CMMI Initiatives May Fall Short of Previous Savings Projections

The Center for Medicare and Medicaid Innovation (CMMI) will save far less in the coming years than the Congressional Budget Office (CBO) projected, according to an analysis conducted by Avalere.

Avalere, a health care research and consulting firm, estimates that CMMI will save $18 billion from 2017 to 2026. The CBO had projected $34 billion in net federal government savings over that same time period.

CMMI is being relied on to reduce costs as the Centers for Medicare & Medicaid Services (CMS) continues to emphasize value-based care. That, and testing and innovating new payment and delivery models, is the purpose of CMMI.


Examples of CMMI-led initiatives include the Accountable Care Organization (ACO) model and the Medicare Diabetes Prevention Program (MDPP).

The key takeaway from the Avalere analysis, besides CBO’s inflated numbers, is ultimately the difficulty of assuming cut costs from new models, which are often volatile or even short-lived.

“CMMI’s impact on Medicare spending has not reached earlier projections by the [CBO], demonstrating the difficulty in projecting savings from untested and future unknown alternative payment models,” Avalere stated in its analysis summary.


CBO assumes that CMMI would both identify successful demonstrations and terminate demonstrations that did not create noticeable savings. Those assumptions are partly to blame for the lofty predictions.

Perhaps one example of CMMI savings not adding up over time is the Home Health Value-Based Purchasing Model (HHVBPM), another CMMI initiative. HHVBPM was implemented in 2016 with widespread praise for its ability to tie home health reimbursements to patient outcomes, but the model has since been stuck in a nine-state demonstration.

Avalere only deviated a little from CBO in its analysis.

“Avalere’s approach for projecting future CMMI activity is generally consistent with CBO, with the notable exception that Avalere’s projected savings for CMMI rely on demonstration-specific savings estimates, based on program evaluation reports for existing demonstrations and CMS regulatory impact analyses for proposed demonstrations,” the analysis said. “Avalere assumes $11 billion in program spending for 2017–2026.”

Avalere estimated savings based on current programs expanding, proposed demonstrations being implemented and future not-yet-proposed demonstrations, among other things.

The U.S. Department of Health and Human Services (HHS) announced at the beginning of 2020 that CMMI’s new director would be Brad Smith, a co-founder of Aspire Health and former chief operating officer of Anthem’s diversified business group.

Smith founded Aspire with former U.S. Senator Bill Frist.

The former director of CMMI, Adam Boehler, left the position in July when he was selected to lead the International Development Finance Corp. (DFC). Among his accomplishments, Boehler tried to reduce costs by emphasizing in-home and value-based care.

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