CMS Innovation Center: Model Implementation and Center Performance
Released: 2018-04-25T00:00:00


Highlights: section_title: Why GAO Did This Study
paragraphs: The Patient Protection and Affordable Care Act created the Innovation Center within CMS to test new approaches to health care delivery and payment—known as models—for use in Medicare, Medicaid, or CHIP. The Innovation Center became operational in November 2010. In 2012, GAO reported on the early implementation of the Innovation Center. GAO found that, during the first 16 months of operations, the Innovation Center focused on implementing 17 new models and developed preliminary plans for evaluating the effects of each model and for assessing the center's overall performance.

GAO was asked to update its previous work. In this report, GAO: (1) describes the status of payment and delivery models implemented and the resources used; (2) describes the center's use of model evaluations; and (3) examines the center's assessment of its own performance. GAO reviewed available documentation, such as model fact sheets and frequently asked questions, and evaluation reports for models that have been implemented. GAO reviewed obligation data and performance information for the time period for which complete data or information were available. GAO also interviewed officials from the Innovation Center and CMS's Office of the Actuary.

The Department of Health and Human Services provided technical comments on a draft of this report, which GAO incorporated as appropriate.

section_title: What GAO Found
paragraphs: As of March 1, 2018, the Center for Medicare and Medicaid Innovation (Innovation Center) had implemented 37 models that test new approaches for delivering and paying for health care with the goal of reducing spending and improving quality of care. These models varied based on several characteristics, including the program covered—Medicare, Medicaid, the Children's Health Insurance Program (CHIP), or some combination of the three—and the nature of provider participation—voluntary or mandatory. Going forward, the Innovation Center indicated that the center plans to continue focusing on the use of voluntary participation models and to develop models in new areas, including prescription drugs, Medicare Advantage, mental and behavioral health, and program integrity. Through fiscal year 2016, the Innovation Center obligated $5.6 billion of its $10 billion appropriation for fiscal years 2011 through 2019.

The Innovation Center has used evaluations of models (1) to inform the development of additional models, (2) to make changes to models as they are implemented, and (3) to recommend models for expansion. For example, Innovation Center officials noted that, for some instances where evaluations have shown reduced spending with maintained or improved quality of care, the center has developed new models that build upon the approaches of earlier models, but with adjustments intended to address reported limitations. In addition, the Innovation Center used evaluations to recommend two models to the Centers for Medicare & Medicaid Services (CMS) Office of the Actuary for certification for expansion. According to CMS officials, a model evaluation and a certification for expansion differ in that a model evaluation assesses the impact of a delivery and payment approach for model participants only, while a certification for expansion assesses the future impact on program spending more broadly across all beneficiaries, payers, and providers who would be affected by the expanded model. As a result, the Office of the Actuary used the results of the evaluation and other information, such as Medicare claims data and published studies, to certify the expansion of both models.

To assess the center's overall performance, the Innovation Center established performance goals and related measures and reported meeting its targets for some goals in 2015, the latest year for which data were available (see table below).

Innovation Center officials told GAO that the center also recently developed a methodology to estimate a forecasted return on investment for its model portfolio. The center is in the early stages of refining the methodology and applying it broadly across its models.

section_title: Letter
paragraphs: Federal spending on health care in the United States—driven primarily by  Medicare and Medicaid expenditures—is expected to reach over $1  trillion in 2018 and to continue increasing and exerting pressure on the  federal budget. At the same time, studies have found that higher levels  of spending do not reliably lead to enhanced quality of care. The Centers  for Medicare & Medicaid Services (CMS), within the Department of Health  and Human Services (HHS), has sought to both reduce spending and  improve quality of care for beneficiaries enrolled in Medicare, Medicaid,  and the Children’s Health Insurance Program (CHIP) by testing new ways  for delivering and paying for health care services. To further such testing,  the Patient Protection and Affordable Care Act (PPACA) established the  Center for Medicare and Medicaid Innovation (Innovation Center) within  CMS under section 1115A of the Social Security Act.

In establishing the Innovation Center, the law provided CMS with  additional authority when testing new health care delivery and payment  approaches, known as models. For example, CMS may expand the  duration and scope of models tested by the Innovation Center through  rulemaking instead of needing the enactment of legislation, which was  required to expand the demonstrations that CMS frequently conducted in  the past. In addition, the law provided a dedicated appropriation for  testing models—$10 billion for the Innovation Center’s activities for the  period of fiscal years 2011 through 2019 and $10 billion per decade  beginning in fiscal year 2020.

