Academic journal article Journal of Health and Human Services Administration

The CMS Innovation Center's Expansion Authority and the Logic of Payment Reform through Rulemaking

Academic journal article Journal of Health and Human Services Administration

The CMS Innovation Center's Expansion Authority and the Logic of Payment Reform through Rulemaking

Article excerpt


Many models in the early CMMI portfolio appear not to be amenable to expansion, as their payment component is tenuous. In considering models for expansion, CMS will need to assess their generalizability, codifiability, and political viability as well as whether they saved money.

Challenges to CMS in exercising expansion authority include choosing or coordinating among models that target the same beneficiaries, transitioning from distributive mode to potentially contentious rulemaking, and deciding whether APMs will exist as voluntary adjunct payment options alongside traditional fee-for-service payment codes or will supplant certain FFS payment codes on a mandatory basis.

The Patient Protection and Affordable Care Act (2010) created a Center for Medicare and Medicaid Innovation (CMMI) within the Centers for Medicare and Medicaid Services (CMS), charged with mounting pilot projects that improve the quality and experience of care while reducing costs. The Innovation Center statute is unique in giving the Secretary of Health and Human Services (HHS) broad authority to scale up models that, in the judgment of the CMS Actuary, have proven successful after testing on a pilot basis. Effective use of this "expansion authority" could put payment reforms on a fast-track by obviating the need to get legislation passed by Congress.

The creation of this bypass recognized the politically contentious environment surrounding payment reform. Alternative payment methodologies threaten the business models of service providers and suppliers that thrive under the fee-for-service system. Secretarial expansion can mandate the types of payment reforms that would be the most difficult to legislate; Medicare officials could simply insert new payment methodologies into annual rate-setting rules. This would shift to aggrieved interest groups the burden of changing the status quo through passage of a bill by two houses of Congress and signature by the president (judicial review is specifically prohibited by the statute).

In addition to this sweeping authority, the Innovation Center enjoys a $10 billion endowment and counts many prominent health systems, academic medical centers, and even state governments as partners. Nevertheless, it faces daunting challenges in translating its portfolio of demonstrations into alternative payment models. These translation hurdles may be broadly characterized as legal, practical, and political issues, although these are themes more than categories.

HHS Secretary Sylvia Matthews Burwell (2015) announced a goal of moving 50 percent of payments in the FFS Medicare program to value-based "alternative payment models" (APMs) by 2018. Her announcement did not specify a means of achieving this goal. The intention may have been to exert moral suasion upon providers, or to rely upon market forces outside of Medicare; but to the extent HHS officials wish to use regulatory powers to spur change, Innovation Center expansion authority would seem the most obvious vehicle. The outcome of the 2016 elections has swept from power the officials who backed the ACA, and led to Sec. Burwell's replacement by Dr. Tom Price, a critic of CMMI and past opponent of the exercise of CMMI's most far reaching authorities. Nevertheless, "the movement toward value-based care both preceded the Affordable Care Act and has bipartisan support" (Muhlestein, Burton and Winfield 2017). Further, any inclination new HHS leadership might have to abandon the 50 percent goal must take into account the fact that it has also been embraced by some private payers, e.g., Cigna.

This article provides a framework for understanding the potential role of CMMI expansion authority in promulgating payment reforms, with an emphasis on the challenges. It begins by setting the context for the statute with a brief review of payment reform basics. It next describes the early CMMI portfolio of projects. It reviews the first invocations of CMMI's statutory authorities. …

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