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CMS’s Innovation Center To Increasingly Focus On Medicaid As Expansion Of The Program Accelerates


Under the framework announced this week for the proposed $1.85 trillion budget reconciliation bill, gaps in Medicaid coverage would be closed in states that have not expanded eligibility under the Affordable Care Act (ACA), effectively boosting enrollment by 2.2 million individuals.

There’s still a lot of uncertainty regarding whether the budget reconciliation bill will pass. But, the inexorable increase in Medicaid enrollment is set to continue regardless of the status of the bill. According to the Kaiser Family Foundation, Medicaid and the Children’s Health Insurance Program (CHIP) enrollment increased by 11.5 million people from February 2020 to May 2021, to 82.8 million, amid the Covid-19 pandemic.

Medicaid expansion appears to the impetus behind efforts by policymakers at the Department of Health and Human Services to prioritize equity and reduce inequality in health outcomes. One tool at their disposal is the so-called “Innovation Center” or Center for Medicare and Medicaid Innovation (CMMI). The Centers for Medicare and Medicaid Services (CMS) administrator, Chiquita Brooks-LaSure, has laid out a vision for the next decade, one in which CMMI will drive “meaningful change” towards an “equitable” and “value-based system of healthcare.”

The CMMI’s main lever to attain improvements in government programs, such as Medicare and Medicaid, is implementation of alternative payment models. Since its founding in 2010, the CMMI has launched more than 50 alternative payment models. The CMMI will now shift the focus of alternative payment models from Medicare to Medicaid.

Last month, the policy and programs group director at CMMI, Ellen Lukens, said that “models have been predominantly Medicare-oriented, and have disproportionately served white beneficiaries.” By contrast, relatively few models have centered around Medicaid beneficiaries. That is about to change.

In order to carry out the mission of improving equity, policymakers will explicitly address barriers to participation in CMMI models by healthcare providers that serve a high proportion of underserved. Policymakers also want to entice more underserved patients to register to participate in pilot programs.

The CMMI was created in 2010 under the Affordable Care Act. Its remit is to test innovative payment and delivery system models that “show promise for improving the quality of care” in Medicare, Medicaid, and CHIP, while “slowing the rate of growth in program costs.”

Correspondingly, the Innovation Center’s top-level goals for these payment and delivery system models are “reducing federal expenditures,” “helping to lower out-of-pocket costs for Medicare and Medicaid beneficiaries,” and “maintaining access to quality care.”

An oft-cited success story is the Part D Senior Savings Model, which the Innovation Center set in motion to test the impact of offering Medicare beneficiaries prescription drug plan options that include comprehensive coverage of all insulin products with lower out-of-pocket costs. Thanks to a robust public-private partnership between CMS, Medicare Advantage and Part D plans, and pharmaceutical companies this model has achieved all three goals laid out by the Innovation Center.

On the other hand, CMMI’s Oncology Care Model is often cited as having failed to yield cost savings to the government, at least insufficient to offset the monthly enhanced oncology services and performance-based payments paid to participating practices. Specifically, the model did not lead to reductions in emergency room visits or hospitalizations.

This said, there was a reduction in end-of-life care spending. Also, expenditures decreased for lymphoma, colorectal cancer, and high-risk breast cancer.

Of the more than 50 alternative payment models that have been launched, the vast majority have turned out not to be cost saving. One wonders whether the bar was set too high. For certain models, cost savings to the government may not be a realistic objective. But, perhaps some of these models represent good value for money; that is, for the incremental dollars spent they yield meaningful benefits to beneficiaries. Judicious use of resources doesn’t invariably imply cost savings to the government.

The CMMI’s aims are ambiguous, as is reflected in discrepancy in the language used to describe cost saving goals. On one hand, the CMMI says its models are meant to “lower the growth rate in costs.” On the other, the CMMI states that models must “reduce federal expenditures.” These are two totally different objectives. The first seems more reasonable than the second, especially with respect to models catering to very difficult to manage diseases, like cancer.

Obviously, eliminating duplicative or wasteful care can save money. If such waste can easily be identified and removed, then it’s a win-win situation for all involved. But once you’ve cut out the waste then it may be too much to expect cost savings from programs targeting critically ill cancer patients. At the same time, one could establish specific value targets for the additional money spent; return on investment parameters, if you will.

The CMMI says it is setting “achievable financial benchmarks around which there is a consensus among stakeholders.” However, a reduction in the cost of programs designed to treat difficult to manage sub-populations in Medicare and Medicaid may be a bridge too far.

It’s also unclear whether all the financial benchmarks are considered achievable by stakeholders. In particular, the CMMI seeks to include more financial risks for participating healthcare providers and make alternative payment models compulsory. Here, a problem is how much of the risk is manageable by the providers involved? They often have limited control, for example, over patient behavior, such as adherence to treatment regimens. Also, there may be an uneven distribution of risks which would saddle certain providers with more risk than others. In turn, some healthcare providers may have trouble managing costs, no matter how well designed the models are.

As the Innovation Center embarks on a quest to improve the Medicaid program through the use of alternative payment models , it may need to consider adjusting its criteria of what counts as a successful model. Lowering federal expenditures appears to be the overriding goal of the CMMI models, and therefore cost savings to the government their standard measure of success. But, sometimes that might not be achievable, even if the model is worth it and may save beneficiaries out-of-pocket expenses. In certain disease areas, improved health outcomes might be a better objective, along with a cost-effective use of additional resources.


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