In November 2012, we reported on the early activities of the Innovation  Center. We found that, during the first 16 months of operations, the  Innovation Center focused on implementing 17 new models while  assuming responsibility for 20 demonstrations that CMS began before the  start of the center. We also reported that the Innovation Center developed  preliminary plans for evaluating the effects of each model on spending  and quality of care and assessing the center’s overall performance.

At the time of our 2012 report, however, it was too early to consider  certain questions raised by members of Congress about Innovation Center operations, including the use of its dedicated funding, the impact  of the models tested, and the center’s overall performance. Given the  amount of time that has passed—the Innovation Center has been in  operation for over 7 years—you asked us to update our previous work to  provide information on the activities of the center and to report on any  results of the testing. This report examines  1.  the status of the Innovation Center’s testing of models and the  resources used for such activities;  2.  the use of model evaluations; and  3.  the Innovation Center’s assessment of its performance.

To determine the status of model testing and the resources used by the  Innovation Center for such activities, we reviewed Innovation Center  documentation, including information on models the center was  implementing or had announced, as well as web pages, model fact  sheets, and frequently asked questions. We obtained and analyzed  Innovation Center data on the amounts of the Innovation Center’s  appropriations obligated. We also interviewed and obtained written  responses from Innovation Center officials. Our work focused on models  tested and funded through appropriations under section 1115A of the  Social Security Act, as enacted by PPACA, which established the center  and provided its dedicated appropriations. In general, our work covered  the period during which the Innovation Center first became operational  (fiscal year 2011) through the most recent time period for which complete  information was available. For the status of model testing, we considered  information through March 1, 2018. For the resources used, we analyzed  data on the amounts of the Innovation Center’s appropriations obligated  through fiscal year 2016. We assessed the reliability of the obligation data  by comparing it to publicly reported amounts and discussing the data with  center officials. We determined these data were sufficiently reliable for the  purposes of our objectives.

To determine how the Innovation Center used evaluations of models, we  interviewed officials from the center, CMS’s Office of the Actuary,  evaluation contractors, and subject matter experts to discuss the use of  evaluations, in general, as well as for five selected models specifically.  We selected models based on a nonprobability sample that included both  Medicare and Medicaid models; ongoing and completed models; models  that fell under the responsibility of different Innovation Center staffing  groups; and one model evaluated for expansion. Because we used a  nonprobability sample, our results are not generalizable beyond the  models we reviewed; however, they provide insight into how CMS uses  the evaluations of its models. We also analyzed publicly available  evaluation reports and other model documentation publicly available from  the Innovation Center and the Office of the Actuary.

To describe the Innovation Center’s assessment of its performance, we  reviewed information reported on the center’s targeted and actual  performance available in CMS’s Congressional Budget Justifications for  fiscal years 2012 through 2018. Information on the center’s targets was  available for performance years 2014 through 2018. Complete  information on the center’s actual performance was available for 2015.  Partial information was available for 2014 and 2016, and no information  was available for 2017 and 2018. We also interviewed Innovation Center  officials regarding the assessment of performance.

We conducted this performance audit from February 2017 to March 2018  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.
subsections: section_title: Background
subsections: section_title: Requirements for Innovation Center Models Implemented under Section 1115A
paragraphs: Section 1115A establishes certain requirements for the Innovation Center  that relate to the selection of models, use of resources, and evaluation of  models. These requirements include:  consulting with representatives of relevant federal agencies, as well  as clinical and analytical experts in medicine or health care  management, when carrying out its duties as described in the law; ensuring models address deficits in care that have led to poor clinical  outcomes or potentially avoidable spending; making no less than $25 million of the Innovation Center’s dedicated  funding available for model design, implementation, and evaluation  each fiscal year starting in 2011; evaluating each model to analyze its effects on spending and quality  of care, and making these evaluations public; and modifying or terminating 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.

Under section 1115A, certain requirements applicable to previous CMS  demonstrations are inapplicable to models tested under the Innovation  Center. For example, while prior demonstrations generally required  congressional approval in order to be expanded, section 1115A allows  CMS to expand Innovation Center models—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 Actuary certifies that the  expansion will reduce or not increase net program spending; and (3) the  agency determines that the expansion would not deny or limit coverage or  benefits for beneficiaries. In addition, certain requirements previously  cited by the Medicare Payment Advisory Commission as administrative  barriers to the timely completion of demonstrations are inapplicable.  Specifically, section 1115A provides the following:

HHS cannot require that an Innovation Center model initially 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.

Certain CMS actions in testing and expanding Innovation Center  models cannot be subject to administrative or judicial review.

