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United States Government Accountability Office: 
GAO: 

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: 

GAO-13-12: 

GAO Highlights: 

Highlights of GAO-13-12, a report to congressional requesters. 

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 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. 

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. 

View [hyperlink, http://www.gao.gov/products/GAO-13-12]. For more 
information, contact Linda Kohn at (202) 512-7114 or kohnl@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

The Innovation Center's Activities, Funding, Organization, and 
Staffing Focused on Implementing 17 New Models: 

The Innovation Center's Evaluation Plans Include Identifying Measures, 
Hiring Contractors, and Aggregating Data across Models: 

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: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Models Initiated by the Innovation Center as of March 31, 
2012, in Order of Start Date: 

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

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

Appendix IV: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Number of Models and Total Funding over Lifetime by Model 
Type, as of March 31, 2012: 

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

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

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

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: 

[End of section] 

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.[Footnote 1] Complicating these 
trends, recent evidence suggests that higher levels of health care 
spending do not always lead to enhanced quality of care.[Footnote 2] 
As a result, policymakers have sought to both 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.[Footnote 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. 
[Footnote 4] Although CMS conducted similar testing through 
demonstrations prior to PPACA, the recent law provides the Innovation 
Center with additional authority.[Footnote 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.[Footnote 6] 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 through 2010.[Footnote 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. 
[Footnote 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,[Footnote 9] which, if not effectively coordinated, 
could result in the inefficient use of federal resources through 
unnecessary duplication.[Footnote 10] 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. 

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, including information on models the center was implementing 
as of this date, and planning documents, such as organizational 
charts.[Footnote 11] 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 in-depth 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 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. 

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 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.[Footnote 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.[Footnote 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. 

Background: 

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 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.[Footnote 14] In addition, PPACA makes inapplicable 
certain requirements that have previously been cited as administrative 
barriers to the timely completion of demonstrations.[Footnote 15] 
Specifically, PPACA provides the following: 

* 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. 

* 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.[Footnote 16] 

The Innovation Center's Activities, Funding, Organization, and 
Staffing Focused on Implementing 17 New Models: 

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. 

Innovation Center Activities and Funding Have Focused on Implementing 
17 New Models: 

From the time it became operational in November 2010, through March 
31, 2012, the Innovation Center announced the implementation of 17 new 
models[Footnote 17] designed to test different approaches to health 
care delivery and payment in Medicare and Medicaid.[Footnote 18] 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 involved, ranging, for 
example, from physician group practices to Federally Qualified Health 
Centers, to health plans, to state Medicaid programs.[Footnote 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.[Footnote 20] 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. 

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.[Footnote 21] The 
degree of flexibility that the Innovation Center has in implementing 
these six models varies by each model's specific statutory authority. 
[Footnote 22] 

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.[Footnote 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.[Footnote 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. 

Table 1: Number of Models and Total Funding over Lifetime by Model 
Type, as of March 31, 2012: 

Models selected by the Innovation Center: 

Model type: Patient care[B]; 
Number of models of this type: Models selected by the Innovation 
Center: 4; 
Total funding in millions of dollars[A]: $889. 

Model type: Seamless care[C]; 
Number of models of this type: Models selected by the Innovation 
Center: 6; 
Total funding in millions of dollars[A]: $837. 

Model type: Preventive care[D]; 
Number of models of this type: Models selected by the Innovation 
Center: [Empty]; 
Total funding in millions of dollars[A]: [Empty]. 

Model type: Other[E]; 
Number of models of this type: Models selected by the Innovation 
Center: 1; 
Total funding in millions of dollars[A]: $931. 

Model type: Subtotal; 
Number of models of this type: Models selected by the Innovation 
Center: 11; 
Total funding in millions of dollars[A]: $2,657. 

Models specifically required by PPACA: 

Model type: Patient care[B]; 
Number of models of this type: Models selected by the Innovation 
Center: 3; 
Total funding in millions of dollars[A]: $380. 

Model type: Seamless care[C]; 
Number of models of this type: Models selected by the Innovation 
Center: 2; 
Total funding in millions of dollars[A]: $530. 

Model type: Preventive care[D]; 
Number of models of this type: Models selected by the Innovation 
Center: 1; 
Total funding in millions of dollars[A]: $100. 

