Last week, the Center for Medicare & Medicaid Innovation (CMMI) made news in releasing a second $1 billion solicitation for health care innovation awards.

While many stakeholders may be salivating over the potential opportunities here, there are some major distinctions between the current solicitation and the one issued in 2012 with a similar $1 billion outlay. In 2012, the Center placed an emphasis on those proposals that created jobs — and fewer than 5 percent of all applications were funded, indicating the degree of intensity expected.

This year the solicitation requires applicants to include a new payment model that would support the proposed care intervention, yet another clear indication of the agency's interest in driving down costs and moving away from the fee-for-service model. Applicants must not only propose a payment model but submit a fully developed model by the end of the agreement period, and CMS may further develop such models through a future solicitation. The specific models and priorities being pursued in the current solicitation were identified as gaps in existing CMMI programs, and models focused primarily on acute care efforts will not be reviewed this go-around. The requirement that each application include a proposed new payment model that must be fully developed by the end of the three-year award period is likely to limit the number of serious applicants and places a premium on integrated systems or applications involving payers.

In addition to requiring applicants to focus on new payment models, the solicitation puts forth a number of other priorities. For example, in seeking models that reduce Medicare, Medicaid or CHIP costs, it set as priority areas diagnostic services, outpatient radiology, high-cost physician-administered drugs and home-based services, among others. Similarly, in requesting models focused on specialized populations, the Center named as priorities high-cost pediatric populations, children in foster care or at high risk for dental disease, and patients with Alzheimer's disease, HIV/AIDS, or in need of long-term support and services. The Center also wants proposals testing the ability of specific types of providers to transform their financial and clinical models.

Ultimately, this is another step toward what the Obama Administration hopes is movement away from the traditional fee-for-service, or more-pay-for-more-procedures, model into a system that incents the delivery of coordinated care and rewards outcomes. While the solicitation is open to a wide array of stakeholders, integrated health systems or applicants with a payer partner experienced in crafting new payment models could be particularly appealing given the emphasis placed on new payment models. Similarly, proposals focused on one or more of the priority areas should be similarly well-positioned.

FaegreBD Consulting was fortunate to support a number of clients in preparing proposals during last year's initial round of innovation awards. We understand what the Center wants — and does not want — to see in applicants and can help clients shape proposals designed to maximize their likelihood of achieving success. Letters of intent are due by June 28, 2013, and completed applications by August 15, 2013. So time is of the essence.