The Paperwork Reduction Act—which generally requires agencies to  submit all proposed information collection efforts to the Office of  Management and Budget (OMB) for approval and provide a 60-day  period for public comment when they want to collect data on 10 or  more individuals—does not apply to Innovation Center models.

section_title: Innovation Center Staffing and Organization
paragraphs: The Innovation Center uses a combination of staff and contractors to test  models. Since the center became operational in November 2010, the  number of staff increased steadily through the end of fiscal year 2016.  (See fig. 1.) As of September 30, 2017, there were 617 staff—a slight  decrease in the number of staff from the end of the prior fiscal year.  Officials indicated that, in the future, changes in the model portfolio may  require additional staff to manage and support model development and  implementation. However, officials do not anticipate needing to increase  staffing levels at the same pace as they did between fiscal years 2011  and 2016. Additionally, the Innovation Center uses third-party contactors  to perform functions related to the implementation of models and to  perform evaluations of the changes in the quality of care furnished and  program spending under a model.

The Innovation Center has organized its 617 staff members primarily into  eight groups and the Office of the Director. Four of the eight groups are  responsible for coordinating the development and implementation of  models. Staff in these four groups primarily lead efforts in developing  model designs and obtaining approval for their models from CMS and  HHS. Once a model is approved, staff coordinate the remaining  implementation steps, including soliciting and selecting participants and  overseeing the model during the testing and evaluation period. The other  four groups perform key functions that support model development and  implementation, such as reviewing ideas submitted for consideration as  possible models, overseeing the evaluations of models, providing  feedback to model participants about their performance, disseminating  lessons learned across models, and monitoring budget resources. The  Office of the Director, in general, has oversight responsibilities for the  models led by these groups. Table 1 provides information on the staffing  groups within the Innovation Center.

section_title: Innovation Center Process for Model Development and Implementation
paragraphs: The Innovation Center has developed internal agency guidance that  outlines a general process used by the four model groups for developing  and implementing models. (See fig. 2.) Appendix I provides additional  information about the general process for implementing models.

section_title: Innovation Center Categories for Models
paragraphs: The Innovation Center has organized its models into seven categories  based on delivery and payment approaches tested and program  beneficiaries covered. The seven categories are as follows:

Accountable Care. This category includes models built around  accountable care organizations (ACOs)—groups of coordinated  health care providers who are held responsible for the care of a group  of patients. The models are designed to encourage ACOs to invest in  infrastructure and care processes for improving coordination,  efficiency, and quality of care for Medicare beneficiaries.

Episode-based payment initiatives. This category includes models  in which providers are held accountable for the Medicare spending  and quality of care received by beneficiaries during an “episode of  care,” which begins with a health care event (e.g., hospitalization) and  continues for a limited time after.

Initiatives Focused on Medicare-Medicaid Beneficiaries. This  category includes models focused on better serving individuals  eligible for both Medicaid and Medicare in a cost-effective manner.

Initiatives Focused on Medicaid and CHIP Populations. This  category includes models administered by participating states to lower  spending and improve quality of care for Medicaid and CHIP  beneficiaries.

Initiatives to Accelerate the Development and Testing of New  Payment and Service Delivery Models. This category includes  models where the Innovation Center works with participants to test  state-based and locally developed models, covering Medicare  beneficiaries, Medicaid beneficiaries, or both.

Initiatives to Speed the Adoption of Best Practices. This category  includes models in which the Innovation Center collaborates with  health care providers, federal agencies, and other stakeholders to test  ways of disseminating evidence-based best practices that improve  Medicare spending and quality of care for beneficiaries.

Primary Care Transformation. This category includes models that  use advanced primary care practices—also called “medical homes”— to emphasize prevention, health information technology, care  coordination, and shared decision-making among patients and their  providers.

For certain categories, the Innovation Center assigns primary  responsibility for developing and implementing models to a single model  group; for some other categories, the responsibility is shared across  different groups. For example, the center assigned responsibility for  models in the ACO and the Primary Care Transformation categories to  the Seamless Care Model Group, whereas the responsibility for models in  the Initiatives to Accelerate the Development and Testing of New  Payment and Service Delivery Models categories were assigned across  all four model groups. Appendix II provides a summary of the number of  models organized under each category and a description of each model.

section_title: The Innovation Center Implemented 37 Models That Test Varying Delivery and Payment Approaches, and Obligated over $5.6 Billion
subsections: section_title: The Innovation Center Implemented 37 Models and Announced an Additional 2; Models Varied by Delivery and Payment Approaches Tested, Beneficiaries Covered, and Other Characteristics
paragraphs: As of March 1, 2018, the Innovation Center had implemented 37 models  under section 1115A of the Social Security Act. (See fig. 3.) Of those 37  models, the testing period has concluded for 10 of them. In addition, the  Innovation Center has announced two models to begin testing in 2018.