Model type: Subtotal; 
Number of models of this type: Models selected by the Innovation 
Center: 6; 
Total funding in millions of dollars[A]: $1,010. 

Model type: Total; 
Number of models of this type: Models selected by the Innovation 
Center: 17; 
Total funding in millions of dollars[A]: $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. 

[End of table] 

[Side bar: Innovation Center Model-Implementation Process: 
Planning and Development: 
* Solicit ideas and select models to develop (except for models 
specifically required in PPACA).
* Develop an Innovation Center Investment Proposal that includes the 
proposed model design and evaluation approach.
* Obtain approval from CMS, HHS, and OMB, and announce model.
* Solicit, select, and establish agreements, such as grants or 
cooperative agreements, with participants, such as providers or health 
plans. 
* Solicit and select contractors for testing and evaluating model 
(evaluation contractors are not always hired before testing begins). 
Testing and Evaluation: 
* Conduct test of model in which participants and CMS put specified 
changes to health care delivery and payment into effect.
* Conduct evaluation of model, which includes evaluation while the 
test is ongoing, as well as completing a final evaluation of model 
outcomes. 
* Determine whether to terminate, modify, or recommend expanding 
model, which can occur at any time during the testing and evaluation 
period depending on evaluation results (models specifically required 
in PPACA may require different steps in considering expansion).
End of side bar] 

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.[Footnote 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. 
[Footnote 26] Appendix II provides additional information about the 
general process used to implement models. 

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.[Footnote 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,[Footnote 28] or because they were 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. 

The Innovation Center's Organization and Staffing Reflect Its Focus on 
the 17 Models and Other Key Functions That Support Model 
Implementation: 

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.[Footnote 29] 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. 

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 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.[Footnote 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. 

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

Office or group: Office of the Director; 
Purpose: Manage the Innovation Center; 
Total staff: 8. 

Groups organized by type of model: 

Seamless Care models; 
Purpose: 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; 
Total staff: 18. 

Patient Care models; 
Purpose: 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; 
Total staff: 11. 

Preventive Care models; 
Purpose: Develop Preventive Care models and coordinate implementation. 
Preventive care models test approaches designed to improve health, 
such as incentive programs to prevent smoking; 
Total staff: 2. 

Medicare Demonstrations; 
Purpose: Coordinate implementation for models specifically required by 
other PPACA provisions and for demonstrations that existed before 
PPACA and the Innovation Center; 
Total staff: 29. 

Groups organized by key function: 

Rapid Cycle Evaluation; 
Purpose: Coordinate evaluation of models including providing ongoing 
feedback to participants and final model evaluations; 
Total staff: 38. 

Business Services; 
Purpose: Coordinate with other CMS centers to provide administrative 
support for budgeting, contracting and project management; 
Total staff: 33. 

Policy and Programs; 
Purpose: Manage the intake of ideas, and help ensure balanced 
portfolio of models; 
Total staff: 9. 

Learning and Diffusion; 
Purpose: Communicate with model participants about what is working 
across models; 
Total staff: 27. 

Stakeholder Engagement; 
Purpose: Communicate with potential stakeholders and the public; 
Total staff: 9. 

Total: 
Total staff: 184. 

Source: GAO analysis of CMS information. 

[End of table] 

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.[Footnote 31] In 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,[Footnote 32] which is one 
of the higher management levels.[Footnote 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. 

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

Federal General Schedule (GS) employment level[A]: GS Grades 1-8; 
Innovation Center (as of 3/31/12): 
Number: 4; 
Percentage: 2.2%; 
CMS (as of 9/30/11): 
Number: 134; 
Percentage: 3.1%. 

Federal General Schedule (GS) employment level[A]: GS-9; 
Innovation Center (as of 3/31/12): 
Number: 16; 
Percentage: 8.7%; 
CMS (as of 9/30/11): 
Number: 194; 
Percentage: 4.5%. 

Federal General Schedule (GS) employment level[A]: GS-10; 
Innovation Center (as of 3/31/12): 
Number: 0; 
Percentage: 0.0; 
CMS (as of 9/30/11): 
Number: 1; 
Percentage: less than 0.1%. 

