CMS Launches Medicare, Medicaid Innovation CenterCMS Launches Medicare, Medicaid Innovation Center

Healthcare Innovators

In the midst of a national debate on whether entitlement programs like Medicare and Medicaid can cut costs while running their systems more efficiently, a new center for Medicare and Medicaid innovation was launched Tuesday to explore better ways to deliver healthcare while improving payment systems that can save money.

The Centers for Medicare & Medicaid Services (CMS) said the center, which was created by the Affordable Care Act, will consult a diverse group of healthcare stakeholders including hospitals, doctors, consumers, payers, states, employers, advocates and relevant federal agencies, to discuss ways in which healthcare providers can coordinate their efforts, supported by technology, to drive greater efficiency into healthcare delivery.

"For too long, healthcare in the United States has been fragmented -- failing to meet patients' basic needs, and leaving both patients and providers frustrated. Payment systems often fail to reward providers for coordinating care and keeping their patients healthy reinforcing this fragmentation," Donald Berwick, CMS Administrator, said in a statement. "The Innovation Center will help change this trend by identifying, supporting and evaluating models of care that both improve the quality of care patients receive and lower costs."

The center will focus its attention on three main areas. These are:

-- Better Care for Individuals: Improving care for patients in formal care settings like hospitals, nursing homes and doctors' offices, and developing innovations that make care safer, more patient-centered and more efficient. The Innovation Center will also promote the use of "bundled payments," an approach to paying for care where providers collaborate to manage multiple procedures as part of a single episode with a single payment, rather than the current fee-for-service method of submitting separate bills for each procedure, which leads to higher costs.

-- Coordinating Care to Improve Health Outcomes for Patients: Developing new models that make it easier for doctors and clinicians in different care settings to work together to care for a patient. Examples include identifying and widely deploying the best advanced primary care and health home models, and supporting innovations in accountable care organizations.

-- Community Care Models: Exploring steps to improve public health and make communities healthier and stronger. The Innovation Center will work to identify and address major public health crises and the appropriate interventions for areas of great concern, such as obesity, smoking and heart disease.

The Innovation Center will offer contracts of up to $1 million each for 15 states that design demonstration projects to fully integrate care for dual eligibles (individuals eligible for both Medicare and Medicaid). According to CMS, dual eligibles account for 16 to 18 percent of enrollees in Medicare and Medicaid, but roughly 25 to 45 percent of spending in these programs respectively. Significant health benefits and savings can come from better coordinating the care of low-income seniors and people with disabilities. States may apply for resources to support the demonstration projects they design beginning in December. In 2011, the Center will be announcing two additional demonstrations that will focus respectively on providers and beneficiaries.

Healthcare Innovators

In recent months, CMS has been improving the technology that supports its programs. For example, in October CMS awarded Hewlett-Packard Enterprise Services a $26 million contract to maintain CMS's Integrated Data Repository (IDR) and provide data quality services to improve the accuracy of Medicare payment data. In September, CMS also awarded four states grants worth $6.9 million to help them implement electronic health records to improve the quality and efficiency of healthcare and make it easier for providers to coordinate care of Medicaid patients. And in August Hewlett-Packard Enterprise Services won a $200 million contract to provide application services that improve Medicare Part B claims processing, as well as the delivery of healthcare services to beneficiaries.

According to Berwick, the country is making great strides toward modernizing its healthcare information systems, and said Stage 1 of Meaningful Use will improve healthcare modernization efforts over time.

The combination of technology with the centers innovation efforts should help to test models that include establishing an "open innovation community" that serves as a clearinghouse of best practices in healthcare delivery reform. CMS will also replicate successful innovations in communities across the country.

Further plans for the center include improving care for Americans enrolled in Medicare and Medicaid. These initiatives include:

-- Expansion of the Multi-Payer Advanced Primary Care Practice Demonstration: Eight states have been selected to participate in a demonstration project to evaluate the effectiveness of doctors and other health professionals across the care system working in a more integrated fashion and receiving payment from Medicare, Medicaid, and private health plans. This demonstration will ultimately include over 1,200 medical homes serving almost one million Medicare beneficiaries.

-- Announcement of the Federally Qualified Health Center (FQHC) Advanced Primary Care Practice Demonstration: This demonstration will test the effectiveness of doctors and other health professionals working in teams to treat low-income patients at community health centers. The demonstration will be conducted by the Innovation Center in up to 500 FQHCs and provide patient-centered, coordinated care to approximately 195,000 people with Medicare.

-- Launch of the Medicaid Health Home State Plan Option: Authorized by the Affordable Care Act, this new State plan option allows patients enrolled in Medicaid with at least two chronic conditions to designate a provider as a "health home" to help coordinate treatments for the patient. States that implement this option will receive enhanced financial resources from the federal government to support "health homes" in their Medicaid programs.