When asked about government’s influence and impact on healthcare, I like to cite my friend, former Health and Human Services (HHS) Secretary Michael Leavitt, who says, “If you want to change healthcare you have to change Medicare.” Everybody else—the commercial insurers and the providers—will follow.
But changing Medicare is hard. As we’ve seen, even with control of Congress, President Biden’s grand plans for Medicare changes—lowering the eligibility age, creating a public option—have yet to see any movement.
However, one little-known agency in the vast Centers for Medicare and Medicaid (CMS) is wholly focused on this lofty goal: advancing change in our federal healthcare entitlement programs to reduce costs and improve quality. I’m speaking about the Center for Medicare and Medicaid Innovation, or CMMI.
Established as a part of the Affordable Care Act (ACA) of 2010, the Center was created to develop models that “reduce program expenditures… while preserving or enhancing the quality of care furnished to individuals.” Former Senate Finance Committee counsel and recently-appointed CMMI Director Liz Fowler explains that the agency was added to the ACA in committee at the time because they weren’t sure how to save money in healthcare and make it more efficient. So, CMMI was established as a learning lab.
Uniquely and imaginatively, this newly created organization was given the power and freedom to create and implement innovative payment models without the approval of Congress. Furthermore, if a CMMI pilot model met certain standards and was considered successful, the HHS Secretary was granted significant power to expand its scope to apply to all of Medicare or Medicaid. But as you’ll see, few models have met this threshold, which is why the strategy of CMMI is shifting.
Since its launch in 2010, CMMI has been led by diverse leaders with deep healthcare knowledge. Rick Gilfillan left his role as president and CEO of Geisinger Health Plan to serve as the original CMMI head under President Obama, then in 2013 CMS Deputy Administrator Dr. Patrick Conway took over as director of the Center. Under Trump, it was first led by Landmark Health founder & CEO Adam Boehler, who is now here in Nashville launching the health investment firm Rubicon Founders. And he was succeeded by Brad Smith, my long-time colleague in the nonprofit and investor world, who is also back in Nashville leading Russell Street Ventures and Main Street Health.
In the beginning, the goal for CMMI was to see what sticks, and today, just over a decade after its creation, we have a better idea of what’s working and what’s not. This summer, Director Fowler is putting significant thought into refining CMMI’s approach: “The days of letting 1,000 flowers bloom is gone,” she has said. She’s narrowing the focus with fewer models and a more concentrated strategy, drawing upon lessons learned.
In a decade of CMMI existence, what has been achieved? There are some impressive figures that capture the progress, including having launched 54 very different models that address a broad array of areas such as primary care, oncology, chronic kidney disease, and cardiovascular conditions. Nearly one million healthcare providers have participated in these models, serving 26 million patients, leading the system-wide move to value-based care. Now, approximately 40% of Medicare fee-for-service payments, 30% of commercial payments, and 25% of Medicaid payments are made through some sort of value-based arrangements. And the journey from fee-for-service toward more value-based care will continue.
And what about success? Despite these remarkable numbers, only five of the 54 models delivered substantial financial savings. The majority have not saved money, and several are on pace to lose billions of dollars. Similarly, while several models produced significant improvements in quality, past director Brad Smith explains, “the majority of models do not show significant improvements in quality, although no models show a significant decrease in quality.”
Furthermore, only four of these models have shown enough success to be approved as a permanent part of Medicare. And these scaled programs aren’t yet making a major impact. One of the programs that was approved, the Diabetes Prevention Program, while effective only has approximately 3,000 patients enrolled. Thus in terms of magnitude and numbers of lives affected, the program is not yet appreciably changing Medicare, or even diabetes treatment at scale.
These findings inform lessons learned from the experience of planting a thousand flowers, as Director Fowler termed it.
The first lesson is that voluntary models don’t work. With 50 of the 54 models being voluntary for providers, Center leaders found it very difficult to overcome risk selection: only those with an economic interest in participating tended to opt in.
Second, having multiple bundles and a separate alternative payment model (APM) for each specialty group has not been right approach. It perpetuates fragmentation and won’t truly move the needle to a more holistic, value-based care system.
Third, adding incentive funding on top of payments hasn’t worked (e.g., adding the Per Member Per Month incentive). When that added incremental payment is taken away, providers gravitate back to their previous way of doing business.
Fourth, accurate benchmarking—vital in value-based care and measuring outcomes—is really hard to do effectively. At the end of his tenure at CMMI, Brad Smith wrote in the New England Journal of Medicine: “At a minimum, benchmarks need to be tested against historical data before being rolled out. When possible, the Center needs to use retrospective benchmarks or, when using prospective benchmarks, create guardrails that allow policymakers to automatically adjust the benchmark if it proves to be inaccurate by a certain amount in a retrospective analysis.” He pointed to several instances where prospective benchmarks incorrectly overestimated costs, and noted one money-losing model that would have reduced costs had the benchmark been accurate.
Looking to the future, in which direction should we expect CMMI to head in under Fowler’s leadership and will it result in real change in Medicare or Medicaid? Director Fowler has shared some of her focused priorities, which include:
- Advanced Primary Care: doubling down on the role primary care can play in a high performing health system;
- Total Cost of Care Models: A likely goal will be to have every patient, starting with Medicare, in a total cost of care model with responsibility for some segment of risk, whether that be in Medicare Advantage, Direct Contracting, an accountable care organization, or advanced primary care;
- Stakeholder Engagement: Get stakeholder input much earlier in the process of model development, and move towards multi-payer alignment;
- Making Fee-For-Service Less Comfortable: CMMI plays a critical role in implementing the Quality Payment Program passed as part of MACRA in 2015, which replaces Medicare’s Sustainable Growth Rate with participation in either the Merit-based Incentive Payment System or Advanced Alternative Payment Models. The trajectory of bonus payments has made it more comfortable for providers to continue to stay in FFS. This may require a legislative change;
- Better Risk Adjustment: Innovation must truly be centered on care delivery and improving outcomes, and not just upcoding and gaming the system;
- Better Data Infrastructure: CMS’s antiquated data systems have made mistakes that have literally cost the program millions. A modern approach to Medicare and Medicaid requires modern technology for successful implementation and evaluation; and
- Equity and Justice: We will see increased emphasis on embedding equity into reporting and every other aspect of the model development, deployment, and evaluation processes.
My own take on whether these changes will move Medicare, or impact Medicaid, is this: even the most innovative arms of government move laboriously compared to the nimbler and more responsive private sector. We together must combine the agility, the creativity, and the capital that can be provided by the private sector with the direction, the massive size, and the ethical assurance provided by government, working as a partnership capturing the strengths of both.
The areas of focus that CMMI seems to be centering on—advanced primary care, moving to total cost of care, moving patients into risk-based models, cracking down on upcoding—are all components that, over time, will make their way into the broader healthcare system. And it is in these areas that there will be vast opportunities for partnership with nongovernmental entities and private sector organizations looking to improve health and healthcare in America.
CMMI isn’t going to boil the ocean quite yet, but the information and results it is gleaning from its current and past models are effectively planting the seeds for future system-improving changes in federal health entitlement programs that will benefit us all. To entrepreneurs, healthcare executives, providers and innovators, keep your eye on how you can partner with the Center for Medicare and Medicaid Innovation to better the lives of others.