Federal General Schedule (GS) employment level[A]: GS-11; 
Innovation Center (as of 3/31/12): 
Number: 19; 
Percentage: 10.3%; 
CMS (as of 9/30/11): 
Number: 221; 
Percentage: 5.1%. 

Federal General Schedule (GS) employment level[A]: GS-12; 
Innovation Center (as of 3/31/12): 
Number: 12; 
Percentage: 6.5%; 
CMS (as of 9/30/11): 
Number: 723; 
Percentage: 16.7%. 

Federal General Schedule (GS) employment level[A]: GS-13; 
Innovation Center (as of 3/31/12): 
Number: 60; 
Percentage: 32.6%; 
CMS (as of 9/30/11): 
Number: 1899; 
Percentage: 43.8%. 

Federal General Schedule (GS) employment level[A]: GS-14; 
Innovation Center (as of 3/31/12): 
Number: 22; 
Percentage: 12.0%; 
CMS (as of 9/30/11): 
Number: 586; 
Percentage: 13.5%. 

Federal General Schedule (GS) employment level[A]: GS-15; 
Innovation Center (as of 3/31/12): 
Number: 43; 
Percentage: 23.4%; 
CMS (as of 9/30/11): 
Number: 499; 
Percentage: 11.5%. 

Federal General Schedule (GS) employment level[A]: Senior Executive 
Service; 
Innovation Center (as of 3/31/12): 
Number: 2; 
Percentage: 1.1; 
CMS (as of 9/30/11): 
Number: 74; 
Percentage: 1.7%. 

Federal General Schedule (GS) employment level[A]: Other; 
Innovation Center (as of 3/31/12): 
Number: 6; 
Percentage: 3.3%; 
CMS (as of 9/30/11): 
Number: 0; 
Percentage: 0.0. 

Federal General Schedule (GS) employment level[A]: Total; 
Innovation Center (as of 3/31/12): 
Number: 184; 
Percentage: 100%; 
CMS (as of 9/30/11): 
Number: 4331; 
Percentage: 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. 

[End of table] 

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.[Footnote 34] 

The Innovation Center's Evaluation Plans Include Identifying Measures, 
Hiring Contractors, and Aggregating Data across Models: 

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. 

The Innovation Center's Plans for Evaluating Models Include 
Identifying Measures Related to the Cost and Quality of Care and 
Hiring Contractors: 

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.[Footnote 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.[Footnote 36] 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. 

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 pressure exceeds a certain level 
(primary care); newborn birth-weight (prenatal care); and the number 
of adverse events, such as hospital-acquired 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: Federally Qualified Health Center Advanced Primary Care 
Practice[A]; 
Model purpose and type of care: Test the effect of an advanced primary 
care practice model; 
Cost measures: 
* Average annual cost of care per beneficiary (Medicare Parts A and B 
costs)[B]; 
Quality measures: 
* Patient rating of care experience; 
* Inappropriate medication use; 
* Rate of provision of preventive services. 

Model name: Partnership for Patients; 
Model purpose and type of care: Test the effect of multiple strategies 
to improve patient safety in hospitals, including reducing preventable 
hospital-acquired conditions and reducing 30-day readmissions[C]; 
Cost measures: 
* Cost for initial hospitalization, for outpatient services, and for 
subsequent hospitalizations, for cases of preventable hospital-
acquired conditions; 
Quality measures: 
* Rate of certain hospital-acquired conditions; 
* Rate of 30-day readmissions. 

Model name: Strong Start for Mothers and Newborns; 
Model purpose and type of care: Test, among other things, the effect 
of three different approaches to providing enhanced prenatal care; 
Cost measures: 
* Total cost of care for pregnancy, for the delivery, and for care 
provided to infant in first year; 
Quality measures: 
* 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. 

[End of table] 

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 contractors to evaluate its models.[Footnote 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.[Footnote 38] 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. 

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.[Footnote 39] 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, 
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.[Footnote 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.[Footnote 41] 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. 

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. 

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 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 across Models and Monitoring Implementation 
of 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. 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. 
[Footnote 42] 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. 

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. 

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. 

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: 

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. 

