CMS INNOVATION 

CENTER

Early Implementation 

Efforts Suggest Need 

for Additional Actions 

to Help Ensure 

Coordination with 

Other CMS Offices

Report to Congressional Requesters

November 2012

GAO-13-12

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United States Government Accountability Office

GAO
United States Government Accountability Office

Highlights of GAO-13-12, a report to 

congressional requesters

November 2012

CMS INNOVATION CENTER 

Early Implementation Efforts Suggest Need for 

Additional Actions to Help Ensure Coordination 

with Other CMS Offices

Why GAO Did This Study

PPACA created the Innovation Center 

within CMS. The purpose of the 

Innovation Center is to test new 

approaches to health care delivery and 

payment—known as models—for use 

in Medicare or Medicaid.

GAO was asked to review the 

implementation of the Innovation 

Center. Specifically, GAO:

(1) describes the center’s activities, 

funding, organization, and staffing as 

of March 31, 2012; (2) describes the 

center’s plans for evaluating its models 

and its own performance; and 

(3) examines whether efforts of the 

center overlap with those of other CMS 

offices and how the center coordinates 

with other offices. GAO analyzed 

budget and staffing data; reviewed 

available documentation, such as 

Innovation Center policies and 

procedures and functional statements 

for CMS offices; and interviewed 

officials from the Innovation Center and 

other CMS offices, such as the Center 

for Medicare. GAO assessed how the 

Innovation Center coordinates in the 

context of federal internal control 

standards and key practices for 

collaboration from prior GAO work.

What GAO Recommends

GAO is recommending that the 

Administrator of CMS direct the 

Innovation Center to expeditiously 

complete its process to review and 

eliminate any areas of unnecessary 

duplication in contracts that have been 

awarded in one of its models. HHS 

agreed with this recommendation and 

described steps it is taking to address 

unnecessary duplication.

What GAO Found

From the time it became operational in November 2010, through March 31, 2012, 

the Center for Medicare and Medicaid Innovation (Innovation Center) has 

focused on implementing 17 new models to test different approaches for 

delivering or paying for health care in Medicare and Medicaid. The center is still 

relatively early in the process of implementing these models. Eleven of the 

models were selected by the Innovation Center under the provision in the Patient 

Protection and Affordable Care Act (PPACA) that established the center, while 

the remaining 6 were specifically required by other PPACA provisions. The 

Innovation Center projects that a total of $3.7 billion will be required to fund 

testing and evaluation of the 17 models, with the expected funding for individual 

models ranging from $30 million to $931 million. As of March 2012, the center’s 

184 staff were organized into four groups responsible for coordinating the 

implementation of different models and another five groups responsible for key 

functions that support model implementation. Officials said that, among other 

things, the center’s initial hiring of staff reflected the need for leadership and for 

specific types of expertise, such as individuals with a background in evaluation.

The Innovation Center’s plans for evaluating individual models include identifying 

measures related to the cost and quality of care. Officials from the Centers for 

Medicare & Medicaid Services (CMS) told GAO that the Innovation Center had 

developed preliminary evaluation plans for the 17 models being implemented 

that, among other things, identified proposed measures. According to CMS 

officials, these measures will be finalized by contractors responsible for 

evaluating, on behalf of CMS, each model’s impact on cost and quality. As of 

August 1, 2012, the Innovation Center had contracted for the evaluation of 10 of 

the 17 models. The center’s plans for evaluating its own performance include 

aggregating data across models by using a set of core measures it has 

developed. In addition, the Innovation Center has taken steps to monitor its 

progress in implementing the 17 models through biweekly reviews of standard 

milestones and related data, such as the number of applications to participate in 

a model the center has received. 

GAO identified three key examples of overlap between the 17 Innovation Center 

models and the efforts of other CMS offices, meaning that the efforts share 

similar goals, engage in similar activities or strategies to achieve these goals, or 

target similar populations. However, these overlapping efforts also have 

differences, and CMS officials said the efforts are intended to be complementary 

to each other. GAO also identified a number of mechanisms the Innovation 

Center uses to coordinate its work in order to avoid unnecessary duplication 

between its models and other efforts, such as multi-office meetings at the staff, 

director, and agency level. Further, through using these mechanisms, the 

Innovation Center has engaged in key practices for collaboration, including 

leveraging resources across offices. At the same time, the center is still working 

on ways to make its coordination more systematic. For example, largely because 

of questions raised during GAO’s review, the Innovation Center initiated a 

process to ensure that CMS does not pay for the same service under the 

contracts in one of its models and those in another CMS office. However, officials 

told GAO that the center is still working on implementing this process and may 

need to take additional steps to eliminate any unnecessary duplication.

View GAO-13-12. For more information, 

contact Linda Kohn at (202) 512-7114 or 

kohnl@gao.gov.
Page i GAO-13-12 CMS Innovation Center

Letter 1 

Background 6

The Innovation Center’s Activities, Funding, Organization, and 

Staffing Focused on Implementing 17 New Models 8

The Innovation Center’s Evaluation Plans Include Identifying 

Measures, Hiring Contractors, and Aggregating Data across 

Models 18

The Innovation Center Uses a Number of Mechanisms to 

Coordinate Efforts That Overlap with Other Offices, but Is Still 

Working on Ways to Make Coordination More Systematic 23

Conclusions 32

Recommendations for Executive Action 33

Agency Comments and Our Evaluation 33

Appendix I Models Initiated by the Innovation Center as of March 31, 2012, 

in Order of Start Date 35

Appendix II Innovation Center: Steps in Process for Implementing Models 39

Appendix III Comments from the Department of Health and Human Services 42

Appendix IV GAO Contact and Staff Acknowledgments 46

Tables

Table 1: Number of Models and Total Funding over Lifetime by 

Model Type, as of March 31, 2012 11

Table 2: Innovation Center Staff by Group, as of March 31, 2012 15

Table 3: Innovation Center Staff and CMS Staff by Employment 

Level 17

Table 4: Examples of Preliminary Measures for Innovation Center 

Models Involving Different Types of Care 19

Contents
Page ii GAO-13-12 CMS Innovation Center

Abbreviations

ACO Accountable Care Organization

CCSQ Center for Clinical Standards and Quality 

CMCS Center for Medicaid and CHIP Services 

CMS Centers for Medicare & Medicaid Services

GS General Schedule

HEN Hospital Engagement Network

HHS Department of Health and Human Services 

ICIP Innovation Center Investment Proposal 

Innovation Center Center for Medicare and Medicaid Innovation

OMB Office of Management and Budget

ORDI Office for Research, Development and Information

PPACA Patient Protection and Affordable Care Act

QIO Quality Improvement Organization

This is a work of the U.S. government and is not subject to copyright protection in the 

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Page 1 GAO-13-12 CMS Innovation Center

United States Government Accountability Office

Washington, DC 20548

November 15, 2012

The Honorable Orrin G. Hatch

Ranking Member

Committee on Finance

United States Senate

The Honorable Michael B. Enzi

Ranking Member

Committee on Health, Education, Labor, and Pensions

United States Senate

The Honorable Tom Coburn

Ranking Member

Permanent Subcommittee on Investigations

Committee on Homeland Security and Governmental Affairs

United States Senate

Spending on health care in the United States reached $2.6 trillion in 2010 

and is expected to increase, with federal spending—driven primarily by 

expenditures for Medicare and Medicaid—accounting for a growing 

percentage of the total.1 Complicating these trends, recent evidence 

suggests that higher levels of health care spending do not always lead to 

enhanced quality of care.2

 

1

Medicare is the federal health insurance program for persons aged 65 or over, individuals 

under the age of 65 with certain disabilities, and individuals with end-stage renal disease. 

Medicaid is a joint federal-state program that finances health care for certain categories of 

low-income individuals. The State Children’s Health Insurance Program is a federal-state 

program that provides health care coverage to children 18 years of age and younger living 

in low-income families whose incomes exceed the eligibility requirement for Medicaid. For 

this report we use the term “Medicaid” to include both Medicaid and the State Children’s 

Health Insurance Program. 

As a result, policymakers have sought to both 

2

See for example, E. S. Fisher and H. G. Welch, “Avoiding the Unintended Consequences 

of Growth in Medical Care: How Might More Be Worse?” Journal of the American Medical 

Association, vol. 281, no. 5 (1999): 446-453; E. S. Fisher et al., “The Implications of 

Regional Variations in Medicare Spending; Part 1: The Content, Quality, and Accessibility 

of Care,” Annals of Internal Medicine, vol. 138, no. 4 (2003): 273-287; E. S. Fisher et 

al.,”The Implications of Regional Variations in Medicare Spending; Part 2: Health 

Outcomes and Satisfaction with Care,” Annals of Internal Medicine, vol. 138, no. 4 (2003): 

288-298; and Joseph P. Newhouse and the Insurance Experiment Group, Free for All? 

Lessons from the RAND Health Insurance Experiment (Cambridge, Mass.: Harvard 

University Press, 1993). 

 
 

Page 2 GAO-13-12 CMS Innovation Center

reduce costs and improve quality by researching ways of changing how 

health care services are delivered and health care providers are paid. To 

identify approaches that work, policymakers need credible information on 

the effects of the approaches on cost and quality. In 2010, the Patient 

Protection and Affordable Care Act (PPACA) created the Center for 

Medicare and Medicaid Innovation (Innovation Center) within the Centers 

for Medicare & Medicaid Services (CMS)—the agency within the 

Department of Health and Human Services (HHS) that administers 

Medicare and Medicaid.3 The purpose of the Innovation Center is to test 

new approaches to health care delivery and payment—known as 

models—in order to reduce Medicare and Medicaid expenditures while 

preserving or enhancing quality of care for beneficiaries of the programs.4

Although CMS conducted similar testing through demonstrations prior to 

PPACA, the recent law provides the Innovation Center with additional 

authority.5 For example, unlike for demonstrations CMS has frequently 

conducted in the past, models tested under the provision establishing the 

Innovation Center can, under certain conditions, be expanded—including 

on a nationwide basis—through rulemaking instead of requiring 

legislation.

6

 

3

Pub. L. No. 111-148, §§ 3021, 10306, 124 Stat. 119, 389, 939 (codified at 42 U.S.C. 

§ 1315a). 

In addition, PPACA significantly increased the funding 

available to CMS to test new approaches. According to an analysis by the 

Medicare Payment Advisory Commission, CMS’s funding for research, 

demonstrations, and evaluations has historically been appropriated 

annually, and was less than $1 billion for the period of fiscal years 2000 

4

Tests of models are initially limited in duration and put into effect through agreements

with participants, such as providers, that may be located in several geographic areas or be 

specific to particular areas. Participants apply and are selected by the Innovation Center 

generally through a competitive process and may enter into a variety of agreements, such 

as grants and cooperative agreements.

5

Historically, CMS’s efforts to test new approaches to health care delivery and payment 

have been referred to as “demonstrations.” In this report, we will use the term “models” 

when discussing approaches initiated by the Innovation Center, and “demonstrations” 

when discussing approaches that were initiated prior to the establishment of the Center.

6

Another important difference is that while approval of prior demonstrations has generally 

been contingent on a determination of budget neutrality—that is, that estimated federal 

expenditures under the model are expected to be no more than they would have been 

without the model— PPACA provides that HHS cannot make such a requirement for 

models tested under the provision establishing the Innovation Center.
 

Page 3 GAO-13-12 CMS Innovation Center

through 2010.7 In contrast, PPACA provided the Innovation Center with a 

dedicated source of funding, appropriating $10 billion for its activities for 

the period of fiscal years 2011 through 2019 and $10 billion per decade 

beginning in fiscal year 2020.8

PPACA required CMS to make the Innovation Center operational by 

January 1, 2011, and the center became operational in November 2010. 

Since that time, some members of Congress have raised questions about 

the extent to which models the Innovation Center has selected for testing 

will lead to reduced costs and improved quality in health care, particularly 

given the amount appropriated for its work. They have also raised 

questions about the potential for overlap between efforts of the Innovation 

Center and those of existing centers and offices within CMS,9 which, if not 

effectively coordinated, could result in the inefficient use of federal 

resources through unnecessary duplication.10

To describe the Innovation Center’s activities, funding, organization, and 

staffing, we focused our review on information as of March 31, 2012—

about 2 years after the enactment of PPACA. We reviewed documents, 

We were asked to review 

the implementation of the Innovation Center. In this report, we: 

(1) describe the Innovation Center’s activities, funding, organization, and 

staffing; (2) describe the Innovation Center’s plans for evaluating its 

models and its own performance; and (3) examine whether efforts of the 

Innovation Center overlap with those of other CMS offices and assess 

how the center coordinates with other offices.

