Tip Sheets

How to gauge ‘success’ at the Center for Medicare and Medicaid Innovation

By Joanne Kenen

One agency created by the Affordable Care Act is the Center for Medicare & Medicaid Innovation (CMMI). As the name implies, its task is to innovate: trying new ways of delivering health care and testing new incentives and payment models. Some ideas are likely, even expected, to fail. Others may lead to new ways of delivering higher quality care for less money.

CMMI also is supposed to help spread new ideas so they’ll take root in the real world. The U.S. Department of Health and Human Services has the authority to expand approaches that reduce spending – and halt those that do not. This is a more flexible approach than officials had with “demonstration projects” prior to the ACA.

The agency’s website is a goldmine of health care innovation. You can search by state for projects or by category, such as “Accountable Care Organizations” or “Primary Care Transformation.”

Some people think CMMI’s role as combination think-tank and health care financier is a creative and energetic approach to health innovation. Others regard it as a huge waste of money, including some Congressional Republicans who recently asked the nonpartisan Congressional Budget Office some questions about it. Two CBO staffers, Paul Masi and Tom Bradley, posted some of their responses in the CBO Blog.

The CBO officials here aren’t trying to evaluate the success or failure of the innovation center – it’s far too early for that. Nor are they trying to decide whether, say, an “ACO” is going to be a smarter idea than a “medical home.” Rather they are looking at how the program is seen – not just in terms of budgetary numbers, per se, but in terms of how and when an agency that by design will have some failures is eventually evaluated. The overview can help you understand the pace of innovation – and a realistic timetable for evaluation – in your own community. This tip sheet draws largely on the two budget officials’ written comments, which have been condensed and/or paraphrased. (The longer original version is here.)

The CBO expects that some innovations -– although it doesn’t yet know which ones – will prove successful and will expand. Innovation projects are still in early stages and “have not yet yielded noticeable savings.” Between 2016 and 2025, however, the CBO estimates nets savings will total $27 billion – and by net, that means after the money CMMI spent to get it going.

If Congress proposes legislation that would be duplicative of CMMI efforts, the CBO would see it, or “score it” to use the CBO term, as cutting into those savings. Similarly any legislation that would “delay implementation of promising initiatives or limit CMMI’s flexibility” would be judged as increasing federal costs. (That would make it harder for the GOP to try to repeal CMMI or significantly shrink it.)

HHS was able to test new ideas before CMMI’s creation – but in far more limited ways. HHS could either initiate demonstration project on its own (with limited funding), or carry out demonstrations under legislation passed by Congress. In recent years (pre-ACA), this was mostly Congress-directed. Results were mixed, and HHS often lacked the flexibility to make some adjustments to modify or expand Congressionally-mandated projects. They could learn from experience – but not make adjustments with what they had learned, or do much to apply those lesson in real time.

The ACA added money, breadth and flexibility. It gave CMMI $10 billion for fiscal years 2011-19 and another $10 billion for each subsequent decade. It also gave CMMI power to solicit and test ideas, and gave priority to designing demonstration projects that could “be scientifically evaluated using appropriate research methods, including requirements for sample sizes large enough to allow statistical analysis.”

So far, not that much is known about the new programs. They take a few years to design, implement and evaluate – and some will be tweaked as the experts learn as they go. The CBO says detailed findings are available for only one model, and it didn’t show net savings – but the data is based only on the first year. That’s too short a period to be conclusive.

How long will it take to know more? CBO says that on average, “models that succeed will operate for four to seven years before HHS decides whether to expand them.” Those that don’t generate savings will probably operate for two to five years before HHS halts them. These time frames generally include a two-year window for a full and independent evaluation. In the early years, costs might go up. Over time, they would generate savings for the federal government.

Keep in mind that CMMI is working within Medicare and Medicaid. The CBO blog post doesn’t address this, but models tested by CMMI that save money could also be adopted by private insurers and health care providers, increasing savings in private health insurance markets as well.