Innovation Center models varied based on several characteristics,  including delivery and payment approaches tested and program(s)  covered. Delivery and payment approaches varied across all  implemented and announced models—even models organized by the  Innovation Center under the same model category. For example, the six  models that tested an episode-based payment approach varied in terms  of how episodes were defined, including the clinical and surgical episodes  to which models applied. In addition, some models included multiple  approaches for achieving changes in health care delivery or payment.  Models also differed in terms of the programs covered, with 22 models  covering Medicare only, 9 models covering Medicare and Medicaid, one  model covering Medicaid and CHIP, and 7 models covering all three  programs. Other characteristics by which models varied include the  nature of model participation for providers (voluntary or mandatory) and  the source of innovation (i.e., federal, state, or local initiatives). See table  2 for a breakdown of models across selected characteristics. Appendix II  provides a full description of all models implemented and announced by  the Innovation Center.

In September 2017, the Innovation Center provided some insight into its  future plans when it issued an informal “request for information” that  identified guiding principles under which models will be designed going  forward, described focus areas for new models, and requested feedback  from stakeholders. One of the guiding principles focused on voluntary  models—a principle consistent with a final rule published in December  2017 canceling four mandatory participation models in development and  making participation in a fifth mandatory model voluntary for some  geographic areas. Other guiding principles included promoting  competition based on quality, outcomes, and costs; empowering  beneficiaries, their families, and caregivers to take ownership of their  health; and using data-driven insights to ensure cost-effective care that  also leads to improvements in beneficiary outcomes. In addition, the  Innovation Center indicated the following focus areas for new model  development: additional advanced alternative payment models;  consumer-directed care and market-based innovation models; physician  specialty models; prescription drug models; Medicare Advantage  innovation models; state-based and local innovation, including Medicaid- focused models; mental and behavioral health models; and program  integrity.

section_title: The Innovation Center Obligated over 55 Percent of Its Initial Multiyear Appropriation through Fiscal Year 2016
paragraphs: According to Innovation Center documentation, through September 30,  2016, the center obligated over $5.6 billion of the $10 billion appropriated  for fiscal years 2011 through 2019 under section 1115A of the Social  Security Act. The obligated amounts for individual models during this  period ranged from $8.4 million to over $967 million, and varied based on  model scope and design. For example, a model where the Innovation  Center used its waiver authority to provide additional flexibility to  participants (rather than additional funding) required only $8.4 million in  obligations for the evaluation of the model and implementation activities.  In contrast, a model where the Innovation Center awarded funding to a broad set of partners, including providers, local government, and public- private partnerships, to test their own care delivery and payment models  required more than $870 million in obligations for payments to awardees  and used over $95 million for contractor evaluations and other activities  that supported model development and implementation.

Innovation Center spending falls into three categories: model programs,  innovation support, and administration.

Model programs include obligations that directly support individual  models and delivery system reform initiatives.

Innovation support includes center-wide operational expenses that are  not directly attributable to a single model.

Administration includes permanent federal full-time equivalent payroll  expenses, administrative contracts, administrative interagency  agreements, and general administrative expenses.

As the Innovation Center implemented additional models each year, total  annual obligations increased steadily from approximately $95 million in  fiscal year 2011 to more than $1.3 billion in fiscal year 2015, but  decreased slightly in fiscal year 2016. (See fig. 4) Most of these total  obligations were for model programs, which followed a similar pattern,  increasing from $51 million in 2011 to about $1.1 billion in fiscal year  2015, with a slight decrease in fiscal year 2016. According to officials, the  2016 decrease in obligations for model programs was due in part to some  of the earlier, expensive models ending and to newer models being less  costly than the older models. Officials noted, for example, that a number  of newer models incorporated basic program infrastructure used in  previously implemented models, which allowed for reduced model costs.  Officials also indicated that the decrease in obligations may be due to  newer models using payment approaches that are funded by the  Medicare Trust Fund, rather than funded by the Innovation Center’s  dedicated appropriation. The center’s obligations for both innovation  support and administration increased from around $20 million for each  category in fiscal year 2011 to about $163 million for innovation support  and $119 million for administration in fiscal year 2016. Officials told us  that as obligations for model programs grew, so did obligations for  innovation support and administration, which includes indirect costs and  contractor assistance.

section_title: Evaluations Inform the Development of Models and Decisions to Certify Certain Models for Expansion
subsections: section_title: The Innovation Center Has Used the Results from Evaluations to Inform the Development of Additional Models and to Make Changes to Implemented Models
paragraphs: The Innovation Center has used the results from model evaluations to  generate ideas for new models. For some of the early implemented  models, evaluation results showed reduced spending and maintained or  improved quality of care, but also identified model design limitations that  could affect those results. According to officials, in some of these  instances, the Innovation Center has developed new models that build  upon the approaches of earlier models, but include adjustments intended  to address identified limitations (see text box).