 

7

See Medicare Payment Advisory Commission, Report to Congress: Aligning Incentives in 

Medicare (Washington, D.C.: 2010). 

8

PPACA also appropriated $5 million for fiscal year 2010 activities. Amounts appropriated 

by PPACA are to remain available until expended. 

9

For the purposes of this report, we refer to both centers and offices within CMS as 

offices. 

10We have previously defined “overlap” as occurring when two or more agencies or 

programs have similar goals, engage in similar activities or strategies to achieve them, or 

target similar beneficiaries, and observed that while some degree of overlap may be 

warranted due to the nature or magnitude of the federal effort, overlap can also result in 

unnecessary duplication of efforts. We have previously defined “duplication” as occurring 

when two or more agencies or programs are engaged in the same activities or provide the 

same services to the same beneficiaries. See GAO, 2012 Annual Report: Opportunities to 

Reduce Duplication, Overlap and Fragmentation, Achieve Savings, and Enhance 

Revenue, GAO-12-342SP (Washington, D.C.: Feb. 28, 2012). 
 

Page 4 GAO-13-12 CMS Innovation Center

including information on models the center was implementing as of this 

date, and planning documents, such as organizational charts.11

To describe the Innovation Center’s plans for evaluating its models and 

its own performance, we reviewed documents, such as descriptions of the 

center’s model evaluation process and internal tracking documents. We 

also reviewed examples of more-detailed information, such as documents 

discussing evaluation plans for individual models the center was 

implementing as of March 31, 2012, and reviewed information on the 

center’s progress in evaluating models. In addition, we reviewed the 

statement of work for a contractor to evaluate the Innovation Center’s 

operations. To supplement this information, we interviewed Innovation 

Center officials and officials from CMS’s Office of the Actuary.

We also 

reviewed budget and staffing data for the Innovation Center. We 

interviewed knowledgeable agency officials about their efforts to ensure 

the quality of the data, checked for anomalies, and determined these data 

were sufficiently reliable for our purposes. In order to obtain more indepth information on center activities, we reviewed examples of the types 

of documents used in implementing models, such as a model’s Innovation 

Center Investment Proposal (ICIP), which is the document developed to 

obtain approval for models or initiatives. Finally, we interviewed 

Innovation Center officials and officials in CMS’s Office of Financial 

Management.

To examine whether efforts of the Innovation Center overlap with those of 

other CMS offices and assess how the center coordinates with other 

offices, we reviewed the key functions of all offices within CMS, using 

information that was available on CMS’s website to identify areas of 

potential overlap. We then interviewed Innovation Center officials, as well 

as officials from other CMS centers and offices, including the Center for 

Medicare, the Center for Clinical Standards and Quality (CCSQ), and the 

Center for Medicaid and CHIP Services (CMCS), to obtain more-specific 

information about the efforts they conduct. On the basis of these 

interviews and review of related documentation, such as statements of 

 

11Model implementation involves a period of planning and development followed by a 

period of testing and evaluation. Planning and development include a series of steps, such 

as developing an evaluation approach and obtaining approval from CMS, HHS, and the 

Office of Management and Budget (OMB). Testing and evaluation also includes a series 

of steps, such as the collection of cost and quality data and sharing feedback with model 

participants. 
 

Page 5 GAO-13-12 CMS Innovation Center

work for program contractors, we assessed whether Innovation Center 

models being implemented as of March 31, 2012, had similar goals, 

engaged in similar activities or strategies to achieve these goals, or 

targeted similar beneficiaries as the efforts of other CMS offices. While 

efforts identified in this report may not represent the full universe of 

overlapping efforts between the Innovation Center and other CMS offices, 

we conducted a systematic examination to identify key examples of 

where overlap may have occurred. Finally, we interviewed the same 

officials to obtain information on how the Innovation Center coordinates 

its efforts with other CMS offices, and reviewed corroborating 

documentation, such as center policies and procedures, when available. 

We assessed how the center coordinates within the context of federal 

internal control standards and key practices for collaboration identified in 

prior GAO work.12 According to federal internal control standards, an 

entity should, among other things, have the policies and procedures 

necessary to provide reasonable assurance of the effectiveness and 

efficiency of its operations, including the use of resources, and ensure 

that these policies and procedures are appropriately documented.13

We conducted our performance audit from February 2012 through 

November 2012 in accordance with generally accepted government 

auditing standards. Those standards require that we plan and perform the 

audit to obtain sufficient, appropriate evidence to provide a reasonable 

basis for our findings and conclusions based on our audit objectives. We 

believe that the evidence obtained provides a reasonable basis for our 

findings and conclusions based on our audit objectives.

 

12These collaboration practices are: (1) defining and articulating a common outcome; 

(2) establishing mutually reinforcing or joint strategies; (3) identifying and addressing 

needs by leveraging resources; (4) agreeing on roles and responsibilities; (5) establishing 

compatible policies, procedures, and other means to operate across agency boundaries; 

(6) developing mechanisms to monitor, evaluate, and report on results; (7) reinforcing 

agency accountability for collaborative efforts through agency plans and reports; and 

(8) reinforcing individual accountability for collaborative efforts through performancemanagement systems. See GAO, Results-Oriented Government: Practices That Can Help 

Enhance and Sustain Collaboration among Federal Agencies, GAO-06-15 (Washington, 

D.C.: Oct. 21, 2005). 

13See GAO, Standards for Internal Control in the Federal Government, 

GAO/AIMD-00-21.3.1 (Washington, D.C.: November 1999). 
 

Page 6 GAO-13-12 CMS Innovation Center

While PPACA gives CMS discretion in how to implement the Innovation 

Center, such as the composition of its staff, the law also established 

certain requirements for the center. For example, PPACA requires that, in 

carrying out its duties described in the law, the Innovation Center consult 

with representatives of relevant federal agencies and clinical and 

analytical experts with expertise in medicine or health care management. 

It also requires that, of amounts appropriated to the center, the center 

make no less than $25 million available for model implementation each 

fiscal year starting in 2011. In addition, PPACA requires that the 

Innovation Center evaluate each model to measure its effects on 

spending and quality of care, and that these evaluations be made public. 

Further, PPACA requires the Innovation Center to modify or terminate a 

model any time after testing and evaluation has begun unless it 

determines that the model either improves quality of care without 

increasing spending levels, reduces spending without reducing quality, or 

both.

In addition to these requirements, when selecting models, PPACA 

requires the Innovation Center to determine that a model addresses a 

situation in which deficits in care were leading to poor clinical outcomes or 

unnecessary spending. The law also describes types of models that the 

Innovation Center could consider in selecting models to test; however the 

center is not limited to this list. Examples of model types include changing 

the way primary care providers are reimbursed for services and improving 

care for patients recently discharged from the hospital. PPACA also 

directs that in selecting models, the Innovation Center give preference to 

those that improve the coordination, quality, and efficiency of health care 

services and lists additional factors for consideration, such as whether the 

model uses certain technology to help achieve its goals.

Finally, PPACA also makes certain requirements not applicable to models 

tested under the provision establishing the Innovation Center that were 

applicable to demonstrations CMS has frequently conducted in the past. 

For example, while prior demonstrations generally required legislation in 

order to be expanded, PPACA allows CMS to expand Innovation Center 

models more broadly into Medicare or Medicaid—including on a 

nationwide basis—through the rulemaking process if the following 

conditions are met: (1) the agency determines that the expansion is 

expected to reduce spending without reducing the quality of care or 

improve quality without increasing spending, (2) CMS’s Office of the 

Background 
 

Page 7 GAO-13-12 CMS Innovation Center

Actuary certifies that the expansion will reduce or not increase net 

spending, and (3) the agency determines that the expansion would not 

deny or limit coverage or benefits for beneficiaries.14 In addition, PPACA 

makes inapplicable certain requirements that have previously been cited 

as administrative barriers to the timely completion of demonstrations.15

• HHS cannot require that an Innovation Center model be budget 

neutral, that is, designed so that estimated federal expenditures under 

the model are expected to be no more than they would have been 

without the model, prior to approving a model for testing.

Specifically, PPACA provides the following:

• Certain CMS actions in testing and expanding Innovation Center 

models cannot be subject to administrative or judicial review. For 

example, the selection of models for testing or expansion is not 

subject to review by the agency or the courts.

• The Paperwork Reduction Act does not apply to Innovation Center 

models. Under the Paperwork Reduction Act, agencies generally are 

required to submit all proposed information collections to the Office of 

Management and Budget (OMB) for approval and provide a 60-day 

period for public comment on collections, among other things, when 

they want to collect data on 10 or more individuals.16

 

14In addition, PPACA provides that demonstrations conducted under 42 U.S.C. 

§ 1395cc-3 may also be expanded under the same conditions. 42 U.S.C. § 1315a(c). 

These demonstrations comprise Medicare’s Health Care Quality Demonstration Program.

15See for example Medicare Payment Advisory Commission, Report to Congress: Aligning 

Incentives in Medicare, (Washington, D.C.: 2010).

1644 U.S.C. §§ 3501-3520.OMB assists the President in overseeing the preparation of the 

federal budget and in supervising its administration in executive branch agencies. OMB 

also oversees and coordinates the administration’s procurement, financial management, 

information, and regulatory policies.
 

Page 8 GAO-13-12 CMS Innovation Center

From the time it became operational in November 2010, through 

March 31, 2012, the Innovation Center’s activities and use of funding 

focused on implementing 17 new models to test different approaches to 

health care delivery and payment in Medicare and Medicaid. During this 

period, the Innovation Center hired and organized staff into groups to 

implement models and to provide for the key functions that support model 

implementation.

From the time it became operational in November 2010, through 

March 31, 2012, the Innovation Center announced the implementation of 

17 new models17 designed to test different approaches to health care 

delivery and payment in Medicare and Medicaid.18

 

17While there are 17 models, each model may include multiple strategies for achieving 

changes in health care delivery or payment. For example, Innovation Center models may 

engage broad segments of the health care delivery system simultaneously, including 

multiple delivery settings, purchasers, or consumers. In another example, 1 of the 

17 models—Strong Start for Mothers and Newborns—tests, among other things, three 

different ways of providing enhanced prenatal care. 

These models 

generally fall into three different types on the basis of the delivery and 

payment approaches tested. The center’s “Patient care” models test 

approaches that are designed around improving care for clinical groups of 

patients such as patients needing heart bypass surgery. “Seamless care” 

models test approaches designed to improve coordination of care for a 

patient population across care settings, such as the coordination of 

inpatient and outpatient care for all of a provider’s Medicare beneficiaries.

“Preventive care” models test approaches designed to improve health, 

such as incentive programs to prevent smoking. The 17 models vary by 

the program and beneficiaries targeted. For example, some target 

Medicare or Medicaid beneficiaries specifically, whereas others are open 

to beneficiaries of either program. In addition, three models have been 

designed to target individuals who are covered by both Medicare and 

Medicaid. The models also vary in terms of the types of participants 

18In addition, the Innovation Center launched two other initiatives intended to support 

innovation. These initiatives are not models because they did not involve a test of a 

particular payment or delivery approach. For example, the Innovation Advisors Program 

provides training and support to individuals across the country so that they can help their 

organizations implement new approaches to care delivery.

The Innovation 

Center’s Activities, 

Funding, 

Organization, and 

Staffing Focused on 

Implementing 17 New 

Models 

Innovation Center 

Activities and Funding 

Have Focused on 

Implementing 17 New 

Models
 

Page 9 GAO-13-12 CMS Innovation Center

involved, ranging, for example, from physician group practices to 

Federally Qualified Health Centers, to health plans, to state Medicaid 

programs.19

Of these 17 models, 11 were selected by the Innovation Center under the 

PPACA provision that established the center and, as a result, certain 

requirements that have applied to demonstrations CMS has frequently 

conducted in the past are not applicable to these models. The Innovation 

Center selected the 11 models for implementation by reviewing model 

types identified in PPACA and ideas submitted by CMS staff as well as 

through a variety of mechanisms designed to obtain ideas from 

beneficiaries, providers, payers, state policymakers and others.20

The remaining six new models the Innovation Center is implementing 

were specifically required by other PPACA provisions. For example, the 

center is implementing a model required by PPACA that tests whether 

partnerships between and community-based organizations can improve 

transition care services for Medicare beneficiaries.

