Assessing the First Year of CMS’ New Innovation Center

Assessing the First Year of CMS’ New Innovation Center

In a report released earlier this month -- "One Year of Innovation: Taking Action to Improve Care and Reduce Costs" -- the CMS Innovation Center summarizes what it's been up to in its first year of existence: 16 initiatives involving more than 50,000 health care providers in all 50 states.

Some true believers in the free market say new ideas only grow in the wild, that the words “government” and “innovation” are mutually exclusive.

An infant agency — the Center for Medicare and Medicaid Innovation — hopes to prove them wrong.

In a report released this month, “One Year of Innovation: Taking Action to Improve Care and Reduce Costs,” the Innovation Center summarizes its first year — 16 initiatives involving more than 50,000 health care providers in all 50 states. The center’s initiatives range from setting up a framework to establish accountable care organizations to working with states to coordinate care for individuals eligible for both Medicare and Medicaid.

The goal is to begin shifting the country’s huge health care system away from paying for volume and toward paying for value.

The Innovation Center, charged with devising, testing and refining new payment and delivery systems, has a budget of $10 billion over a decade. That represents about 0.1% of Medicare and Medicaid spending — considerably less than most organizations typically spend on research and development.

The Affordable Care Act calls on CMS to develop new tools to improve quality and reduce costs in government-subsidized health care programs. The Innovation Center is a sort of a designer/foundry combination, trying to draw and build new tools at the same time. So far, response has been mostly positive from industry and government leaders.

The White House is “thrilled with the level of involvement and interest so far,” Jeanne Lambrew, President Obama’s deputy assistant on health policy, told participants at the National Health Policy Conference last week in Washington, D.C.

Jane Hyatt Thorpe and Teresa Cascio of George Washington University’s Hirsh Health Law and Policy Program’s HealthReformGPS said Innovation Center officials are “making considerable progress on their mandated tasks.”

Medicare as Payment Innovation Leader

Government regulation has long been accused of interfering with innovation in some industries, but in the delivery of health care — particularly the way health care is paid for — the accusation may not apply.

“The reality is that over the years, the private sector has by and large followed Medicare’s lead in payment systems,” Innovation Center Director Richard Gilfillan said in a recent Washington Post story.

“Medicare has been the most innovative payer if you look back over the last 30 years,” Gilfillan said.

Too Slow or Too Fast?

Another common criticism of government involvement in business is that government bureaucracies can’t be nimble enough to rapidly respond to market changes.

Speed and agility don’t appear to be lacking at the CMS Innovation Center. In fact, one criticism after the center’s first year is that it may be trying to go too fast.

In a status report by the Urban Institute that was commissioned by the Robert Wood Johnson Foundation, Robert Berenson and Nicole Cafarella gave the new center generally good marks for its first year of work.

However, they added, “Some policy and health delivery observers express concern that the Innovation Center’s speed and approach are leaving behind potential innovators that have not been ready to respond to the quick pace of RFPs (requests for proposals). They seek a more deliberative process that permits establishment of a consensus vision — and plan — for achieving a reformed health care delivery system. Exactly how such a consensus would be achieved remains unclear, given divergent views of how ‘paying for value’ can best be achieved.”

Poor Cost-Reduction Track Record

So far, Medicare doesn’t have a very good track record of reducing spending, according to the Congressional Budget Office. The Innovation Center hopes to change that.

A CBO report released last month showed that only one of 10 major Medicare demonstration projects launched since 1967 actually saved the government money.

Robert Laszewski, a veteran health care consultant, summed it up on his Health Care Policy and Marketplace Review blog: “Thirty years into managed care, the stark reality is that we aren’t yet smart enough to get things under control.”

Some reform critics predict the Innovation Center’s projects are unlikely to result in savings, like most of their predecessors.

Laszewski said fear of failure isn’t a good reason to turn away from the Innovation Center’s goals.

“It would be wrong to assume we shouldn’t do these new projects just because the last ones didn’t succeed,” Laszewski told the Post. “If Thomas Edison had stopped the first time he failed, we wouldn’t have the light bulb.”

Laszewski said policymakers should concentrate on the lessons learned from a Medicare experiment that did manage to save money.

Medicare made bundled payments to hospitals and physicians to cover all services connected with heart bypass surgeries, and Medicare spending for those services declined by about 10%, Laszewski wrote on his blog.

“The good news here is that when put on a budget, when the payment system was changed to create a downside if results weren’t improved, one of the studies did identify ‘significant savings.'”

“What we’ve learned is that you can’t rely on people to do the right thing just because you’ve provided them with more information,” Laszewski told the Post. “You’ve got to change the way they’re paid so that there is a downside to not doing the right thing. … You can’t have all carrot with no stick.”

Here’s a look at what else is making news in health reform.

Administration Actions

Challenges to Reform

Eye on the Courts

In the States

On the Hill

Studying Its Effects

Exit mobile version