HHS Gives $665 Million for State-led State Innovation Models to “Improve” Healthcare Quality

Twenty eight states, three territories and the District of Columbia will receive more than $665 million in Affordable Care Act funding to design and test healthcare payment and service delivery models that will try to improve healthcare quality and lower costs, Health and Human Services Secretary Sylvia M. Burwell announced.

Together with awards released in early 2013, more than half of states (34 states and three territories and the District of Columbia), representing nearly two-thirds of the population are participating in efforts to support comprehensive state-based innovation in health system transformation aimed at finding new and innovative ways to improve quality and lower costs.

The State Innovation Models initiative supports states in planning or implementing a customized, fully developed proposal capable of creating statewide health transformation to improve health care. Example initiatives include:

“We are committed to partnering with states to advance the goals we all share: better care, smarter spending, and, ultimately, healthier people,” said Secretary Burwell. “We’re seeing states do some very innovative things when it comes to improving the ways we deliver care, pay providers, and distribute information. These funds will support states in integrating and coordinating the many elements of health care – including Medicaid, Medicare, public health, and private health care delivery systems – to the benefit of patients, businesses, and taxpayers alike.”

The awards include both states that are designing plans and strategies for state-wide innovation and states that are taking the next step from designing to testing and implementing comprehensive state-wide health transformation plans. More than $622 million in State Innovation Model Test Awards will support eleven states – Colorado, Connecticut, Delaware, Idaho, Iowa, Michigan, New York, Ohio, Rhode Island, Tennessee and Washington – in implementing their State Health Care Innovation Plans.

These states join six previous round one Model Test awardees: Arkansas, Maine, Massachusetts, Minnesota, Oregon, and Vermont. Nearly $43 million in State Innovation Model Design Awards will support 17 states, three territories, and the District of Columbia to create and refine proposals for comprehensive health care transformation.

States will engage a broad group of stakeholders including health care providers and systems, long-term service and support providers, commercial payers, state hospital and medical associations, tribal communities and consumer advocacy organizations. Transformation efforts supported by this initiative must improve health, improve care and lower costs for Medicare, Medicaid, and Children’s Health Insurance Program (CHIP) beneficiaries. In addition, CMS will identify best practices among state-led transformations that are potentially scalable to all states.

“States are laboratories of innovation and serve as critical partners in transforming health care,” said Patrick Conway, M.D., CMS deputy administrator for innovation and quality and chief medical officer. “States are large health care purchasers for their employees and residents, have broad regulatory authority over health care providers and payers, have the ability to convene multiple parties to improve statewide health delivery systems, and oversee public health, social, and educational services. Partnering with states on health innovation has the potential to accelerate and transform health innovation in all of these areas.”

The State Innovation Models initiative is one part of an overall effort to help lower costs and improve care through the Affordable Care Act.  Initiatives like Accountable Care Organizations, the Partnership for Patients and others have helped reduce hospital readmissions in Medicare by nearly 8 percent between 2007 and 2013 – translating into 150,000 fewer readmissions – and quality improvements have resulted in saving 50,000 lives and $12 billion in health spending from 2010 to 2013, according to preliminary estimates.

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