Selection criteria—which are available to the public on the Innovation 

Center’s website—include focusing on health conditions that offer the 

greatest opportunity to improve care and reduce costs, and meeting the 

needs of the high-admission-rate hospitals most vulnerable populations.

21 The degree of 

flexibility that the Innovation Center has in implementing these six models 

varies by each model’s specific statutory authority.22

 

19Federally Qualified Health Centers are health centers that have received a “Federally 

Qualified Health Center” designation from CMS and provide comprehensive communitybased primary and preventive care services in medically underserved areas or to 

medically underserved populations. Federally Qualified Health Centers must meet certain 

federal requirements and enjoy certain federal benefits, such as enhanced Medicaid 

reimbursement rates. 

20These mechanisms included the Innovation Center’s online web program and “listening 

session” meetings held across the country in 2010. 

21Pub. L. No. 111-148, § 3026, 124 Stat. at 413 (codified at 42 U.S.C. § 1395b-1 note).

22For example, for the Independence at Home model, PPACA provides that the Innovation 

Center may waive such provisions of titles XVIII and XI of the Social Security Act as is 

determined necessary to implement the program. 42 U.S.C. § 1395cc-5. In contrast, the 

Treatment of Certain Complex Diagnostic Tests model does not include this broad waiver 

authority. 42 U.S.C. § 1395l note. See app. I for more information on these models. 
 

Page 10 GAO-13-12 CMS Innovation Center

The Innovation Center projects that the total funding required to test and 

evaluate these 17 models will be $3.7 billion over their lifetime, including 

$2.7 billion for the 11 models selected by the Innovation Center and 

$1.0 billion for the 6 models specifically required by other provisions of 

PPACA.23 The expected funding for individual models ranges from 

$30 million to $931 million, depending on model scope and design.

Officials said that the period required to test and evaluate an individual 

model typically ranges from 3 to 5 years. With regard to the Innovation 

Center’s annual expenditures, as of March 31, 2012, the Innovation 

Center forecast that most of its fiscal year 2012 budget—or 

76.8 percent—would be spent implementing the 11 models that were 

selected for implementation by the Innovation Center.24 Table 1 provides 

funding information on the 17 Innovation Center models, including total 

funding for models over their lifetime, by model type. Appendix I provides 

additional information about individual models.

 

23These estimates include programmatic costs, such as payment to providers, and 

acquisition costs, such as contracts to support testing and evaluation of models. They do 

not include administrative costs, such as CMS staff salaries. 

24The Innovation Center’s total fiscal year 2012 budget was expected to be $1.2 billion.

Outside of the money spent implementing the 11 models, 13.8 percent of the budget was 

expected to be spent on implementing the other 6 PPACA models and on other 

demonstrations that predated the Innovation Center. An estimated 5.7 percent was 

expected to be spent on programmatic resources that support all models and 3.7 percent 

was expected to be spent on administrative costs that are not included in implementation 

costs. The Innovation Center’s annual funding comes primarily from the appropriation in 

the PPACA provision establishing the center. However, the center also receives funding 

from amounts specified in other sections of PPACA for the testing of specific models 

provided for in those sections. Finally, the center receives funding from the annual 

appropriation for CMS. 
 

Page 11 GAO-13-12 CMS Innovation Center

Table 1: Number of Models and Total Funding over Lifetime by Model Type, as of 

March 31, 2012 

Model type 

Number of models 

of this type 

Total funding in 

millions of dollars

Models selected by the Innovation Center

a

Patient care 4 b $889

Seamless care 6 c 837

Preventive care — d — 

Other 1 e 931

Subtotal 11 2,657

Models specifically required by PPACA

Patient care 3 b 380

Seamless care 2 c 530

Preventive care 1 d 100

Subtotal 6 1,010

Total 17 $3,667

Source: GAO analysis of CMS data.

Notes: Section 3021 of PPACA established the Innovation Center and authorized the selection of 

models to test using the funds appropriated to it in that section. Pub. L. No. 111-148, §§ 3021, 10306, 

124 Stat. 119, 389, 939 (codified at 42 U.S.C. § 1315a). For models selected by the Innovation 

Center, the center obtains approval from CMS, HHS, and OMB for the amount it expects will be 

required to test and evaluate the models. In addition to the models selected by the Innovation Center, 

there are models specifically required by other PPACA provisions that the Innovation Center is 

responsible for implementing. For these models, the funding amount is the amount appropriated in 

each model’s PPACA provision.

a

Includes programmatic costs, such as payment to providers, and acquisition costs, such as contracts 

to support testing and evaluation of models. Does not include administrative costs, such as CMS staff 

salaries.

b

Patient care models test approaches to health care delivery and payment that are designed around 

improving care for clinical groups of patients such as patients needing heart bypass surgery.

c

Seamless care models test approaches designed to improve coordination of care for a patient 

population across care settings.

d

Preventive care models test approaches designed to improve health, such as incentive programs to 

prevent smoking.

e

One model includes grants for multiple types of models.
 

Page 12 GAO-13-12 CMS Innovation Center

As of August 1, 2012, the Innovation Center was still relatively early in the 

process of implementing the 17 models. CMS officials explained that this 

process includes a series of steps to develop and prepare the model for 

testing followed by a testing and evaluation period that is typically 3 to 

5 years in which, among other things, participants and CMS put specified 

changes to health care delivery or payment into effect. (See sidebar.)

While the Innovation Center had started testing 12 of the 17 models as of 

August 1, 2012, nearly all of these tests had started within the prior 

12 months, and 5 had started within the prior 6 months.25 Thus, the 

models still have a significant portion of their testing and evaluation period 

remaining. In addition, for the 5 models that had not yet started testing, 

the Innovation Center was still completing the steps necessary to start 

testing.26

In addition to the 17 models, the Innovation Center also assumed 

responsibility for 20 demonstrations that were initiated prior to the 

Innovation Center’s formation. Responsibility for the demonstrations was 

moved to the Innovation Center in March 2011, when the demonstration 

and research and evaluation groups of CMS’s former Office for Research, 

Development and Information (ORDI) were brought into the Innovation 

Center through reorganization.

Appendix II provides additional information about the general 

process used to implement models.

27 As of August 1, 2012, testing of 9 of 

these 20 demonstrations had ended, although evaluation activities were 

still ongoing for 4 of them. The demonstrations were initiated under the 

Medicare Health Care Quality Demonstration Program which enables 

CMS to select which demonstrations to conduct,28

 

25Of the 12 models, 7 were selected by the Innovation Center under the PPACA provision 

that established the center, and the remaining 5 were specifically required by other 

PPACA provisions. 

or because they were 

26Of the 5 models, 4 were selected by the Innovation Center under the PPACA provision 

that established the center, and the remaining 1 was specifically required by another 

PPACA provision. 

27The remaining group within ORDI—the data group—was originally merged with CMS’s 

Center for Strategic Planning and later with its Office for Enterprise Management.

Whereas most Medicare demonstrations were consolidated under the Innovation Center 

when it merged with parts of ORDI, state Medicaid demonstrations are overseen by 

CMCS. CMS officials said that where Medicare demonstrations are still being conducted 

outside of the Innovation Center, it is generally because the effort was already ongoing 

within an office other than ORDI when the Innovation Center was established. 

2842 U.S.C. § 1395cc-3.
 

Page 13 GAO-13-12 CMS Innovation Center

specifically required by various pre-PPACA statutes. Like the Innovation 

Center’s models, the demonstrations test a range of delivery and 

payment approaches; for example, one demonstration tests the use of 

care management—a particular approach to coordinating and managing 

health services—for high-cost Medicare beneficiaries while another tests 

approaches for preventing and treating cancer among minorities in 

Medicare.

As of March 31, 2012, the Innovation Center’s 184 staff were organized 

into nine groups and the Office of the Director. Four of the nine groups 

are generally responsible for coordinating the implementation of models.

Three of these four groups—the Patient Care Models, Seamless Care 

Models, and Preventive Care Models Groups—focus on models selected 

by the Innovation Center under the PPACA provision that established the 

center.29

The remaining five groups have primary responsibility for key functions 

that support model implementation. The Policy and Programs Group 

reviews ideas submitted for consideration as possible models and seeks 

to ensure a balanced portfolio of different types of models. The Rapid 

Cycle Evaluation Group is responsible for evaluation of models, including 

collecting data on and providing feedback to model participants about 

their performance. The Learning and Diffusion Group facilitates learning 

within models and disseminates the lessons learned across models so 

that participants can benefit from the experiences of other models. The 

The Medicare Demonstrations group is generally responsible for 

implementing models specifically required by other PPACA provisions as 

well as the CMS demonstrations that existed prior to the establishment of 

the Innovation Center. Staff in these four groups coordinate planning, 

develop model designs, and obtain approval for their models from CMS 

and HHS. Once a model is approved, staff in these groups coordinate the 

remaining implementation steps, including soliciting and selecting 

participants and overseeing the model during the testing and evaluation 

period.

 

29However, as of March 31, 2012, 3 of the 11 models selected by the Innovation Center 

were targeted at beneficiaries of both Medicare and Medicaid and were coordinated by 

CMS’s Federal Coordinated Health Care Office. Two models were coordinated by two of 

the other groups within the Innovation Center, the Learning and Diffusion Group and the 

Policy and Programs Group. One of the models selected by the Innovation Center was 

coordinated by the Medicare Demonstrations Group. 

The Innovation Center’s 

Organization and Staffing 

Reflect Its Focus on the 17 

Models and Other Key 

Functions That Support 

Model Implementation
 

Page 14 GAO-13-12 CMS Innovation Center

Stakeholder Engagement Group conducts outreach to potential 

stakeholders to gain support and solicit ideas for innovative models, as 

well as outreach to potential participants—such as physician groups and 

hospitals—to inform them of the opportunity to participate in models. The 

Business Services Group coordinates with other CMS centers and offices 

to provide administrative and business support to the Innovation Center in 

areas such as budgeting, contracting, and project management.

CMS officials explained that the 184 staff hired between the time the 

Innovation Center became operational in November 2010, and 

March 31, 2012, were distributed across the Office of the Director and the 

nine groups in part because of an initial need for expertise with certain 

model types and certain key functions. For example, because most of the 

models that the Innovation Center selected for implementation were 

Patient Care and Seamless Care Models, more staff were hired in those 

groups than in the Preventive Care Models Group.30 Similarly, the Rapid 

Cycle Evaluation Group and the Business Services Group were among 

the largest groups by staff size because of (1) the Innovation Center’s 

need for evaluation expertise when selecting which models to test as well 

as its responsibility for evaluating existing demonstrations and (2) the 

need for staff to carry out key administrative activities right away, 

including contract solicitation, budget development, and hiring. Because 

the Innovation Center assumed responsibility for prior CMS 

demonstrations, staff from ORDI, which was responsible for implementing 

the demonstrations, were reassigned to the Innovation Center to form the 

Medicare Demonstrations Group and part of the Rapid Cycle Evaluation 

Group. Table 2 provides information on the staff size for each group in the 

Innovation Center as of March 31, 2012.

 

30As of March 31, the Innovation Center had not yet announced a model coordinated by 

the Preventive Care Models Group; however CMS officials told us that this group is 

overseeing a number of approaches funded through the Health Care Innovation Awards

model.
 

Page 15 GAO-13-12 CMS Innovation Center

Table 2: Innovation Center Staff by Group, as of March 31, 2012

Office or group Purpose Total staff

Office of the Director Manage the Innovation Center 8 

Groups organized by type of model

Seamless Care models Develop Seamless Care models and coordinate implementation. Seamless 

care models test approaches designed to improve coordination of care for a 

general patient population across care settings.

18

Patient Care models Develop Patient Care models and coordinate implementation. Patient care 

models test approaches designed around improving care for clinical groups of 

patients, such as patients needing heart bypass surgery.

11

Preventive Care models Develop Preventive Care models and coordinate implementation. Preventive 

care models test approaches designed to improve health, such as incentive 

programs to prevent smoking.

2

Medicare Demonstrations Coordinate implementation for models specifically required by other PPACA 

provisions and for demonstrations that existed before PPACA and the 

Innovation Center.

29

Groups organized by key function

Rapid Cycle Evaluation Coordinate evaluation of models including providing ongoing feedback to 

participants and final model evaluations. 

38

Business Services Coordinate with other CMS centers to provide administrative support for 

budgeting, contracting and project management. 

33

Policy and Programs Manage the intake of ideas, and help ensure balanced portfolio of models. 9 

Learning and Diffusion Communicate with model participants about what is working across models. 27

Stakeholder Engagement Communicate with potential stakeholders and the public. 9 

Total 184

Source: GAO analysis of CMS information.

