States across the US are engaged in ambitious and critically important initiatives to reform health care payment and care delivery.  Partnering with other major health care purchasers and payors, including employers and commercial health plans, State Medicaid agencies seek to improve health outcomes and decrease per capita health spending.  This requires replacing inefficient, volume-based fee-for-service reimbursement with value-based payment methods to reimburse providers according to their clinical and economic performance. At the health plan and provider levels, it requires fundamental transformation of care delivery and ongoing transparency and accountability for outcomes.

New grant funding is available for States seeking to develop or test models for payment and delivery reform.  The Center for Medicare and Medicaid Innovation (CMMI), part of the Centers for Medicare and Medicaid Services (CMS), as announced $730 million in a second round of grants available to States through the State Innovation Models (SIM) initiative.  According to CMMI:

The State Innovation Models initiative is designed specifically for States that are prepared for or committed to planning, designing, testing, and supporting the evaluation of new payment and service delivery models in the context of larger health system transformation.

CMS is interested in State-sponsored models that also have the potential to improve quality of care while lowering costs for Medicare, Medicaid, and the Children’s Health Insurance Program beneficiaries.

CMS awarded the first round of State Innovation Models funding to 25 States in 2013 – Model Test grants to 6 States to implement statewide health transformation plans and Model Design grants to 19 States to create and refine State Health Care Innovation Plans.

Under the second round of State Innovation Models grants, CMS builds on lessons learned from the first round projects and anticipates awarding States:

  • Up to $30 million in grants to fund up to 15 Model Design projects.
  • Up to $700 million in grants to fund up to 12 Model Test initiatives.

Model Design grants are for States interested in developing transformative payment and delivery reforms.  CMS/CMMI expects States to

  • Engage a diverse range of stakeholders—including providers, private and public payors, advocates, consumers, tribal governments, and community organizations—in the reform design process.
  • Develop multi-payor models for payment and care delivery reform.
  • Identify strategies that will improve health care system performance, including continuous improvement in quality, outcomes and costs.
  • Build on existing health reform initiatives, such as s. 1115 waiver-based demonstrations and federal health reform policies under the Affordable Care Act (ACA).
  • Create a State Health Care Innovation Plan – a comprehensive plan that describes strategies and methods the State will use to transform “the structure and performance of the State’s entire health system” and improve outcomes and reduce costs in Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP).

The larger Model Test grants are available for States wishing to implement an already developed statewide, multi-payor payment and delivery reform plan capable of creating health transformation for the majority of care within the State.

Key deadlines for SIM grant applications from States are:

  • Letters of Intent to apply for awards are due June 6, 2014 by 5:00 PM Eastern Daylight Time
  • Applications are due July 21, 2014 by 5:00 pm Eastern Daylight Time

CMMI anticipates making grant awards to selected State applicants in the fall of 2014.  Model Design grants are for one year: January through December 2015.  Model Test grants will help support reform implementation over three years: January 2015 through December 2018.

To learn more, visit the State Innovation Models initiative webpage and read the CMS funding announcement.  CMMI has also posted helpful background information, include answers to frequently asked questions and a briefing video and slide deck.

Given limited staff resources, States typically need the outside technical assistance to develop State Health Care Innovation Plans and implement statewide, multi-payor payment and delivery reforms.  My colleagues at Sellers Dorsey offer in-depth expertise in all facets of payment and delivery reform and long experience working with States, CMS, health plans, providers, and other stakeholders.