- The CMS Innovation Center is on the path to reducing healthcare costs while improving care quality through alternative payment and care delivery models, a recent Government Accountability Office (GAO) report found. But only four alternative payment models have achieved lower spending and higher quality.
When CMS launched its innovation arm about eight years ago, the federal agency established three goals for the center:
• Decrease healthcare cost growth while promoting improved health and care quality
• Identify, test, and improve alternative payment and care delivery models
• Accelerate the spread of successful models and best practices
In a report on whether the CMS Innovation Center has met its goals, the federal watchdog found that the agency’s innovation arm has partially met two of its three goals and completed the third.
GAO found that the center has successfully pinpointed, tested, and improved alternative payment and care delivery models. The CMS Innovation Center has implemented 37 models as of March 2018, according to the GAO report. And the center concluded testing for 10 of these models.
The CMS Innovation Center also intends to begin testing two more models in 2018.
However, only four of the models implemented by the center as of Sept. 30, 2016, either produced healthcare cost savings while maintaining or enhancing care quality, or improved care quality while maintaining or decreasing healthcare costs.
The models were the Pioneer Accountable Care Organization (ACO) initiative, Diabetes Prevention Program, Initiative to Prevent Avoidable Hospitalizations among Nursing Facilities Residents Phase I, and lower-extremity joint replacement bundles under the Bundled Payments for Care Improvement (BPCI) initiative.
While four models achieved lower spending and higher care quality, the CMS Innovation Center only recommended two of the models for expansion. Those models were the Pioneer ACO model and the Diabetes Prevention Program.
GAO noted that managing these four models met the CMS Innovation Center’s secondary goal of operating four models that achieve improvements in care quality and/or spending by 2016.
The center aims to manage six models that demonstrate care quality and/or spending improvements in 2018.
While the CMS Innovation Center has met one of its goals, the federal agency’s innovation arm still has work to do with decreasing healthcare costs, the GAO report found.
To achieve this goal, the CMS Innovation Center developed three measures relating to ACOs. The measures are number of Medicare beneficiaries who are aligned with an ACO, number of physicians participating in an ACO, and the percentage of ACOs that share in savings.
Most recent performance data from 2014 and 2015 showed that the center exceeded its goal of aligning 5.4 million Medicare beneficiaries with ACOs by 2014. ACO programs treated over 5.9 million beneficiaries that year.
The center also topped its 2015 target of 7.09 million Medicare beneficiaries aligned with an ACO. By that year, over 7.7 million beneficiaries sought care through an Innovation Center ACO.
The CMS Innovation Center also aimed to have 150,000 physicians participate in an ACO program by 2014 and upped that goal to 178,000 physicians by 2015.
The performance data uncovered that the center was about 17,800 physicians short of its goal in 2014.
However, the number of physicians participating in an ACO by 2015 eclipsed the CMS Innovation Center goal by over 17,000 physicians. The total number of physicians in an ACO reached 195,212 doctors by 2015.
Despite surpassing the targets for two measures, ACO programs run by the center have failed to increase the percentage of ACOs that share in savings. CMS set a target of 35 percent of ACOs sharing in savings by 2014 and 37 percent by 2015.
But the percentage of ACOs earning shared savings payments has remained at 34 percent since 2014.
“Officials stated that the missed target was driven by the high growth in the number of ACOs that were new—and therefore would not yet be expected to achieve a level of savings in which they could share—and not by ACO performance deficits,” the report stated. “As a result, officials decided that no adjustments were required to the Medicare Shared Savings Program or other ACO Models to help improve performance.’
However, the stagnant portion of ACOs earning shared savings could spell trouble for the center’s future goals of 36 percent by 2016, which was one percentage point lower than the 2015 goal, and 37 percent by 2017.
But the CMS Innovation Center expects more ACOs to earn shared savings as they gain experience.
The longer an ACO participates in a program, the greater likelihood the organization will reduce its costs below its financial benchmark, a recent Office of the Inspector General (OIG) report showed. About 57 percent of ACOs in the Medicare Shared Savings Program (MSSP) for three years decreased costs below their spending target in 2015 compared to just 46 percent of organizations in the program for one year.
The same rang true in 2016. A recent Health Affairs report revealed that the rate of MSSP ACOs earning shared savings payments ranged from less than 20 percent of organizations in their first year to almost 40 percent of those in their fourth year.
Time may help the CMS Innovation Center achieve its healthcare cost reduction goal, but the innovation arm must still work on meeting its third goal of accelerating the spread of alternative payment and care delivery models, the GAO pointed out.
For this goal, the center created two measures. The measures are the number of states developing and implementing a health system transformation or payment reform plan and the percentage of active model participants who are engaged in Innovation Center or related learning activities.
The internal review by GAO uncovered that the CMS Innovation Center met its target of getting 38 states to enact a health system transformation or payment reform plan in both 2015 and 2016.
However, the center failed to achieve its goal of engaging 61 percent of active model participants in learning activities in 2015. Only 58.6 percent of active model participants were involved in Innovation Center and related activities.
The CMS Innovation Center also did not meet its target of engaging 64.5 percent of active model participants by 2016. The percentage of active model participants participating in learning activities only increased to 56.9 percent by 2016.
“For the second measure, the Innovation Center noted in its report to Congress that although the results for fiscal year 2016 showed a slight decrease in overall participation in Innovation Center or related learning activities, the majority of models performed higher than their individual targets. Several models underperformed, however, bringing down the overall percentage rate,” the report stated.
Despite some setbacks, the CMS Innovation Center is on its way to achieving lower healthcare costs and widespread adoption of alternative healthcare models, the report concluded.
“Looking forward, officials told us that the Innovation Center has developed a methodology to estimate a forecasted return on investment for the model portfolio, and is in the early stages of refining the methodology and applying it broadly across the portfolio in 2018,” the GAO explained. “As part of the development efforts, the Innovation Center expects to utilize standard investment measures used in the public and private sectors.”
However, the center may have to implement its future plans on a smaller budget. The White House recently proposed to rescind $800 million in funds to the CMS Innovation Center.
"These funds are in excess of amounts needed to carry out the Innovation Center's planned activities in FY s 2018 and 2019, and the Innovation Center will receive a new mandatory appropriation in FY 2020," the proposal stated. "Enacting the rescission would allow the Innovation Center to continue its current activity, initiate new activity, and continue to pay for its administrative costs."