Looking Back on Promising Progress in Round One State Innovation Model, Looking Forward to the Future of State Based Innovation

by Patrick Conway, M.D., CMS Principal Deputy Administrator and Chief Medical Officer
The State Innovation Models (SIM) Initiative began in April 2013, and has supported over 38 states, territories and the District of Columbia in two rounds of awards.  Yesterday, we released the second annual independent evaluation report for the Round 1 State Innovation Model Test Awards, including the first findings available for SIM after the baseline data summary.  This report shows both progress in states being catalysts for health care transformation and the value of CMS’ collaboration with states. Today, we are releasing a Request for Information (RFI) to obtain input on the design and future direction of the SIM Initiative.

Overview of SIM

SIM states are testing strategies to transform health-care across their entire state, specifically to have a preponderance of payments to providers from all payers in the state be in value-based purchasing and/or alternative payment models.

In the SIM Initiative, CMS is testing models for how state governments can use their policy and regulatory levers to accelerate statewide health care system transformation from encounter-based service delivery to care coordination, and from volume-based to value-based payment.  Round 1 states are implementing statewide health care innovation plans that support health care transformation through a variety of methods, including:

  • primary care practice transformation through patient-centered, coordinated care;
  • integration of primary care with other health and social services, including behavioral health services and long-term services and supports;
  • payment reforms that promote delivery system transformation and a variety of enabling strategies to facilitate and sustain an improved health system that puts the patient at the center of care delivery; and
  • community-based population health and prevention.

Central to enhanced care coordination, population health, behavioral and physical health integration, and alternative payment models is the use of health information technology (IT) and a robust data infrastructure.  The Round 1 Test states are strengthening these capacities through:

  • engaging and supporting providers that have not typically been connected to health IT;
  • requiring participating providers to report on data and/or implement health IT;
  • making available patient-level health information to providers and systems to improve care coordination; and
  • improving data analytics to support quality improvement and payment reform, and aligning metrics and data infrastructure across payers and initiatives.

Evaluation findings from Year 2 of SIM Round 1

In SIM Round 1, Model Test awards were made to six states: Arkansas, Massachusetts, Maine, Minnesota, Oregon, and Vermont. The SIM Initiative has made notable progress in accelerating health care transformation among the Round 1 Test states. Over time, many states have been able to increase the populations served by their SIM-supported models.

  • Over 70% of eligible Medicaid primary care providers participate in Arkansas’ patient-centered medical home, which serves about 80% of their eligible Medicaid population.
  • Alternative payment models supported by SIM funds in Minnesota and Vermont are reaching about 50% of each state’s total population, with Oregon and Vermont also reaching over 80% of their total Medicaid population.

The evaluation found that states have been successful in engaging a wide swath of the payer, provider, purchaser, and patient communities and building stakeholder consensus by balancing standardization and flexibility when expanding payment reforms statewide. States have leveraged multi-payer efforts to implement payment and delivery system reforms, engaged the provider community in SIM-related activities, and used a range of policy levers to effect change. Some of the most substantial changes to delivery systems and payment methods are in areas where public and private payers are working together to accelerate transformation. For example:

  • In Arkansas, Arkansas Blue Cross Blue Shield, QualChoice and some large self-insured employer groups, including Walmart, participate in the SIM-supported patient-centered medical home and episode of care models.
  • Vermont’s SIM Initiative focuses on supporting Accountable Care Organizations. Providers participating in both Medicaid and commercial ACOs now represent a significant majority of the state’s available primary care providers. ACOs offer services to nearly all residents statewide, and about half of eligible beneficiaries were participating as of late 2014.
  • In Oregon, participation in the Coordinated Care Model under the SIM Initiative currently includes commercial insurance carriers contracting with the state to cover state employees and Medicaid beneficiaries.

It remains too early to attribute specific quantitative results directly to the SIM Initiative. However, analyses based on Medicare and commercial populations show that states were making progress on health outcomes, such as declines in emergency room visits and inpatient readmissions through models pre-dating SIM and models upon which SIM efforts are expanding. Future evaluation reports will provide more detail on quantitative results and whether and how the SIM Initiative is affecting and accelerating trends in health outcomes and spending.

SIM Supports Health Care Transformation

The Affordable Care Act provides tools through the CMS Innovation Center, like the SIM Initiative, to move our health care system toward one that provides better care to patients, spends dollars more wisely, and results in healthier communities. Today’s announcement is part of the Administration’s broader strategy to improve the health care system by paying providers for what works, unlocking health care data, and finding new ways to coordinate and integrate patient care to improve quality.

In 2015, the Administration announced goals for Medicare to tie payment to quality or value. These goals are for 30 percent of Medicare fee-for-service payments to be made through alternative payment models by the end of 2016 (and 50 percent by 2018), and tying 85 percent of payments to quality or value by 2016 (90 percent by 2018). In early 2016, the Secretary announced that HHS had reached its goal of 30 percent of Medicare payments made through alternative payment models ahead of schedule. HHS is also working with private payers, employers, consumers, providers, states and state Medicaid programs, and other partners to expand alternative payment models. Initiatives like SIM are an important part of states’ role in health care transformation and tying payments to quality or value.

