CMS Initiatives to Transform the Healthcare System

Las Vegas—The Centers for Medicare & Medicaid Services (CMS) provides coverage to approximately 105 million beneficiaries, representing one-third of people in the United States. It is the largest purchaser of insurance in the world at $900 billion per year. Each day, the Medicare program alone pays out more than $1.5 billion in benefit payments, according to Patrick Conway, MD, chief medical officer at CMS.

Dr. Conway, who addressed attendees at the fall managed care forum via satellite during a keynote general session, said CMS is implementing several initiatives to improve the quality of care while also reducing costs. In October, Dr. Conway was named director of the CMS Innovation Center, which was created as part of the Patient Protection and Affordable Care Act (ACA) to test payment and delivery models. Some of the programs already launched include accountable care organizations (ACOs) and bundled payment systems. “I think [the CMS Innovation Center] is a tremendous opportunity for the healthcare system,” Dr. Conway said.

Dr. Conway cited a study he authored that mentioned 6 components of changing healthcare: (1) quality measurement; (2) aligned payment incentives; (3) comparative effectiveness research; (4) health information technology; (5) quality improvement collaborations; and (6) training clinicians and multi-disciplinary teams [JAMA. 2009;301(7):763-765]. CMS also adheres to the Institute of Healthcare Improvement’s Triple Aim of better health for the population, better care for individuals, and lower cost through improvement. Former CMS administrator Donald Berwick, MD, developed the Triple Aim before joining President Barack Obama’s administration in 2010.

Based on those principles, CMS has recently been successful at controlling costs, although Dr. Conway admitted there is still much left to accomplish. Medicare’s per capita spending growth is typically between 5% and 10% per year, but it has been below 4% each year since 2008, which Dr. Conway said is at “historic lows.” Some of the decline is due to poor economic conditions and people choosing not to spend money on healthcare. However, Dr. Conway said actuarial analyses and several studies have indicated some of the slowing growth is due to “a fundamental shift in the healthcare delivery system.”

Still, Dr. Conway said there is too much variation in spending in the states. For instance, the national average for computed tomography scans is $76 per capita, but it is $117 per capita in Fort Myers, Florida, and $49 per capita in Honolulu, Hawaii. A Medicare claims analysis also found that patients with heart failure and shock with complications pay 1.49 times the national average if they live in Ridgewood, New Jersey, but 0.71 times the national average if they live in Owensboro, Kentucky.

However, several programs have been successful. Medicare readmissions to hospitals within 30 days of discharge have declined from 19% to 17%, which Dr. Conway said translates to 100,000 fewer people admitted per year. The federal government invested $500 million in the readmissions reduction program, while states and the private sector contributed millions more. “It is a good indication of what we can do working together,” Dr. Conway said.

The Agency for Healthcare Research and Quality (AHRQ), an agency within the Department of Health and Human Services, has also sponsored numerous initiatives. For instance, AHRQ funded a national initiative in which more than 100,000 intensive care units reduced central line-associated bloodstream infections by an average of 41% during an 18-month period. The average declined from 1.915 to 1.133 central line-associated bloodstream infections per 1000 central line days.

According to Dr. Conway, CMS’s strategy to improve the quality of care includes reducing the harm caused during care delivery, strengthening patients and their families engagement in care, promoting the coordination of care and better communication, preventing and treating chronic diseases, working with communities to promote healthy living, and making care affordable for all people.

In the CMS value-based purchasing program established as part of the ACA, the agency rewards acute care hospitals with incentive payments for providing quality of care to Medicare patients. In fiscal year 2014, 1.25% of a hospital’s Medicare payments are withheld. Hospitals can then regain that money, get a bonus, or lose the money depending on how they perform on quality standards. In a blog post on the CMS website, Dr. Conway predicted that half of the hospitals in the program will break even and regain the money, a quarter will receive a bonus for exceeding the quality standards, and a quarter will have their Medicare payments reduced because they failed to meet the standards. More than 3000 hospitals in the United States are eligible to participate in the program. They will be assessed based on 3 domains: clinical process of care (45%), patient experience (30%), and outcomes (25%).

President Obama established the CMS Innovation Center to transform the delivery system from a fee-for-service system focused on the volume of care to a model that pays providers based on outcomes, cost savings, and quality improvements. So far, CMS has implemented several ACO models, including the Medicare Shared Savings program, Pioneer ACOs, Advance Payment ACOs, and the Comprehensive End-Stage Renal Disease care initiative.

In an ACO, doctors, hospitals, and healthcare providers collaborate to promote high quality care and lower costs. If they are able to achieve savings, they receive a bonus payment. Four million Medicare beneficiaries are participating in 220 Medicare Shared Savings programs and 32 Pioneer ACOs, according to Dr. Conway, who said ACOs have shown “real, real promise.”

The Innovation Center also includes bundled payment programs and primary care initiatives such as the Comprehensive Primary Care initiative, the Multi-Payer Advanced Primary Care Practice demonstration, the Federally Qualified Health Center Advanced Primary Care Practice Demonstration, the Independence at Home Demonstration, and the Graduate Nurse Education Demonstration. In addition, Medicaid patients can participate in the Medicaid Emergency Psychiatric Demonstration, the Medicaid Incentives for Prevention of Chronic Diseases, and the Strong Start Initiative, while people enrolled in Medicaid and Medicare are eligible for the Financial Alignment Initiative and the Initiative to Reduce Avoidable Hospitalizations of Nursing Facility Residents.

More than 50,000 providers are currently or will be providing care to millions of beneficiaries enrolled in CMS Innovation Center programs, according to Dr. Conway. He mentioned that the upcoming delivery and payment models funded through the CMS Innovation Center will focus on reducing Medicare, Medicaid, and/or Children’s Health Insurance Program expenditures in outpatient and/or post-acute settings, improving care for populations with specialized needs, transforming the financial and clinical models for specific types of providers and suppliers, and improving the health of populations.

CMS also has several quality initiatives that can be implemented in the community, in practice settings, and among individual clinicians and patients. In each case, healthcare professionals should focus on patient-centric outcomes oriented measures, according to Dr. Conway. He said measuring outcomes leads to quality improvement, reliable and accurate value-based purchasing, and better-informed consumers.

Earlier this year, Dr. Conway and Neal Halfon, MD, MPH, wrote a journal article titled The Opportunities and Challenges of a Lifelong Health System [N Engl J Med. 2013;368(17):1569-1571]. They wrote that healthcare professionals should focus on long-term outcomes instead of the traditional method of caring, which is focused on short-term measures. They noted that with the average life expectancy increasing, people will remain on Medicare longer, while the expansion of Medicaid in several states will increase the number of people in that federal program, too.

Although people may not develop chronic diseases until well into adulthood, the choices they make when they are younger can contribute to diseases later in life, according to Drs. Conway and Halfon. For instance, they wrote that childhood obesity has been associated with adult-onset diabetes and heart disease.

“The main challenge to creating a lifelong health system lies in moving from a fee-for-service model with short time frames to paying for value and better outcomes over the long term,” Drs. Conway and Halfon wrote. “But innovation in care delivery, integration of services, and development or adaptation of new fiscal tools can all contribute to strategies for improving health.”