CMS officials explained that initial hiring of staff also reflected other needs 

such as the need for rapid recruitment, the need to balance the number of 

staff with expertise in CMS policies and procedures with staff who had 

experience in the private sector, and the need for leadership to guide the 

development of the new center’s activities.

Rapid recruitment: Approximately 40 percent of the staff working in the 

Innovation Center as of March 31, 2012, was brought on board within the 

first 5 months from when it became operational in November 2010.31

 

31Of the staff brought on board within the first 5 months from when the Innovation Center 

became operational in November 2010, about 82 percent were reassignments from within 

CMS, and officials told us most of these were from ORDI. 

In 
 

Page 16 GAO-13-12 CMS Innovation Center

order to help the center get started quickly, CMS gave the Innovation 

Center authority to hire staff directly until March 31, 2011, after which it 

followed standard hiring procedures. Of the 184 staff in CMMI as of 

March 31, 2012, 64 had been hired through the Innovation Center’s 

direct-hire authority.

Balancing the need for CMS expertise with expertise in the private sector: 

CMS officials said the Innovation Center sought a balance of staff who 

had expertise with CMS policies and procedures and staff from outside of 

the agency in the private sector. Of the staff on board as of March 31, 

2012, about 54 percent were reassignments from within CMS, while 

about 46 percent were new hires from outside of the agency, and officials 

explained that most of these were from the private sector.

Leadership: During its first year, CMS officials said the center sought to 

build its leadership. When compared with data for CMS as a whole for 

2011, the distribution of the center’s staff as of March 31, 2012, shows a 

higher percentage of Innovation Center staff at the General Schedule 

(GS)-15 employment level,32 which is one of the higher management 

levels.33 Specifically, 23.4 percent of the Innovation Center’s staff were in 

the GS-15 level, compared with 11.5 percent for CMS as a whole. At the 

same time, the proportion of staff at other upper levels, including the 

Senior Executive Service level, in the Innovation Center was similar to 

that of CMS as a whole. Table 3 provides information about Innovation 

Center staff by employment level as of March 31, 2012.

 

32The General Schedule is a classification and pay system for civilian Federal employees. 

The General Schedule has 15 grades—GS-1 (lowest) to GS-15 (highest). Senior 

Executive Service positions are Federal employee positions that are classified above 

GS-15.

33CMS Officials told us that the higher level of staff at the GS-15 level reflects a higher 

concentration of researchers at the Ph.D. and master’s degree level supporting Innovation 

Center functions. 
 

Page 17 GAO-13-12 CMS Innovation Center

Table 3: Innovation Center Staff and CMS Staff by Employment Level

Innovation Center 

(as of 3/31/12) CMS (as of 9/30/11)

Federal General Schedule 

(GS) employment level Number a Percentage Number Percentage

GS Grades 1–8 4 2.2% 134 3.1%

GS-9 16 8.7 194 4.5

GS-10 0 0.0 1 < 0.1

GS-11 19 10.3 221 5.1

GS-12 12 6.5 723 16.7

GS-13 60 32.6 1899 43.8

GS-14 22 12.0 586 13.5

GS-15 43 23.4 499 11.5

Senior Executive Service 2 1.1 74 1.7

Other 6 3.3 0 0.0

Total 184 100% 4331 100%

Source: GAO analysis of CMS data.

Notes: Percentages do not add to 100 due to rounding.

a

The General Schedule is a classification and pay system for civilian federal employees. The General 

Schedule has 15 grades—GS-1 (lowest) to GS-15 (highest). Senior Executive Service positions are 

federal employee positions that are classified above GS-15.

CMS officials said that the Innovation Center plans to hire additional staff 

with an emphasis on hiring into the three groups—the Seamless Care, 

Patient Care, and Preventive Care Models groups—that focus on models 

selected by the Innovation Center. Officials told us that the center’s goal 

is to have a total of 338 staff and noted that, compared to initial hiring, 

which focused on staff at leadership levels, future hiring will emphasize 

lower GS levels.34

 

34Officials said that the Innovation Center had received approval from OMB for funding to 

hire 125 staff in addition to the 154 staff it had on board as of January 1, 2012.
 

Page 18 GAO-13-12 CMS Innovation Center

The Innovation Center’s plans for evaluating its models include identifying 

measures related to the cost and quality of care and hiring contractors to 

evaluate the models. The Innovation Center’s plans for evaluating its own 

performance include aggregating data on cost and quality measures to 

determine the overall impact of the center and monitoring its progress 

implementing models.

As part of its evaluation of individual models, the Innovation Center plans 

to identify measures related to the cost and quality of care. CMS officials 

said that, as of August 1, 2012, the Innovation Center had developed 

preliminary evaluation plans for each of the 17 models being 

implemented. In these plans, the center has identified preliminary cost 

and quality measures to be used to evaluate the 17 models.35 According 

to CMS officials, in identifying the preliminary measures, they generally 

selected cost and quality measures that were well accepted in the health 

care industry, including those developed or endorsed by national 

organizations, such as the National Quality Forum and the Agency for 

Healthcare Research and Quality.36

The preliminary cost and quality measures the Innovation Center 

identified vary for different models. For example, preliminary cost 

measures include the average total cost of care per Medicare beneficiary 

per year and the cost per hospitalization and related outpatient care and 

subsequent hospitalizations for certain types of conditions. In the case of 

quality, preliminary measures identified by the Innovation Center vary by 

the type of care involved, such as the percentage of patients whose blood 

Officials said that they also identified 

measures for which data sources were readily available, such as claims 

data and standard patient surveys conducted by providers.

 

35The evaluation plans also include information on the types of research questions the 

Innovation Center wants answered, possible analytic approaches to be taken when 

conducting the evaluations, and reporting guidelines.

36The National Quality Forum is a nonprofit organization that fosters agreement on 

national standards for measurement of health care performance data. The Agency for 

Healthcare Research and Quality is an agency within HHS that supports research and 

dissemination of information about health care safety and quality.

The Innovation 

Center’s Evaluation 

Plans Include 

Identifying Measures, 

Hiring Contractors, 

and Aggregating Data 

across Models

The Innovation Center’s 

Plans for Evaluating 

Models Include Identifying 

Measures Related to the 

Cost and Quality of Care 

and Hiring Contractors
 

Page 19 GAO-13-12 CMS Innovation Center

pressure exceeds a certain level (primary care); newborn birth-weight 

(prenatal care); and the number of adverse events, such as hospitalacquired infections (hospital care). See table 4 for examples of 

preliminary measures identified by the Innovation Center and intended for 

use for different types of care.

Table 4: Examples of Preliminary Measures for Innovation Center Models Involving Different Types of Care

Model name Model purpose and type of care Cost measures Quality measures 

Federally Qualified 

Health Center 

Advanced Primary 

Care Practice

Test the effect of an advanced 

primary care practice model

a

• Average annual cost of 

care per beneficiary 

(Medicare Parts A and B 

costs)

• Patient rating of care experience

b

• Inappropriate medication use

• Rate of provision of preventive 

services

Partnership for 

Patients

Test the effect of multiple strategies 

to improve patient safety in 

hospitals, including reducing 

preventable hospital-acquired 

conditions and reducing 30-day 

readmissions

• Cost for initial 

hospitalization, for 

outpatient services, and for 

subsequent 

hospitalizations, for cases 

of preventable hospitalacquired conditions

c

• Rate of certain hospital-acquired 

conditions

• Rate of 30-day readmissions

Strong Start for 

Mothers and Newborns

Test, among other things, the effect 

of three different approaches to 

providing enhanced prenatal care

• Total cost of care for 

pregnancy, for the delivery, 

and for care provided to 

infant in first year

• Gestational age at delivery

• Rate of low birth weight births

• Timeliness of prenatal care

Source: GAO analysis of CMS information.

a

Federally Qualified Health Centers are health centers that have received a “Federally Qualified 

Health Center” designation from CMS and provide comprehensive community-based primary and 

preventive care services in medically underserved areas or to medically underserved populations. 

Federally Qualified Health Centers must meet certain federal requirements and enjoy certain federal 

benefits, such as enhanced Medicaid reimbursement rates.

b

Medicare is the federal health insurance program for persons aged 65 or over, individuals under the 

age of 65 with certain disabilities, and individuals with end-stage renal disease. Medicare Part A 

covers hospital services and Medicare Part B covers physician and other outpatient services.

c

Hospital-acquired conditions are conditions that a patient acquires while an inpatient in the hospital, 

such as catheter-associated urinary tract infections or injuries from falls. The 30-day hospital 

readmission rate is the rate at which patients discharged from the hospital return within 30 days. 

While some readmissions are unavoidable, such as those not related to the initial diagnosis, others 

can be prevented through the use of best practices of care.

Preliminary measures the Innovation Center identifies will be finalized 

with contractors responsible for evaluating models on behalf of CMS. 

According to CMS officials, the Innovation Center plans on hiring 
 

Page 20 GAO-13-12 CMS Innovation Center

contractors to evaluate its models.37 The Innovation Center uses its 

preliminary evaluation plans as the basis for developing solicitations for 

and selecting contractors, who will be asked to propose specific 

evaluation approaches. Officials said that after contracts are awarded, the 

Innovation Center goes through a “design phase” with the contractor 

where they reach agreement on the final evaluation plan, including the 

measures of cost and quality of care that will be used. As of August 1, 

2012, the Innovation Center had contracted with evaluators for 10 of the 

17 models and had finalized measures for 2 models.38

In addition to finalizing the selection of a model’s measures, each 

contractor will be responsible for collecting data for the measures, and 

assessing the model’s impact on cost and quality. To make this 

assessment, CMS officials said the evaluation contractors will generally 

compare the model’s cost and quality outcomes to the outcomes for a 

comparison group of beneficiaries or providers that did not participate in 

the model by using a variety of statistical techniques.

The center 

anticipated awarding contracts for 6 of the remaining models by the end 

of fiscal year 2012 and for the other remaining model—the Strong Start 

for Mothers and Newborns model—by March 2013.

39

 

37Hiring contractors to conduct evaluations of models is consistent with how CMS 

conducted evaluations of demonstrations initiated prior to the Innovation Center’s 

formation. 

Officials also said 

that to ensure that any differences observed between model participants 

and the comparison group are due to the model’s approach as opposed 

to other factors, they have set a threshold of statistical significance that 

they will use for all models. While a model’s testing and evaluation period 

is typically set at 3 to 5 years, officials noted that in some cases it may be 

clear from the data within 1 or 2 years whether a model has had a 

positive impact on the cost and quality of care and should be 

recommended for implementation more broadly in Medicare or Medicaid, 

38Officials said that before measures are finalized with contractors, evaluation activities 

may still be conducted using preliminary measures. 

39Officials told us that comparison groups will be matched to model participants along a 

variety of measurable dimensions, such as provider and market-specific characteristics, 

and that particular care will be taken to identify the impact of each reform in the context of 

other models or interventions. Officials also told us that in certain cases, it may not be 

possible to develop comparison groups for models. In these cases, the center will 

compare cost and quality outcomes for model participants before and after the start of the 

model. 
 

Page 21 GAO-13-12 CMS Innovation Center

or that it has increased costs and should be discontinued. Alternatively, 

there may also be cases where the results at the end of the testing and 

evaluation period show that a model saves money but not at the threshold 

of statistical significance set by the Innovation Center.40 CMS officials told 

us that impact assessments will be ongoing, but will not begin until a 

model has been under way for the amount of time expected for the 

change in health care delivery or payment to start producing results.41

As a complement to assessing the impact of models on the cost and 

quality of care, evaluation contractors will be asked to conduct site visits 

and interviews to obtain qualitative information about the different 

strategies participants may use to deliver care under each model. For 

example, for models that seek to incentivize better coordination of care, 

participants may implement different strategies to support care 

coordination, such as increasing staffing or investing in technology. 

Contractors will analyze whether different strategies are associated with 

particular cost and quality outcomes.

Officials said that they received data for their first impact assessment on 

August 31, 2012, although they emphasized that early impact 

assessments may not show clear results.

Innovation Center officials told us that information collected by contractors 

will also be shared on a regular basis with model participants. The 

purpose of what the center refers to as “rapid cycle” feedback is to 

provide timely information so that participants can make improvements 

during the testing period of the model. For example, CMS officials 

explained that under the Federally Qualified Health Center Advanced 

Primary Care Practice model, participating health centers will be provided 

with feedback reports on a quarterly basis. According to officials, these 

reports will describe how each participant is performing relative to others 

 

40CMS plans to establish a working group to address cases where the impact of a model 

is unclear, for example where the cost or quality measures are not statistically significant.