Evaluations of Implemented Models  The evaluation of each model is performed by  a third-party contractor, who generally  determines the effect of a model on quality of  care and program spending by comparing  data for model participants to those of a  comparison group of providers and  beneficiaries with characteristics similar to  model participants. For purposes of the  evaluation, the Innovation Center has the  authority to require the collection and  submission of necessary data by model  participants. Accordingly, the third-party  contractor collects both quantitative and  qualitative data. The quantitative data are  used to assess program spending and quality  of care and the qualitative data are used to  provide the context needed to understand the  quantitative results.

Example of A Model That Tests the Same General Delivery and Payment Approach  of a Previously Implemented Model While Addressing Limitations  Bundled Payment for Care Improvement (BPCI) Model 2 tested an episode-based  delivery and payment approach in which the Innovation Center set a benchmark, or  target, price for all Medicare services a beneficiary might receive during a clinical  episode—defined by BPCI Model 2 as the initial hospital stay and all services received up  to 90 days after discharge. If the total spending for Medicare services during an episode  was lower than the target price, participating hospitals would receive payments in  addition to the normal fee-for-service payments. If the total spending for Medicare  services during an episode was higher than the target price, participating hospitals would  have to reimburse Medicare. Participants could select up to 48 different clinical episodes  under the model.   The evaluation of BPCI Model 2 found that orthopedic surgery episodes—of which  approximately 90 percent were hip and knee joint replacement surgeries—may have  resulted in reduced program spending and improved quality of care. However, the  evaluation also identified limitations affecting those results. For example, the target prices  for hip and knee replacement surgeries did not account for potential differences in  Medicare spending between elective surgeries and surgeries required after a fracture. As  a result of this limitation, hospitals could attempt to control spending by limiting the  number of episodes associated with higher cost beneficiaries (i.e., those requiring  surgery due to a fracture).  In part to address the design issue identified under BPCI Model 2, Innovation Center  officials told us they developed the Comprehensive Care for Joint Replacement (CJR)  model. Implemented in April 2016, the CJR model tests the same general delivery and  payment approach used in BPCI Model 2, but focuses specifically on hip and knee joint  replacement surgical episodes and adjusts the target price to account for the higher  spending related to hip and knee joint replacement surgeries following a fracture. As of  March 1, 2018, no evaluations of the CJR model have been publicly released.

The Innovation Center has also used the results from evaluations as one  way to improve the operational and participant support for new models.  According to officials, evaluations have helped them identify lessons  learned regarding support systems, such as which types of systems work  well with which types of models, and then the center incorporated those  lessons when designing the systems for new models. For example,  officials noted that the experience with the learning system from the  Bundled Payments for Care Improvement (BPCI) models informed the  learning system for the Comprehensive Care for Joint Replacement  (CJR) model. The lessons learned helped the Innovation Center better  identify where participants would need additional support and the learning  activities—such as webinars and implementation guides—to provide the  needed support during the early stages of model implementation.  Innovation Center officials told us that these lessons from evaluations  helped ensure that each successive model built upon the collective  experience of models implemented by the center.

The Innovation Center also has used evaluation results to make periodic  changes to models during the testing period. According to officials, these  changes include adjustments to the delivery and payment approaches  tested, such as refining the target population, broadening the geographic  focus, and refinements of spending calculations. Innovation Center  officials noted that, in general, such changes were limited to minimize  their effects on the evaluation of program spending and quality of care.  Officials also identified changes to operational and participant support  systems, which have included changes to the timing of participant data  reporting, revisions to how data are collected from participants, and  changes to the way learning materials are delivered to participants.  According to officials, these types of changes are generally intended to  help improve the experience of participants.

