CMMI is Neither Centered nor Innovative | Citizens Against Government Waste

CMMI is Neither Centered nor Innovative

The WasteWatcher

The Center for Medicare and Medicaid Innovation (CMMI) sounds like it should be involved in ground-breaking, state-of-the-art healthcare projects and programs.  However, the center was created in the Patient Protection and Affordable Care Act (ACA), better known as Obamacare, which in and of itself raises red flags. 

CMMI is run by the Centers for Medicare and Medicaid Services (CMS), and is supposed to test “innovative payment and service delivery models to reduce program expenditures … while preserving or enhancing the quality of care furnished.”  CMMI has broad authority to create and test payment models in Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP).  However, the mandatory payment models created to date for doctors, hospitals, and other providers, particularly for patients in Medicare, have been controversial.

Citizens Against Government Waste (CAGW) previously commented on CMMI in the February 2016 WasteWatcher, “Obamacare’s Cerberus” and the March 2016 Swine Line blog, “Obamacare Further Immerses Itself Between Doctor and Patient.”  Now there are new worries about how the center’s unconstrained authority is affecting Congress’s power of the purse and oversight of the executive branch, as well as patients.

The ACA gave Congress limited control over CMMI, especially with respect to spending.  Funding is on autopilot (similar to entitlements or mandatory programs) and is therefore not obtained through the annual appropriations bills.  From fiscal years 2011-2019, CMMI has been set up to receive $10 billion.  Starting in 2020, the center will receive $10 billion more for each subsequent 10-year fiscal period.  According to the September 6 House Budget Committee digest, the Congressional Budget Office (CBO) has reported that CMMI has obligated $6.1 billion to date to develop and run its models.  However, any savings from these models are unknown.

For example, the “Comprehensive Care for Joint Replacement,” the first mandatory payment model, was implemented in April, 2016 in 67 metropolitan areas, which contains counties with more than 50,000 people and includes 800 acute care hospitals.  The payment model is supposed to cover all services a patient receives within a limited period, or episode, for a hip or knee replacement.  Providers will be paid under the current fee-for-service payment system, but the model will set a target cost for each episode.  Depending on patient outcomes and final costs, the hospital could receive an additional payment or be forced to pay back the government a portion of what it previously received.

Members of Congress expressed uneasiness over the model, as it could diminish patient choice while increasing government control and/or provide an incentive for many hospitals to avoid high-risk patients.  They asked CMS to delay implementation, at a minimum, to allow health providers to prepare for the change.  CMS put the model into operation anyway.

A proposed rule for a mandatory payment model for Medicare Part B drugs was released in March, 2016.  The model is divided into two phases and is supposed to “result in savings through changes in prescribers’ behavior.”  Even though there has been a bipartisan pushback from Congress, CMS plans to finalize the model by the end of the year.

A third mandatory payment model was proposed in July, 2016, and will be used for cardiac care and surgical services.  CMS plans to implement the bundled payment in 98 randomly-selected metropolitan statistical areas, or about one-quarter of all metro areas in the nation.


Making matters worse, CBO has decided to score any legislation that conflicts with or eliminates a CMMI payment model as a cost to the government.  In a July 30, 2015 online post, “Estimating the Budgetary Effects of Legislation Involving the Center for Medicare and Medicaid Innovation” CBO stated that while some of CMMI’s proposals will be successful and others will not, the center will “generate savings that exceed the costs of conducting the tests and trials” and these “savings” will be incorporated in its baseline. 

This rather strange analysis was discussed by the House Budget Committee during a September 7, 2016 hearing,  “Center for Medicare and Medicaid Innovation:  Scoring Assumptions and Real-World Implications.”  In his opening statement, Committee Chairman Tom Price (R-Ga.) noted that one of Congress’s core oversight responsibilities is to ensure that departments’ and agencies’ “activities are fairly, efficiently, and effectively executed,” and that CBO must “provide well-reasoned, non-partisan analysis that informs and helps shape Congressional decision-making.”

