Hospitals In Focus

Improving Care & Lowering Costs: Is CMMI Accomplishing Its Mission?


Dr. Liz Fowler, Deputy Administrator of CMS and Director of CMMI 


Chip and Dr. Fowler discuss CMMI’s mission to improve health outcomes, overcome the obstacles to health equity, and reduce care costs. They look back on what CMMS has accomplished in its first 10 years, what we have learned from this experimentation, and the future of care and payment innovation.    

Topics they examine include: 

  • CMMI’s successes over the last decade and what programs have resonated most. 
  • Controversial CBO report that says CMMI’s programs have increased federal spending – not lowered it. 
  • Performance of CMMI bundled payments and rationale behind a new mandatory bundled payment program. 
  • Goals of the newly announced state-based AHEAD model and how it will interact with other ACO and value-based care programs. 
  • Dealing with the challenges created by massive growth in Medicare Advantage. 
  • How CMMI is addressing the broad issue of health equity. 


Dr. Fowler has the unique role of leading an agency she helped create. From 2008-2010, she was Chief Health Counsel to Senate Finance Committee Chair, Senator Max Baucus (D-MT), where she played a critical role in developing the Senate version of the Affordable Care Act. The framework for the CMMI was embedded in the law – so now, after several roles in the private sector, Dr. Fowler oversees CMMI. 

Speaker 1 (00:05):

Welcome to Hospitals In Focus from the Federation of American Hospitals. Here’s your host, Chip Kahn.

Chip Kahn (00:14):

Hello again, and welcome to Hospitals In Focus. We so appreciate you listening. Improving healthcare outcomes, overcoming the obstacles to health equity and reducing healthcare costs define the mission of CMS’s Center for Medicare and Medicaid Innovation, otherwise known as CMMI.


CMMI was created by the Affordable Care Act in 2010, and since then it has had an agenda aimed at transforming Medicare and Medicaid through innovations accelerating the shift from fee-for-service care to value-based purchasing.


So what has CMMI accomplished? And what have we learned from its experimentation? And finally, what’s in its future? Today we will seek answers to these questions from Deputy Administrator of CMS and Director of CMMI, Dr. Liz Fowler. Thanks so much for joining us today, Liz.

Liz Fowler (01:10):

Thanks so much, Chip. I really appreciate this chance to be here and share our thinking and future plans at the CMS Innovation Center, or CMMI, as you said.

Chip Kahn (01:20):

So Liz, you have the really unique opportunity to actually implement a program that you were one of the framers of back in 2009, 2010 as a staff person on the Senate Finance Committee. You were one of the main drafters of the ACA and one of the framers, as I said, of this whole notion of CMMI and bringing this concept of experimentation and transformation to CMS.


Now that you’re in charge, how’s the experience and how does it feel to actually be in charge of a program that you framed when you worked on the Hill?

Liz Fowler (02:03):

Well, let me just first say that I feel really fortunate to have the opportunity to serve in this role at this time. And it’s not to say it’s an easy job. I think the US health system has a lot of positive attributes. We have high level of innovation. We provide some of the most sophisticated, cutting-edge care in the world, the greatest and best technologies available at some of the world’s leading institutions.


But we also have some really significant challenges related to fragmentation, misalignment of incentives, affordability and access. And it’s not a system that works well for patients who have to navigate a complicated maze of coverage restrictions and out-of-pocket costs and a confusing array of treatment options, sometimes without the benefit of a navigator or quarterback.


And the Innovation Center was really created to try to address some of these friction points in the system that affects both providers and patients by testing new payment and delivery system innovations.


And I think the question we ask every day, “Is there a better way to pay for care? Is there a better way to deliver better health outcomes that reduces spending through care coordination, avoiding unnecessary, duplicative and low-value care?” And when ACA was established, we didn’t know how to achieve these goals. And so CMMI was really set up to be the R&D function for Medicare.