According to Innovation Center officials, evaluation results may also be  used in making a decision to terminate a model prior to the end of its  planned testing period. However, officials stated that the Innovation  Center has not terminated any models prior to the conclusion of their  testing periods, either based on the results of an evaluation or for other  reasons.

section_title: Evaluations Informed Innovation Center Decisions to Recommend Two Models be Certified for Expansion
paragraphs: The Innovation Center used evaluation results in recommending two  models be certified for expansion. According to Innovation Center  officials, the evaluation of each model adequately demonstrated that the  delivery and payment approach tested reduced Medicare spending while  maintaining or improving quality of care. Based on these results, the  Innovation Center formally requested that CMS’s Office of the Actuary  analyze the financial impact of a potential expansion of each model. The  two models were:

Pioneer ACO. Pioneer ACO tested an ACO delivery and payment  approach that gave providers an opportunity to be paid a relatively  greater share of savings generated, compared to participants in other  ACO models, in exchange for accepting financial responsibility for any  losses. In year 3 of the model, ACOs that met certain levels of savings  in the first two years could elect to receive a portion of their Medicare  fee-for-service payments in the form of predetermined, per beneficiary  per month payments.

YMCA of the USA Diabetes Prevention Program (Diabetes  Prevention Program). The Diabetes Prevention Program applied a  lifestyle change program recognized by the Centers for Disease  Control and Prevention to reduce to the risk of Type 2 diabetes for at- risk Medicare beneficiaries. The Diabetes Prevention Program was a  part of the Health Care Innovation Awards Round One model.

When assessing the Pioneer ACO and Diabetes Prevention Program  models for expansion, the officials from the Office of the Actuary  considered the model evaluation results that were available and  information from other sources. For example, the assessment of  Pioneer ACO used historical shared savings calculations and beneficiary  attribution data from ACOs in the Medicare Shared Saving Program and  Pioneer ACO; Medicare claims and enrollment data; and published  studies. According to CMS officials, a model evaluation and a certification  for expansion differ in that a model evaluation assesses the historical  impact of a delivery and payment approach for model participants only,  while a certification for expansion assesses the future impact on program  spending across all beneficiaries, payers, and providers who would be  affected by the expanded model.

Based on its assessments, the Office of the Actuary certified both models  for expansion and steps have been taken to expand them. In certifying  Pioneer ACO, the Office of the Actuary concluded that because ACOs, in  general, have been shown to produce savings relative to Medicare fee- for-service, an expansion of Pioneer ACO would generate further savings  to the Medicare program. According to officials, CMS expanded Pioneer  ACO by incorporating elements of the model—through rulemaking—as  one of the options that providers may choose under the Medicare Shared  Savings Program. For the Diabetes Prevention Program, the Office of  the Actuary concluded that certain changes considered as part of the  expansion would, in the near term, improve upon the original savings  achieved as part of the Health Care Innovation Awards as well as savings  achieved in similar diabetes prevention programs. The Innovation Center  has expanded—through rulemaking—the Diabetes Prevention Program  under a new, nationwide model to be implemented in April 2018.

In addition, officials from the Innovation Center and the Office of the  Actuary discussed potentially assessing whether Partnership for Patients  should be certified for expansion. Partnership for Patients is a model that  leveraged federal, state, local, and private programs to spread proven  practices for reducing preventable hospital-acquired conditions and  readmissions across acute care hospitals. According to officials, the  Innovation Center shared the results for Partnership for Patients—which  showed improved quality of care in the form of reduced preventable  hospital-acquired conditions and readmissions—with the officials from the  Office of the Actuary. After discussing these issues, Innovation Center  officials decided not to request a formal analysis for certification of  expansion.

section_title: The Innovation Center Established Performance Goals and Related Performance Measures and Reported Meeting Its Targets for Some Goals
paragraphs: To assess is own performance, the Innovation Center established three  center-wide performance goals and related measures.

Goal 1: Reduce the growth of healthcare costs while promoting  better health and health care quality through delivery system reform.  This goal has three performance measures that focus on ACOs. As  shown in table 3, the Innovation Center has reported mixed results in  achieving the targets set. According to agency reported data, the  Innovation Center met the targets for 2 of its 3 Goal 1 performance  measures for 2015. For the remaining measure—the percentage of ACOs  that shared in savings—the center did not meet its target during either of  the two years for which data were available. According to officials, when  results fall short of targets, they examine the causes and make  appropriate adjustments to the program. Officials stated that the missed  target was driven by the high growth in the number of ACOs that were  new—and therefore would not yet be expected to achieve a level of  savings in which they could share—and not by ACO performance deficits.  As a result, officials decided that no adjustments were required to the  Medicare Shared Savings Program or other ACO Models to help improve  performance. However, as shown in table 3, the Innovation Center set a  target for 2016 that was lower than the 2015 target. For 2017, the  Innovation Center lowered the expectation for growth compared to  previous years, setting a target that was 1 percent higher than the 2016  target. Moving forward, CMS believes that as more ACOs gain  experience, more will share in savings. Additionally, the agency expects  that with additional performance years, the targets for the measure will  become more refined.