Looking to the future, we are also seeking input through an RFI on the following concepts related to the evolution of the SIM Initiative:

  • Partnering with states to implement delivery and payment models across multiple payers in a state that could qualify as Advanced Alternative Payment Models (APMs) or Advanced Other Payer APMs under the proposed Quality Payment Program, making it easier for eligible clinicians in a state to become qualifying APM participants and earn the APM incentive;
  • Implementing financial accountability for health outcomes for an entire state’s population;
  • Assessing the impact of specific care interventions across multiple states, and;
  • Facilitating alignment of state and federal payment and service delivery reform efforts, and streamline interaction between the Federal government and states.

For more information on the RFI, please visit: https://innovation.cms.gov/Files/x/sim-rfi.pdf.  To be assured consideration, RFI comments must be received by October 28, 2016.  Comments should be submitted electronically to: SIM.RFI@cms.hhs.gov with “RFI” in the subject line.

CMS supports states through SIM and other innovation efforts to move towards this vision of multi-payer delivery system reform across an entire state.  Health system transformation and improvement happens at the state and local level and CMS will continue to support states in their transformation journey to improve care for people across the nation.

Taking Action Now for a Stable Marketplace for the Long-Term

By Kevin Counihan, CEO of the Marketplace

As we get ready for 2017 Open Enrollment and look to the future, one of our most important tasks is to continue to build a strong Health Insurance MarketplaceSM, where the millions of Americans who rely on the Marketplace can continue to find affordable plans that meet their needs. That is why today we are announcing a proposed rule with clear, substantive improvements that would help issuers deliver more affordable choices to consumers and will help strengthen the Marketplace for years to come.  These proposed actions and others we have taken over the last six months would help to: support issuers with high-cost enrollees, while updating risk adjustment; strengthen the risk pool; promote additional enrollment; and support issuers in entering the Marketplace or growing their Marketplace business.  While some of these changes are proposed for 2018, others could begin in 2017.  And other, related improvements are already underway.

Supporting Issuers with High-Cost Enrollees and Updating Risk Adjustment for Everyone

Prior to the Affordable Care Act (ACA), millions of Americans with pre-existing conditions were locked out of health insurance, and one of the core tenets of the ACA has been that people with pre-existing conditions finally have access to the coverage they need. The ACA’s risk adjustment program plays an important role in ensuring that issuers have both the incentives and the financial support to design products to serve all Americans, and today’s rule proposes significant actions to strengthen the risk adjustment program. These changes will support issuers in serving the highest cost enrollees while also seeking to make risk adjustment more predictable and more effective at spreading risk for all issuers.  Specifically:

  1. Beginning with the 2017 benefit year, the rule proposes a modification to risk adjustment regarding the cost of enrollees who do not stay with an issuer for the full plan year.
  2. In order to help reflect enrollees with serious conditions like Hepatitis C, HIV, or others, the rule proposes to use prescription drug utilization data as a source of information about enrollee’s health and the severity of their conditions beginning with the 2018 benefit year.
  3. The rule also proposes to modify risk adjustment as to costs associated with the most expensive enrollees. Under this proposal, a portion of costs exceeding $2 million for an individual would be shared among issuers. This type of risk sharing would reduce uncertainty for issuers who are not yet able to reliably predict the prevalence and nature of high-cost cases.
  4. The proposed rule also asks for comment on a number of approaches for addressing the costs of healthier enrollees. Our goal is to update risk adjustment for all types of enrollees, to ensure that issuers can have confidence in the program as they design products to attract all types of consumers.
  5. Lastly, separate from the risk adjustment program, we are seeking comment on whether and how to further support the successful transition of former Pre-Existing Condition Insurance Plan (PCIP) Program enrollees into the Marketplace to ensure that they do not experience a lapse in coverage.

These proposals would bring more certainty into the Marketplace, as they would enable issuers to account for the risk of all enrollees in their bottom line, while continuing to ensure that all Americans have access to the care they need.

Strengthening the Marketplace Risk Pool

Along with helping issuers cover enrollees with more serious health needs, we also recognize the importance of balancing the mix of enrollees in the Marketplace risk pool. Today’s rule builds on other steps already under way to strengthen the risk pool.

  1. Special enrollment periods (SEPs) exist to ensure that people who lose coverage or experience other qualifying events have the opportunity to enroll in coverage.  We are committed to making sure that SEPs are available to those who are eligible for them and equally committed to avoiding any misuse or abuse of special enrollment periods. In 2016, we took a number of steps to ensure appropriate use of SEPs, such as introducing a confirmation process under which consumers enrolling through common SEPs are directed to provide documentation to confirm their eligibility.  In the proposed rule, we are seeking information on additional steps related to SEP outreach or policy we could take as soon as the 2017 plan year to strengthen the SEP risk pool.
  2. We’re helping ensure consumers who turn 65 are moving into Medicare and off the Marketplace, and already this year we’ve begun to see the impact of the efforts we’ve made to do that, as we saw a precipitous drop in dual enrollment with those who just turned 65 in August.
  3. We’re seeking comments through our recently issued Request for Information regarding concerns that some third-party entities may be inappropriately steering their Medicare and Medicaid patients into the individual market in order to receive higher reimbursement rates.
  4. We seek comment in this proposed rule on coordination of benefit policy that, similarly, is intended to ensure individuals entitled to Medicare and Medicaid are appropriately enrolled in those programs.

Improving Enrollment Growth

We also are always looking for new opportunities to increase both the number of Marketplace enrollees and the share of enrollees who are young and healthy.

