State Innovation Models: Worth the Investment

By Carol Backstrom, Principal and Director, Delivery System Transformation

Recently, the CMS Center for Medicare and Medicaid Innovation (CMMI) released a Request for Information (RFI) regarding the future direction of the agency’s priorities. The RFI noted that CMS was seeking feedback on “a new direction to promote patient-centered care and test market-driven reforms that empower beneficiaries as consumers, provide price transparency, increase choices and competition to drive quality, reduce costs, and improve outcomes.”

States as Laboratories of Innovation

Harbage Consulting is proud of our extensive federal, state, and local experience working with state Medicaid programs and we were pleased to have an opportunity to comment on one of the specific areas outlined in the RFI – State-Based and Local Innovation, Including Medicaid-Focused Models. We have had the privilege of working on the development and implementation of state-level care delivery and payment reforms including State Innovation Models (SIM) and Medicaid Section 1115 waivers and wanted to share our perspectives on the critical importance of the federal investment in state innovation and the benefits of SIM in action.

In our comment letter, we noted that statewide health reform is challenging but rewarding work that can improve the efficiency, effectiveness, and value of health care programs. The funding through SIM became available at a critical moment in the evolution of state delivery systems and has proven particularly valuable in providing state leaders needed flexibility to undertake transformative innovations. However, there is more work to be done.  Achieving statewide delivery transformation takes time, as well as a consistent financing stream. Although states have made significant progress in achieving payment and service delivery improvements, full transformation is not yet complete.

Return on Investment

Since the first round of SIM grants was released in 2013, states have made clear and tangible progress in advancing their delivery system transformation goals.  Following are several specific examples we cited regarding the impact of SIM to date:

1. Flexibility. SIM has enabled states to pursue delivery system and payment reforms tailored uniquely to their individual needs and goals. As we know, what works in Minnesota may not be right for Arkansas, and the fact that SIM created space for that kind of flexibility has truly fostered state-level innovation. In Minnesota, the SIM grant supported the creation of Integrated Health Partnerships (Medicaid Accountable Care Organization models), which tested and refined a per-capita population health payment model. Preliminary results show that in the second year of the program (2014), Integrated Health Partnerships saved an estimated $61.5 million compared to projected costs. Likewise, SIM funding in Arkansas allowed the state to explore and implement medical homes and episodes of care. Early evaluation credited medical homes with saving the state’s Medicaid program over $34 million in 2014.

2. All-Payer Focus. SIM grants have supported state innovation that includes all payers in a state, not just Medicaid or Medicare. Unlike 1115 waivers that focus only on Medicaid, the broader scope of SIM allows state officials to consider the entire insurance market in their state, including coverage provided by both large and small businesses and through the individual market. This is especially important for reforms that seek change in a large-scale, streamlined manner. Maryland, for example, has received significant support from CMMI for their all-payer model, which enabled the state to accelerate and refine its global budget model.

3. Funding for Infrastructure Development. The ability to use SIM funds for infrastructure development has been critical to states’ success in testing innovative models. This includes the Health Information Technology/Exchange (HIT/E) necessary to successfully share data, act on information, and streamline quality measurement and reporting. State investments of SIM funds into HIT/E efforts has expedited provider participation in value-based purchasing arrangements and generated actionable cost and quality data that providers can utilize to make care improvements.

4. Stakeholder Input. SIM grants have provided the impetus for states to facilitate health reform discussions between state agencies, health plans, provider groups, and consumers. SIM has allowed for convening groups – both providers and non-providers – to meet and exchange ideas, in some cases for the first time. Some states have expanded these conversations to include public health, long-term services and supports providers, and community health workers, all of whom have the ability to influence health outcomes.  This opportunity to break down the long-standing siloes in the health care system has created new and previously unlikely partnerships.

5. Promising Early Results. Although formal evaluation results are still under development, initial findings from the SIM Round 1 Testing indicate an increase in the number of people and providers in value-based purchasing arrangements. Early findings have also demonstrated decreases in utilization and expenditures. SIM has enabled states to increase efforts around integration of behavioral and physical health and expand on the concept of behavioral health homes, which holds promising results in improving health outcomes and reducing costs.

We hope that our comments are helpful to CMS as the agency considers the future of CMMI and SIM funding as a vehicle for state Medicaid agencies.  We are at a critical juncture nationally in the drive toward value-based purchasing and the federal investment in these efforts could not be more essential in enabling states to test efficient and effective payment strategies in their health care systems.