The Center for Medicare & Medicaid Innovation (CMMI) is beginning to set its policy agenda in the new administration.

Created under the Affordable Care Act (ACA), CMMI is designed to allow the Centers for Medicare & Medicaid Services (CMS) to test innovative payment and service delivery models in Medicare, Medicaid and the Children’s Health Insurance Program (CHIP). Despite this provenance, Congress did not press for a repeal of CMMI’s authority during this year’s failed ACA repeal-and-replace debate. Instead, for now, the administration and Congress appear content to preserve CMMI as a lever for advancing their own priorities in government-sponsored healthcare.

Thus far, CMMI’s activities signal that these priorities include more provider-friendly approaches, such as voluntary tests and programs that qualify providers for Medicare bonuses, and a focus on and interest in value-based contracting for high-cost drugs. More activity is expected this year that could reveal other priorities.

Voluntary Model Tests

CMMI’s mandatory bundled payment initiatives have been a target of criticism from providers, some of whom feel they are administratively burdensome or financially disadvantageous. The key argument in favor of mandatory bundled payments is that voluntary bundled payments will not generate enough evidence to support scaling. Voluntary testing of bundles is taking place on a limited scale, but—more importantly—is likely to include selection bias, since participants are likely to opt in only if they predict more favorable financial outcomes than under fee for service. The random assignment in the design of the mandatory tests eliminates this problem.

However, CMMI is now responding to the criticism by cancelling or scaling back mandatory tests. At the close of the previous administration, CMS finalized rules to launch the Episode Payment Models (EPMs) and Cardiac Rehabilitation (CR) incentive model and to broaden its Comprehensive Care for Joint Replacement (CJR) model. Each of these was designed to build on prior CMS bundled payment initiatives by testing the use of a single, comprehensive payment for episodes of heart attack care, bypass surgery, hip fractures and femur fractures. While those past initiatives were voluntary, and relied on providers to opt in to the new payment structure, the EPM, CR and revised CJR model tests were each intended to be made mandatory, and require all providers within specific geographic areas to accept the new payment methodologies.

At the time of their adoption, one of the strongest critics of the mandatory bundled payment models was then-Representative, now-Department of Health and Human Services (HHS) Secretary Tom Price, who wrote CMS claiming that mandatory models (particularly the previously cancelled model for Part B drug payment) were not only misguided, but placed quality of care at risk and were outside of CMMI’s statutory authority. Not surprisingly, CMS is now proposing the cancellation of the mandatory EPM and CR models, and reversion of the CJR test to a voluntary approach by allowing a provider opt-out. In so doing, CMS cited “concern that engaging in large mandatory episode payment model efforts at this time may impede our ability to engage providers, such as hospitals, in future voluntary efforts.”

Launching Advanced Alternative Payment Models and Promoting Their Provider Bonuses

CMMI is also actively working to advance another current priority for CMS: designing model tests that promote physician participation in Advanced Alternative Payment Models (A-APM). Under the Medicare Quality Payment Program, providers participating in an A-APM are rewarded with a 5% Part B payment bonus, among other advantages. As might be expected, providers are clamoring for CMMI to create more model tests that meet statutory criteria for an A-APM so that they might participate.

CMMI appears willing to meet the demand for more A-APM opportunities. For example, in its proposal to scale back the CJR rule, CMS created an administrative mechanism to allow more physicians affiliated with a CJR participant to earn A-APM credit. In addition, CMS has solicited comments and is considering how it could use CMMI’s waiver and model test authority to give providers A-APM credit for A-APM payments made in Medicare Advantage. The federal government has also begun publicly responding to A-APM suggestions submitted through its Physician-Focused Payment Model Technical Advisory Committee. Secretary Price rejected two but favorably commented on an episode-based payment model submitted by the American College of Surgeons, and asked CMS to continue work on the project.

Value-Based Contracting for Drugs

Other activities have signaled an interest at CMMI in addressing the rising costs of prescription drugs by encouraging value-based contracting. When Novartis obtained approval for Kymriah, the first gene therapy available in the United States, the company hinted at a coming value-based payment arrangement with CMS. The agency issued its own press release affirming CMS’s commitment to developing payment models for drugs, announcing forthcoming guidance on submission of other value-based pricing proposals to CMS, and affirming a commitment to use CMMI to “identify and alleviate regulatory barriers in Medicare and Medicaid as may be necessary to test payment and service delivery models that involve value-based payment arrangements.”

More Activity Will Shed Light on CMMI Priorities

There is still considerable ambiguity in the direction CMMI will take in the coming years. More activity from CMMI may further clarify the policy agenda. CMS is expected to release a request for information (RFI) soon to solicit new ideas for program improvements from CMMI. The specific questions asked in that RFI should shine further light on CMMI’s policy priorities and specific goals, particularly in other areas that might be of focus to the current administration, such as model tests in Medicare Advantage or Part D. A recent behavioral health summit hosted by CMMI may also yield ideas for a model test for beneficiaries with behavioral health conditions.

In addition, Patrick Conway, CMMI’s current director, will leave CMS at the end of this week. His successor, once named, will have further opportunity to set CMMI’s objectives for the coming years, and could reshape its portfolio by scaling back current model tests and launching new ones. The cancellation of the EPM and CR models not only serves to reinforce the new CMMI approach favoring voluntary model tests but also frees up budget and staff for new models that might be in the pipeline. CMMI has also cancelled a branch of its Accountable Health Communities model test that saw little public interest, and based on that action might be expected to pare down its portfolio further to free up resources for new initiatives.