Some Innovation Center Models Overlap with Efforts of Other CMS 
Offices: 

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's Two Accountable Care Organization (ACO) 
Models and the Center for Medicare's Shared Savings Program.[Footnote 
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. 
[Footnote 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.[Footnote 45] 
However, the Innovation Center's models and the Shared Savings Program 
each adopt a different approach to sharing any realized savings. 
[Footnote 46] Further, while the Shared Savings Program is open to all 
eligible ACOs, the models target specific subgroups of ACOs.[Footnote 
47] 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 alternative approaches are proven effective, officials 
explained, they could be incorporated into the Shared Savings Program. 
[Footnote 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 CMCS[Footnote 49]--
testing new ways of delivering and paying for health care in 
Medicaid.[Footnote 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,[Footnote 51] state Medicaid demonstrations allow for a 
larger number of tests to be conducted--according to CMS, there were 
approximately 70 active section 1115 demonstrations as of August 2012--
and can point to promising approaches that should be considered for 
further testing.[Footnote 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 readmissions[Footnote 53]--are also currently among the many 
goals of CCSQ's QIO program.[Footnote 54] In order to achieve these 
goals, both the Partnership for Patients model and the QIO program 
contract with organizations--Hospital Engagement Networks (HEN) 
[Footnote 55] and QIOs, respectively--to disseminate successful 
patient safety interventions in hospitals through training and 
technical assistance.[Footnote 56] 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 broader 
population that includes non-Medicare patients.[Footnote 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. 

The Innovation Center Uses a Number of Mechanisms to Coordinate with 
Other Offices, but Is Still Working on Ways to Make Coordination More 
Systematic: 

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,[Footnote 58] 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: 

* 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.[Footnote 
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 
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.[Footnote 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.[Footnote 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.[Footnote 62] 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. 

* 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.[Footnote 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 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 hospital-
acquired 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.[Footnote 64] 
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. 

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 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. 

Conclusions: 

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 well-
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. 

Recommendations for Executive Action: 

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. 

Agency Comments and Our Evaluation: 

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 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 [hyperlink, 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. 

Signed by: 

Linda T. Kohn: 
Director, Health Care: 

[End of section] 

Appendix I: Models Initiated by the Innovation Center as of March 31, 
2012, in Order of Start Date: 

Title and description: 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. 
Type of participants: State Medicaid programs; 
Estimated number and type of beneficiaries affected[A]: Not applicable; 
Start date of testing and evaluation period: 4/14/11; 18 months for 
design; 
Authorizing section of PPACA[B]: 3021; 
Total funding in millions of dollars (lifetime of model)[C]: $131. 

Title and description: 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; 
Type of participants: State Medicaid programs; 
Estimated number and type of beneficiaries affected[A]: Not available 
at the time of our review; 
Start date of testing and evaluation period: 9/13/11; 5 years; 
Authorizing section of PPACA[B]: 4108[D]; 
Total funding in millions of dollars (lifetime of model)[C]: $100[E]. 

Title and description: 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; 
Type of participants: 202,000 Medicare beneficiaries; 
Start date of testing and evaluation period: 11/1/11; 3 years; 
Authorizing section of PPACA[B]: 3021; 
Total funding in millions of dollars (lifetime of model)[C]: $57.2. 

Title and description: 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; 
Type of participants: Hospitals with high readmission rates that 
partner with community-based organizations that provide care 
transition services; 
Estimated number and type of beneficiaries affected[A]: 275,000 
Medicare beneficiaries; 
Start date of testing and evaluation period: 11/18/11; 5 years; 
Authorizing section of PPACA[B]: 3026[F]; 
Total funding in millions of dollars (lifetime of model)[C]: $500[G]. 

Title and description: 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; 
Type of participants: Networks of hospitals and their hospital members; 
Estimated number and type of beneficiaries affected[A]: While Medicare 
and Medicaid beneficiaries will be affected, this model targets all 
patients receiving related services in participating hospitals; 
Start date of testing and evaluation period: 12/9/11; 2 years with 1 
option year; 
Authorizing section of PPACA[B]: 3021; 
Total funding in millions of dollars (lifetime of model)[C]: $513. 

