Medicare, Medicaid payment and delivery models face scrutiny by new agency

A family physician leading the federal office is charged with reshaping how the programs can run more efficiently.

By — Posted Nov. 1, 2010

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A new federal agency is poised to start exploring ways to reform Medicare and Medicaid's payment and delivery systems.

Leaders at the Center for Medicare and Medicaid Innovation will root out unnecessary services and treatments that result in preventable complications for patients. They also plan to develop more effective therapies that target chronic diseases, medical errors and safety concerns. They are finalizing their goals as the agency nears its January 2011 start up date.

CMMI comes from the health system reform law adopted earlier this year, which directed the Dept. of Health and Human Services to develop a working framework for how existing and new programs can reduce Medicare and Medicaid costs, while preserving or enhancing patient care.

Leading government and private-sector officials converged at a conference hosted on Oct. 18 by the nonprofit public policy organization Brookings Institution in Washington, D.C., to discuss the direction the center needs to take to meet the health reform law's mandates.

The center has $5 million in fiscal year 2010 to help it get up and running. It has a $10 billion budget between 2011 and 2019 to test models that could improve Medicare and Medicaid.

The Brookings meeting comes on the heels of a Sept. 27 Centers for Medicare & Medicaid Services announcement that Richard Gilfillan, MD, would serve as CMMI's acting director. Dr. Gilfillan, a family physician who joined CMS in July 2010 as director of performance-based delivery systems, is tasked with leading the development of innovative programs geared to improve the current payment and delivery models. Before coming to CMS, Dr. Gilfillan served as president and CEO of Geisinger Health Plan and executive vice president for System Insurance Operations at the Geisinger Health System in Danville, Pa.

Dr. Gilfillan said he hopes to partner with national insurers, hospital systems, doctors and nursing organizations moving forward. "This is not going to be your father's innovation activity, and it's not going to be your mother's evaluation methodology."

At the Oct. 18 conference, former CMS Director Mark McClellan, MD, PhD, said Dr. Gilfillan and his staff will need to address some significant policy and technical challenges, including getting a handle on the numerous models that have already been researched, while also looking for new partners and possibilities.

"The real goal of CMMI [is] ... to implement promising payment and delivery models more quickly to determine their impact more rapidly and in a more compelling way, and thereby, to help assure that these reforms can diffuse out into the health care system more quickly and effectively as well," said Dr. McClellan, who is now director of the Engelberg Center for Health Care Reform at the Brookings Institution.

Current system "broken"

New and more effective systems would be welcomed by the American Medical Association, which has implored Congress to avoid a pending "Medicare meltdown" in the form of significant payments cuts that threaten the program's foundation.

"The AMA looks forward to working with CMMI during the formation and testing of new payment and delivery models to improve care delivery and enhance value for patients and physicians," said AMA President Cecil B. Wilson, MD. "Development of these models is especially important as physicians face looming cuts of almost 30% in January from the broken Medicare physician payment system."

Dr. Wilson said assisting physicians in small practices through direct technical and financial assistance also must be a top priority for CMMI. Small practices account for 78% of U.S. office-based physicians.

Dr. Gilfillan indicated that CMMI will embrace social media tools and new technologies in an effort to address matters of timeliness.

"So what's on our mind? Speed. How do you do this fast, right and well, and how do we do this in the age of Facebook and the social network dimension?" he asked.

He added that CMMI plans to follow a "Triple Aim" planning format unveiled recently by CMS Administrator Donald M. Berwick, MD. It focuses on a select group of overarching goals: concentrating on safety and quality to provide better care; focusing on poor nutrition, substance abuse and generally unwise behavioral choices to help improve Medicare patients' health; and reducing per capita costs.

Dr. Berwick said he will work closely with Dr. Gilfillan and CMMI on developing and implementing new models.

"We have great prototypes around. We have enormous successes around the country, which I have seen many of in my prior life before I arrived at CMS," said Dr. Berwick, who was recess-appointed by President Obama earlier this year. "And I believe that we can build on a great foundation of progress, but only if we think very, very hard and are able to support creativity throughout the country to adapt health care and community systems to produce this seamless coordinated care."

Some of those prototypes include accountable care organizations, medical homes and bundled payments, Dr. Berwick said. "The goal," he said, "is to have care that's seamless and coordinated at every level so that we can live full lives in the least possible pain with the least possible dysfunction."

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Countdown to reform


  • Patient-Centered Outcomes Research Institute established.
  • Beacon Pilot Program to begin.


  • Center for Medicare and Medicaid Innovation established.
  • National quality strategy due.
  • Stage 1 "meaningful use" of health information technology deadline.


  • Accountable care organization program established.
  • Independent Payment Advisory Board established.


  • Stage 2 "meaningful use" of health IT deadline.
  • National pilot program to test bundled payments.


  • First set of IPAB recommendations due to improve quality and cut costs.
  • Stage 3 "meaningful use" of health IT deadline.

Source: The Brookings Institution

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