  1. We recognize that robust outreach and consumer assistance can help with enrollment growth. To that end, we see comment on whether a certain amount or percent of user fees for the Federally-facilitated Marketplace should be dedicated to outreach.
  2. Today’s proposed rule includes consumer protections intended to provide a transparent consumer experience when enrolling directly through online agents or brokers who are registered with the Marketplace, or directly through an insurance company’s website. We have been working hard on the technology behind this additional enrollment channel, and our proposals, if finalized, will further competition in the Marketplaces while providing another channel for consumers, including young, healthy consumers, to enroll.

Removing Obstacles to Issuer Entrance, Growth, and Innovation

Today’s proposed rule also contemplates further removing potential obstacles to issuers growing their business and entering more markets.

  1. We are seeking comment on whether we should eliminate a requirement that certain issuers participating in the individual market Federally-facilitated Marketplaces also offer coverage through the Federally-facilitated SHOP Marketplaces.
  2. The proposed rule offers more flexibility for innovation around plan design by issuers, particularly around bronze plan offerings, while still protecting the coverage upon which consumers rely.
  3. We also include proposals to give new and growing issuers more flexibility in calculating their medical loss ratios, and to avoid instances where issuers who are adjusting their individual market or group market portfolios would inadvertently trigger a ban on participating in the individual or group market.

In just a few weeks, Open Enrollment will begin for consumers to come and shop and find a wide variety of affordable choices. As the Marketplace continues to grow and mature, one of our most important priorities is to study data, listen to a range of market participants, test out different approaches, and adapt to what we see and hear. We have a number of tools to make adjustments like the ones we are proposing today, and are confident in our ability to make the Marketplace an even more attractive market for consumers and health plans alike.


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Delivering on the Promise of Better Care for Older Adults

By Andy Slavitt, Acting Administrator, Centers for Medicare & Medicaid Services (CMS)

Since becoming acting administrator, I have spoken frequently about to the importance of moving to the next chapter in implementing the Affordable Care Act. This new chapter goes beyond providing people with quality, affordable coverage – but making sure that we are delivering patient-centered care to all consumers at critical stages of their lives.

What does that look like? It looks like more individualized care – care that allows people to heal, recover, and age in their homes and communities; care that is coordinated so we avoid people falling through the cracks; and care that includes family members and the realities of all the things that impact our health like culture, nutrition, and other social factors. For the growing number of aging and frail Americans, many living with Alzheimer’s, it looks like PACE.

The Programs of All-inclusive Care for the Elderly (PACE) is a Medicare and Medicaid program that helps people meet their health care needs in the community in which they live instead of a nursing home or other care facility. The focus is on the participant. A team of health care professionals works to make sure that care is coordinated in the home, the community, and at a PACE center.

Today, CMS proposed the first major update to the PACE program in a decade. This proposal will help the program reflect the latest advances in caring for frail elders and changes in the use of technology. The goal of this proposal is to strengthen beneficiary protections and provide PACE organizations with more administrative and operational flexibilities so they can do what they do best – caring for our nation’s most vulnerable individuals. While PACE serves a relatively small number of people today, our proposal is intended to encourage states to further expand these programs.

Our proposals aim to offer the kind of common sense supports to allow older adults to get the best care possible. For example, individual care team members would be able to serve more than one role in addressing the wide spectrum of a participant’s needs, rather than just the one role they are permitted to occupy today. This would help better coordinate services, while providing important flexibility to care providers.

We also propose more modern and simplified administrative and operational rules to enhance PACE organizations’ ability to do a number of things more easily, including a more automated application process to speed up and customize services to participants.

Over the last six years, since the onset of the Affordable Care Act, we have been taking significant steps to care for more people, care for them better, and make health care more affordable. But for us to be successful, we need to work hand-in-hand with patients and their families, physicians and clinicians, and other actors to support new approaches to care. Team-based models that put the individual in the center, like PACE, will be a vital part of the fabric of our system.

We must work hard to support these approaches so our country can continue to provide our people with the care they need in the years ahead.

Learn more about the proposed rule to update and modernize PACE at https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2016-Fact-sheets-items/2016-08-11.html.


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Building on Premium Stabilization for the Future

By Kevin Counihan, Health Insurance Marketplace CEO

The Affordable Care Act (ACA), the Medicare Part D prescription drug benefit, and a number of states’ insurance plans include reinsurance programs as a way to promote stable, affordable health coverage. Because high-cost enrollees and events are rare, they create disproportionate uncertainty in setting health insurance premiums: it is hard for any given issuer to predict how many people with very high-cost conditions will enroll, or how many expensive but unusual events will occur. By protecting against some of this risk, reinsurance programs help stabilize health insurance markets, promote issuer participation, and reduce premiums for consumers. Reinsurance programs also reduce insurers’ incentives to discourage enrollment by people with very high-cost conditions, thereby helping ensure those individuals can access the care they need.

The three-year, transitional reinsurance program established under the ACA was designed to buffer the new individual market as new federal reforms were implemented, enrollment grew, and issuers gained experience pricing and planning for new consumers. New data released today show that per-enrollee costs in the ACA individual market were essentially unchanged from 2014 to 2015, falling by 0.1 percent, even as per-enrollee costs in the broader health insurance market grew by at least 3 percent.