Title and description: 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; 
Type of participants: ACOs with at least 15,000 Medicare fee-for-
service beneficiaries (or at least 5,000 Medicare beneficiaries in the 
case of rural areas); 
Estimated number and type of beneficiaries affected[A]: 750,000 
Medicare beneficiaries; 
Start date of testing and evaluation period: 1/1/12; 3 years with 
optional 2-year extension; 
Authorizing section of PPACA[B]: 3021; 
Total funding in millions of dollars (lifetime of model)[C]: $77.3. 

Title and description: 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; 
Type of participants: Clinical laboratories performing certain complex 
tests; 
Estimated number and type of beneficiaries affected[A]: Not applicable; 
Start date of testing and evaluation period: 1/1/12; 2 years; 
Authorizing section of PPACA[B]: 3113[H]; 
Total funding in millions of dollars (lifetime of model)[C]: $105[I]. 

Title and description: 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; 
Type of participants: Providers of obstetric care, hospitals, state 
Medicaid programs, Medicaid managed care organizations; 
Estimated number and type of beneficiaries affected[A]: Strategy 1: 
This model targets all patients receiving related services; Strategy 
2: 90,000 Medicaid beneficiaries; 
Start date of testing and evaluation period: 2/8/12; Strategy 1: 2 
years; Strategy 2: 4 years; 
Authorizing section of PPACA[B]: 3021; 
Total funding in millions of dollars (lifetime of model)[C]: $99.2. 

Title and description: 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; 
Type of participants: Small physician-led or rural organizations 
participating in the Medicare Shared Savings Program; 
Estimated number and type of beneficiaries affected[A]: 650,000 
Medicare beneficiaries; 
Start date of testing and evaluation period: 4/1/12; 3 years; 
Authorizing section of PPACA[B]: 3021; 
Total funding in millions of dollars (lifetime of model)[C]: $177.1. 

Title and description: 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; 
Type of participants: Physician practices with at least 200 high-need 
beneficiaries; 
Estimated number and type of beneficiaries affected[A]: 10,000 
Medicare beneficiaries; 
Start date of testing and evaluation period: 6/1/12; 3 years; 
Authorizing section of PPACA[B]: 3024[J]; 
Total funding in millions of dollars (lifetime of model)[C]: $30[K]. 

Title and description: 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; 
Type of participants: Diverse set of participants; 
Estimated number and type of beneficiaries affected[A]: Not available 
at the time of our review; 
Start date of testing and evaluation period: 7/1/12; 3 years; 
Authorizing section of PPACA[B]: 3021; 
Total funding in millions of dollars (lifetime of model)[C]: $931.2. 

Title and description: 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; 
Type of participants: State Medicaid programs; 
Estimated number and type of beneficiaries affected[A]: Not available 
at the time of our review; 
Start date of testing and evaluation period: 7/1/12; 3 years; 
Authorizing section of PPACA[B]: 2707[L]; 
Total funding in millions of dollars (lifetime of model)[C]: $75[M]. 

Title and description: 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; 
Type of participants: Hospitals, schools of nursing, and non-hospital-
based community-based care settings; 
Estimated number and type of beneficiaries affected[A]: Not applicable; 
Start date of testing and evaluation period: 9/1/12; 4 years; 
Authorizing section of PPACA[B]: 5509[N]; 
Total funding in millions of dollars (lifetime of model)[C]: $200[O]. 

Title and description: 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; 
Type of participants: Commercial and state health plans and primary 
care physician practices in seven selected localities across the 
country; 
Estimated number and type of beneficiaries affected[A]: Up to 315,000 
Medicare and 16,000 Medicaid beneficiaries; 
Start date of testing and evaluation period: 10/1/12; 4 years; 
Authorizing section of PPACA[B]: 3021; 
Total funding in millions of dollars (lifetime of model)[C]: $322.1. 

Title and description: 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; 
Type of participants: Organizations that partner with states and 
nursing facilities to provide enhanced care coordination; 
Estimated number and type of beneficiaries affected[A]: Not available 
at the time of our review; 
Start date of testing and evaluation period: Fall 2012; 4 years; 
Authorizing section of PPACA[B]: 3021; 
Total funding in millions of dollars (lifetime of model)[C]: $158. 

