WSJ Contributors Have It All Wrong About CMMI

By Coleen Kivlahan, MD

On April 23, 2014, an op-ed in the Wall Street Journal described the Center for Medicare and Medicaid Innovation (CMMI), one of the few bright spots on the health reform horizon in our country, as “a stealthy menace.” It was written by Lanhee Chen from the Hoover Institute (a scholar and attorney) and James Capretta from the American Enterprise Institute (a scholar and long term public policy government servant). The authors are not working in one of our nation’s health systems

Top 10 reasons to MOVE ON:

1. The authors state that CMMI is committed to “preserve rather than reform” Medicare’s traditional—and broken—fee-for-service Medicare program. The reality is just the opposite. In its short existence, CMMI has provided incentives for the nation’s health system to heal itself at a faster pace than most of us ever dreamed. CMMI has developed programs across the full spectrum of care that will benefit all Americans: patient-centered medical homes, nursing home reform, hospital payment reform, and value-based payment to physicians. There is interest around the world in the programs developed under CMMI’s leadership.

2. Chen and Capretta tell us that CMMI’s “unstated yet clear agenda is to impose stricter price controls within Medicare.” Well, they got that one right, but it is far from an unstated agenda. CMMI/CMS is clear about its mission: to lead the charge in managing cost, price, and quality in our health system. Its efforts are methodically addressing challenges in our current structures and providing new incentives for a better, more transparent system.

3. “Cutting costs only lowers quality and induces non-price rationing (e.g., queues).” The fear strategy will no longer work. Millions of Americans have signed on with state and federal exchanges just to get the same kind of health security most of us are fortunate to have. The literature is clear that cutting costs can lead to better quality and improved access to care when implemented by health professionals in a disciplined, informed way.

4. At CMMI, the authors scold, about “10 percent of the agency’s funding is going to personnel and administrative expenses.” Before the Affordable Care Act was passed and a medical loss ratio threshold was set, most commercial insurance companies in the United States consumed 15 to 20 cents on every dollar for administrative purposes. CMMI is a bargain.

5. The authors believe it is a bad thing that “changes that are found through pilot programs to reduce costs without harming quality, or found to be budget-neutral while improving quality, can be implemented nationwide through regulatory fiat.” CMMI can actually promote the dissemination of effective programs rapidly, instead of being paralyzed by Congressional debate or dissension.

6. The federal government is not in the position “to lead an effort in innovation in medical delivery,” yet Medicare is widely considered to be one of the most effective health insurance programs in the nation. Medicare beneficiaries are overwhelmingly satisfied with their coverage and administrative costs are lower than any other large health plan.

7. Chen and Capretta extol the virtues of Medicare Advantage plans and state that “accountable-care organizations and bundled payments are the same tools already in use in Medicare’s private-plan option.” Medicare Advantage plans cover about 30 percent of Medicare beneficiaries nationally, and have improved care for some populations. There is clear evidence of favorable selection in many areas of the country where MA plans are active, but it is a good model of managed care and deserves expansion. For other areas of the country, and in immature markets, ACOs and bundled payments offer enhanced cost control and opportunities for risk-based payment.

8. Medicare Advantage plans also routinely cut costs. Studies have noted reductions in admissions and mortality, yet there is no clear conclusion about the cost savings to Medicare that have accrued by MA Plans. The subsidies to insurance companies, rich benefit packages, and minimal value-based incentives have left room for considerable improvement in cost and quality management in MA plans.

9. The authors contend that CMMI will “prop up the more costly fee-for-service program with government-led innovation.” In fact, today’s fee-for-service programs are being systematically eliminated thanks to CMMI’s programs aimed at every sector of the U.S. health system. The bundled payment program has four models from which to choose, offering options as to how health systems will be paid and for various durations of care (up to 90 days). ACOs are managing populations for three years. These programs are the interim steps on the way to more highly developed fixed payment models.

10. “The agency’s authority is broad enough to allow across-the-board cuts in payments to hospitals and physicians, and lower reimbursements for pharmaceuticals and related products as well, all in the name of innovation.” And that is exactly what most Americans expect of the federal government: cost control, expanded access to care, and incentives for innovation. As health professionals, hospitals, and community providers, we know this about CMMI. We may not all like all the changes, but we know that our health systems are becoming more reliable, more transparent, and higher quality by the debate and the programs stimulated under CMMI’s leadership.

coleen-kivlahanColeen Kivlahan, MD, MSPH, is senior director of health care affairs at the Association of American Medical Colleges. She can be reached at