In certain cases they may request additional time to test the model.

41Officials noted, for example, that with the Comprehensive Primary Care Initiative—which 

tests the effectiveness of enhanced primary care services—they would not expect 

participating providers to have an impact on cost and quality right away. Therefore, the 

assessment of cost and quality measures relative to a comparison group would not be 

started until approximately 9 months after the start date. Considering the time required to 

capture claims data and the time it takes to evaluate the data, it would be over a year 

before they would expect to see results. Officials noted that this time frame will vary by 

model as some may produce results faster than others. 
 

Page 22 GAO-13-12 CMS Innovation Center

with respect to the model’s measures. The reports, officials say, will also 

include information on differences among participants in how they are 

delivering care under the model in order to encourage the adoption of 

more-successful strategies. Officials told us that rapid cycle feedback will 

generally begin within the first year after testing of a model has started. 

As of August 1, 2012, the Innovation Center had started rapid cycle 

feedback for 1 of the 17 models—the Partnership for Patients model.

The Innovation Center’s plans for evaluating its own performance include 

aggregating data on cost and quality measures to determine the overall 

impact of the center. To do this, the Innovation Center will use a set of 

core measures. The center has identified about 70 core measures, 

including some of the preliminary cost and quality measures related to the 

17 models it was implementing as of March 31, 2012.42

The Innovation Center’s plans for evaluating its performance also include 

monitoring its progress in implementing models. The Innovation Center 

has established a project management approach for its models that 

includes standard milestones—such as “completion of OMB clearance” 

and “issuance of participant solicitation and application”—that it uses to 

track the progress of models against target deadlines. In addition, certain 

data are monitored for each model against specified targets, such as the 

number of applications submitted and the number of participants 

selected. Individual milestones and data are summarized across all of the 

Innovation Center models every 2 weeks. The intended purpose is to 

allow the center’s management to monitor progress across models and to 

identify and promptly address potential delays. According to CMS 

officials, the Innovation Center was monitoring the progress of each of the 

17 models it was implementing as of March 31, 2012.

Because not all 

core measures will apply to all models, data will be aggregated for groups 

of models. To conduct this aggregation, the Innovation Center will use 

statistical techniques, such as meta-analysis. Aggregation will not occur 

until individual models have been evaluated, but officials said that the 

Innovation Center has started asking evaluation contractors to consider 

using the 70 measures when possible.

 

42While the core measures will be used to determine the Innovation Center’s overall 

performance, their primary purpose is to compare outcomes between models to determine 

whether some models had more of an impact on a specific measure than others. 

The Innovation Center’s 

Plans for Evaluating Its 

Own Performance Include 

Aggregating Data across 

Models and Monitoring 

Implementation of Models
 

Page 23 GAO-13-12 CMS Innovation Center

Finally, in order to help evaluate its performance, in June 2012, the 

Innovation Center contracted with a firm to review the Innovation Center’s 

internal operations and how the center operates within the context of 

CMS’s programs overall. The statement of work for this contract identified 

a number of objectives, including recommending ways to improve the 

center’s organizational structure, revising the center’s management 

policies and procedures, and identifying additional ways to evaluate the 

Innovation Center’s performance on an ongoing basis. To support these 

objectives, the contract requires the firm to, for example, identify best 

practices for expanding innovative models of care into ongoing programs 

such as Medicare and Medicaid. The contract also requires the firm to 

identify policies and procedures that are missing within the Innovation 

Center that would improve its performance. The evaluation under this 

contract is expected to be completed in November 2012.

In our review of models the Innovation Center was implementing as of 

March 31, 2012, we identified three key examples of overlap with efforts 

of other CMS offices. While the center uses a number of mechanisms to 

coordinate with other CMS offices, it is still working on ways to make 

coordination more systematic.

We identified three key examples of Innovation Center models being 

implemented as of March 31, 2012, that overlap with efforts of other CMS 

offices, meaning that the efforts share similar goals, engage in similar 

activities or strategies to achieve these goals, or target similar 

populations. However, these overlapping efforts also have differences, 

and CMS officials said they are intended to be complementary to each 

other. The three key examples we identified are the following:

The Innovation 

Center Uses a 

Number of 

Mechanisms to 

Coordinate Efforts 

That Overlap with 

Other Offices, but Is 

Still Working on Ways 

to Make Coordination 

More Systematic

Some Innovation Center 

Models Overlap with 

Efforts of Other CMS 

Offices
 

Page 24 GAO-13-12 CMS Innovation Center

• The Innovation Center’s Two Accountable Care Organization (ACO) 

Models and the Center for Medicare’s Shared Savings Program.

43

The Innovation Center is implementing two models—the Pioneer ACO 

model and the Advance Payment ACO model—that share similar 

goals with those of the Shared Savings Program, which is required by 

PPACA and administered nationally by CMS through its Center for 

Medicare.44 All three efforts aim to encourage Medicare providers that 

participate in ACOs to improve the quality of care among the patients 

they serve, while at the same time reducing Medicare expenditures. In 

order to achieve these goals, the efforts provide financial incentives 

for ACOs that meet specified quality of care and cost savings 

thresholds by allowing them to share in a certain amount of the 

savings they achieve for the Medicare program.45 However, the 

Innovation Center’s models and the Shared Savings Program each 

adopt a different approach to sharing any realized savings.46 Further, 

while the Shared Savings Program is open to all eligible ACOs, the 

models target specific subgroups of ACOs.47

 

43An ACO refers to a group of providers and suppliers of services, such as hospitals and 

physicians, that will work together to coordinate care for the patients they serve.

According to CMS 

officials, the Innovation Center’s ACO models are intended to be 

complementary to the Shared Savings Program, because they allow 

CMS to test alternative approaches to the national effort. If these 

44As required by PPACA, the Center for Medicare is implementing the Shared Savings 

Program to encourage the use of ACOs in Medicare. Pub. L. No. 111-148, §§ 3022, 

10307, 124 Stat. 119, 395-399, 940-941. While the Shared Savings Program is a national 

program within Medicare, a provider’s decision to participate in an ACO is voluntary, and 

Medicare beneficiaries are still able to choose the providers they would like to see 

regardless of whether they are in an ACO.

45In certain cases, ACOs must also agree to share a certain amount of risk for any losses 

incurred. See 42 C.F.R. § 425.606 (2011). 

46For example, whereas the Shared Savings Program pays an ACO—and 

correspondingly its membership of providers and suppliers—after specified quality of care 

and savings thresholds are met, the Advance Payment model prepays a portion of 

expected shared savings. 

47In the case of the Advance Payment model, it targets ACOs that lack the necessary 

capital to make investments in care coordination, such as hiring new staff or improving 

information technology systems. 
 

Page 25 GAO-13-12 CMS Innovation Center

alternative approaches are proven effective, officials explained, they 

could be incorporated into the Shared Savings Program.48

• The Innovation Center’s Medicaid Models and CMCS’s State 

Medicaid Demonstrations. As of March 31, 2012, the Innovation 

Center was implementing nine models that share the same broad goal 

as the state Medicaid section 1115 demonstrations overseen by 

CMCS49—testing new ways of delivering and paying for health care in 

Medicaid.50 Despite this similarity, the Innovation Center’s models can 

test delivery and payment approaches across geographic areas and 

with different types of participants, including directly with providers, 

while Medicaid demonstrations under CMCS are agreements between 

CMS and state Medicaid agencies to test approaches within a 

particular state. According to CMS officials, the Medicaid models and 

demonstrations are intended to be complementary: the models allow 

CMS to test the effectiveness of approaches it selects, while the 

demonstrations are initiated by states on the basis of their own 

priorities and needs. Further, officials said that while evaluations of 

Innovation Center models may be able to more-rigorously test 

effectiveness,51

 

48According to CMS officials, it is more difficult to implement changes within the Shared 

Savings Program because, unlike models, the Shared Savings Program must go through 

the federal rulemaking process. Among other things, the rulemaking process requires 

CMS to propose changes and a rationale for the changes, seek and consider stakeholder 

input, review comments, and make final policy decisions.

state Medicaid demonstrations allow for a larger 

number of tests to be conducted—according to CMS, there were 

49Of the nine models, three specifically target Medicaid beneficiaries (Incentives for 

Prevention of Chronic Disease in Medicaid, Strong Start for Mothers and Newborns, and 

the Medicaid Emergency Psychiatric Demonstration), three target individuals eligible for 

both Medicare and Medicaid (State Demonstrations to Integrate Care for MedicareMedicaid Beneficiaries, Initiative to Reduce Hospitalizations Among Nursing Facility 

Residents, and the Financial Alignment Initiative), and three include Medicaid 

beneficiaries in addition to other beneficiary types (Partnership for Patients: Hospital 

Engagement Networks and Other Strategies, Health Care Innovation Awards, and the 

Comprehensive Primary Care Initiative). See app. I for more information on these models. 

50While each state administers its Medicaid program within federal requirements 

established in statute and regulations, section 1115 of the Social Security Act allows the 

Secretary of HHS to waive certain federal requirements for demonstrations that the 

Secretary deems likely to promote Medicaid objectives. 42 U.S.C. § 1315.

51For example, according to CMS officials, the Innovation Center is able to define 

necessary sample sizes and comparison groups for its models, which officials said has 

historically been difficult within the framework of state Medicaid demonstrations for a 

number of reasons, including that evaluations have generally been state-specific. 
 

Page 26 GAO-13-12 CMS Innovation Center

approximately 70 active section 1115 demonstrations as of August 

2012—and can point to promising approaches that should be 

considered for further testing.52

• The Innovation Center’s Partnership for Patients Model and CCSQ’s 

Quality Improvement Organization (QIO) Program. The goals of the 

Innovation Center’s Partnership for Patients model—namely reducing 

the rate of preventable hospital-acquired conditions and 30-day 

hospital readmissions53—are also currently among the many goals of 

CCSQ’s QIO program.54 In order to achieve these goals, both the 

Partnership for Patients model and the QIO program contract with 

organizations—Hospital Engagement Networks (HEN)55 and QIOs, 

respectively—to disseminate successful patient safety interventions in 

hospitals through training and technical assistance.56

 

52While there were approximately 70 active section 1115 demonstrations as of August 

2012, states use these demonstrations for more than testing specific approaches to health 

care delivery or payment, such as expanding Medicaid coverage to additional individuals 

in their state. 

While the two 

efforts are very similar in this respect, compared to QIOs, the activities 

of HENs target more hospital-acquired conditions and focus on a 

53According to CMS officials, for the purposes of the Partnership for Patients model, 

hospital-acquired conditions are conditions that a patient acquires while an inpatient in a 

hospital, such as catheter-associated urinary tract infections or injuries from falls and 

immobility. The 30-day hospital readmission rate is the rate at which patients discharged 

from the hospital return within 30 days. While some readmissions are unavoidable, such 

as those not related to the initial diagnosis, others can be prevented through the use of 

best practices of care.

54The mission of the QIO Program is to improve the effectiveness, efficiency, economy, 

and quality of services delivered to Medicare beneficiaries. The QIO Program is required 

by the Social Security Act. 42 U.S.C. §§ 1320c-1320c-4, 1395y(g). While QIOs currently 

work on reducing hospital-acquired conditions and readmissions, they also conduct other 

activities, such as the promotion of immunizations and screenings, and work in more 

settings than hospitals, such as nursing homes and physicians’ offices. There is one QIO 

for every state as well as the District of Columbia, Puerto Rico, and the U.S. Virgin 

Islands.

55HENs are state, regional, and national hospital system organizations, such as the Health 

Care Association of New York State and Intermountain Healthcare.

56Contracting with HENs is one of multiple strategies the Partnership for Patients model 

uses to achieve its goals. Other strategies include engaging in other activities within the 

federal government and developing relationships with external stakeholders. 
 

Page 27 GAO-13-12 CMS Innovation Center

broader population that includes non-Medicare patients.57 CMS 

officials also told us that the work of HENs and QIOs is intended to be 

complementary and that HENs reinforce and expand on work already 

being done by QIOs in order to reduce hospital-acquired conditions 

and 30-day hospital readmissions at a faster rate. While QIOs may 

have established relationships with certain hospitals in their states, as 

of September 2012, CMS officials said that HENs had engaged a 

much wider network of hospitals in patient safety interventions when 

compared with QIOs—about 4,000 versus just over 800 respectively. 