And did I imagine myself serving in this role after a decade after its creation? No. But it’s really a privilege to have the opportunity to work on these issues again. It’s a really critical time in our health system after the pandemic, which we’re still recovering from. And I feel like we need the Innovation Center more than ever to be creative and test these possible solutions.

Chip Kahn (03:47):

So as you say, Liz, we are at the 10-year mark of CMMI. From your standpoint, over that period, what are the results that have resonated and what are the results that stand out for you?

Liz Fowler (04:03):

We talked a little bit about the ACA creating the Innovation Center, this bold concept of a center that has at its disposal this investment of $10 billion over 10 years that renews every decade, and the ability to waive regulations as part of these models.


In terms of the results, the Innovation Center has the ability to scale successful models in duration and scope. Only four models have met that standard for certification, which is what we call the standard. And I would say that the models that have been expanded are not the ones that necessarily have been the most transformational, like Home Health Value-Based Purchasing and RSNAT, a model that addressed recurrent use of non-urgent ambulance services.


On the other hand, models that have been really more transformational haven’t met that bar for certification. And here I would point to models like the Oncology Care Model, the Next Gen ACO Model, Accountable Health Communities Model.


And as it’s been applied, this certification standard is really a high bar. It requires thus actuaries to attest that they believe we’ll generate savings on a net basis with 95% certainty.


So I think we’re learning a lot more from the models than just a simple yes, no, did the model get certified? And I know we need to do a better job of communicating what we’re learning from these models and how our models might be impacting the broader health system.


And so to that end, we’re working on a new framework for considering the impact of our work based on health system transformation, really going back over a decade’s worth of evaluation reports, and recently published a paper in the New England Journal of Medicine Catalyst on the types of delivery changes that have taken place in our models, and so what have we been learning? And so I point folks to that and as maybe an expansion of how we’re defining success.

Chip Kahn (05:59):

In terms of one way of looking at success, there was a recent report from the Congressional Budget Office that showed that CMMI over the 10 years had spent more than it saved. Maybe that’s a bit unfair because I know that CBO, of the Congressional Budget Office, tends to look at things very much in terms of the box of the program and what it did inside the program, not broader effects.


How do you see that? And maybe it’s a bit unfair when you’re in an experimentation program overall, which is what CMMI is, to even get into cost benefit because the issue is what specific programs did, not necessarily what the overall effort did.

Liz Fowler (06:44):

Well, you made some of my talking points for me, Chip. As we know, moving the health system towards value isn’t easy. Ask anyone who’s been at the forefront of this movement or invested in strategies or models or worked at the Innovation Center.


And as you said, CBO’s assessment of our track record is that we haven’t generated the level of savings they projected back in 2010, and I do think that’s a fair assessment if you just count the dollars saved versus dollars spent for a specific model, but they didn’t account for the spillover effects from the models into the broader health system, the savings that accrued to Medicare Advantage or to the Shared Savings Program.


We know there’s a spillover effect where practices and providers that are implementing care delivery improvements expand those innovations to all patients in their practices, regardless of whether the patient is part of a model or not. We aren’t able to quantify this impact, but we see it on the ground and we hear about the effect of our models when we talk to health providers.


I think they also acknowledge some of the challenges to generating savings that we’ve identified ourselves, namely that most of our models have been voluntary, so we’ve suffered from selection bias, and that with a lot of models in the field, sometimes we’ve had conflicting incentives.


I think another factor that also plays into our record of savings is that a lot of our models address areas of historical underfunding, like improving care for underserved population, addressing social drivers of health, improving the primary care infrastructure, thinking about access and sustainability in rural healthcare. And in some of those areas, what you really need is an investment and not necessarily savings.

Chip Kahn (08:26):

So if we could take a deep dive on some of the programs that are most relevant to hospitals, could you talk a bit about where you think CMMI is on bundle payments generally? And you brought up the issue of mandatory. Can we talk about that in terms of where you may be going in the future regarding bundles?

