Medicare and Medicaid

CMMI Poised to Weather White House’s $800 Million Cut if Approved, Experts Say

Top Democrats raise alarm over funding for innovation center, but experts see value-based models moving forward

Health and Human Services Secretary Alex Azar has made speeding up the nation’s shift toward value-based care one of his top priorities. (Photo by Chris Kleponis-Pool/Getty Images)

The White House’s call for Congress to slash $800 million in funding for a federal office that tests value-based payment models has raised concerns among some Democrats, who say it casts doubt on the Trump administration’s commitment to reining in health care costs and improving patient care.

Despite the proposed cuts to the Center for Medicare and Medicaid Innovation, which was established under the Affordable Care Act, health care experts say they see the Trump administration planning a new direction for CMMI, as evidenced by federal health officials’ outreach to stakeholders seeking feedback on ways to change the office. In addition, since President Donald Trump took office, most Obama-era models have continued, and the Trump administration has moved forward with a new bundled-payment initiative.

Dan Mendelson, president of Avalere Health, said in a phone interview Wednesday that he believed CMMI is “amply funded to do what they need to do over the course of the year” and that the proposed funding cuts are “taking money that wasn’t going to be used.” CMMI had $3.5 billion in “unobligated,” or unspent, federal funds on Oct. 1, 2017, according to the latest federal data.

If it loses $800 million in funding, “I don’t think that this is a material adverse development for CMMI,” he said.

But some Democrats who see the office as crucial to government efforts to shift providers from traditional fee-for-service to value-based payment models are alarmed by Trump’s proposed move.

CMMI “has a critical mission to test transformational models to improve patient care and encourage more responsible spending in our federal health programs,” Sen. Mark Warner (D-Va.) said Wednesday by email. “Targeting the innovation center for savings could indicate that the Administration may not be as interested in the center’s ongoing work to bring down the cost of health care. I will be closely monitoring this.”

Democrats have panned Trump’s proposed reductions, which are part of an effort to eliminate $15 billion in previously approved funding, as an attempt by the White House to placate fiscal hawks, which have balked at the price tag of the GOP’s tax overhaul that was signed into law in December. House Republicans on Wednesday introduced legislation (H.R. 3) to enact Trump’s proposed cuts. The bill faces tough odds in the Senate, where Republicans hold a slim one-seat majority.

CMMI “works to reduce health care costs while improving the quality of care,” Rep. Nita Lowey (D-N.Y.), the ranking member of the House Committee on Appropriations, said Wednesday by email. “To pay for the GOP tax cuts now, the Trump administration’s swipe at CMMI – along with the Children’s Health Insurance Program — will likely cost the American people billions of dollars in future lost savings.”

An official at the White House’s Office of Management and Budget on Wednesday rebutted the Democrats’ criticism, saying that the proposed cuts are for funds that would otherwise go unspent. If the CMMI cuts are enacted, the official said, the office would still have more than $2 billion available to test innovative payment and delivery models in Medicare and Medicaid until the 2019 fiscal year, at which point it is slated to receive a new $10 billion appropriation.

The proposed cuts come as top federal health officials pursue a new direction for CMMI that is focused on patient-centered care and testing market-driven reforms.

Health and Human Services Secretary Alex Azar has made speeding up the nation’s shift toward value-based care one of his top priorities, and in a speech on Wednesday to the American Hospital Association, he said CMMI is going to think “big and bold” when coming up with new payment and service delivery models.

CMMI will likely ramp up its operations in the coming year, including testing more new payment models and service delivery projects, once the new vision is firmly in place, Cristina Boccuti, associate director of Kaiser Family Foundation’s Program on Medicare Policy, said in a phone interview Wednesday.

“I think that CMMI is still viewed in this administration as an important tool that they have to test and design new models of care that could potentially save money and improve care,” Boccuti said.

During the Obama administration, CMMI was a frequent target of GOP lawmakers who said the office’s power to design and test demonstration projects without congressional approval was government overreach.

Republican calls for eliminating the office or stripping it of its power have died down since Trump took office, as administration officials eye a new direction for CMMI.

So far, CMMI under the Trump administration has been most aggressive at  undoing some Obama-era policies, including scaling back three mandatory payment programs that were unpopular with provider groups. Those actions took place under Azar’s predecessor, Tom Price, who was a staunch opponent of mandatory models.

CMMI said in April that it was seeking input from stakeholders on a future model that would allow providers to directly contract with Medicare patients. The office is also moving forward with a new bundled-payment model that will launch in October.