This finding suggests a year-over-year improvement in the ACA individual risk pool, with the Marketplaces gaining healthier, lower-cost consumers as it expanded. Meanwhile, independent researchers recently estimated that 2016 Marketplace premiums are between 12 percent and 20 percent below what the Congressional Budget Office (CBO) initially predicted. At the same time, the Health Insurance Marketplace remains a young, maturing market, one where all participants – insurers, consumers, providers, states, and we as federal regulators – are still learning.

Given this evolution and as part of our ongoing efforts to strengthen the Marketplace, we are exploring options to modify the ACA’s permanent risk adjustment program to better adjust for the highest-cost enrollees and their actuarial risk, which would achieve some of the same risk-sharing benefits as the reinsurance program. The ACA’s risk adjustment program plays an important role in distributing the costs of sicker, more expensive enrollees, and data show that the program worked as intended in its first two years.

But as described in a white paper released this spring, the current HHS risk adjustment methodology cannot easily adjust for certain high-cost enrollees. In future rulemaking, we plan to propose modifying the risk adjustment program to absorb some of the cost for claims above a certain threshold (e.g. $2 million), funded by a small payment from all issuers. This type of risk sharing would reduce uncertainty for issuers who are not yet able to reliably predict the prevalence and nature of high-cost cases in their Marketplace business, while also protecting access to robust coverage options for people with very high-cost conditions.

Some states are also considering creating their own reinsurance programs to help stabilize and strengthen their markets. Recently, Alaska enacted a law to allocate $55 million from an existing premium tax to provide reinsurance for the individual market and to pursue a State Innovation Waiver under the ACA. Alaska had previously collected funds for the state’s high-risk pool that is no longer needed because the ACA guarantees coverage to individuals with pre-existing conditions; about 35 states had high-risk pools prior to the ACA as well and may have similar opportunities.

Alaska’s health insurance market has struggled for many years with the highest health care costs in the country, low levels of insurance market competition, and other challenges, which are likely related, at least in part, to its very low population density and unique geography. But after Alaska’s governor signed the reinsurance bill into law, Premera, the state’s Blue Cross Blue Shield plan, reduced its requested 2017 rate increase to 9.8 percent, less than the previous two years’ increases, well below the 40 percent increase the company had previously considered. According to media reports, this difference reflected the fact that nearly a quarter of Premera’s claims costs in the first half of 2015 came from just 37 high-cost enrollees and the plan expects these high claims costs to be partially covered under the state’s reinsurance program.

Alaska’s reinsurance legislation also includes authority for Alaska to seek a State Innovation Waiver from CMS. Innovation Waivers may be granted for changes that waive specific existing ACA policies and meet four statutory guardrails: maintaining or improving access to coverage, affordability of coverage, comprehensiveness of coverage, and not adding to federal deficits.

While the details of Alaska’s waiver will not be clear until the state submits an application, a reinsurance program has the potential to improve access and affordability by strengthening the state’s insurance market and buffering risk for insurers. In addition, to the extent a reinsurance program reduces individual market premiums, it could also reduce federal costs for the Premium Tax Credit. If an Innovation Waiver is approved, the state may receive federal pass-through funding based on any savings realized in Marketplace financial assistance. Thus, a waiver – in Alaska or other states considering creating state reinsurance programs – could potentially provide pass-through funding that would in effect cover part of the cost of a reinsurance program.

Our door is always open to new ideas that help spread the risk of providing coverage for people with significant health care needs. These ideas contribute to our ongoing work in promoting Marketplace stability and help ensure affordable options for consumers.


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Helping Consumers Make Care Choices through Hospital Compare

By: Kate Goodrich, MD, MHS, Director of Center for Clinical Standards and Quality

When individuals and their families need to make important decisions about health care, they seek a reliable way to understand the best choice for themselves or their loved ones. That’s why over the past decade, the Centers for Medicare & Medicaid Services (CMS) has published information about the quality of care across the five different health care settings that most families encounter.[1] These easy-to-understand star ratings are available online and empower people to compare and choose across various types of facilities from nursing homes to home health agencies. Today, we are updating the star ratings on the Hospital Compare website to help millions of patients and their families learn about the quality of hospitals, compare facilities in their area side-by-side, and ask important questions about care quality when visiting a hospital or other health care provider.

Today’s ratings include the Overall Hospital Quality Star Rating that reflects comprehensive quality information about the care provided at our nation’s hospitals. The new Overall Hospital Quality Star Rating methodology takes 64 existing quality measures already reported on the Hospital Compare website and summarizes them into a unified rating of one to five stars. The rating includes quality measures for routine care that the average individual receives, such as care received when being treated for heart attacks and pneumonia, to quality measures that focus on hospital-acquired infections, such as catheter-associated urinary tract infections. Specialized and cutting edge care that certain hospitals provide such as specialized cancer care, are not reflected in these quality ratings.