Liz Fowler (08:49):

Sure. Happy to. As you know, and as many in your audience know, we’ve tested two bundled payment programs, and both of which have gone through different iterations and extensions and are still running today.


The first is the Bundle Payment for Care Improvement Advanced Model, which combines payments for physicians, hospitals, and other providers, services into a single bundle payment amount calculated based on the expected costs of all the items and services furnished during an episode of care.


And the second is the Comprehensive Care for Joint Replacement, or CJR, which is different in two key respects. First, it’s mandatory. And then second, it focuses exclusively on one type of episode, lower extremity joint replacement, largely hip and knee replacements.


I think the top-line findings from both of these models are similar. We’re seeing a consistent reduction in institutional care that leads to greater reductions in cost while maintaining some of the, and in some instances, improving the quality of care.


The BPCIA Model, which we refer to it as for short, has generated net savings for surgical episodes, but those savings have been offset by losses from medical episodes. We’ve made some adjustments to target pricing methodology, et cetera, and we’ve published evaluation reports, but certainly that’s sort of the flagship bundled payment model.


And then looking at CJR, we find promising results. The results are similar to BPCIA. We’ve reduced avoidable spending through reductions in post-acute care after discharge, and we were on track to save Medicare spending until the COVID public health emergency and we provided some relief to that.


So based on those two models, our history of bundle payment models, we are looking at moving into a mandatory approach. We published a request for information over the summer. We’ve gone through some of the input from that RFI and we’re working on a mandatory model and we’ll release hopefully the proposed rule on that sometime in January.

Chip Kahn (10:53):

One of the issues that has been raised to me over the years of the bundle payment experiments was sort of changing the goalposts after the game started. And some of the hospitals that I work with really started off excited about the possibilities of these alternative payment models, but found as they proceeded through experimentation that it became very problematic.


If you do move in this way of mandatory, can you assure people that there’s going to be stability? Because the problem is that from a hospital standpoint particularly, you do your planning, and as I said, if the goalpost changes, that really raises a lot of problems for you and could just make a program negative and just a cut program, not a program that really gives you incentives to improve care or improve services.

Liz Fowler (11:51):

Well, Chip, I think that’s a legitimate point, and I think that has been one effect of running a number of voluntary models where to address some of the risk selection we’ve seen, we’ve had to change some of the features of the model and some of the approaches in the course of the model, which I hope will be mitigated in a mandatory setting.


One of the selling points for value-based care is that we’re going to establish more predictable and stable funding. And certainly when the goalposts are changed and people feel like it hasn’t been a good experience, I think we really have soured some providers on value-based care, and I want to avoid that in the future because I really do believe this is the future and the direction we need to go and we need to be mindful of the experience of providers in these models so we can move, I think, more quickly and more expeditiously in this direction.

Chip Kahn (12:48):

Beyond bundling, one of the other major aspects of your upcoming agenda is the AHEAD Model that would assume state-based control over some kind of general budgeting, maybe interaction between ACOs and other kind of value-based care programs in Medicaid. What’s your vision for AHEAD? What states do you think are going to be the primary users of this option and how do you see it playing out?

Liz Fowler (13:25):

Yeah, it’s a great question. I’m really excited about the AHEAD Model, which stands for States Advancing All-Payer Health Equity Approaches and Development, or AHEAD.


We’ve been working on this model for several years now, and so we’re really excited to be launching the model. It’s very ambitious in its design and combines elements and lessons learned from previous models, including the Vermont All-Payer ACO Model, the Maryland Total Cost of Care Model, and the Pennsylvania Rural Hospital or Rural Health Model, or PARHM.


And it is proposing a significant restructure of health system spending across all-payers in a state, or it can also be a region. We see increased investments, or what we want to see is increased investments in the type of care that’s correlated with improved population health and health equity like primary care. And those investments are offset by reductions in spending and utilization in other areas to constrain total cost of care growth.


