Wishing success to the Center for Medicare and Medicaid Innovation

When I mention the new Center for Medicare and Medicaid Innovation to my business-oriented friends, they often sneer at the idea. “Medicare and innovation,” the say. “That’s an oxymoron.” And while it’s true that in general innovation thrives in small, private, entrepreneurial organizations rather than big government bureaucracies, the only real hope to bend the health care cost curve in this country lies with CMS.

Some Medicare Demonstration Projects, notably the Medicare Health Support Program for chronic illness that was part of the 2003 Medicare reform bill, have been big failures. Thankfully the Innovation Center has been freed of many of the restrictions that have prevented success. As described by Barr et al. in a subscribers-only Health Affairs article (Lessons For The New CMS Innovation Center From The Medicare Health Support Program):

The statute authorizes the secretary of health and human services (HHS) to select the models to be tested and to expand those that reduce costs while preserving or improving the quality of care. It also eliminates the requirement of budget-neutrality during the initial period of development and testing, allowing the CMS and its partners to build and refine new models before testing their impact on program expenditures.

The statute also requires the HHS secretary to terminate or modify the design and implementation of models if initial testing indicates that they are not expected to produce the desired results. This authority gives the CMS greater flexibility to design and develop new models. The new health care law also exempts Innovation Center activities from some judicial and administrative review processes, thereby accelerating the potential pace of improvements.

Finally, the center is not required to use randomized controlled trials for evaluation, which permits the CMS to use other valid evaluation methods to facilitate rapid learning and to test models not well suited to randomization.

These changes will allow the Innovation Center to design, manage, and evaluate new models as quality and cost improvement efforts without adhering to rigid research protocols. This approach should help stimulate innovation and diffuse its lessons more rapidly while maintaining the credibility of the process and the validity of the findings.

I’m hopeful that HHS will use its authority to test and deploy some bold new initiatives. Commercial health plans will get on board once Medicare demonstrates what works. It would be great if it could happen the other way around but it’s unlikely. Only Medicare is big enough to matter.

July 28, 2010

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