CMMI: ‘Pork Project’ or Manhattan Project?

The Congressional Budget Office warned last week that without a major course correction, health care spending will drive the nation deeper into debt across the next 25 years.

And unfortunately, some demographic trends can’t be corrected. We can’t make aging baby boomers younger. We probably can’t compel Americans to eat healthier.

But maybe we can innovate ourselves out of trouble — and into cheaper health care.

At least, that’s the working theory behind the Center for Medicare and Medicaid Innovation. The 15-month-old program has drawn passionate support as a necessary reform, and some say it’s one of the best parts of the Affordable Care Act.

Of late, it’s taken just as fiery criticism, too.

Program Built Around Independence

First, here’s why the CMMI has won fans from ex-Medicare chiefs to academic researchers: It’s designed as a market-driven hothouse, intended to reform government health care from within.

The program’s administrators are empowered with plucking ideas from both the public and private sector, piloting them as necessary and near-instantly implementing them in the full Medicare program, assuming they meet basic cost and quality thresholds.

That makes CMMI staggeringly unlike its pseudo-parent, Medicare, which is subject to political reviews — and often has difficulty making transformative reforms, given that they’ll hurt some constituents of some legislator. Those ties to Congress have helped contribute to Medicare’s terrible record of implementing pilot projects that actually saved the government money.

Well, that and CMS’ 47 years of bureaucratic inertia. In contrast, CMMI isn’t even located on Medicare’s main campus, but in a small office about a mile away.

But where some see unfettered reforms, others see a slush fund waiting to happen.

Louisiana Rep. Charles Boustany (R) worries that the CMMI’s lack of congressional oversight will allow federal officials to steer funds to … well, whomever they like.

“I’m very concerned this is going to be a way of picking some winners and losers, rather than one actually looking at how you improve health care and innovate,” Boustany told Bloomberg’s Alex Wayne in March.

Criticism of Innovation Grants

Dr. Steven Greer recently echoed Boustany’s remarks, although with a twist. Greer isn’t just any CMMI critic — he briefly served as a grant reviewer for the organization, too.

In early 2012, Greer helped with the Health Care Innovation Challenge, which was CMMI’s open call for organizations to submit ideas that would trim health care costs and boost quality. The competition received about 3,000 applications, and CMMI announced 26 awards of about $5 million each in May.

But based on his exposure to the Innovation Challenge, which he describes as rushed, politically motivated, and even lacking functional computer support, Greer concluded that the CMMI is hardly transformative.

Instead, it’s a throwback, he said.

“Despite its lofty ideals, [CMMI] is one more pork program and venue for political cronyism,” Greer wrote in the Wall Street Journal last week. “Congress ought to dismantle and defund the program.”

(Greer’s original critique, posted on his website, was even more cutting; he suggested that one project was steered to the University of Chicago Medical Center because of President Obama’s personal ties to a hospital administrator.)

While Greer’s story made waves with health care analysts and was championed by anti-ACA critics like Sen. Jim DeMint (R-S.C.), it also provoked disagreement, too. One Journal reader, who purported to be an Innovation Challenge grant reviewer, described a much more productive experience of working with fellow researchers and receiving proper time to vet applications.

Several applicants who didn’t receive CMMI funding also spoke up for the program. Brian Lang, CEO of Seniors in Touch, described the process of preparing an application, which helped improve company operations. And while Greer charged that the Innovation Challenge bestowed money-losing “handouts” — like a $1.9 million grant for a George Washington University program that expects to save $1.7 million — Lang also noted that CMMI collectively funded about $126 million worth of projects, which are expected to lead to $254 million in savings.

Meanwhile, Dr. Steven Charlap, who leads an organization called MDPrevent, noted that if the CMMI was truly politically motivated, it wasn’t set up in a particularly savvy way.

Although some Wall Street Journal readers suggested that the grants were intended less as awards — and more as political rewards — Charlap explained that “only 6% of grants can be approved” under current funding levels. “There will be some 2,820 unhappy supplicants when this process is over,” he added. “That doesn’t seem like a very good political move, so let’s not rush to judgment.”

What Happens Next?

Of course, some of the questions dogging the ACA’s future are now haunting the CMMI, too.

While the program should survive — Sen. Sheldon Whitehouse (D-R.I.) recently stressed that although parts of the ACA could fall, there would be “no logic” to the Supreme Court striking down the CMMI, too — there’s always the possibility that the whole law could come tumbling down this month.

And what of CMMI?

Director Richard Gilfillan last month reiterated the position of HHS on the court’s looming decision.

“We’re confident that law will be upheld, and we’re moving forward,” he said.

Quite literally. The organization just put out another call for Accountable Care Organization applications, which won’t be due until late September … essentially, three months after the Supreme Court could decide that the ACA, and all of CMMI’s funding, is null and void.

Here’s what else is happening around the nation.

Administration Actions

  • At a White House town hall on seniors’ health on Monday, HHS Secretary Kathleen Sebelius promoted the federal health reform law’s role in strengthening the Medicare program and criticized Republicans proposals that would privatize the program. Sebelius credited the overhaul with eliminating “gaps in Medicare coverage” and maintaining benefits. She also noted that the law will save beneficiaries $4,200 over the next nine years, in part through better benefits, lower prescription drug costs and more affordable preventive care (Viebeck, “Healthwatch,” The Hill, 6/11).
  • During a White House forum on women’s health last week, HHS Secretary Kathleen Sebelius said the Obama administration is “confident and optimistic” that the U.S. Supreme Court will uphold the federal health reform law (Viebeck, “Healthwatch,” The Hill, 6/7). If the outcome is unfavorable, “[w]e’ll be ready for court contingencies,” she added (Morgan, Reuters, 6/7).
  • In a White House blog post last week, Deputy Chief of Staff Nancy-Ann DeParle noted that health insurers have announced millions of dollars in consumer rebates required under the federal health reform law’s medical-loss ratio provision. The post is the latest attempt by the Obama administration to highlight the overhaul’s popular provisions and improve public opinion of the law ahead of the U.S. Supreme Court‘s ruling (Viebeck, “Healthwatch,” The Hill, 6/5).