It is really an opportunity for states that have been investing and thinking about strategies at a statewide basis and really thinking about making these sort of investments at a population level.


It’s not, as I’ve said in other settings, for the faint of heart. I think we can accept up to eight states through the funding that we’re providing, through the Notice of Funding Opportunity which we hope to have out within the next week or so.


So while it’s a bold model, and I think not all states are in a position to join, we are really encouraged by the number of states that have reached out.


Now, this is a hospital audience, and so speaking on the hospital side, the model is voluntary for hospitals. There’s no requirement to join the model, but in order for a state to participate, they’ve got to bring in a certain percentage of Medicare revenue on the fee-for-service side in order to join the model. So we’ll be counting on states to work with hospitals in their states if they’re planning on applying.

Chip Kahn (15:26):

Just to add a follow-up question here, I don’t know how the models will work, but frankly, how do you react to the point that the future of Medicare may not be CMMI, but may be Medicare Advantage? Because we already see Medicare Advantage now at above 50%.


And frankly, the areas where most of my hospitals that I represent are Texas, Florida, and some other areas. You’re well over 50% in Medicare Advantage, and really it’s Medicare Advantage that’s the defining change, not other kinds of transformative aspects of fee-for-service. How do you respond to that and what do you see in terms of where Medicare is going in the big picture?

Liz Fowler (16:14):

Yeah, that’s a great question. And we have a couple of models in the Medicare Advantage space, the Value-Based Insurance Design Model and then the VBID Hospice Model. And certainly there have been a number of calls for us to do more in Medicare Advantage, and so we’re exploring that.


But I think while Medicare Advantage continues to grow and is a really important part of Medicare, there is still traditional fee-for-service Medicare, and we want there to be viable options for beneficiaries who don’t want to go into Medicare Advantage, and we want them to have care coordination and patient navigation, and we want providers to still be able to be successful in traditional fee-for-service Medicare and I think that’s where a lot of our Accountable Care strategy comes in.


So if you’re not in Medicare Advantage, we want beneficiaries to be aligned to an advanced primary care or an ACO where they can receive this sort of additional benefits, supplemental benefits and care navigation that you might see in other parts of the program like in Medicare Advantage.


But it’s certainly a really good question and something we’re mindful of and tailoring our innovations as we think about them going forward.

Chip Kahn (17:26):

One of the main objectives for CMS now is throughout all of its programs to have an equity factor, whether it’s some commentary when you’re doing regulations on the implications of a regulation for equity, or whether it’s your agenda at CMMI to integrate the issue of reaching greater health equity through whatever changes or transformation you’re proposing and experimenting with.


How do you see that playing out in your agenda? And how successful have you been up to this point with the broad issue of health equity?

Liz Fowler (18:05):

Well, it’s a great question, and advancing health equity is a priority for the Biden administration as well as for all of HHS and CMS. And we’ve made advancing health equity one of the key components or key objectives as part of the strategy we put out in 2021.


And for the Innovation Center, that means four areas. First of all, we’re looking at embedding equity into the models, and that includes payment innovation and strategies to address disparities. So for example, the ACO REACH program and the Making Care Primary program where we are adjusting payments based on underservedness, and so providers that are serving a higher proportion of these patients will get a payment bonus.


We’re also thinking about increasing the diversity of beneficiaries served by our models, and so we think of doing that by including more safety net providers into our models. We’ve included incentives for FQHCs, and in some models rural health centers, Medicaid providers to come into our models.


We’re thinking about equity in our evaluations, and that needs to be done upfront when we’re developing the model and planning the evaluation, so we want to make sure that at the backend we’ll be able to say whether we’ve had an impact on health disparities.


And then finally, we’re also focused on data collection across beneficiary groups, including underserved populations and also social determinants of health. So collecting information and data on social drivers of health and making efforts to connect patients to resources to address those social drivers of health.


