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That's a Billion with a 'B': The Health Care Innovation Challenge

Dec 15

Written by: Grants Office, LLC
Thursday, December 15, 2011  RssIcon

By Chris LaPage
December 2011

The health sector grant funding landscape is abuzz with excitement. The new Health Care Innovation Challenge program is providing $1 billion in funding for projects that offer innovations in service delivery and payment modeling. The primary target population for the funding are those individuals enrolled in CMS insurance programs, which includes Medicare, Medicaid, and Child Health Insurance Program (CHIP). While applicants can address other populations, the project will not be funded unless one of the three CMS-insured populations are incorporated at some level.

Specifically, the program was created to fund promising projects that address three critical areas in regards to the target population. In order to meet the three-part aim, projects must result in better health care, better health, and reduced costs. It is important to distinguish between better health care, which revolves around systematic delivery issues and better health, which refers to improved outcomes and individual health status. Finally, while the program welcomes initiatives that drives savings to the overall healthcare system, CMS wants to fund projects that reduce their specific costs as the primary payer for Medicare, Medicaid and CHIP.

Considering the huge amount of money available, it is no wonder that the program has created a lot of hype. In addition, eligibility for the program is wide open with the exception of state governments (and their agencies or instrumentalities). If you can make a case for addressing the three-part aim, the program allows a great deal of flexibility in the types of projects that can be supported. Projects can even include significant technology components, such as the utilization of disease registries, electronic health records, health information exchange, and telehealth networks. However, it is unlikely that a full scale health information technology initiative, as a standalone project, would be funded through the program. Instead, the program would support utilization of these systems along with some build-out to ensure capacity for the proposed project. This is reflected in one of the program's key attributes, which requires infrastructure and capacity-building activities to be completed within six months of the project start date. CMS wants you to spend the bulk of the three-year project period actually testing the model and generating savings.

The key consideration for any potential applicant revolves around whether their project is truly innovative. First and foremost, a project cannot be innovative if the applicant is proposing to deliver services that are already reimbursed through CMS programs. In other words, if you are proposing to deliver mental health services to Medicaid patients at a clinic via telehealth equipment, you better be sure that the Medicaid program in your state is not currently reimbursing for those services. While such a program may result in better health care, better health and cost savings to CMS, it will not be considered innovative in your area. Every scenario must be qualified by the location of the applicant because Medicaid reimbursement policies vary in each state.

If you have a project that proposes to deliver services that are not covered by the relevant CMS-insurance program, you must still do some due diligence to ensure it will be considered innovative. CMS has several demonstration projects that they have funded in the past as well as some that are currently ongoing or planned for the future. Potential applicants must familiarize themselves with these initiatives to ensure they are not replicating a model that CMS is already testing. Reviewing the details of these other demonstration projects will also give potential applicants insight into the types of innovation in service delivery and payment structure that will potentially be supported. While you cannot replicate an entire model, potential applicants may borrow pieces from several models and apply it in a different setting or target a new population. For instance, while CMS may have supported medical home demonstration projects in Federally Qualified Health Centers for Medicare patients, they may consider a project where the medical home model is tested with Medicaid patients in rural health clinics. Table 1 (see page 11) is a list of past, current and planned CMS demonstration projects with a website link that will provide additional information on the initiative.

Once you are confident that the model being proposed is truly innovative, there are some additional considerations to keep in mind. CMS anticipates that most innovations will be accompanied by significant workforce development activities, including training. In some cases, proposals will involve the re-engineering of certain health professional roles, where a nurse or tech (less costly) may be able to take on a responsibility that historically was provided by a physician (more expensive). The other area that is critical to the proposal's ultimate success is the sustainability plan that is proposed. CMS wants to be assured that a successful model will be able to continue operating once the project period ends and the grant dollars are dispensed. Applicants should think about policy considerations that CMS and state Medicaid programs could potentially implement in order to ensure sustainability of the project. For instance, you may suggest that CMS takes into consideration reimbursing home-based tele-psychiatry visits under Medicare should the results of the project be successful (better health care, better health, reduced costs). In addition, you may bring private payers (insurance companies) on board as part of the long-term sustainability plan for the project.

Whenever a government agency makes $1 billion available for a grant program, the subsequent excitement and hype that is generated is understandable. The trick is to temper that enthusiasm with a dose of reality: CMS will only be funding the most innovative projects that are best suited to meet the three-part aim and continue once the grant funding stops. Interested applicants need to be sure they are doing their due diligence in these regards.

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