Goal 2: Identify, test, and improve payment and service delivery  models. This goal has one performance measure, which identifies the  number of models that currently indicate (1) cost savings while  maintaining or improving quality or (2) improving quality while maintaining  or reducing cost. As of September 30, 2016, the Innovation Center  reported that four section 1115A model tests have met these criteria (see  table 4).

Goal 3: Accelerate the spread of successful practices and models.  For this goal, the first performance measure focuses on the number of  states developing and implementing a health system transformation and  payment reform plan. The second measure focuses on increasing the  percentage of active model participants who are involved in Innovation  Center or related learning activities. As shown in table 5, the Innovation  Center reported meeting its target for the first measure for both fiscal  years 2015 and 2016, but not meeting its target for the second measure.  For the second measure, the Innovation Center noted in its report to  Congress that although the results for fiscal year 2016 showed a slight  decrease in overall participation in Innovation Center or related learning  activities, the majority of models performed higher than their individual  targets. Several models underperformed, however, bringing down the  overall percentage rate.

In addition to the Goal 3 performance measures, the Innovation Center  identifies two related contextual indicators—which according to officials  are measures that provide supporting information to help understand  trends or other information related to the goal. The first contextual  indicator provides a snapshot of Medicare beneficiary participation at a  given point in time for all models operational for more than 6 months. In  fiscal year 2016, CMS reported that over 3.6 million Medicare fee-for- service beneficiaries participated in models, representing approximately 9  percent of Medicare fee-for-service beneficiaries. The second contextual  indicator provides information to help understand the level of interest and  participation among providers in the Innovation Center’s model portfolio.  In fiscal year 2016, the Center estimates that 103,291 providers  participated in Innovation Center payment and service delivery models.

In addition to the three goals established by the Innovation Center, CMS  has established an agency-wide goal related to the center’s performance.  In 2015, CMS announced goals to help drive Medicare, and the health  care system at large, toward rewarding the quality of care instead of the  quantity of care provided to beneficiaries. One of these goals was to shift  Medicare health care payments from volume to value using alternative  payment models established under the Innovation Center. This agency- wide goal has one performance measure, which is to increase the  percentage of Medicare fee-for-service payments tied to alternative  payment models, such as ACOs or bundled payment arrangements. As  shown in table 6, CMS reported meeting its target for 2015 and 2016.

Looking forward, officials told us that the Innovation Center has  developed a methodology to estimate a forecasted return on investment  for the model portfolio, and is in the early stages of refining the  methodology and applying it broadly across the portfolio in 2018. As part  of the development efforts, the Innovation Center expects to utilize  standard investment measures used in the public and private sectors.

section_title: Agency Comments
paragraphs: We provided a draft of this report to HHS for comment. The Department  provided technical comments, which we incorporated as appropriate.

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 Health  and Human Services. In addition, the report will be available at no charge  on the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact  me at (202) 512-7114 or kingk@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.

section_title: Appendix I: Center for Medicare and Medicaid Innovation’s General Process for Implementing Models
paragraphs: Appendix I: Center for Medicare and Medicaid  Innovation’s General Process for Implementing  Models An agency may issue a request for information for planning purposes.

section_title: Appendix II: Models Implemented or Announced by the Center for Medicare and Medicaid Innovation under Section 1115A
paragraphs: As of March 1, 2018, the Center for Medicare and Medicaid Innovation  (Innovation Center) organized its models into seven categories based on  delivery and payment approaches tested and program beneficiaries  covered. Table 8 provides the number of models implemented and  announced, organized under each category.

The Innovation Center organized seven of its models under the  Accountable Care category. (See table 9.)

The Innovation Center organized seven of its models under the Episode- Based Payment Initiatives category. (See table 10.)

The Innovation Center organized three of its models under the Initiatives  Focused on Medicare-Medicaid Enrollees category. (See table 11.)

The Innovation Center organized one of its models under the category,  Initiatives Focused on the Medicaid and Children’s Health Insurance  Program Population. (See table 12.)

The Innovation Center organized 14 of its models under the category,  Initiatives to Accelerate the Development and Testing of New Payment  and Service Delivery Models. (See table 13.)

The Innovation Center organized three of its models under the category,  Initiatives to Speed the Adoption of Best Practices. (See table 14.)