We have received numerous letters from national patient and consumer advocacy groups supporting the release of these ratings because it improves the transparency and accessibility of hospital quality information. In addition, researchers found that hospitals with more stars on the Hospital Compare website have tended to have lower death and readmission rates.[2],[3]

Prior to publishing the Overall Hospital Quality Star Rating, we paused to give hospitals additional time to better understand our methodology and data. In response, we delayed the release of the ratings. Since then, we have conducted significant outreach and education to hospitals to understand their concerns and directly answered their questions, including:

  • Hosting two National Provider Calls with over 4,000 hospital representatives. During the calls, we walked through the Overall Hospital Quality Star Rating data and the methodology in detail while responding to questions that the attendees raised.
  • Providing specialized assistance to hospitals. We held numerous meetings with the hospital associations and individual hospitals to explain their data and answer questions.
  • Posting an evaluation of the national distributions of the Overall Hospital Quality Star Rating based on hospital characteristics. The analysis shows that all types of hospitals have both high performing and low performing hospitals.
  • Subjecting the measures used to calculate the Overall Hospital Quality Star Rating to rigorous scientific review and risk adjustment. All of the measures used to calculate the Overall Hospital Quality Star Rating are based on clinical guidelines and have undergone a rigorous scientific review and testing. The vast majority are endorsed by the National Quality Forum. Most of these quality measures are already adjusted for clinical co-morbidities to account for the illness-burden of the population. Some hospitals have raised the question of making additional adjustments to account for the sociodemographic characteristics of the patients they serve. We continue to work closely with the National Quality Forum and the Assistant Secretary for Planning and Evaluation (ASPE), who is required by the IMPACT Act to study the effect of socioeconomic status on quality measures and payment programs based on measures. We will work with ASPE and determine what next steps, if any, should be taken to adjust our measures based on the recommendations in the report.

CMS will continue to analyze the star rating data and consider public feedback to make enhancements to the scoring methodology as needed. The star rating will be updated quarterly, and will incorporate new measures as they are publicly reported on the website as well as remove measures retired from the quality reporting programs.

Today, we are taking a step forward in our commitment to transparency by releasing the Overall Hospital Quality Star Rating. We have been posting star ratings for different facilities for a decade and have found that publicly available data drives improvement, better reporting, and more open access to quality information for our Medicare beneficiaries. We will continue to work closely with hospitals and other stakeholders to enhance the Overall Hospital Quality Star Rating based on feedback and experience.

These star rating programs are part of the Administration’s Open Data Initiative which aims to make government data freely available and useful while ensuring privacy, confidentiality, and security.

For more information please see https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2016-Fact-sheets-items/2016-07-27.html.


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[1] CMS Compare websites include: Nursing Home Compare; Physician Compare; Medicare Plan Finder; Dialysis Compare; and Home Health Compare.

[2] Wang DE, Tsugawa Y, Figueroa JF, Jha AK. Association Between the Centers for Medicare and Medicaid Services Hospital Star Rating and Patient Outcomes. JAMA Intern Med. 2016;176(6):848-850. doi:10.1001/jamainternmed.2016.0784. http://archinte.jamanetwork.com/article.aspx?articleid=2513630

[3] Trzeciak, S. Gaughan, J. Mazzarelli, A. Association Between Medicare Summary Star Ratings and Clinical Outcomes in US Hospitals. Journal of Patient Experience. 2016 vol. 3 no. 1 2374373516636681 doi: 10.1177/2374373516636681 http://jpx.sagepub.com/content/3/1/2374373516636681.abstract

Remarks by Andy Slavitt before the American Osteopathic Association

Chicago, Illinois

Mr. President and Members of the American Osteopathic Association, I’m honored to be invited to address your annual business meeting. Hello and good morning. Thank you for hosting me. I want to give special thanks to:

  • Doctor John Becher, the President of the AOA [congratulations on your service to the AOA],
  • Doctor Boyd Buser, the President-elect of the AOA [congratulations on your new role],
  • Ms. Adrienne White-Faines, the AOA CEO,
  • Joseph Giaimo, Member of Board of Trustee, Chair of our Department of Governmental Relations,
  • All members of the American Osteopathic Association, and
  • Perhaps most of all, the DOs who serve our beneficiaries and consumers everyday, especially in rural and underserved areas.

    I want to start by recognizing your long history as osteopathic physicians who lead the nation to where we need to be on health care. Your focus on treating people, not symptoms; on prevention, not illness; in the link between physical and mental health and in all the things that surround a healthy lifestyle so people can live their lives, heal, and age in comfortable settings. In particular, I want to begin by thanking you for your commitment to serving Americans in rural and underserved communities. With all that surrounds health care as a system, it’s reassuring to see your profession focus on what matters most.

    Cornerstone is an example of your philosophy in action. A philosophy, while over a century-old, feels very modern today. We’ve just celebrated 50 years of the Medicare program and as we think about how we springboard into the future, it’s very clear that if our health care system continues to center on our big medical institutions, our testing machinery, our pharmaceutical pipelines — and not the people at the center of care, then we will not succeed– either by our beneficiaries or by our country. With 10,000 beneficiaries turning 65 every day, the baby boom population headed into their 70s, and the prevalence of chronic disease where one in four Americans has multiple chronic conditions, and a confusing, fragmented medical system, we won’t have enough taxpayers to support the kind of system we have.