Title and description: 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; 
Type of participants: Providers such as hospitals, physician group 
practices, and health systems; 
Estimated number and type of beneficiaries affected[A]: Model 1: 
389,000 Medicare fee-for-service beneficiaries; 
Start date of testing and evaluation period: 12/1/12; 3 years with 
possible 2-year extension; 
Authorizing section of PPACA[B]: 3021; 
Total funding in millions of dollars (lifetime of model)[C]: $119.4. 

Title and description: 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; 
Type of participants: State Medicaid programs; 
Estimated number and type of beneficiaries affected[A]: Up to 2 
million Medicare-Medicaid beneficiaries; 
Start date of testing and evaluation period: 2013; 3 years; 
Authorizing section of PPACA[B]: 3021; 
Total funding in millions of dollars (lifetime of model)[C]: $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 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 high-admission-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). 

[M] Section 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. 

[End of table] 

[End of section] 

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

Planning and development: 

Solicit ideas for new models and select which models to develop[A]; 
* 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[B]; 
* 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; 
- 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[C,D]; 
* 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. 

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. 

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. 

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 [hyperlink, 
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: [hyperlink, 
http://www.innovations.cms.gov/about/our-portfolio-
criteria/index.html] (accessed Sept. 13, 2012). 

[End of table] 

[End of section] 

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

Department of Health & Human Services: 
Office of the Secretary: 
Assistant Secretary for Legislation: 
Washington, DC 20201: 

November 2, 2012: 

Linda T. Kohn: 
Director, Health Care: 
U.S. Government Accountability Office: 
441 G Street NW: 
Washington, DC 20548: 

Dear Ms. Kohn: 

Attached are comments on the U.S. Government Accountability Office's 
(GAO) report entitled, "CMS Innovation Center: Early Implementation 
Efforts Suggest Need for Additional Actions to Help Ensure 
Coordination With Other CMS Offices" (GAO-13-12). 

The Department appreciates the opportunity to review this report prior 
to publication. 

Sincerely, 

Signed by: 

Jim R. Esquea: 
Assistant Secretary for Legislation: 

Attachment: 

General Comments Of The Department Of Health And Human Services (HHS) 
On The Government Accountability Office's (GAO) Draft Report Entitled, 
"CMS Innovation Center: Early Implementation Efforts Suggest Need For 
Additional Actions To Help Ensure Coordination With Other CMS Offices 
(GAO-13-12): 

The Department appreciates the opportunity to comment on this report. 
The Patient Protection and Affordable Care Act (PPACA) created the 
Center for Medicare and Medicaid Innovation (Innovation Center). The 
purpose of the Innovation Center is to test innovative payment and 
service delivery models to reduce expenditures in Medicare, Medicaid 
and the Children's Health Insurance Program (CHIP) while preserving or 
enhancing the quality of care. GAO was asked to review the 
implementation of the Innovation Center. In this report, GAO: 

* Describes the Center's activities, funding, organization, and 
staffing as of March 31, 2012; 

* Describes the Center's plans for evaluating its models and its own 
performance; and; 

* Examines whether efforts of the Center overlap with those of other 
Centers for Medicare & Medicaid Services (CMS) offices and how the 
Center coordinates with other offices. 

GAO found that the Innovation Center is in the early stages of 
implementing its first models with much work, particularly on 
evaluations, to be done in the coming years. GAO noted it is important 
that the Innovation Center continue testing its models and conduct 
evaluations to determine the extent to which new approaches are able 
to reduce costs and improve quality of care. GAO identified a few 
examples of Innovation Center models that overlap with efforts being 
conducted in other offices within CMS and the mechanisms the 
Innovation Center uses to coordinate its work in order to avoid 
unnecessary duplication. 

GAO issued one recommendation for executive action. HHS concurs with 
this recommendation and are taking steps to address it, as described 
further below. 

GAO Recommendation: 

The Administrator of CMS should 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 Hospital Engagement Networks (HENS) and Quality 
Improvement Organizations (QIOs) in hospitals. 

HHS Response: 

HHS concurs with GAO's recommendation and is committed to identifying 
and eliminating duplication of effort. However, 141IS believes that 
only one of the three examples cited poses a genuine risk of 
duplicative effort and we are working to address that concern. Our 
view on each example of potential overlap is described in detail below. 

