The Center for Medicare and Medicaid Innovation (CMMI), once expected to save money and deliver healthcare at a lower cost, is increasing federal spending after all.
A report from the Congressional Budget Office (CBO) shows that the office increased direct spending by $5.4 billion between 2011 and 2020. CMMI spent $7.9 billion to operate models, but those models only reduced healthcare benefits spending by $2.6 billion.
The new figures reflect a stark contrast from CBO’s projections when the Affordable Care Act (and CMMI) was first enacted. CBO believed at the time that CMMI would reduce spending by $2.8 billion and lower spending on benefits by $10.3 billion, offsetting the $7.5 billion needed to operate CMMI’s models.
CBO now anticipates spending will increase an additional $1.3 billion from 2021 to 2030, though the office notes that the “budgetary effects of CMMI’s activities over the first decade and its updated projects are subject to considerable uncertainty.” For example, the report did not capture savings that were gained by accountable care organizations (ACOs) through the Medicare Shared Savings Program.
The agency believes that its incorrect projections can be attributed to several factors.
One, CBO thought that CMMI would continue to find models that reduced spending, but after the first two models were certified, the rate of certification declined over time. Second, CMMI models are largely voluntary, meaning providers can choose models that have positive financial outcomes and drop models that have the opposite effect. CMMI has discussed implementing mandatory participation for this reason. Third, CBO said it did not realize CMMI models would contradict within health systems, creating conflicts for providers, as well as payment policy changes.
Several days before the CBO report was released, Senate Budget Committee members briefly praised the CMMI for working to lower spending, prematurely praising CMMI during a hearing on Medicare solvency when it did not actually lower spending.
Blair Childs, president and CEO of healthcare communications company Childs and Associates and a senior executive advisor for Premier Inc., said the CBO report is “missing the forest for the trees.”
“We are undergoing a tectonic shift in the incentives in healthcare payment,” he said in a LinkedIn post. “This is due to a bipartisan movement to shift payment from fee-for-service to accountable, value-based care. CMMI is a key player in making that change a reality under traditional Medicare and Medicaid. While Washington skeptics don’t want to stick their heads out and attribute this spending decline to the movement to value-based care, I submit that, based on strong evidence, it is the dominant cause of this change.”