CMS Research Update

1. CMS Research Update Thomas W. Reilly, Ph.D. Deputy Director Office of Research, Development, and Information June 8, 2008

2. Overview • Background • CMS R&D agenda • Looking forward

3. Projections • Federal spending on Medicare and Medicaid is expected to total 4.6% of GDP this year • Without changes in current law, Federal spending on Medicare and Medicaid will reach 5.9% of GDP by 2017 • This is an increase of 30% in 10 years

4. Projections, cont. • Under current projections, the Medicare Health Insurance Trust Fund will be insolvent by 2019 • If the trend continues, Federal spending on Medicare and Medicaid will reach 20% of GDP by 2050 • Roughly the same share of the economy that the entire federal budget accounts for today

5. Implications • “Growth of this magnitude, if realized, would substantially increase the strain on the nation’s workers, Medicare beneficiaries, and the Federal budget. These projections demonstrate the need for timely and effective action to address Medicare’s financial challenges.” (Annual Medicare Trustees Report: March, 2008) • Although not the only thing we need to address, a central priority for CMS’ research agenda is exploring and testing innovations to help slow the growth of program spending

6. CMS research niche • Conduct research and evaluations of interest to the Administration and Congress to develop, assess, and refine Medicare and Medicaid policies • Develop, implement, and evaluate demonstrations to test innovations • Develop data infrastructure to enhance research capacity

7. Current CMS Research Themes to Help Slow the Growth of Program Spending • Value-based purchasing • Gainsharing • Promote greater competition • Bundled payments • Patient-centered payment • Refine and improve current payment systems • 7. Chronic care and disease management • 8. Health promotion and disease prevention • 9. Health IT infrastructure • 10. Data development and dissemination

8. 1. Value-based purchasing • Pay-for-performance demonstrations • Hospitals • Physicians • Nursing homes • Home health agencies • ESRD facilities • Research on measuring provider efficiency

9. 2. Gainsharing • Medicare Hospital Gainsharing Demonstration • Physician Hospital Collaboration Demonstration

10. 3. Promote greater competition • DME Competitive Bidding Program Evaluation • Clinical Lab Competitive Bidding Demonstration • Evaluation of Competitive Acquisition Program for Part B Drugs and Biologicals • Comparative Cost Adjustment Demonstration

11. 4. Bundled payments • Acute Care Episode Demonstration

12. 5. Patient-centered payment • Post Acute Care Payment Reform Demonstration • [For more background on this demonstration, go to Ann Meadow’s session on “Medicare Post-Acute Care”]

13. 6. Refine and improve current payment systems • Study of revisions to wage index used in the hospital prospective payment system • Research on outpatient therapy payment alternatives • Study of geographic variation in Rx spending, for Part D risk adjustment

14. 7. Chronic care and disease management • Disease management demonstrations • Seven demonstrations across 35 sites • Medical Home Demonstration • Medicare Advantage studies, including Special Needs Plans (SNP) evaluation • Part D Prescription Drug Benefit evaluation

15. 8. Health promotion and disease prevention • Senior Risk Reduction Demonstration • Cancer Prevention and Treatment Demonstration for Ethnic & Racial Minorities

16. 9. Health IT infrastructure • Electronic Health Records (EHR) Demonstration • Medicare Care Management and Performance Demonstration

17. 10. Data development and dissemination • Our goal is to build research capacity by making CMS administrative and other data available and understandable for health services researchers, within the limits of privacy restrictions and resource constraints

18. 10. Data development and dissemination, cont. • Primary approaches include: a. Develop research-oriented data files b. Provide information and assistance to researchers c. Improve data distribution process

19. 10. Data development and dissemination, cont. a. Develop research-oriented data files • Medicare Current Beneficiary Survey (MCBS) • Consumer Assessment of Healthcare Providers and Systems (CAHPS) • Medicare Health Outcomes Survey (HOS) • Medicaid Analytic eXtract (MAX) • Chronic Condition Warehouse (CCW) • Part D data • [For more detail, go to Dan Waldo’s session on “CMS Databases”]

20. 10. Data development and dissemination, cont. b. Provide information and assistance to researchers • Research Data Assistance Center (ResDAC) • Assists in development of file formats for core research files • Develops researcher friendly documentation • Training and liaison with research community • Assists with the development of all requests for CMS identifiable data

21. 10. Data development and dissemination, cont. c. Improve data distribution processes • Research Data Distribution Center pilot (RDDC) • This pilot will determine whether an outside data distribution contractor can efficiently provide CMS data to external researchers, identify CMS operational issues and resolutions, identify contractor operational issues • Potential advantages to researchers include quicker turnaround, greater flexibility in data formats, ability to produce databases oriented toward researcher needs

22. Summary of Current CMS Research Themes to Help Slow the Growth of Program Spending • Value-based purchasing • Gainsharing • Promote greater competition • Bundled payments • Patient-centered payment • Refine and improve current payment systems • Chronic care and disease management • Health promotion and disease prevention • Health IT infrastructure • Data development and dissemination

23. Looking forward • Trends in Medicare and Medicaid spending are not sustainable • We need to explore and test innovations to help slow the growth of program spending • CMS resources are increasingly constrained, we need to prioritize our R&D investments • If you were in our shoes, what research would you focus on going forward?

24. For More Information • Medicare demonstrations: http://www.cms.hhs.gov/DemoProjectsEvalRpts/CMS • Research reports and results: http://www.cms.hhs.gov/Reports/Reports/list.asp • Medicare and Medicaid statistics: http://www.cms.hhs.gov/researchers/statsdata.asp • ResDAC: http://www.resdac.umn.edu E-mail: resdac@umn.edu

25. My contact Information Thomas W. Reilly, Ph.D. Phone: 410-786-0631 E-mail: Thomas.Reilly2@cms.hhs.gov