* CMMI ACO Models/MSSP: The draft GAO report expresses concern about 
duplication between the Medicare Shared Savings Program (MSSP) and 
CMMI's two ACO models. We do not believe this concern is justified. 
The two models (Pioneer ACOs and Advance Payment ACOs) were carefully 
and explicitly designed to be complementary to MSSP. The Pioneer ACO 
model is a discrete initiative; as such, providers who participate in a
Pioneer ACO are not permitted to also participate in MSSP. Therefore, 
there is no potential for overlap. Conversely, the Advance Payment 
model is a tool to allow certain ACOs to be successful, within the 
context of the MSSP program. Accordingly, all participants in the 
Advance Payment ACO initiative are also required to participate in 
MSSP. As such, the two programs are fully aligned and work in 
conjunction with each other. 

* Innovation Center Medicaid Models and CMCS State Medicaid 
Demonstrations: The draft GAO report expresses concern about 
duplication between Innovation Center Models and §1115 State Medicaid 
Waivers, Here too, we believe this concern is not justified. We note 
that the coexistence of these two authorities is simply a statutory 
fact, and in no sense the consequence of CMMI policy decisions or 
other actions, Moreover, there are very fundamental differences 
between the two authorities: §1115A (CMMI) models are initiated by 
CMS, are focused on payment and delivery reforms, are not required to 
be budget neutral during the testing phase, and can span multiple 
States and payer types, although their ability to waive Medicaid 
provisions is limited. By contrast, §1115 (CMCS) waivers are initiated 
by States, can go beyond payment/delivery reforms to include 
coverage/service expansions, must be budget neutral, and are limited 
in scope to Medicaid within a single State, although within this 
limited context they have broad latitude. Given these fairly 
fundamental differences, we think the likelihood of overlap is 
extremely low, although a § 1115 waiver and an Innovation Center model 
may sometimes work in a complementary fashion. We believe it is 
telling that, of the nine CMMI models cited as potentially overlapping 
with § 1115 authority, all either include other (non-Medicaid) payers 
or are national in scope (and most are both). As such, none of these 
models could reasonably have been pursued through § 1115 authority. 
Additionally, two of these models (Incentives for Prevention of 
Chronic Disease in Medicaid and the Medicaid Emergency Psychiatric 
Demonstration) were specifically authorized and appropriated through 
the ACA, so we note that any potential for duplication with existing 
CMCS efforts would be purely the result of statutory requirements. 

* Partnership for Patients Model and 010s: The Partnership for 
Patients within the Innovation Center and the Center for Clinical 
Standards and Quality (CCSQ) are both charged to work collaboratively 
to reduce hospital acquired conditions and readmissions. CMS designed 
the Partnership for Patients initiative to maximize the respective 
strengths of the HENs and the QIOs. For example, QIOs have highly 
specialized expertise in data collection and analysis, while HENs 
(which are mostly hospital systems and state or national hospital 
associations) have strong relationships with hospital administrators 
and can capitalize on these relationships. It is CMS's intention that 
QIOs and HENs capitalize on these and other distinct strengths in 
supporting the quality improvement work of hospitals. 

When the Partnership for Patients awarded the HEN contracts in 
December 2011, the Secretary specifically charged QIOs and HENs, and 
their accountable CMS program offices, to collaborate to maximize the 
teamwork and synergy among these programs. To ensure appropriate 
management and oversight of both initiatives, the Innovation Center 
and CCSQ have been analyzing the activities of the HENs and QIOs as 
they relate to one another in the areas of hospital acquired 
conditions and hospital readmissions. 

CMS has put steps into place to identify and eliminate any duplication 
of effort between the HENs and the QIOs. Both the steps that have 
previously been implemented and those that are underway within CMS are 
as follows: 

1. Teams were formed in March 2012 in the Innovation Center, CCSQ, and 
the CMS Office of Acquisition and Grants Management (OAGM) to 
collaborate, prevent duplication, and continuously monitor the effort. 
Regular weekly team meetings were established to ensure clear 
communication and teamwork. 

