New Medicare Center Aims to Test Ideas to Save Money, Improve Care

BY Lea Winerman  November 16, 2010 at 5:29 PM EDT

Among its many provisions, the federal health care reform law allocates $10 billion over the next decade for Medicare and Medicaid to test new ways of paying doctors and hospitals, part of an effort to save money and improve patient care. On Tuesday, the government launched the office that will oversee that spending.

The new Center for Medicare and Medicaid Innovation hasn’t gotten the attention of some other, more high-profile, provisions in the law — but its work could be crucial to the law’s success, experts say.

“It might actually be the most important provision in health reform law, because the ability to improve care and reduce cost growth is the key to making health reform sustainable,” said Stuart Guterman, vice president of the Program on Payment and System Reform at the Commonwealth Fund.

The center will fund pilot programs that will test new ways to give doctors, hospitals and other providers financial incentives to work together. The idea is to improve patients’ health and save money, through avenues like eliminating unnecessary tests and treatments and making sure that patients’ chronic health conditions are dealt with before they escalate into more serious problems.

The NewsHour has profiled some health systems that are already experimenting with new, coordinated models of care — such as the Billings Clinic in Montana and Geisinger Health System in Pennsylvania.

But such models are relatively uncommon.

“For too long, health care in the United States has been fragmented — failing to meet patients’ basic needs, and leaving both patients and providers frustrated [...] The Innovation Center will help change this trend by identifying, supporting, and evaluating models of care that both improve the quality of care patients receive and lower costs,” Donald Berwick, the Center for Medicare and Medicaid Services administrator, said in a statement. The new innovation center is part of the Center for Medicare and Medicaid Services.

Among the innovation center’s first initiatives: It will fund a demonstration project in eight states to evaluate the effectiveness of coordinating payments for health providers working together in “medical homes” — teams of doctors and other providers who work together to coordinate a patient’s care. That project could involve more than 1 million Medicare beneficiaries. Another project, which could involve 195,000 people, will test coordinating the care of low-income patients at up to 500 community health centers.

Medicare and Medicaid have long been a laboratory for testing payments reforms, says Guterman, who was director of the CMS Office of Research, Development, and Information from 2002 to 2005 — reforms that were often later picked up by private health insurers. But the new law provides unprecedented authority — and funding — to do more.

“Demonstration programs always had to fight for resources,” he says. “The health reform law put $10 billion on the table, and that’s important.”
In a conference call today, Berwick told reporters that the new center would move quickly to test reforms.

“Time is of the essence,” he said. “Seven-year demonstration projects aren’t going to be responsive to the pace of change that this country needs.”