Strengthening the Center for Medicare and Medicaid Innovation's Approach to Constructing Alternative Payment Models

Abstract

The Center for Medicare and Medicaid Innovation (CMMI) seeks to develop evidence-based alternative payment models (APM) to improve health care quality and reduce costs, but its performance in achieving these goals has been mixed. In October 2021, CMMI released its Innovation Strategy Refresh to highlight challenges faced by payment models and suggest new strategic approaches for the upcoming decade. While a welcome recast of organizational goals, the Refresh leaves space for how CMMI will address persistent issues. These include how CMMI can best engage physicians and patients in APMs, minimize conflicting incentives among APMs, reduce selection bias in model participation, and, ultimately, transition away from the fee-for-service framework that underlies much of Medicare reimbursement. This article provides guidance to CMMI's vision by examining challenges within CMMI's strategy for model building and offering solutions to mitigate these issues. These strategies include engaging beneficiaries in APM incentives, expanding operational flexibility to improve clinical behaviors (e.g., waivers), rectifying issues with conflicting model incentives, building voluntary short-term and mandatory long-term incentives to mitigate selection bias, and transitioning to an overriding population-based model to constrain net costs. Policy Points The Center for Medicare and Medicaid Innovation (CMMI) seeks to develop evidence-based alternative payment models (APM) to improve care quality and reduce health care cost, but its performance in achieving these goals has been mixed. In October 2021, CMMI released a “strategic refresh” of its goals but left space for how persistent issues to model development would be addressed. We propose strategies to engage physicians and patients in APMs, minimize conflicting incentives among APMs, reduce selection bias in model participation, and, ultimately, transition away from the fee-for-service framework that underlies much of Medicare reimbursement.