2. QIOs and HENs have been instructed by their accountable CMS 
Contracting Officer Representatives (CORs) to develop clear plans that 
delineate their accountabilities and arrangements they may have worked 
out locally to ensure there is no duplication of effort, In addition, 
the CORs have collected information from the QIOs and HENs and are 
conducting an independent assessment of whether there are areas of 
duplication that require further review. If duplication is identified, 
the CORs make recommendations to OAGM on the appropriate action for 
each contract. 

3. OAGM assesses the CORs' recommendations to make final 
determinations whether to accept or modify any recommended actions for 
each contract. If any potential duplication is identified, CMS will 
work with the contractors to implement the following actions, as 
appropriate: (I) Put in place an acceptable mitigation strategy; (2) 
Issue the appropriate technical direction; or (3) Modify the 
appropriate contract (either the HEN or QIO, or both) to eliminate the 
duplication of effort. 

CMS anticipates completing the work described above by December 31, 
2012. In addition, monitoring plans are in place for the CORs to 
regularly assess future changes in the work plans of QIOs and HENs and 
the relationships of QIOs and HENs in the field to avoid future 
duplication. 

Testing new payment and service delivery models for Medicare, Medicaid 
and CHIP is one of CMS's key priorities. Through such testing we can 
identify ways to improve health and health care and reduce costs 
through improvement. 

[End of section] 

Appendix IV: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Linda T. Kohn, (202) 512-7114 or kohnl@gao.gov: 

Staff Acknowledgments: 

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. 

[End of section] 

Footnotes: 

[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. 

[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). 

[3] Pub. L. No. 111-148, §§ 3021, 10306, 124 Stat. 119, 389, 939 
(codified at 42 U.S.C. § 1315a). 

[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. 

[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. 

[10] We 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, [hyperlink, 
http://www.gao.gov/products/GAO-12-342SP] (Washington, D.C.: Feb. 28, 
2012). 

[11] Model 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. 

[12] These 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, 
Results-Oriented Government: Practices That Can Help Enhance and 
Sustain Collaboration among Federal Agencies, [hyperlink, 
http://www.gao.gov/products/GAO-06-15] (Washington, D.C.: Oct. 21, 
2005). 

[13] See GAO, Standards for Internal Control in the Federal 
Government, [hyperlink, 
http://www.gao.gov/products/GAO/AIMD-00-21.3.1] (Washington, D.C.: 
November 1999). 

[14] In 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. 

[15] See for example Medicare Payment Advisory Commission, Report to 
Congress: Aligning Incentives in Medicare, (Washington, D.C.: 2010). 

[16] 44 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. 

[17] While 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. 

[18] In 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. 

[19] 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. 

[20] These mechanisms included the Innovation Center's online web 
program and "listening session" meetings held across the country in 
2010. 

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

[22] For 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. 

[23] These 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. 

[24] The 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. 

[25] Of 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. 

[26] Of 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. 

[27] The 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. 

[28] 42 U.S.C. § 1395cc-3. 

[29] However, 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. 

[30] As 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. 

[31] Of 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. 

[32] 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. 

[33] CMS 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. 

[34] Officials 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. 

[35] The 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. 

[36] The 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. 

[37] Hiring contractors to conduct evaluations of models is consistent 
with how CMS conducted evaluations of demonstrations initiated prior 
to the Innovation Center's formation. 

[38] Officials said that before measures are finalized with 
contractors, evaluation activities may still be conducted using 
preliminary measures. 

[39] Officials 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. 

[40] CMS 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. 

[41] Officials 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. 

[42] While 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. 

[43] An 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. 

[44] As 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. 

[45] In 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). 

[46] For 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. 

[47] In 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. 

[48] According 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. 

[49] Of 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 Medicare-Medicaid 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. 

[50] While 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. 

[51] For 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. 

[52] While 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. 

[53] According 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. 

[54] The 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. 

[55] HENs are state, regional, and national hospital system 
organizations, such as the Health Care Association of New York State 
and Intermountain Healthcare. 

[56] Contracting 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. 

[57] According to CMS, HENs and QIOs target four of the same 
conditions: catheter-associated 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). 

[58] These 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 
[hyperlink, http://www.gao.gov/products/GAO-06-15]. 

[59] CMS 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. 

[60] 1-800-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. 

[61] The 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. 

[62] Examples 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. 

[63] Officials 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. 

[64] For 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. 

[End of section] 

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