Effects on Consumers

  • On Monday, CMS announced that 14.3 million Medicare beneficiaries received no-cost preventive care during the first five months of 2012 as a result of a provision in the federal health reform law that provides beneficiaries with access to preventive care services, such as an annual checkup without a copayment or deductible (Baker, “Healthwatch,” The Hill, 6/11).
  • Between November 2010 and November 2011, about 13.7 million young adults had health insurance coverage through their parents’ plans, according to a Commonwealth Fund study. Of that number, 6.6 million young adults likely would not have been eligible to stay on their parents’ plans if not for a federal health reform law provision allowing them to do so (Yukhananov, Reuters, 6/8).
  • In an interview with the Associated Press last week, Jeremy Lazarus — the incoming president of the American Medical Association — said physicians and practices across the country will continue to provide services regardless of how the U.S. Supreme Court rules on the federal health reform law. Lazarus said he hopes the high court will uphold the entire law, but he acknowledged that there would be challenges if the court strikes down all or parts of the law (Tanner, AP/Washington Times, 6/6).
  • Last week, HHS officials said that grants provided by the federal health reform law to Consumer Assistance Programs helped U.S. residents save millions of dollars. According to the officials, CAPs help state-based agencies respond to residents’ questions about health insurance and assist them in finding coverage, navigating appeals when coverage is denied and understanding how plans work (Baker, “Healthwatch,” The Hill, 6/7).

Eye on the Courts

  • If the U.S. Supreme Court overturns all or part of the federal health reform law, an organized dissolution would be difficult because the legislation is so complex, while other complications could result if the law is upheld because some conservative lawmakers are unprepared to carry out its requirements (Alonso-Zaldivar, AP/San Francisco Chronicle, 6/10).
  • A U.S. Supreme Court ruling in a 2009 challenge against the 1965 Voting Rights Act highlights the difficulties in predicting Supreme Court cases, because skeptical questioning by the justices — which occurred during oral arguments on the federal health reform law during the oral arguments in March — do not always signal how rulings fall, according to several legal experts (Bloomberg/San Francisco Chronicle, 6/8).
  • As much as $1 trillion in federal funding over the next 10 years could be freed up for Congress if the U.S. Supreme Court strikes down the federal health reform law’s individual mandate and other provisions. The additional cash flow could help relieve budget-related policy issues. However, the savings could not be used directly to offset taxes or spending, because most of it would come toward the end of the 10-year budget window (Allen, Politico, 6/6).

Gauging Public Opinion

  • More than two-thirds of respondents to a new CBS News/New York Times poll said they want the U.S. Supreme Court to strike down all or part of the federal health reform law (Liptak/Kopicki, “The Caucus,” New York Times, 6/7). The court is expected to deliver its ruling later this month (Jackson, “The Oval,” USA Today, 6/7). According to the poll, 41% of respondents want the entire law overturned and 27% want the law’s individual mandate struck down (Viebeck, “Healthwatch,” The Hill, 6/7).

Inside the Industry

  • A decision by the U.S. Supreme Court to strike down the federal health reform law would hurt for-profit hospital facilities by increasing exposure to bad-debt and reduced reimbursements, according to a recent report by Moody’s Investors Service (Caramenico, FierceHealthFinance, 6/8).

In the States

  • In 2009, fewer than 1% of all Massachusetts residents paid a penalty for failing to obtain health coverage under the individual mandate in the state’s 2006 health care law. There also was little opposition to the mandate, mainly because most residents already had insurance before the law took effect. At the national level, about 94% of all U.S. residents would be exempt from penalties when the federal individual mandate takes effect in 2014, according to an Urban Institute study (LeBlanc, AP/Boston Globe, 6/6).

On the Campaign Trail

  • During a tele-town hall meeting with members of the National Federation of Independent Business last week, presumptive Republican presidential nominee Mitt Romney said he remains committed to repealing and replacing the federal health reform law, but acknowledged that there might be some challenges. He also noted that if Republicans are not a majority in the House and Senate, “we’re going to have to get a number of Democrats to come along with us” (Sonmez, Washington Post, 6/6).
  • At a campaign stop in Texas last week, Romney said President Obama “knowingly slowed down” the economic recovery to focus efforts on achieved federal health reform. Romney added that Obama and his advisers discussed “the fact that ObamaCare would slow down the economic recovery of this country, and they knew that before they passed” the overhaul, adding that the move “deserves a lot of explaining “(Baker, “Healthwatch,” The Hill, 6/6).

Studying Its Effects

  • An annual fee that health insurers will begin paying in 2014 to help fund the federal health reform law will raise premiums by $10.6 billion, largely affecting policyholders with annual incomes under $50,000, according to a new report by the American Action Forum. The report argues that the fee amounts to a tax on the middle class (Viebeck, “Healthwatch,” The Hill, 6/8).
  • Residents in less-populated rural areas might not have a broad selection of health plans to choose from in the health insurance exchanges required under the federal health reform law, because of a potential lack of competition in those areas, according to a new according to a new Health Affairs study. The study cites the Federal Employees Health Benefits Program, in which plans in some less-populated areas do not face much competition, requiring residents to pay more out-of-pocket for health care (Baker, “Healthwatch,” The Hill, 6/5).

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