Medicare’s laboratory to test new ideas to improve health care may remain largely untouched if the 2010 health care law partially survives the Supreme Court, but a full repeal of the Affordable Care Act (ACA) could mean trouble for the ACA-created Center for Medicare & Medicaid Innovation.

“If the entire law is struck down, it will create some chaos,” said Marianne Udow-Phillips, director of the Michigan-based Center for Healthcare Research & Transformation. “The Innovation Center will be part of that chaos.”

A full repeal of the law would mean the dismantling of the Innovation Center, which, according to the Centers for Medicare & Medicaid Services (CMS), has already spent more than $270 million as of March 2012.

But there are slivers of hope that the Innovation Center could continue its work even if the entire health care law is repealed.

“There is a lot of promise and some risks with the (Innovation Center’s projects),” said Marc Steinberg, deputy director of health policy for Families USA, a nonprofit advocate for high-quality and affordable health care for all Americans.

 “But the idea that you just throw everything out is really quite shocking,” he said. “We’ve been saying for a long time that the best way to control health care spending is to improve quality.”

Innovation Center Initiatives

The Innovation Center was established on January 1, 2011, by the ACA. Its goal: test new ways of delivering care that could ultimately improve quality of care while cutting health care costs. Since its inception, it has established more than a dozen demonstration project initiatives involving over 50,000 health care providers. Congress, with reluctance from Republican lawmakers, has appropriated $10 billion to the Innovation Center for 10 years.

In addition to the $270 million spent as of March 2012, another $54 million has been given to projects now administered by the agency but started before the creation of the Innovation Center. Distribution of funds varies by project and initiatives, according to a CMS spokeswoman.

Among the Innovation Center projects are the creation of accountable care organizations (ACOs), where groups of doctors, hospitals and other health care providers come together to coordinated care for Medicare patients. The Pioneer ACO Model tests a new payment framework where groups of providers are paid according to their ability to improve their patient’s health, rather than the specific services they provide. The Innovation Center has allotted $77 million to the three-year project, which began January 2012 and would affect 860,000 Medicare beneficiaries.

Another demonstration project being administered by the Innovation Center, the bundled payment for care improvement initiative, also redesigns the way providers are paid. The model encourages coordination among health care providers by bundling their payments instead of making separate payments to separate providers for treating a single patient. The three-year project has been allotted $118 million.

Other Innovation Center initiatives include:

• Comprehensive Primary Care Initiative Demonstration, a public–private partnership to enhance primary care services, including 24-hour access, care plans, and care coordination. The 4-year long project costs $322 million and involves 315,000 Medicare beneficiaries.
• Federally Qualified Health Center (FQHC) Advanced Primary Care Practice Demonstration, which coordinates payments to FQHCs, enhancing primacy care services and improving access. The 3-year project involves 500 FQHCs in 44 states, costs $49.7 million and affects 202,000 Medicare beneficiaries.
• Multi-payer Advanced Primary Care Practice Demonstration, a state-led, multi-payer collaborations to help primary care practices transform into medical homes. The 3-year $283 million project involves eight states and 332,000 Medicare beneficiaries.
• Independence at Home Demonstration tests effectiveness of home-based care for patients with multiple chronic conditions. The 3-year project costs $15 million and affects 10,000 Medicare beneficiaries.
• Accelerated Development Learning Sessions was a series of three sessions to educate the public on successful ACO developments. It cost $1.5 million.
• Advanced Payment ACO Model Initiative is a prepayment of expected shared savings set to support the ACO infrastructure and care coordination. The payments end June 2014,  and is expected to cost $175 million and affect 650,000 Medicare beneficiaries.
• Physician Group Practice Transition Demonstration is a precursor to the Medicare Shared Savings Program which rewards physician groups for efficient care and high quality. It was allotted $500,000 in administration cost.
• State Demonstration to Integrate Care for Medicare-Medicaid Enrollees assists states in engaging stakeholders in redesigning care for Medicare-Medicaid enrollees. The 18-month project costs $15 million and involves 15 states.
• Financial Alignment Model Demonstrations is an opportunity for states to implement new care and payment systems to better coordinate care for Medicare-Medicaid enrollees.
• The Partnership for Patients is a national campaign targeting a 40 percent reduction in hospital-acquired conditions and a 20 percent reduction in 30-day readmissions. The $500 million project involves 26 hospital networks supporting over 3,200 hospitals in all 50 states.
• Innovation Advisors Program trains health care providers to improve care and patient experience.
• Health Care Innovation Challenge, a 3-year, $1 billion initiative is a broad appeal for innovations with a focus on developing the workforce for new care models.
• Medicaid Emergency Psychiatric Demonstration is a 3-year, $75 billion project to expand access to inpatient psychiatric services for Medicaid beneficiaries.
• Medicaid Incentives for Prevention of Chronic Diseases (MIPCD) Program tests the effectiveness of preventive services in Medicaid. The $100 million project involves 10 states.