    So it’s clear that for the next 50 years of Medicare we need to do things differently – do things more in the Cornerstone way. Here’s how we’re beginning that change:

  • Making primary care and prevention a bigger part of people’s lives so that treating illness can be a smaller part of our system. We will be paying for community-based diabetes prevention across Medicare beginning in 2018. And yesterday we were pleased to announce the participation of 20,000 practitioners in our Million Hearts model which focuses on prevention of strokes and heart attacks. I’m happy to note DOs from around the country like the Philadelphia College of Osteopathic Medicine are participating. Paying physicians not just to test or write a prescription, but to actually listen and explain and heal– a move we furthered with our actions in Advanced Care Directives and recent proposals to reward cognitive care;
  • Coordinating the care a patient receives so the entanglement of prescriptions, referrals, care instructions, and interpretations can be made simpler and clearer and so patients and families can lead their lives, not spiral around a system feeling worse and feeling more confused;
  • Moving towards helping people stay in their homes or in comfortable settings in their communities as they age and recover instead of institutions;
  • And, finally, we need technology and information to support us like it does in the rest of our lives, wrapping around the needs of patients and clinicians and how they use the health care systems, not residing in the silos of health IT companies.

But this is really what MACRA is about. It is the opportunity to change how Medicare pays for care, but also the opportunity to achieve something bigger: to support the kind of care that patients want– with physicians able to anticipate and focus on their needs.

While we are talking about how we pay for care in America, payment systems are not intended to be finely calibrated models that we expect to be performed to the test. In all my years, I have never met, nor do I hope to meet, a physician who makes her decision on how to treat a patient based on how she gets paid. She does what she thinks is right for the patient and hopes that the system will support her. Our job in implementing MACRA is to design policies that support the Cornerstones of the world in providing the care they think is best.

Goals for the Quality Payment Program

When Congress passed, and the President signed, the bipartisan Medicare Access and CHIP Reauthorization Act, we finally ended– permanently– the Sustainable Growth Rate (SGR) formula and brought the potential for long-term stability and reliability to the Medicare program.

With MACRA, we answered one question and opened up a set of others that are now ours to begin to address. So how did Congress approach the tough task of sustaining the Medicare program and how will we carry it out? What do you really need to know about the program? And what new sets of requirements are there to participate?

While any change can be distracting, the goal of the program is to return the focus to patient care, not spend time learning a new program. Medicare will still pay for services as it always has, but every physician will have the opportunity to be paid more for better care and for making investments that support patients — like having a staff member follow up with patients at home. MACRA also allows us to end the patchwork of alphabet-soup measurement programs like PQRS, VM, and MU and replaces them with a new single framework that can provide the basis for a more flexible, relevant and ultimately simpler-to-use system.

The new program brings changes intended to promote coordinated care at reasonable costs through a uniform merit-based system. It is defined in the statute to focus on quality– both standard measures of care and practice-based initiatives of a physician’s choosing and encourage the use of technology. Physicians and other clinicians who wish to go further will receive additional bonuses and will be able to join more advanced approaches to care for patients like medical homes, specialty models, and team-based models that improve quality and manage costs.

Implementation Approach and Priorities

Given the size of this change, we decided to engage more with patients and physicians than we ever had to figure out the best path to implementation.

Even with all the promise of MACRA, adding new regulations to an already busy health care system without improving how the pieces fit together just will not work. So, we adopted a new outside-in approach we label “user-driven policy design.” This approach calls on us to conduct an unprecedented effort of intensive listening and learning. And my first commitment is that we do this in as open, transparent, and iterative way possible.

Policy cannot be written from behind our desks. So, we asked our staff to put down their pens and take the unique opportunity to go into the field, meet with physicians, and listen. Starting with me, our career staff and our regions have been tasked with connecting us closer and closer to where care actually happens. And in May, we launched a listening tour across the country so that we could hear firsthand physician thoughts and concerns about the proposal to implement the Quality Payment Program.

Thanks to all of you, this listening tour has been incredibly valuable, and thousands of individuals have provided feedback on the initial proposal for the new Quality Payment Program. Whether you formally submitted one of the nearly 4,000 comments we received, or were one of over 64,000 attendees at one of our outreach sessions, there have been record levels of engagement in this implementation. These conversations are grounding our priorities and we are hearing some hard, but important truths.

To start with, many are frustrated at the overwhelming amount of paperwork they have to do and about measures the become exercise in compliance, instead of quality improvement; about how technology has often distracted instead of supported patient care; and how an accumulation of many small things imposed from afar add up to the feeling that we just don’t get it. This gives us all a place to start thinking about a new framework and the drive to develop a roadmap that not only improves patient care, but does it by beginning to address some of the very real causes of physician burnout.

For all of you who care deeply about serving Medicare patients and are contributing to making the health care system work better, this is a step toward a valuable partnership. And, while we can’t act on every suggestion—your voices as caregivers have been heard and your partnership is having a very real effect on the implementation of this program.

All of this feedback falls into priority areas for us.


First Area of Feedback – Impact on patients.

First of all, you should know that patients, consumers, and families are overwhelmingly supportive of a payment system that pays more for what works and supports the delivery of better care. And physicians and clinicians agree and tell us, in the words of one physician, “Let us practice medicine, and not practice documentation and bureaucracy. We don’t have it in us. We are caregivers. Let us do our job.”

This is the first area of input: to keep the focus on patients.

We must create a system that sharpens the focus on paying for what helps your patients get and stay healthy, rewards collaboration and gives physicians back more time to spend on patients. Fifteen minutes spent tapping at a keyboard is 15 minutes that can’t be spent on patient care. So we have included fewer metrics and more flexibility and a menu of activities that physicians can choose from that are patient-centered– such as expanding office hours, developing specific care plans, or using evidence-based aids that help support shared decision-making. And rather than more documentation, all physicians will need to do in many cases is select an activity and attest to it.