You can see a lot of the elements that I’ve just laid out in the models that we’ve announced. I think it’s a little soon to say we’ve had an impact or we’ve been successful, but we have seen a substantial increase in the number of safety net providers in our models, which we’re really proud of.

Chip Kahn (19:58):

Just to close out, Liz, and we’ve actually touched on a lot of these, could you just characterize for our audience, your agenda, the main elements of it, and frankly, what you’d like the takeaways from our conversation for the last 20 or so minutes to leave the audience with?

Liz Fowler (20:16):

Thanks, Chip. And we’ve laid out a strategy refresh in 2021. I think we’ve built in five key components or key objectives, Accountable Care. We’re driving towards 100% of traditional Medicare beneficiaries. We want to see them aligned with a primary care physician in advanced primary care and ACO.


Advancing health equity, which we just talked about. Supporting innovation, so thinking about those data tools, investments needed to be successful in models. We’re thinking about affordability, and that includes, we haven’t talked at all about prescription drug pricing, but have a couple of models in development in that area.


And then multi-payer alignment, we’re partnering to achieve system transformation. I think if we just look at Medicare or just look at Medicare and Medicaid, we’ll only be so successful, so we’re also thinking about how to align with commercial payers in markets and bring them along as well.


As I’ve discovered in this job, and based on my previous experience, value-based care and moving in this direction really is a marathon and not a sprint. And so we’re taking count of what’s worked and what hasn’t, what we’ve learned, and I think trying to spell out a strategy and a direction for the future that will bring improvements to our health system in a way that benefits both patients and people with Medicare and Medicaid as well as providers who, at this point, feel overwhelmed by a lot of the burdens that the health system places on them.


So we think there’s a future in the direction we’re heading. We’re really excited about it and hope that folks will join us. In some cases maybe they may be compelled to join us, and we’ll get to that at some other point and see how that goes. But really excited about the direction we’re heading and what we hope to achieve in the future.

Chip Kahn (22:03):

Liz, thank you so much. This has just been a great conversation and really covered the entire waterfront, I think, of CMMI. And it’s going to be so useful for those listeners when they tune in.

Liz Fowler (22:16):

Well, thanks for having me, Chip. It’s a great opportunity, and our door is open. We’d love to hear from you. We have learned a lot from site visits and meeting with folks directly, so we’d love to hear from your audience directly.

Speaker 1 (22:33):

Thanks for listening to Hospitals In Focus from the Federation of American Hospitals. Learn more at fah.org.


Follow the Federation on social media, @FAHhospitals, and follow Chip, @chipkhan. Please rate, review and subscribe to Hospitals In Focus. Join us next time for more in-depth conversations with healthcare leaders.

Elizabeth Fowler, Ph.D., J.D.

Dr. Elizabeth Fowler is Deputy Administrator and Director of the Center for Medicare and Medicaid Innovation at CMS. Dr. Fowler previously served as Executive Vice President of programs at The Commonwealth Fund and Vice President for Global Health Policy at Johnson & Johnson. Before that, she was special assistant to President Obama on health care and economic policy at the National Economic Council.

From 2008 to 2010, she was Chief Health Counsel to Senate Finance Committee Chair, Senator Max Baucus (D-MT), where she played a critical role developing the Senate version of the Affordable Care Act. She also played a key role drafting the 2003 Medicare Prescription Drug, Improvement and Modernization Act (MMA).

Dr. Fowler has over 25 years of experience in health policy and health services research. She earned a bachelor’s degree from the University of Pennsylvania, a Ph.D. from the Johns Hopkins Bloomberg School of Public Health, and a law degree (J.D.) from the University of Minnesota. She is admitted to the bar in Maryland, the District of Columbia, and the U.S. Supreme Court. Dr. Fowler is a Fellow of the inaugural class of the Aspen Health Innovators Fellowship and was elected to the National Academy of Medicine in 2022.

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