Visiting the Innovation Center

At the invitation of a former student (thanks, JP!), I gave a lunch talk at the Center for Medicare and Medicaid Innovation yesterday. Over the course of the day, I met with a bunch of people at the agency to get a better sense of what they were up to. Here are my top-line impressions:

  • The Innovation Center isn’t your grandmother’s government bureaucracy. The office has the vibe of a start-up, with earnest young people in open cubicles and a shared sense that the work they’re doing matters. (And it does.) To a person, everyone I met was curious, sophisticated, and whipcord smart. None of them are blind to the challenges of reforming Medicare and Medicaid.
  • The biggest recurring theme was the difficulty in calibrating how fast and hard the Center could innovate. Push too little and nothing changes. Push too much and no one signs up for demonstrations. The trick is to find a sweet spot, where providers can learn to bear more risk without getting spooked by the prospect of revamping their entire organization. There’s no other real choice: as Austin has pointed out, you’ve got to start with sensible structures that have tiny teeth, only to add the fangs much, much letter.
  • Heterogeneity in payment models is the new normal. It’s not just traditional Medicare v. Medicare Advantage anymore. A number of new programs (shared savings, the Pioneer program, a new ESRD model) now fall somewhere in the middle. The heterogeneity reflects the blunt fact that some provider organizations have the capacity to bear more risk and others less. The Innovation Center has to tailor its demonstrations to those varying organizational capacities. The ultimate goal may be to get as many providers as possible to bear more risk, but there will be leaders and laggards for a long time to come.
  • There’s a big culture clash between the Innovation Center and CMS. It’s not that CMS is against innovating; heck, lots of people at CMS want to innovate, too. But forcing change through large and unwieldy systems is unbelievably hard. And so the Innovation Center is something of a gadfly: an irritant that works to goad CMS into acting. Without question, that can lead to some friction. But that was the whole point of creating the Innovation Center to begin with. The hope is that the friction will be productive, and will spur a set of reforms that can usher Medicare into the 21st century.


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