Second Area of Feedback – Simplified reporting and feedback.  

The second major area is to do everything we can to reduce the reporting requirements, simplify the scoring, and clarify the rules. Physicians also expressed interest in moving towards a quality improvement program– with more frequent, useful feedback, and away from a compliance program.

We started by reducing by one-third the number of quality metrics that need to be reported and we have aligned the measures across categories to end repetitive reporting. We got rid of technology measures that hindered usability, and moved the focus from “clicking” to care provision and collaboration. Part of reducing burden is becoming more flexible. If physicians already report using a registry or as part of an ACO, we will accept that.

It’s also time to ask a lot more of the technology and technology vendors. Most technology doesn’t adapt to our workflow– we adapt to the technology. And this is particularly true in the area of what many call interoperability– but which most physicians describe as allowing data to move back and forth between systems so they can follow the movement of a patient after they make a referral.

The burden needs to be on the technology, not the user. EHR vendors and hospitals that use them will now be required to open their APIs– so data can move in and out of an application safely and securely– and technology can become plug and play. Today’s data silos are more a function of business practices than technology capability and we cannot tolerate it any longer. This will not only help you track referrals, but serve another purpose– to eliminate the “desktop lock” that occurred based on early EHR purchases.


Third Area of Feedback – Impact on small and rural practices.  

Paperwork is one thing if you practice here at Northwestern or Rush, but quite another if you’re a small or solo practice without much, if any, back office staff. Our third focal area is on the impact of this program on small and rural practices to make sure we have a level playing field. This has been an important part of many of our conversations as we travelled the country, including strong feedback from this Association. 

We know from experience that small practices can be just as successful as larger practices if the bar to participating isn’t too administratively burdensome. We are working directly with physician user groups to listen to how we can design additional ways to make that easier. Even more exciting are opportunities to join new medical home models like our CPC+ model for smaller practices, which will provide fewer reporting requirements, innovative telemedicine opportunities, and qualify for a 5 percent bonus.

I should also mention that to help smaller and rural practices, we will be deploying technical assistance through a network of learning collaboratives that are already on the ground in local markets. We will spend $100 million over the next 5 years on those efforts to support small practices.

Fourth Area of Feedback –  Pathway for Advanced Alternative Payment Models  

We heard directly from many physicians, and specialists in particular, that a one-size-fits-all program just won’t work. That’s why our fourth area of focus is to create and offer more approaches and more pathways to models like our medical home model, which qualify for what we call Advanced APMs.

These are models that pay a 5 percent bonus for participation. For example, Accountable Care Organizations that believe their ability to improve care and lower costs enough to take on financial risk. Or, payment approaches like we have launched for cancer care and kidney care.

We have an innovation center that is launching or improving on new payment approaches, so that over the next few years, physicians have more options to participate in something that’s right for their practice and right for their patients. There’s a special advisory committee set up by Congress expressly for the purpose of working with the physician community to develop these new approaches.

Fifth Area of Feedback – Physician readiness for new program. 

Finally, we have listened to feedback from physicians who want to make sure they are prepared for all the changes to come. We are committed to making the start as smooth as possible.

Most physicians participate today in many of the elements of MACRA, but we are getting a lot of good points that we must find ways to make sure physicians feel set up for success.

Some of the things that are on the table include alternative start dates, looking at whether shorter periods could be used, and finding other ways for physicians to get experience with the program before the impact of it really begins.


Looking Ahead

This insight– around patient-benefits, simplicity, flexibility and support– are the things that will make the difference between a set of goals from policymakers and something that actually works. And it’s how we will begin to move Medicare and the rest of the health care system forward and anticipate the next 50 years of Medicare beneficiaries.

But after listening to many patients and clinicians, personally visiting practices and hearing the concerns expressed by many, I have no illusions that the changes we all see as so important can happen overnight. I also know that even with good changes, no one will be happy with all the details and that change creates uncertainty. There are always unintended consequences of new laws and regulations and we will need to work through those changes as well. So I’m asking for your ongoing collaboration over the next several years, so that we can implement, receive feedback, iterate, and progress.

I made a comment earlier this year that we lost the hearts and minds of physicians. We won’t win them back with empty promises of quick fixes. We win them back by listening, by making progress even in small steps, and by calling attention to where the system remains dysfunctional. We don’t have the option of running from the challenges we face– because it’s at the very heart of the care we get, that our family gets, that our country gets. With 140 million people in the Medicare, Medicaid, Insurance exchange, and Children’s Health Insurance Program, many on fixed and modest incomes, we will always rely on you on the front lines in taking care of these Americans and allowing them to live their fullest lives.



We must use every opportunity to commit to the quadruple aim as the key to defining a new future for the health care system. I have also seen what happens when the tide turns and so have many of you. For example, a physician in New Jersey told me that as part of a Medical Home, he is setting up Skype Villages to connect his elderly patients to each other. Another in Oregon fulfilled her vision of being able to coordinate real-time mental health handoffs as a game changer for her community. A physician in Arkansas told me that, once ready to retire early, he was extending retirement to 70 because how he was getting paid caught up to how he wanted to practice. And places like Cornerstone become bedrocks of their communities.