Officials said that one reason for this is that HENs focus exclusively 

on hospitals whereas QIOs are responsible for implementing 

improvement projects across all settings of care. Additionally, officials 

said that because hospital system organizations serve as HENs, they 

can leverage their member hospitals to encourage these hospitals to 

adopt patient safety interventions.

Over the period of our review, we identified a number of mechanisms the 

Innovation Center uses to coordinate its work in order to avoid 

unnecessary duplication in models that overlap with efforts of other CMS 

offices. In using these mechanisms, the center has engaged in key 

practices that we identified in prior work as helping enhance and sustain 

collaboration,58

 

57According to CMS, HENs and QIOs target four of the same conditions: catheterassociated urinary tract infections, central line-associated blood stream infections, surgical 

site infections, and venous thromboembolism (refers to pulmonary embolisms resulting 

from deep vein thrombosis). However, HENs target an additional five conditions: injuries 

from falls and immobility, obstetrical adverse events, pressure ulcers, adverse drug 

events, and ventilator-associated pneumonia. Conversely, QIOs target one additional 

condition, clostridium difficile infections (refers to infections from a bacterium that can 

cause symptoms ranging from diarrhea to life-threatening inflammation of the colon).

such as leveraging resources, establishing compatible 

policies and procedures, and developing ways to report on results across 

offices. The mechanisms the Innovation Center uses are the following:

58These collaboration practices are: (1) defining and articulating a common outcome; 

(2) establishing mutually reinforcing or joint strategies; (3) identifying and addressing 

needs by leveraging resources; (4) agreeing on roles and responsibilities; (5) establishing 

compatible policies, procedures, and other means to operate across agency boundaries; 

(6) developing mechanisms to monitor, evaluate, and report on results; (7) reinforcing 

agency accountability for collaborative efforts through agency plans and reports; and 

(8) reinforcing individual accountability for collaborative efforts through performance 

management systems. See GAO-06-15. 

The Innovation Center 

Uses a Number of 

Mechanisms to Coordinate 

with Other Offices, but Is 

Still Working on Ways to 

Make Coordination More 

Systematic
 

Page 28 GAO-13-12 CMS Innovation Center

• Committees and boards. The Innovation Center uses a number of 

committees and boards to coordinate with other offices. For example, 

CMS officials told us that in deciding whether to select a model for 

testing, the Innovation Center’s Portfolio Management Committee 

considers other efforts within CMS—as well as more broadly across 

HHS—that may overlap with the model in order to avoid unnecessary 

duplication. Officials said that when overlap is identified, the decision 

to continue with the model is made on a case-by-case basis and 

involves a determination of whether the model is significantly different 

from existing efforts. Additionally, members of the Portfolio 

Management Committee are able to help identify staff in other offices 

that the Innovation Center might want to invite to work on a model in 

order to leverage existing agency expertise.59 In another example, 

CMS’s Enterprise Management Board brings together relevant offices 

across the agency, such as the Chief Operating Officer, the Office of 

Acquisition and Grants Management, and the Center for Medicare, 

early in a model’s implementation to determine what needs to be done 

operationally. To avoid unnecessary duplication, the board considers 

whether there are existing CMS resources that could be leveraged for 

the model’s infrastructure needs or whether a resource being 

developed for an Innovation Center model could be shared with other 

CMS efforts.

• Model approval process. According to CMS officials, the process CMS 

uses to approve Innovation Center models for implementation also 

allows the center to coordinate with other CMS offices. Officials 

explained that as part of this process, all CMS offices must have the 

opportunity to review and comment on the ICIP—a document that 

contains key information on a proposed model, such as design 

parameters and cost estimates—before the model is approved by the 

CMS administrator. Officials said that under CMS policy, the 

Innovation Center must address these comments. The ICIP contains 

sections that specifically address issues related to overlap, such as a 

section on “Synergy with Existing or Planned Initiatives” and a section 

on “Uniqueness/Innovation.” CMS officials said that, as a result, when 

the ICIP is circulated, if the Innovation Center did not sufficiently 

 

59CMS officials told us that staff from other offices are invited to participate on teams for 

Innovation Center models and initiatives to provide technical support on aspects of models 

that require specific programmatic knowledge. In certain cases, the idea for a model has 

originated as much from another office as from the Innovation Center, and in these cases 

the center jointly sponsors the model with that office.
 

Page 29 GAO-13-12 CMS Innovation Center

coordinate with other CMS centers or offices during the initial 

selection of a model, these offices would have the opportunity to raise 

any concerns related to unnecessary duplication. After a model is 

approved by CMS, HHS and OMB also review and approve the ICIP.

• Multi-office meetings at the staff, director, and agency level. First, 

CMS officials said that staff from the Innovation Center meet with staff 

from other offices to work on efforts that overlap. For example, during 

planning for its ACO models, the Innovation Center met with the 

Center for Medicare to establish compatible policies and procedures 

with the Shared Savings Program, such as developing common 

scripts for 1-800-MEDICARE call centers and rules for elevating 

beneficiary or provider questions to these centers for additional 

review.60 Additionally, in March 2012, the Innovation Center started 

meeting with CCSQ every week to discuss coordination between 

HENs and QIOs in order to prevent unnecessary duplication of effort.

Second, CMS officials told us that there is regular coordination 

between the director of the Innovation Center and certain other CMS 

centers and offices, through meetings that happen on a weekly, 

biweekly, or monthly basis.61 Officials said that, among other things, 

these meetings are intended to share the results of ongoing efforts 

and address such issues as making sure policies are compatible 

across similar efforts. Officials also told us that all CMS offices have 

weekly issues meetings with the CMS Administrator that other offices 

involved in an issue being discussed are encouraged to attend.62

 

601-800-MEDICARE is a nationwide toll-free telephone help line that beneficiaries, their 

families, and other members of the public can call to ask questions about Medicare. 

Officials told us that if staff from other CMS offices thought an issue 

related to overlapping efforts had not been adequately addressed 

through other coordination mechanisms, these meetings serve as an 

opportunity for them to raise it.

61The Innovation Center’s director has one-on-one meetings with, among others, the 

director of the Center for Medicare, CMCS, the Federal Coordinated Health Care Office, 

CCSQ, the Office of Information Services, and the Chief Operating Officer. Directors also 

meet together regularly as a group.

62Examples of items discussed during the Innovation Center’s meetings include 

documents that need the Administrator’s approval, such as ICIPs, as well as general 

questions for the administrator regarding model design or implementation. CMS officials 

said that the Innovation Center’s weekly meeting with the Administrator is held jointly with 

the Federal Coordinated Health Care Office. 
 

Page 30 GAO-13-12 CMS Innovation Center

• Liaisons. Officials told us that staff members in other CMS offices 

serve as liaisons to the Innovation Center, though they are not 

formally designated as such.63 Officials said that these staff members 

primarily serve as a central point of contact so that there is a 

systematic way to keep track of coordination across offices. For 

example, CMCS has a staff member serving as a liaison to the 

Innovation Center who, among other things, ensures that the 

Innovation Center’s models employ policies and procedures that are 

compatible with Medicaid program rules.

• Targeted reviews. CMS officials said that as part of selecting 

participants for the Innovation Center’s Medicaid models, the 

Innovation Center works with CMCS, CMS regional offices, and OMB 

to ensure that the models do not duplicate funding for states that are 

already being funded to engage in the same activity through a CMCS 

demonstration. For example, the application for the Strong Start for 

Mothers and Newborns model—which tests, among other things, the 

effectiveness of three different approaches to providing enhanced 

prenatal care to Medicaid beneficiaries—specified that states that 

were already paying for enhanced prenatal services were not allowed 

to participate in the model.

While the Innovation Center uses these mechanisms, it is also still 

working on ways to make its coordination with other offices more 

systematic. Specifically, CMS officials said that while some of the 

Innovation Center’s coordination mechanisms are formalized through 

documented policies and procedures, the center is considering the extent 

to which additional policies and procedures are needed. For example, 

officials said that while the Enterprise Management Board, which is 

responsible for addressing how models are coordinated with other CMS 

efforts operationally, is formally established through a written charter, they 

have considered whether a similar group that deals with coordination at 

the policy level needs a more formal structure in place. In another 

example, the Innovation Center has directed the outside firm that began 

an evaluation of Innovation Center operations in June 2012 to consider, 

as part of its statement of work, whether there are any gaps in current 

 

63Officials said that directors have assigned staff within their office to serve as liaisons to 

the Innovation Center when it was determined that their offices were going to have 

ongoing coordination with the center. 
 

Page 31 GAO-13-12 CMS Innovation Center

center policies and procedures—including those related to coordination 

with other offices—and to propose solutions to those gaps.

The Innovation Center is also currently developing a process to ensure 

that CMS does not pay for the same service under both HEN and QIO 

contracts. Officials said that CMS recognizes there are areas of overlap 

between HENs and QIOs and that they made an explicit decision to 

include overlapping activities in HEN and QIO statements of work, 

because, among other things, the nature of trying to reduce hospitalacquired conditions and readmissions requires multiple entities working 

from different perspectives in a reinforcing manner. Although the HEN 

and QIO contractors were originally told to work out areas of overlap 

locally, largely because of questions asked during our review, officials 

recognized the need for a more-formal process to ensure coordination 

was working in practice. CMS officials said that a review of the 26 HEN 

contracts is under way to identify if any unnecessary duplication of effort

has occurred—that is, whether HENs and QIOs are conducting the same 

activities in the same hospital.64

Finally, officials noted that CMS is in the process of developing a 

centralized database, which may also help the Innovation Center make its 

coordination more systematic. Among other things, officials said that the 

database is intended to help prevent duplicative payments to providers 

that participate in CMS efforts involving incentive payments for meeting 

specified quality of care and cost savings thresholds, such as the 

Innovation Center’s ACO models and the Center for Medicare’s Shared 

Savings Program. Specifically, officials said that the database is intended 

to track which beneficiaries are participating in different efforts across 

Officials noted that the review process 

has evolved and may continue to evolve over time, in part because of the 

size of the review—which includes reviewing HENs’ activities in 

approximately 4,000 hospitals—and in part because the Innovation 

Center has not conducted this type of review previously. CMS officials 

said that they will take steps, including potentially modifying HEN or QIO 

contract language, to eliminate any unnecessary duplication of effort that 

the review identifies and to document how this duplication was 

addressed.

 

64For example, officials said that because both have been asked to work on reducing 

central line-associated blood stream infections, it is conceivable that HENs and QIOs 

could be providing the same technical assistance on reducing this type of infection in the 

same hospitals. 
 

Page 32 GAO-13-12 CMS Innovation Center

CMS to help ensure that beneficiaries are not counted twice for the 

purposes of calculating incentive payments. While officials reported that 

the database initially became operational in June 2012, they also said 

that they are currently working on significant system upgrades that are 

expected in September 2012.

The Innovation Center became operational in November 2010 and is still 

in the early stages of implementing its first models, with much work—

particularly evaluation activities—to be done in coming years. As of 

March 31, 2012, the Innovation Center had announced 17 models, 

covering a variety of topics, to test new approaches in health care 

delivery and payment. In addition, the Innovation Center has developed 

preliminary evaluation plans for each of the 17 models, although at the 

time of our review, most still needed to be finalized, and it may take as 

long as 3-5 years until the evaluations begin to produce results. With 

spending on health care in the United States continuing to increase, and 

an appropriation of $10 billion every 10 years, it is important that the 

Innovation Center continue the testing of its models and conduct 

evaluations as planned in order for CMS to determine the extent to which 

the new approaches are able to reduce costs and improve quality of care.

At the time of our review, we identified three key examples of Innovation 

Center models that overlap with efforts being conducted by other offices 

within CMS. As the Innovation Center and other CMS offices work in 

similar areas—namely paying for and delivering health care to Medicare 

and Medicaid beneficiaries—there likely will be additional efforts that 

overlap as the center continues to build its portfolio of models and 

initiatives. We encourage these efforts to the extent that they are 

complementary, well coordinated, and do not result in unnecessary 

duplication. However, our review also suggests that while the Innovation 

Center has taken steps to coordinate with other offices, it still has work to 

do in making this coordination more systematic. For example, the 

Innovation Center is considering whether additional policies and 

procedures are needed to coordinate its efforts with other offices, and it 

will be important for the center to continue to determine the extent to 

which this is necessary, particularly as it considers the results of the 

evaluation by an outside firm. In addition, the Innovation Center is still 

implementing a process to ensure that CMS does not make payments for 

duplicative services under HEN contracts in its Partnership for Patients 

model—one of its first and most expensive models to date—and QIO 

contracts. Given the significance of the Innovation Center’s work, and the 

amount of money involved in its operation, having appropriate and wellConclusions 
 

Page 33 GAO-13-12 CMS Innovation Center

documented coordination mechanisms in place will be an important step 

going forward to help ensure that resources are used most efficiently and 

any overlapping efforts do not become unnecessarily duplicative.

