was developed in large part based on input from the National Governors Association's Health Care Sustainability Task Force, composed of a bipartisan group of 10 governors, including some from states that expanded Medicaid under the Patient Protection and Affordable Care Act—such as Gov. Mike Beebe (D-Ark.) and Gov. Jerry Brown (D-Calif.)—as well as from states that have not—such as Gov. Bill Haslam (R-Tenn.) and Gov. Robert Bentley (R-Ala.),

The aim of the task force was to come up with ways to lower the regulatory barriers for states to continue Medicaid experiments that were showing signs of success or adopt models bearing fruit in other places, said Dan Crippen, the National Governors Association's executive director.

The CMS has not provided details on what kinds of projects it will support. In the coming weeks, the agency plans to hold webinars and other interactive sessions to gather input from states, consumers and experts on the initial plans for and structure of the initiative.

In a July 14 letter to states (PDF), the CMS outlined several current endeavors that officials identified as steps in the right direction. For instance, in 2008, North Carolina implemented a transitional-care program that provided comprehensive medication management and face-to-face self-management education for beneficiaries with multiple chronic conditions who were recently hospitalized. The patients in the program have had 20% fewer readmissions than similar patients.

Nationwide, while Medicaid spending overall has grown as more people have gained coverage, initiatives such as North Carolina's have helped per enrollee spending decline by 1.2%—from $6,768 to $6,641—in 2012, according to the CMS.

“As Medicaid grows as a result of the Affordable Care Act, it is now more important than ever that there be continued innovation in every level of Medicaid,” said Dr. Jay Himmelstein, professor of Family Medicine and Community Health and Quantitative Health Sciences at University of Massachusetts Medical School.

The new CMS initiative has the potential to help state make meaningful changes to their Medicaid programs even if they don't have the resources to do it on their own, said Yevgeniy Feyman, a fellow at the Manhattan Institute, a conservative think tank. The IAP can become a centralized source for data analytics and key technical infrastructure for these states, Feyman said.

Some observers, though, are skeptical.

The central idea of the new program—that it's possible to develop a successful initiative in one state and replicate it in another—is flawed, said Joseph Antos, a healthcare economist with the conservative-leaning American Enterprise Institute. “If something works somewhere, there are a lot of reasons it might not work in other places, including different leadership and the capacity of state Medicaid staff,” Antos said.

Robert Kaestner, a research associate for the conservative-leaning National Bureau of Economic Research, said the CMS is setting up the project for failure by choosing which efforts to back. “It is a way to dole out money to states so that feds can say they are working with states to innovate,” Kaestner said. “It will have virtually no effect on Medicaid program in terms of cost and quality.”

The number of people who have joined Medicaid or the Children's Insurance Program since October has reached 6.7 million, according to the CMS (PDF).

Overall, enrollment climbed by 920,000 people during May, the latest month for which data is available. New enrollments are up 11.4% since last October's ACA rollout.

States say more than half of all new Medicaid and CHIP enrollees were children, according to the CMS.

Wisconsin's BadgerCare Medicaid program is growing faster than expected, with enrollment increasing to 111,432 in June. The figure surpassed state projections by more than 12,000 people. The state will need to find $93 million in the state budget to cover the additional costs.

In January, Wisconsin Gov. Scott Walker, with the backing of the Republican-controlled Legislature, rejected federal funding to expand Medicaid coverage under the Patient Protection and Affordable Care Act to include residents making up to 138% of the federal poverty level. Instead, Wisconsin reconfigured the state's Medicaid program to allow all childless adults at or below 100% of the federal poverty level to join the program.

Wisconsin would have saved money (PDF) if Walker had accepted the federal funds to expand Medicaid, according to the nonpartisan Legislative Fiscal Bureau.

Follow Virgil Dickson on Twitter: @MHvdickson