HHS looks to states to innovate in improving care and lowering costs

Up to $275 million will be made available to states to help them develop and test healthcare system improvements, according to the U.S. Department of Health & Human Services (HHS). Efforts will focus on enhancing healthcare quality and reducing expenditures.

The State Innovation Models initiative, which is made possible through the Affordable Care Act, will offer financial and technical support for states to design innovative health programs for Medicare, Medicaid and Children’s Health Insurance Program (CHIP) beneficiaries, HHS reported.

The initiative, which was created and will be supported by the Centers for Medicare & Medicaid Services (CMS)’ Center for Medicare and Medicaid Innovation, will provide a competitive funding opportunity for up to 30 states. States can apply for two types of awards: Model Design awards, to assist in implementing their already developed models; or Model Design awards that will provide funding and technical assistance as they determine what type of system improvements would work best for them.

Up to five states will be chosen for the initial round of Model Testing awards and up to 25 states will be chosen for Model Design awards. Of the funding available, $50 million has been designated for Model Design awards and $225 million for Model Testing awards.

“These awards are an incentive for states to recruit partners and accelerate the work that many of them are already doing to improve healthcare and lower costs,” said CMS Acting Administrator Marilyn Tavenner in a statement released July 19.

Through this initiative, officials say states will work with a broad coalition – including employers, insurers, community leaders and service organizations, healthcare providers, consumers and tribal governments – to design or test multi-payer payment and delivery system improvements to healthcare systems while eliminating unnecessary spending.

According to federal officials, state governments, with their ongoing relationships with stakeholders across their healthcare systems, have the ability to accelerate the performance of delivery system and payment models that can improve the quality and affordability of healthcare.

“As a former governor, I’ve seen states in action and know what great laboratories they are for innovations we can put into practice nationwide,” said HHS Secretary Kathleen Sebelius in a press release.

Given the broad scope of these multi-payer models, officials expect that successful innovations will benefit both privately and publicly insured residents of participating states.

States can apply for either Model Testing awards program. State Innovation Models initiative applications will be evaluated and reviewed by an independent review panel, CMS and its independent Office of the Actuary.

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