In several short years, our nation has brought access to health to 20 million new Americans. Many didn’t think we would get this done. But through hard work, listening, and adjusting we are on our way to fulfilling our country’s promise to provide care to all Americans.

It is now time to turn our attention to the underpinnings of the care system. And when all of us — policy makers, physicians, patients, hospitals, and innovators– focus with a unified purpose, we can make the significant progress that I believe is ahead of us. We can do it. It’s our responsibility to do it. We have no choice, but to do it, and we will if we rally around patient care first and foremost. I look forward to taking on these challenges together.

Thank you for your having me today. And thank you for bringing your gifts to heal our country when we need it most. I look forward to our continued work together.

$42 Billion Saved in Medicare and Medicaid Primarily Through Prevention

By Shantanu Agrawal, M.D. Deputy Administrator and Director, Center for Program Integrity

Today, CMS released a report showing that investments made in program integrity activities – which include stamping out fraud and deterring and reducing other improper payments – pay off for taxpayers and beneficiaries. From October 1, 2012 through September 30, 2014 (Fiscal Year (FY) 2013 and FY 2014), every dollar invested in CMS’ Medicare program integrity efforts saved $12.40 for the Medicare program.

This means that all our efforts – making sure health care providers enrolled in our programs are properly screened; using predictive analytics to prevent fraud, waste, and abuse; and  coordinating our anti-fraud efforts with our federal and external partners – have resulted in billions of dollars saved in Medicare and Medicaid over the two-year period.

CMS is dedicated to promoting better care, protecting patient safety, reducing health care costs, and providing people with access to the right care, when and where they need it.  This includes continually strengthening and improving Medicare and Medicaid programs that provide vital services to millions of Americans.  We take our responsibility to deliver better care at a better value seriously.

An important part of this mission is to ensure that the resources the nation devotes to health program is used to keep our nation’s seniors and low-income families healthy.  This is why CMS has a comprehensive and robust program integrity strategy that addresses and prevents potentially fraudulent and improper payments in Medicare and Medicaid.  Enhancing program integrity; reducing fraud, waste, and abuse; and tackling all types of improper payments ultimately helps protect current beneficiaries and also protects these programs for future generations.

Medicare and Medicaid Program Integrity Report to Congress

The report highlights CMS’s significant achievements in reducing potentially fraudulent and improper payments.  Total savings from program integrity efforts were nearly $42 billion over the two-year period covered by the report.  This equates to an average savings of $12.40 for each dollar spent on Medicare program integrity alone.  These savings represent funds that remain available to provide needed health care to Medicare, Medicaid, and Children’s Health Insurance Program beneficiaries nationwide and reflect the increasing success of CMS’ efforts to proactively prevent improper payments.

CMS has achieved this impact by using a multifaceted approach, ranging from provider enrollment and screening standards, to use of enforcement authorities, to use of advanced analytics such as predictive modeling. We have previously reported on various outcomes tied to specific programs, some of which can be found here.

More importantly, CMS’s efforts to proactively prevent potentially fraudulent and improper payments from being made have been increasingly effective, moving our efforts away from the “pay-and-chase” method of recovering payments after they had already been made.  In fiscal year 2013, savings from prevention activities represented about 68 percent of total savings.  In fiscal year 2014, the portion of savings from preventing potentially fraudulent and improper payments rose to nearly 74 percent.  This development means that more taxpayer dollars intended to care for the beneficiaries are not being paid at all, avoiding the need to recover improperly paid amounts from health care providers and suppliers.  Preliminary information from FY 2015 indicates that CMS’s program integrity efforts continue to accrue savings of this magnitude and that the portion attributed to prevention continues to increase.  CMS will release FY 2015 numbers later this year.

CMS collaborates with various partners when implementing efforts to prevent or reduce potentially fraudulent payments and to correct improper payments in Medicare and Medicaid.  Assistance from our contractors, state Medicaid agencies, and law enforcement partners are also instrumental in this effort when potentially fraudulent and improper payments result from intentionally fraudulent activities.

CMS remains committed to implementing a robust program integrity strategy to protect beneficiaries from harm and further safeguard taxpayer funds by paying only for appropriate health care items and services.  To this end, CMS continuously evaluates and updates its program integrity strategy.  We welcome input from beneficiaries, providers, suppliers, and others to inform possible future enhancements to our program integrity strategy.  Please contact us at 1-800-MEDICARE (1-800-633-4227) or TTY: 877-486-2048 with your thoughts or to report potentially improper billing.

An infographic reports that CPI program successes mean more taxpayer dollars intended for health care benefits are retained and CPI avoids “pay & chase” efforts to recover monies improperly paid to health care providers and suppliers. CPI efforts create total program saving near $42 billion. This equates to a return of $12.40 for each dollar spent to maintain Medicare program integrity and avoid incorrect or fraudulent payments being made. For Calendar Year 2013, a single bar graph shows that a 68 percent of the total program savings are accomplished by preventing fraud and improper payments. For Calendar Year 2014, a single bar graph shows that program savings were accomplished by preventing fraud & improper payments rose to 74 percent. This represents a six percent (6%) savings increase between the two years. To report fraud, waste or abuse in our programs, please contact us at 1-800-MEDICARE (1-800-633-4227) or by using a telecommunications device for the deaf (TTY) at (877) 486-2048.


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