In order to ensure the efficient use of federal resources, we recommend 

that the Administrator of CMS direct the Innovation Center to 

expeditiously complete implementation of its process to review and 

eliminate any areas of unnecessary duplication in the services being 

provided by HENs and QIOs in hospitals.

We provided a draft of this report to HHS for review and comment. In its 

written comments, reproduced in appendix III, HHS agreed with our 

recommendation and provided general comments. In addition, on 

October 26, 2012, the Innovation Center’s Deputy Director for Operations 

provided oral technical comments that were incorporated, as appropriate. 

In its written comments, HHS stated that it concurred with our 

recommendation to expeditiously complete implementation of its process 

to review and eliminate any areas of unnecessary duplication in the 

services being provided by HENs and QIOs. HHS described the steps 

underway to identify and eliminate any duplication of effort, including 

(1) having Contracting Officer Representatives assess whether there are 

areas of duplication that require further review and recommend 

appropriate actions for each contract and (2) if appropriate, putting in 

place acceptable mitigation strategies, issuing technical direction, or 

modifying the appropriate contract to eliminate the duplication of effort.

HHS stated that it anticipates completing these steps by December 31, 

2012, and has monitoring plans in place to assess future changes in the 

work plans of QIOs and HENs to avoid future duplication.

In its written comments, HHS also stated that only one of the three key 

examples of overlap cited in the report—the HEN and QIO example—

poses a risk of duplicative effort. We agree, and the recommendation we 

make focuses on this example. The other two key examples we described 

in our report are overlapping in that they share similar goals, engage in 

similar activities or strategies to achieve these goals, or target similar 

populations. We noted that these efforts have important differences and 

that CMS officials said the efforts were intended to be complementary to 

each other. Because the Innovation Center and other CMS offices work in 

similar areas—namely paying for and delivering health care to Medicare 

and Medicaid beneficiaries—we observed that there will likely be efforts 

Recommendations for 

Executive Action

Agency Comments 

and Our Evaluation
 

Page 34 GAO-13-12 CMS Innovation Center

that overlap. As we reported, we encourage these efforts to the extent 

that they are complementary, well coordinated, and do not result in 

unnecessary duplication.

As agreed with your offices, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies to the Secretary of HHS, the 

Administrator of CMS, and other interested parties. In addition, the report 

will be available at no charge on the GAO website at http://www.gao.gov.

If you or your staffs have any questions about this report, please contact 

me at (202) 512-7114 or at kohnl@gao.gov. Contact points for our Offices 

of Congressional Relations and Public Affairs may be found on the last 

page of this report. GAO staff who made key contributions to this report 

are listed in appendix IV. 

Linda T. Kohn

Director, Health Care
Appendix I: Models Initiated by the Innovation 

Center as of March 31, 2012, in Order of Start 

Date

Page 35 GAO-13-12 CMS Innovation Center

Title and description 

Type of participants

Estimated number 

and type of 

beneficiaries affected

Start date of 

testing and 

evaluation period a

Length of testing 

and evaluation 

period

Authorizing 

section of 

PPACAb

Total funding in 

millions of dollars

(lifetime of model)

State Demonstrations to Integrate Care for Medicare-Medicaid Beneficiaries—Supports state Medicaid programs in designing 

new approaches to service delivery and financing in order to integrate care for Medicare-Medicaid beneficiaries. This program will 

enable states to participate in the Financial Alignment Model (see below), which will enroll beneficiaries in 2013.

c

State Medicaid programs Not applicable 4/14/11 18 months for 

design

3021 $131

Incentives for Prevention of Chronic Diseases in Medicaid—Tests the impact of providing incentives to Medicaid beneficiaries to 

participate in prevention programs such as those that address tobacco cessation, controlling or reducing weight, lowering cholesterol, 

lowering blood pressure, and avoiding the onset of diabetes.

State Medicaid programs Not available at the time 

of our review

9/13/11 5 years 4108 100 d

Federally Qualified Health Center Advanced Primary Care Practice—Tests the effect of the advanced primary care practice 

model—commonly referred to as the patient-centered medical home—in improving care, promoting health, and reducing the cost of 

care provided to Medicare beneficiaries by Federally Qualified Health Centers. Federally Qualified Health Centers are health centers 

that have received a “Federally Qualified Health Center” designation from the Centers for Medicare & Medicaid Services (CMS) and 

provide comprehensive community-based primary and preventive care services in medically underserved areas or to medically 

underserved populations.

e

Federally Qualified Health 

Centers (must have at least 

200 Medicare fee-for-service 

beneficiaries)

202,000 Medicare 

beneficiaries

11/1/11 3 years 3021 57.2

Partnership for Patients: Community Based Care Transitions—Tests approaches to reduce unnecessary hospital readmissions 

by improving the transition of Medicare beneficiaries from the inpatient hospital setting to home or other care settings.

Hospitals with high 

readmission rates that partner 

with community-based 

organizations that provide 

care transition services

275,000 Medicare 

beneficiaries

11/18/11 5 years 3026 500 f

Partnership for Patients: Hospital Engagement Networks and Other Strategies—Tests the effectiveness of multiple strategies to 

reduce preventable hospital-acquired conditions—conditions that a patient acquires while an inpatient in the hospital, such as 

catheter-associated urinary tract infections or injuries from falls—and 30-day hospital readmissions. One example of a strategy used 

by the Partnership for Patients is contracting with Hospital Engagement Networks—which are state, regional, and national hospital 

system organizations—to disseminate successful patient safety interventions in hospitals through training and technical assistance.

g

Networks of hospitals and 

their hospital members

While Medicare and 

Medicaid beneficiaries 

will be affected, this 

model targets all 

patients receiving 

related services in 

participating hospitals

12/9/11 2 years with 

1 option year

3021 513

Appendix I: Models Initiated by the 

Innovation Center as of March 31, 2012, in 

Order of Start Date
Appendix I: Models Initiated by the Innovation 

Center as of March 31, 2012, in Order of Start 

Date

Page 36 GAO-13-12 CMS Innovation Center

Title and description 

Type of participants

Estimated number 

and type of 

beneficiaries affected

Start date of 

testing and 

evaluation period a

Length of testing 

and evaluation 

period

Authorizing 

section of 

PPACAb

Total funding in 

millions of dollars

(lifetime of model)

Pioneer Accountable Care Organization (ACO) Model—Tests the effectiveness of allowing experienced ACOs to take on financial 

risk in improving quality and lowering costs for all of their Medicare patients. An ACO refers to a group of providers and suppliers of 

services, such as hospitals and physicians, that work together to coordinate care for the patients they serve.

c

ACOs with at least 15,000 

Medicare fee-for-service 

beneficiaries (or at least 

5,000 Medicare beneficiaries 

in the case of rural areas)

750,000 Medicare 

beneficiaries 

1/1/12 3 years with 

optional 2-year 

extension

3021 77.3

Treatment of Certain Complex Diagnostic Laboratory Tests—Tests the effect of making separate payments for certain complex 

diagnostic laboratory tests on access to care, quality of care, health outcomes, and expenditures.

Clinical laboratories 

performing certain complex 

tests

Not applicable 1/1/12 2 years 3113 105 h

Strong Start for Mothers and Newborns—Tests two strategies to improve outcomes for newborns and pregnant women: (1) shared 

learning and diffusion activities to reduce the rate of early elective deliveries among pregnant women and (2) enhanced prenatal care 

to reduce preterm births (less than 37 weeks) in women covered by Medicaid. Each of these strategies addresses three different 

approaches to achieving these goals. 

i

Providers of obstetric care, 

hospitals, state Medicaid 

programs, Medicaid managed 

care organizations

Strategy 1: 

This model targets all 

patients receiving 

related services

Strategy 2: 

90,000 Medicaid 

beneficiaries

2/8/12 Strategy 1: 

2 years;

Strategy 2: 

4 years

3021 99.2

Advance Payment ACO Model—Tests the effect of prepayment of shared savings to support ACO infrastructure development and 

care coordination on quality and costs of care for Medicare beneficiaries.

Small physician-led or rural 

organizations participating in 

the Medicare Shared Savings 

Program 

650,000 Medicare 

beneficiaries

4/1/12 3 years 3021 177.1

Independence at Home Demonstration—Tests the effectiveness of delivering an expanded scope of primary care services in a 

home setting on improving care for Medicare beneficiaries with multiple chronic conditions. 

Physician practices with at 

least 200 high-need 

beneficiaries

10,000 Medicare 

beneficiaries

6/1/12 3 years 3024 30 j

Health Care Innovation Awards—Tests a variety of innovative approaches to paying for and delivering care that have a focus on 

those that will train and deploy the health care workforce to support these innovations.

k

Diverse set of participants Not available at the time 

of our review

7/1/12 3 years 3021 931.2

Medicaid Emergency Psychiatric Demonstration—Tests whether Medicaid can support higher quality care at lower cost by 

reimbursing private psychiatric hospitals for certain services for which Medicaid reimbursement has historically been unavailable.

State Medicaid programs Not available at the time 

of our review

7/1/12 3 years 2707 75 l m
Appendix I: Models Initiated by the Innovation 

Center as of March 31, 2012, in Order of Start 

Date

Page 37 GAO-13-12 CMS Innovation Center

Title and description 

Type of participants

Estimated number 

and type of 

beneficiaries affected

Start date of 

testing and 

evaluation period a

Length of testing 

and evaluation 

period

Authorizing 

section of 

PPACAb

Total funding in 

millions of dollars

(lifetime of model)

Graduate Nurse Education Demonstration—Tests the effect of offsetting the costs of clinical training for Advanced Practice 

Registered Nurses on the availability of graduate nursing students enrolled in APRN training programs.

c

Hospitals, schools of nursing, 

and non-hospital-based 

community-based care 

settings

Not applicable 9/1/12 4 years 5509 200 n

Comprehensive Primary Care Initiative—Tests the impact of enhanced primary care services, including care coordination, 

prevention, and 24-hour access for Medicare and Medicaid beneficiaries.

o

Commercial and state health 

plans and primary care 

physician practices in seven 

selected localities across the 

country. 

Up to 315,000 Medicare 

and 16,000 Medicaid 

beneficiaries

10/1/12 4 years 3021 322.1

Initiative to Reduce Avoidable Hospitalizations Among Nursing Facility Residents—Tests partnerships between independent 

organizations and long-stay nursing facilities to enhance on-site services to reduce inpatient hospitalizations for Medicare-Medicaid 

beneficiaries.

Organizations that partner 

with states and nursing 

facilities to provide enhanced 

care coordination

Not available at the time 

of our review

Fall 2012 4 years 3021 158

Bundled Payment for Care Improvement—Tests the effect of different payment approaches that link payments for multiple services 

received by patients during an episode of care, including hospitalization and posthospital services, on the coordination of patient care.

Four different models of bundling will be tested, but information on models 2 through 4 was not available at the time of our review.

Providers such as hospitals, 

physician group practices, 

and health systems

Model 1: 389,000 

Medicare fee-for-service 

beneficiaries

12/1/12 3 years with 

possible 2-year 

extension

3021 119.4

Financial Alignment Initiative—Tests two approaches to integrating the service delivery and financing of the Medicare and Medicaid 

programs to better coordinate care for Medicare-Medicaid beneficiaries: a capitated approach where a state, CMS, and a health plan 

enter into a three-way contract to provide comprehensive coordinated care; and a managed fee-for-service approach where a state 

and CMS enter into an agreement where the state would be eligible to benefit from savings resulting from its initiatives designed to 

improve quality and reduce costs.

State Medicaid programs Up to 2 million 

Medicare-Medicaid 

beneficiaries

2013 3 years 3021 73

Source: GAO analysis of CMS data.

