ABA Health eSource
September 2010 Volume 7 Number 1

The Center for Medicare and Medicaid Innovation

By Robert H. Schwartz, Butzel Long, Bloomfield Hills, MI

AuthorPPACA 1 and HCERA 2 provide for substantial changes in Medicare and Medicaid which could lead to future changes in the delivery of health care through experimentation and innovation. For example, PPACA established the Center for Medicare and Medicaid Innovation (CMI) under Section 3021 which amends Title XI of the Social Security Act by adding new Section 1115A. The first question that comes to mind is what is CMI and how might CMI create innovation for positive changes to Medicare and Medicaid? CMI appears to be given a fair amount of latitude within the parameters discussed below.

According to PPACA, the purpose of CMI is “…to test innovative payment and service delivery models to reduce program expenditures under the applicable titles while preserving or enhancing the quality of care furnished to individuals under such titles.” 3

Effective on January 1, 2011, CMI 4 provides that preference is to be given to models that improve the coordination, quality and efficiency of healthcare services furnished to those enrolled under Part A or B or who are enrolled in a State Medicaid plan or who meet the criteria of both programs. These are “applicable individuals.” 5 Under PPACA Medicare and Medicaid programs are generally expanded by adding more possible eligibles to their rolls. Even before these potential additions, Medicare and Medicaid expenditures have been increasing, and were projected to continue to increase at a rapid rate.

There are basically two (2) phases to the CMI program. Under Phase I of the program, CMI is to test innovative payment and service delivery models in addition to current initiatives. The purpose of Phase I is to both: (1) test the impact such models may have on expenditures and (2) assess the quality of care provided. The models are likely to address payment and practice reforms in primary care, and should include concepts like the patient centered medical home as well as models that transition payment from fee-for-service to comprehensive payment or salary-based payment. Emphasis is placed on complex individuals (generally people who have multiple chronic medical conditions) as well as women’s health needs. 6 In Phase II, the Secretary may expand the duration and scope of models tested under Phase I if: 1) the Secretary determines that the expansion of a model will reduce spending without reducing quality of care or improve the quality of care without increasing spending; 2) the Chief Actuary of Medicare and Medicaid Services certifies that the expansion would reduce (or would not result in any increase in) net program spending under applicable titles; and 3) the Secretary determines that the expansion would not deny or limit coverage or provision of benefits under the applicable title for applicable individuals. 7

Coordination of Care is one of the important areas where models will need to innovate. The chronically ill and other high risk patients are in particular need of care coordination. The coordination of care will need to be addressed in both Phase I and Phase II. Emphasis will further be placed on electronic health records as one of the elements of care coordination. To assist in coordinating care, models will implement the use of technology including tele-health services, medication management services, and appropriate use of diagnostic imaging. 8

States are going to be allowed to test and evaluate models for fully integrating dual eligible individuals (those eligible for Medicare and Medicaid). States will have control over Medicare money under this part of the program. “The Secretary shall select models to be tested from Models where the Secretary determines that there is evidence that the model addresses a defined population for which there are deficits in care leading to poor clinical outcomes or potentially avoidable expenditures.” Pursuant to Section 1115A(b)(2)(B) of Title XI models under this provision should do the following:

1. Promote broad payment and practice reform in primary care including “high-need applicable individuals”, medical homes that address women’s unique health needs and the transition of primary care practices from fee-for-service toward comprehensive payment or salary-based payment;

2. Contracting directly with providers to promote innovative care delivery models;

3. Geriatric assessments and comprehensive care plans to coordinate care for applicable individuals with multiple chronic conditions and who have either: (a) an inability to perform two (2) or more activities of daily living, or (b) cognitive impairment, including dementia;

4. Promote care coordination that transitions providers and suppliers away from fee-for-service to salary-based payment;

5. Care coordinators for chronically ill applicable individuals at high risk of hospitalization through (Health Information Technology) HIT network that includes care coordinators, a chronic disease registry and home care through health technology;

6. Vary payments to physicians who order advanced diagnostic imaging according to physician’s adherence to appropriate criteria as determined in consultation with physician specialty groups and other relevant stakeholders;

7. Utilizing medication therapy management services;

8. Establish community-based health teams to support small practice medical homes by assisting primary care practitioners in chronic care management (community-based health teams are to be established through a program by the Secretary to provide grants to or enter into contracts with interdisciplinary interprofessional teams to support primary care providers);

9. Assist applicable individuals in making informed health care choices by paying providers for performing services that improve applicable individuals and caregivers in understanding medical treatment options;

10. Allow states to test and evaluate fully integrated care for dual eligible individuals (those eligible for Medicare and Medicaid) including management and oversight of funds;