The Innovation Center organized four of its models under the category,  Primary Care Transformation. (See table 15.)

section_title: Appendix III: Models Required by Different Provisions of the Patient Protection and Affordable Care Act
paragraphs: In addition to models required by section 1115A of the Social Security  Act, as added by the section 3021 of Patient Protection and Affordable  Care Act, the Center for Medicare and Medicaid Innovation implemented  six models under different provisions of the Patient Protection and  Affordable Care Act. (See table 16.)

section_title: Appendix IV: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact

section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Greg Giusto (Assistant Director),  Aaron Holling (Analyst-in-Charge), Ashley Dixon, and Rachel Rhodes  made key contributions to this report. Also contributing to the report were  Sam Amrhein, Muriel Brown, and Emily Wilson.

Fast facts: Federal spending on health care—driven primarily by Medicare and Medicaid—is expected to top $1 trillion in 2018.

The Affordable Care Act created the CMS Innovation Center to test new approaches to health care delivery, known as models, that could curb spending while providing better care. We reviewed the center's efforts.

Since 2010, the center has tested or is in the process of testing 37 models. In evaluating these models, the Innovation Center has recommended the expansion of 2 Medicare models that reduced costs and maintained or improved care quality. Evaluations have also helped the center improve new model design and operation.

Question-summary annotations: questions: question: How is the Center for Medicare and Medicaid Innovation trying to reduce health care spending while improving care quality?
answer: As of March 1, 2018, the Center for Medicare and Medicaid Innovation (Innovation Center) had implemented 37 models that test new approaches for delivering and paying for health care with the goal of reducing spending and improving quality of care.
child_questions: question: How do the models vary?
answer: These models varied based on several characteristics, including the program covered—Medicare, Medicaid, the Children's Health Insurance Program (CHIP), or some combination of the three—and the nature of provider participation—voluntary or mandatory.

question: Which models is the Center focusing on?
answer: Going forward, the Innovation Center indicated that the center plans to continue focusing on the use of voluntary participation models and to develop models in new areas, including prescription drugs, Medicare Advantage, mental and behavioral health, and program integrity.

question: To what extent is the Innovation Center's appropriation adequate for its needs?
answer: Through fiscal year 2016, the Innovation Center obligated $5.6 billion of its $10 billion appropriation for fiscal years 2011 through 2019.

questions: question: Why has the Innovation Center evaluated its models?
answer: The Innovation Center has used evaluations of models (1) to inform the development of additional models, (2) to make changes to models as they are implemented, and (3) to recommend models for expansion.
child_questions: question: How has the Center used evaluations to improve future models?
answer: For example, Innovation Center officials noted that, for some instances where evaluations have shown reduced spending with maintained or improved quality of care, the center has developed new models that build upon the approaches of earlier models, but with adjustments intended to address reported limitations.

question: How do model expansions and certificates for expansion differ?
answer: According to CMS officials, a model evaluation and a certification for expansion differ in that a model evaluation assesses the impact of a delivery and payment approach for model participants only, while a certification for expansion assesses the future impact on program spending more broadly across all beneficiaries, payers, and providers who would be affected by the expanded model.
child_questions: question: What information does the Office of the Actuary use to certify expansions?
answer: As a result, the Office of the Actuary used the results of the evaluation and other information, such as Medicare claims data and published studies, to certify the expansion of both models.

questions: question: Why was the Innovation Center created?
answer: The Patient Protection and Affordable Care Act created the Innovation Center within CMS to test new approaches to health care delivery and payment—known as models—for use in Medicare, Medicaid, or CHIP.

question: What aspects of the Center has GAO reported on?
answer: In 2012, GAO reported on the early implementation of the Innovation Center.
child_questions: question: What were GAO's findings?
answer: GAO found that, during the first 16 months of operations, the Innovation Center focused on implementing 17 new models and developed preliminary plans for evaluating the effects of each model and for assessing the center's overall performance.

questions: question: What does this report examine?
answer: In this report, GAO: (1) describes the status of payment and delivery models implemented and the resources used; (2) describes the center's use of model evaluations; and (3) examines the center's assessment of its own performance.

question: How did GAO source its data for this report?
answer: GAO reviewed available documentation, such as model fact sheets and frequently asked questions, and evaluation reports for models that have been implemented. GAO reviewed obligation data and performance information for the time period for which complete data or information were available.
child_questions: question: What sources were used to augment the raw data?
answer: GAO also interviewed officials from the Innovation Center and CMS's Office of the Actuary.