Notes: While this report generally uses the term “models” when discussing the Center for Medicare 

and Medicaid Innovation’s (Innovation Center) efforts to test new approaches to health care delivery 

and payment, in some cases the Innovation Center’s title for a model may include the words 

“demonstration” or “initiative.” 

a

Beneficiaries affected may include individuals enrolled in Medicare, Medicaid, or both programs 

simultaneously, in which case they are referred to as Medicare-Medicaid beneficiaries. Medicare is 

the federal health insurance program for persons aged 65 or over, individuals under the age of 65 

with certain disabilities, and individuals with end-stage renal disease. Medicaid is a joint federal-state 

program that finances health care for certain categories of low-income individuals. The State 

Children’s Health Insurance Program is a federal-state program that provides health care coverage to 

children 18 years of age and younger living in low-income families whose incomes exceed the 
Appendix I: Models Initiated by the Innovation 

Center as of March 31, 2012, in Order of Start 

Date

Page 38 GAO-13-12 CMS Innovation Center

eligibility requirement for Medicaid. For this report we use the term “Medicaid” to include both 

Medicaid and the State Children’s Health Insurance Program.

b

Section 3021 of the Patient Protection and Affordable Care Act (PPACA) established the Innovation 

Center and authorized the selection of models to test using the funds appropriated to it in that section.

Pub. L. No. 111-148, §§ 3021, 10306, 124 Stat. 119, 389-395, 939-940 (codified at 42 U.S.C. 

§ 1315a). There are also models specifically required in other PPACA provisions that the Innovation 

Center is responsible for implementing.

c

Section 3021 appropriated $10 billion for Innovation Center activities for the period of fiscal years 

2011 through 2019 and $10 billion per 10-year fiscal period beginning in 2020. These amounts are to 

remain available until expended. For models selected by the Innovation Center, the center obtains 

approval from CMS, the Department of Health and Human Services, and the Office of Management 

and Budget for the amount it expects will be required to test and evaluate the models, and this 

funding comes from the Innovation Center’s PPACA appropriation. For models specifically required 

by other PPACA provisions, the funding amount is the amount appropriated in each PPACA 

provision.

d

Section 4108 requires the award of grants to states to test approaches that may encourage behavior 

modification and determine scalable solutions by providing incentives to Medicaid beneficiaries. 

§ 4108, 124 Stat. at 561-564 (codified at 42 U.S.C. §1396a note).

e

Section 4108 appropriated $100 million for a 5-year period beginning on January 1, 2011. The 

amount appropriated is to remain available until expended.

f

Section 3026 requires the implementation of a model that tests whether partnerships between highadmission-rate hospitals and community-based service organizations can improve transition care 

services for high-risk Medicare beneficiaries § 3026, 124 Stat. at 413 - 415 (codified at 42 U.S.C. § 

1395b-1 note).

g

Section 3026 requires the transfer of $500 million from Medicare trust funds for the period of fiscal 

years 2011 through 2015. The amount transferred is to remain available until expended. 

h

Section 3113 requires CMS to develop appropriate payment rates for the tests included in this 

demonstration. § 3113, 124 Stat. at 422-423 (codified at 42 U.S.C. § 1395I note).

I

Section 3113 requires the transfer of $5 million from the Medicare Part B trust fund for administering 

the demonstration. The amount transferred is to remain available until expended. Payments under the 

demonstration are to be made from Medicare Part B funds and may not exceed $100 million.

j

Section 3024 requires CMS to conduct a demonstration to test a payment and service-delivery model 

that utilizes physician- and nurse practitioner–directed home-based primary care teams for reducing 

expenditures and improving the health outcomes of certain Medicare beneficiaries. §§ 3204, 

10308(b)(2). 124 Stat. at 404-408, 942 (codified at 42 U.S.C. § 1395cc-5).

k

Section 3024 requires the transfer of $5 million from Medicare trust funds for each of fiscal years 

2010 through 2015. The amounts transferred are to remain available until expended. 

l

Section 2707 requires CMS to select states to participate in the demonstration project on a 

competitive basis. §2707, 124 Stat. at 326-328 (codified at 42 U.S.C. § 1396a note).

mSection 2707 appropriated $75 million for fiscal year 2011. The amount appropriated is to remain 

available through December 31, 2015.

n

Section 5509 requires CMS to conduct a demonstration under which eligible hospitals receive 

payment for their reasonable costs for the provision of qualified clinical training to advanced practice 

nurses. § 5509, 124 Stat. at 674-676 (codified at 42 U.S.C § 1395ww note).

o

Section 5509 appropriated $50 million for each of fiscal years 2012 through 2015. The amount 

appropriated is to remain available until expended.
Appendix II: Innovation Center: Steps in 

Process for Implementing Models

Page 39 GAO-13-12 CMS Innovation Center

Planning and development

Solicit ideas for new models and select which 

models to develop

• The Center for Medicare and Medicaid Innovation (Innovation Center) solicits and 

receives ideas for different payment and care delivery approaches through 

“Listening Sessions” and through its web-based idea-submission tool.

a 

• The Innovation Center reviews ideas that have been submitted and evaluates 

them with respect to their potential to meet its primary goals of better health care, 

better health, and reduced costs. It reviews ideas against “Portfolio Criteria” that 

were created to guide the Innovation Center in developing a portfolio of models 

that address a range of populations, issues, problems, and solutions.

b

• Examples of these criteria include: having the greatest potential impact on 

Medicare and Medicaid beneficiaries and improving how care is delivered

nationally; focusing on health conditions that offer the greatest opportunity to 

improve care and reduce costs; and meeting the needs of the most 

vulnerable and addressing disparities in care.

• As part of this selection process, the Innovation Center reviews model types 

suggested in the Patient Protection and Affordable Care Act (PPACA) provision 

that established the center, and seeks input from across the Centers for Medicare 

& Medicaid Services (CMS), the Department of Health and Human Services 

(HHS), and other federal partners and from an array of external stakeholders.

c,d

Develop an Innovation Center Investment 

Proposal (ICIP) 

• Once the Innovation Center identifies a payment and care delivery model that 

shows promise, it develops an ICIP, which typically includes

• a proposed design for the model including the size and scope of testing, the 

population and programs involved, and duration;

• a summary of prior evidence and supporting research;

• a preliminary evaluation plan including research questions, proposed 

measures related to cost and quality, and discussion of the model’s expected 

impact; and

• an implementation plan, including the application and selection process, an 

analysis of whether the model overlaps or complements other initiatives, and 

an analysis of the potential for expansion of the model.

• The Innovation Center prepares separate documents for approval that are related 

to funding requests and solicitations associated with the model.

Obtain approval from CMS, HHS, and the 

Office of Management and Budget (OMB) 

and announce model 

• The Innovation Center seeks approval for the model. This includes separate 

approval processes for the ICIP, for model funding, and for any solicitations that 

would be issued to potential participants.

• The approval process includes a sequence of reviews within CMS, within HHS, 

and finally with OMB. During these reviews, modifications may be made on the 

basis of input from individuals in other CMS centers and offices, in other related 

HHS programs, and from OMB.

• Once the ICIP is approved, the Innovation Center issues an announcement and 

other information about the model to the public.

Appendix II: Innovation Center: Steps in 

Process for Implementing Models 
Appendix II: Innovation Center: Steps in 

Process for Implementing Models

Page 40 GAO-13-12 CMS Innovation Center

Planning and development

Solicit, select, and establish agreements with 

participants

• The Innovation Center issues information about how to apply for participation in 

the model, including information about which types of providers or organizations 

are eligible to participate, the process for submitting applications, and the 

selection process. The Innovation Center may also organize webinars or learning 

sessions open to the public and interested participants to share information and 

answer questions.

• Innovation Center models vary by the type of participant that is involved—for 

example, physician group practices, health plans, and state Medicaid 

programs.

• Models also vary in terms of the type of agreement that is established with 

participants, for example, whether it is a grant, a cooperative agreement, a 

contract, or a provider agreement.

• The selection process for participants is generally competitive. The criteria 

used in the selection process may vary by model. For example, selection 

criteria may include such factors as organizational capabilities and plans for 

ensuring quality of care. In other cases, eligible participants may be selected 

in order to achieve a mix and balance of certain characteristics for evaluation 

purposes, for example geographic location (urban, rural) and whether the 

participant uses electronic health records.

Solicit and select contractors for testing and 

evaluating model 

• The Innovation Center solicits and hires contractors to evaluate the model.

Applicants are asked to propose specific evaluation approaches to the preliminary 

evaluation plans that the Innovation Center has identified. Contractors are 

selected through a competitive process. Once a contractor is selected, it works 

with the Innovation Center to complete a design phase and reach agreement on 

the final evaluation plan for the model.

• The Innovation Center also engages contractors for other purposes that are part 

of implementation, such as data collection and provider recruitment.

Testing and evaluation

Conduct test of model • The changes that the model is testing—for example, changes to health care 

delivery or payment—are put into effect by CMS and by participants.

• The testing period for Innovation Center models is typically set for 3 to 5 years.

However, evaluation monitoring may indicate that the model should be modified, 

terminated, or expanded before this period ends (see below). The Innovation 

Center may choose to shorten the test period for a model for such reasons.

Conduct evaluation of model to assess its 

impact on cost and quality

• Data are collected for cost and quality measures. Using a variety of statistical 

techniques, these data are generally compared to data for a comparison group 

representing patients or providers that are not participating in the model to 

determine the model’s impact on cost and quality. When comparison groups are 

not possible, data for model participants are compared to “baseline” data that 

represent a period prior to the test period. Qualitative information on the different 

strategies participants may use to deliver care under each model is also collected 

and analyzed.

• During the testing period information collected is shared on a regular basis with 

participants. The purpose of this “rapid cycle” feedback is to provide timely 

information so that participants can make improvements during the testing period.
Appendix II: Innovation Center: Steps in 

Process for Implementing Models

Page 41 GAO-13-12 CMS Innovation Center

Testing and evaluation

Determine whether to terminate, modify, or 

recommend expanding model

• The Innovation Center plans to regularly review each model’s impact on the 

quality and cost of care to determine whether the payment or delivery approach is 

successful and should be recommended for expansion into the Medicare or 

Medicaid program.

• If the Innovation Center seeks to expand a program, the CMS Office of the 

Actuary must certify that the model would either (1) result in cost savings or 

(2) not result in any increase in costs if implemented on a broader scale within 

Medicare or Medicaid, or both. 

Source: GAO analysis of CMS information.

Notes: The Innovation Center’s process for implementing models includes interaction with several 

government organizations, including HHS, which oversees a wide range of federal health programs; 

CMS, which is the agency within HHS that administers Medicare and Medicaid; and OMB, which 

assists the President in overseeing the preparation of the federal budget and in supervising its 

administration in executive agencies.

a

The step of soliciting ideas applies to those models selected by the Innovation Center under the 

PPACA provision establishing the center. Generally, it does not apply to models the center 

implements that are specifically required by other provisions of law.

b

A series of Listening Sessions was held in 2010, and transcripts of these sessions are available at 

http://www.innovations.cms.gov/community/webinars-and-forums/2010/index.html (accessed 

Sept. 13, 2012).

c

Medicare is the federal health insurance program for persons aged 65 or over, individuals under the 

age of 65 with certain disabilities, and individuals with end-stage renal disease. Medicaid is a joint 

federal-state program that finances health care for certain categories of low-income individuals. The 

State Children’s Health Insurance Program is a federal-state program that provides health care 

coverage to children 18 years of age and younger living in low-income families whose incomes 

exceed the eligibility requirement for Medicaid. For this report we use the term “Medicaid” to include 

both Medicaid and the State Children’s Health Insurance Program.

d

The Innovation Center’s criteria can be found at: http://www.innovations.cms.gov/about/our-portfoliocriteria/index.html (accessed Sept. 13, 2012).
Appendix III: Comments from the Department 

of Health and Human Services

Page 42 GAO-13-12 CMS Innovation Center

Appendix III: Comments from the 

Department of Health and Human Services
Appendix III: Comments from the Department 

of Health and Human Services

Page 43 GAO-13-12 CMS Innovation Center
Appendix III: Comments from the Department 

of Health and Human Services

Page 44 GAO-13-12 CMS Innovation Center
Appendix III: Comments from the Department 

of Health and Human Services

Page 45 GAO-13-12 CMS Innovation Center
Appendix IV: GAO Contact and Staff 

Acknowledgments

Page 46 GAO-13-12 CMS Innovation Center

Linda T. Kohn, (202) 512-7114 or kohnl@gao.gov

In addition to the contact named above, Kristi Peterson, Assistant 

Director; Krister Friday; Mary Giffin; Samantha Poppe; Rachel Svoboda; 

and Jennifer Whitworth made key contributions to this report.

Appendix IV: GAO Contact and Staff 

Acknowledgments 

GAO Contact

Staff 

Acknowledgments 

(291024)
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