What Happens to the Projects?

Families USA’s Steinberg said if the Supreme Court “overreaches” and strikes down the entire law, it throws into question the existence of a lot of demonstration projects.

With the repeal of the law, he said, the Innovation Center wouldn’t have a legislative reason to exist.

“Most of (the projects) have bipartisan support,” Steinberg said. “It’s an example of how reckless the attacks on the ACA have been.”

However, the fate of the demonstration projects are just as varied as the tests they’re conducting—with some continuing no matter what happens with the Court, and others simply seeking other funding sources to maintain their existence.

CHRT partnered with the Michigan Department of Community Health on Michigan’s successful grant application for the CMS’s multi-payer advanced primary care demonstration project, which will bring about $65 million in new Medicare payments into the state over the next three years. The project gives financial support to doctor and hospital organizations that improve health care delivery in the state.

While CHRT’s project is under the Innovation Center, the project was set before the Center was created. It’s among various other projects transferred under the Innovation Center after the agency’s creation. Udow-Phillips said that even if the Innovation Center were dismantled, CHRT’s demo project will continue because it had been allotted money unrelated to the Innovation Center’s budget. But for most of the demonstration projects created under the agency, it may be a different story.

The Innovation Center last month granted Vanderbilt University Medical Center about $2.5 million to reduce hospital readmissions among Medicare and dual-eligible beneficiaries in Tennessee. About 1 in 5 elderly patients are readmitted in the state.

“If that funding disappears, it would hurt our efforts. We couldn’t do it in a bigger way or be as effective,” said John Schnelle, professor of medicine at the Vanderbilt Center for Quality Aging and who will oversee the demonstration project set to begin in July.

The project is determined to continue regardless of the Supreme Court decision, he said.

“There will always be an effort to improve quality and lower costs,” Schnelle said. “But with limited funding, there’s only so much we can do.”

Sliver of Hope

If the Court finds that the two main issues being challenged—the individual mandate and the Medicaid expansion—are severable from the entire law, even if both are found unconstitutional, the Innovation Center should survive, Udow-Phillips said.  

Funding for the Innovation Center isn’t closely tied to either issue, she said. It’s possible that some of the Medicaid-related demonstration projects may be affected if the Medicaid expansion provision is struck down, but the ACA has appropriated $10 billion to the Innovation Center for 10 years.

The CMS declined to discuss the impact of a high court decision on the Innovation Center or the demonstration projects.

“We are fully confident [the Supreme Court] will uphold the law,” a CMS spokeswoman said.

But even if the law is fully repealed, there is a sliver of hope the Innovation Center can continue, according to Peter D. Jacobson, president of the Public Health Law Association and professor of health law and policy at the University of Michigan.

It would be up to the Obama administration whether it wants to allocate resources to continue the center, he said.

“The question is, if the law is struck down, does the (Department of Health and Human Services; HHS) have the authority to establish the center itself?” Jacobson said. “The answer is generally ‘Yes.’”

Jacobson said under the Social Security Act, HHS Secretary Kathleen Sebelius has “broad authority” to organize support for Medicare and Medicaid, which is the main purpose of the Innovation Center.

“But the other question is, where the money will come from,” he added.

Even if HHS has enough money in its discretionary spending fund, it will depend whether the secretary believes the Innovation Center, or a similar agency, deserves the money. Then the secretary must determine how much money to allocate to the Innovation Center.  

“For it to continue, it may be more of a question of practicality,” Jacobson said. “It may just not be feasible.”

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