Price stated that the new payment models are not “a computer simulation or a science project in a lab somewhere,” since they affect “real people and their access to care.”  The models will determine whether “seniors on Medicare are able to receive the medications or treatment options that their physicians believe are in the best interest of the patient. … unfortunately, under its current analysis, the [CBO] tells us that any altering of CMMI’s demonstration activities would result in a substantial loss in savings.  CBO appears to come to this conclusion by assuming that CMMI’s abilities to produce savings supersede those of Congress.  If there is overlap between legislative initiatives and CMMI’s authority, legislative proposals are secondary and savings assumptions favor CMMI.  It is this reasoning – that the Executive [Branch] is more effective at legislating than the Congress – that is so concerning.”

On October 28, CBO released answers to 24 questions for the record submitted following the hearing.  The answer to the first question on how often the CBO communicates with CMMI about its models and the information received by CBO to help score legislative proposals is disturbing.  CBO “relies primarily on information obtained from CMMI’s website to monitor the status of demonstrations,” and while it pays “particular attention to evaluation reports” prepared by independent contractors that “contain estimates of federal savings,” the “evaluation reports are not yet available for many of the demonstrations,” and results that are available “reflect only the early experiences of some demonstrations.”  CBO’s “ability to monitor CMMI’s activities in the future will depend on how much information the center releases about demonstration evaluations and how quickly that information is released.  Conversations with the CMMI staff concerning the status of particular demonstrations occur infrequently” and “CMMI does not share detailed information about its future plans.”

The answer to the second question also provides eye-popping information.  CBO was asked about how much of the $10 billion provided for CMMI has been spent so far, and how much money has been saved through its initiatives.  CBO reported that about $4 billion has been spent, but since “numerous demonstrations are under way and have been in operation for varying lengths of time … budget effects are not yet available for many of them.”  CBO was “unable to assess the accuracy of its projections of the effects of the center’s activities on federal spending to date.”

In other words, any information CBO has from CMMI is scant and incomplete; regardless of costs or results, the center is off and running with little accountability.  Alarmingly, CBO relies on this dearth of information to provide budget scores to any legislation that would change the models.

The September 7 Budget Committee hearing was followed up with a September 29 letter from 179 members of Congress (mostly Republicans) to CMS Acting Administrator Andrew Slavitt and Deputy Administrator for Innovation and Quality Patrick Conway.  The letter stated that CMMI “has exceeded its authority, failed to engage stakeholders, and has upset the balance of power between the legislative and executive branches.”  Instead of starting with voluntary, small-scale studies that should include health providers in model development as intended by law, CMMI has been leaping full steam ahead into large, all-encompassing mandatory models. 

The center has focused on cost savings “without adequate regard to the detrimental effects” of the models.  The letter declared, “Medicare providers and their patients are blindly being forced into high-risk government-dictated reforms with unknown impacts.  Any true medical experiment requires patient consent.  However, patients residing in an affected geographical area will have no choice about their participation.”

CMMI supporters, including former Obama administration officials took the opposite view in a June 23, 2016, letter spearheaded by The Center for American Progress, in which they urged Health and Human Services Secretary Sylvia Burwell to establish as many “mandatory bundled payment demonstrations” as possible before the end of President Obama’s term in office.  These additional efforts would show everyone in the healthcare industry that “Medicare plans to aggressively expand bundled payments alongside other payment reforms.”  In other words, payment reforms should continue to supersede patient care.  Signers included Dr. Ron Berwick and Dr. Ezekiel Emanuel, who are remembered for their advocacy of government-run healthcare plans, similar to the British National Health Service.  They suggested that rationing should be done with “our eyes open,” and that healthcare allocation should be based on remaining life expectancy and one’s contribution or value to society.

Innovation in healthcare is necessary to improve quality and drive down costs, but it is highly unlikely those objectives will be achieved by unelected government bureaucrats that are beholden to no one.  As has been demonstrated time and again, innovation and cost savings come from a vibrant and competitive free market that responds to consumers.

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