Clinical laboratories and pathology groups feel the impact of many of the Center’s demonstration projects that move healthcare toward value-based reimbursement

One perennial criticism of this nation’s healthcare system is that it is slow to innovate. Technologies and management principals widely adopted by many industries may take a decade or longer to gain acceptance by hospitals, physicians, and clinical laboratories.

To encourage faster adoption by useful technologies and innovations by providers, the Affordable Care Act (ACA) has a section that is not well known. This part of the law, passed in 2010, created  the Center for Medicare & Medicaid Innovation.

The Innovation Center was included in the ACA legislation for the purpose of testing “innovative payment and service delivery models to reduce program expenditures … while preserving or enhancing the quality of care” for Medicare, Medicaid, or Children’s Health Insurance Program (CHIP) beneficiaries.”

Clinical Laboratories Affected by Center’s Demonstration Projects

The Innovation Center’s work is relevant to pathologists because clinical laboratories and anatomic pathology groups are involved in many of the innovations that flow out of the center’s demonstration projects. These projects aim to improve patient outcomes while simultaneously reeling in Medicare, Medicaid, and CHIP costs. Most of the changes being tested accelerate healthcare’s transition from fee-for-service to value-based reimbursements.

So far, the center’s portfolio of initiatives has ranged from patient-centered medical homes (PCMHs) and alternative models for accountable care organizations (ACOs) to episode-based bundled payments for such things as hip and knee replacements and cancer treatment. Through its Healthcare Innovation Awards program, the Innovation Center is doling out up to $1 billion in grants to healthcare organizations testing innovative care models.

Innovation Center Key to Future of Medicare

Patrick Conway, MD, MSc, calls the Innovation Center an underappreciated and “essential” part of the health law. Conway is Director of the Center for Medicare & Medicaid Innovation, CMS’ Chief Medical Officer, and, Director of the Center for Clinical Standards and Quality. “It’s incredibly critical,” Conway stated in a Kaiser Health News article.

Patrick Conway, MD, MSc (above left) is Chief Medical Officer for CMS and Director of the Center for Medicare and Medicaid Innovation. Conway is working to ensure that Medicare continues to exist “not just for my mother, but for me and my kids.” (Photo copyright: Drew Angerer/The New York Times.)

Patrick Conway, MD, MSc (above left) is Chief Medical Officer for CMS and Director of the Center for Medicare and Medicaid Innovation. Conway is working to ensure that Medicare continues to exist “not just for my mother, but for me and my kids.” (Photo copyright: Drew Angerer/The New York Times.)

According to Kaiser Health News, the Innovation Center operates on a 10-year, $10 billion budget—the largest amount ever dedicated by the federal government to overhaul not only Medicare and Medicaid, but healthcare in general. Its work is done out of a “sprawling, nondescript office park” near Baltimore, which is home to the center’s roughly 360 workers, who the Associated Press describes as “doctors, lawyers, health policy experts, and career Medicare employees” that tend to be younger than Medicare’s core staff and often from outside of government.

Conway believes the Innovation Center may be key to preserving Medicare for future generations. “I want Medicare to exist not just for my mother, but for me and my kids,” he stated in an Associated Press article.

While CMS had the authority to conduct demonstrations and pilot programs prior to the ACA’s passage, authors of a 2010 study who were examining the reasons for the Innovation Center’s success noted the legislation “strengthens the CMS’ authority and capacity to foster innovation.” Under the new healthcare law, for example, CMS model programs are not required to be budget neutral during their initial period of development and testing, and Innovation Center activities are exempt from some judicial and administrative review processes.

Reductions in Readmissions and Deaths Attributed to Innovation Center

The 2015 Commonwealth Fund State Health System Scorecard (Scorecard) is the first Scorecard that reflects a full year of the ACA’s major healthcare insurance expansion, and the introduction of healthcare delivery and payment reforms. It shows that changes in public policy and the private market may be having the desired impact of improving healthcare while lowering costs.

The Scorecard, which ranks every state and the District of Columbia based on 42 indicators of healthcare access, quality, costs, and outcomes, showed improvements nationwide in access to care. It also showed reductions in hospital readmission rates in 23 states, and declines in deaths among patients who recently had been hospitalized for heart attack, heart failure, or pneumonia in 45 states.

“These are the most substantial and widespread state improvements in access to care we’ve seen since we created the state scorecard series in 2007,” said Commonwealth Fund President David Blumenthal, MD, in a news release. “While there are still wide differences among states, and performance has worsened in some instances, policy changes like those in the ACA, incentives to improve healthcare quality and safety, and provider-led efforts, are beginning to bear fruit.”

Nonetheless, the Innovation Center is not without its critics, including Republicans in Congress who oppose the ACA.

“While I certainly appreciate innovation in the delivery of healthcare, the Center for Medicaid & Medicare Innovation is just another big government bureaucracy created by Obamacare that costs billions and duplicates other efforts,” Utah Senator Orrin Hatch stated in the Kaiser Health News article.

As usual, the truth lies somewhere between the plaudits of supporters and the criticisms of those who don’t see much value in the Center for Medicaid & Medicare Innovation. What is true is how one key goal of the innovation center will have significant impact on clinical laboratories as they are operated today. That goal is to find innovative ways to move healthcare away from free-for-service payment and to value-based reimbursement on an accelerated timeline. Such a change in how providers—including medical laboratories—get reimbursed will trigger major changes in the clinical laboratory industry.

Andrea Downing Peck

Related Information:

Medicare’s ‘Innovation Center’ Rebalancing Quality and Cost

New Commonwealth Fund State Health System Scorecard Finds More Improvement Than Decline Nationwide

Aiming Higher: Results from a Scorecard on State Health System Performance, 2015 Edition

The Patient Protection and Affordable Care Act of 2010

Washington’s $10 Billion Search for Health Care’s Next Big Ideas

Lessons for the New CMS Innovation Center from the Medicare Health Support Program