Innovation center offers $1 billion to test Medicare pay models

Physicians and other health professionals are encouraged to apply for funds to develop innovative payment concepts that reward quality and keep federal costs down.

By Charles Fiegl amednews staff — Posted June 3, 2013

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The Center for Medicare and Medicaid Innovation is looking to invest $1 billion in new payment models to support initiatives that improve care in federal health programs.

Grants will be awarded to organizations seeking to develop and test new payment models that promise to deliver better health care services at a lower cost, Obama administration officials announced May 15. The innovation center is favoring models that will grapple with health care problems considered the costliest for Medicare, Medicaid and the Children’s Health Insurance Program.

“We believe there are organizations that are out there eager to transform the way health care is delivered and help [the Centers for Medicare & Medicaid Services] develop new payment systems to support these innovations,” said Richard Gilfillan, MD, director of the innovation center, during a call with reporters to discuss the grants.

This will be the second opportunity to apply for innovation awards. The first round supported a broad range of more than 100 care models with between $1 million and $26.5 million each in 2011. For instance, the surgery benefits management company Welvie LLC teamed with insurer Anthem Blue Cross Blue Shield in Ohio after receiving an award grant for a care decisions program assisting Medicare beneficiaries. Nearly half of 3,500 participating patients considered surgery alternatives under the program, and 17% chose less invasive treatment options, according to the innovation center. Each surgery that was avoided saved the system an average of $7,000.

Costliest illnesses targeted

Awards during the second round will be more focused. The innovation center is seeking models that rapidly reduce costs in Medicare and Medicaid outpatient hospitals and other settings; care for specialized populations, such as patients with Alzheimer’s disease or HIV/AIDS; support specialties, such as oncology, cardiology and others treating patients with complex chronic diseases; and treat health populations defined by geographical, clinical or socioeconomic areas or status.

Officials hope the target areas will fill gaps in the current pay system, Dr. Gilfillan said. The innovation center also will judge applicants on their ability to demonstrate that the pay models will improve health care quality and be sustainable over the long term.

The financial awards will help with the transition to new models of care that have the potential to improve quality and reduce costs in Medicare and Medicaid, said American Medical Association President Jeremy A. Lazarus, MD. In the case of Medicare, the Association has stated its case for transitioning from the current pay system to one with an array of payment models that support clinical innovations led by physicians.

“We are pleased that these new grants will provide expanded opportunities for physicians in a wide array of specialties,” Dr. Lazarus said. “As the AMA recently announced a long-term initiative to improve health outcomes for patients with cardiovascular disease and type 2 diabetes, we are encouraged that the grants will support innovation in addressing these chronic conditions.”

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Key deadlines for payment innovators

Applying for federal innovation grants is an extremely competitive process, Center for Medicare and Medicaid Innovation officials said. Only 107 out of 3,000 applicants received innovator awards worth $1 million or more during the first round. The second round will follow a specific timeline.

  • June 28: Letters of intent from interested groups are due.
  • Aug. 15: Online applications are due by 3 p.m. Eastern time (link).
  • Jan. 15-31, 2014: Awards are announced.
  • Feb. 28, 2014: Cooperative agreements with awardees are finalized.
  • April 1, 2014, to March 31, 2017: The designated performance period runs.

Source: “Health Care Innovation Awards Round Two,” Center for Medicare and Medicaid Innovation, May 15 (link)

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