11. Allow States to test and evaluate systems of all-payer payment reform including dual eligibles;

12. Align nationally recognized evidence-based guidelines of cancer care with payment incentives under title XVIII in areas of treatment plans and follow up care;

13. Improve post acute care through continuing care hospitals during an inpatient stay and thirty (30) days following discharge;

14. Fund home health providers who offer chronic care management services in cooperation with interdisciplinary teams;

15. Promote quality and reduce cost through collaboration of institutions (high quality and low cost) who are responsible for developing and disseminating best practices and proven care method and implement best practices and proven care methods which demonstrate further improvements in quality and efficiency and provide assistance to other institutions on best practices;

16. Facilitate inpatient care at local hospitals through use of electronic monitoring by specialists including internists and critical care specialists based at integrated health systems;

17. Promote greater efficiency and timely access to outpatient services though models that do not require a physician or other health professionals to refer the service or be involved in establishing a plan of care;

18. Establish comprehensive payments to Healthcare Innovation Zones (HIZ). (HIZ are to be zones comprised of groups of providers which include a teaching hospital, physicians, and other clinical entities that can deliver a full spectrum of integrated and comprehensive health care services to applicable individuals) that include groups of providers including hospitals, physicians and other clinical entities that deliver integrated and comprehensive care to applicable individuals while incorporating innovative methods for clinical training of future health care professionals.

19. Utilizing, in particular in entities located in medically underserved areas and facilities of the Indian Health Service, telehealth services in treating behavioral health issues and stroke and improve capacity of non-medical providers and non-specialized medical providers to provide health services for patients with chronic complex conditions.

20. Utilizing a diverse network of providers and suppliers to improve the care of applicable individuals with two (2) or more chronic conditions and a history of prior year hospitalizations through interventions developed under the Medicare Coordinated Care Demonstration Project. 9

There are additional factors recited in PPACA that CMI may consider in selecting models for testing including:

a. Does the model include regular monitoring and updating processes?

b. Does the model place the applicable individual and family members and informal caregivers at the center of the care team?

c. Does the model provide for in-person contact with the applicable individual?

d. Does the model utilize electronic health records and remote monitoring systems to coordinate care?

e. Does the model provide for a close relationship between care coordinators, primary care practitioners, specialists, community based organizations and other providers?

f. Does the model rely on a team-based approach?

g. Does the model enable providers and suppliers to share information with one another and patients, caregivers, and others on a real time basis?

h. Does the model demonstrate effective linkage with other public sector or private sector payors?

These models are not required to be budget neutral; however, a model that does not appear to be delivering quality in line with costs is likely to be terminated. by the Secretary. CMS is required to post the results of each tested model. CMS may expand the duration and scope of a model if it will reduce spending without reducing quality and the Chief Actuary certifies that the expansion of a model would reduce program spending. 10

There are limitations on administrative and judicial review of model selection, location, and participation, including the selection of models for testing, the selections of organizations, sites, or participants, the elements, parameters, scope and duration of such models, determinations regarding budget neutrality, the termination or modification of the design and implementation of a model. 11

Starting in 2012, and every year thereafter, the Secretary is to report to Congress on CMI actions. The report is to describe the models, the number of people participating, payments under Medicare and Medicaid, models chosen for expansion and the evaluation results and legislative recommendations. 12

Of course, there are many unanswered questions in the establishment of CMI as in other parts of PPACA. Will regulations tell us more about the model criteria and selection? Will efforts be made not to duplicate prior proven or disproven models? Although funds have been allocated for these models, will those funds be sufficient? How much political “mudslinging” will occur that could derail potentially valuable models?


Should these opportunities to experiment be fully utilized, they might be the best chance for health reform to improve quality of care and limit costs. Past activities indicate that innovation occurs where states and indeed providers are able to experiment. Many of the models that are in use today as examples of how the health care system should be revamped arose not by government mandate, but out of a desire to provide better care, including Mayo Clinic, Geisinger and others. If an honest effort is permitted to occur, we might find surprisingly good results. As health lawyers, we can help our clients through these models which may significantly improve the health care system.

1 Pub L. 111-148 The Patent Protection and Affordable Care Act of 2010
2 Pub 2 111-152 The Health Care and Education Reconciliation Act of 2010
3 PPACA Section 3021 (a)
4 PPACA Section 3021(a)
5 PPACA Section 3021(a)
6 PPACA Section 3021(a)
7 PPACA Section 3021(a)
8 PPACA Section 3021(a)
CMS selected 15 sites for a pilot project to test whether providing coordinated care services to Medicare fee-for-service beneficiaries with complex chronic conditions can yield better patient outcomes without increasing costs under the authority of Section 4016 of the Balanced Budget Act of 1997.
9 PPACA Section 3021(a)

PPACA Section 3021(a)

11 PPACA Section 3021(a)
12 PPACA Section 3021(a)

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