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Twenty-five states to test Medicaid models

Innovation program seeks to encourage learning laboratories

Topics: Medicaid, Reimbursement, Finance, Health Care Reform, Market Trends, Strategy

February 22, 2013

HHS on Thursday awarded nearly $300 million for a new innovation program that will help states design and test new multi-payer payment and delivery models for their Medicaid and CHIP programs.

The Center for Medicare and Medicaid Innovation program—called the State Innovation Models Initiative—was created under the Affordable Care Act and will distribute two types of awards:

  • Model design awards: States selected for the design award will receive up to $50 million. Winning states will create and submit a statewide plan to transform its care delivery into a model that uses an integrated-care strategy led by the community.
  • Model testing awards: States selected for the testing award will receive up to $225 million over three to four years. Winning states will use the funds to test and evaluate multi-payer system transformation models that include employer-sponsored, commercial and public health plans.

CMS will use the program to learn whether new models outlined in the ACA, including accountable care organizations, are successful when implemented broadly and combined with state-initiated reforms.


Innovation grant awardees

Arkansas, Maine, Massachusetts, Minnesota, Oregon and Vermont were awarded the first State Innovation Model testing funds, which will be used to implement plans aimed at transforming the health care delivery system within their state.

HHS also awarded the State Innovation Model design funds to 16 states—California, Connecticut, Delaware, Hawaii, Idaho, Illinois, Iowa, Maryland, Michigan, New Hampshire, Ohio, Pennsylvania, Rhode Island, Tennessee, Texas, and Utah—to further develop proposals for comprehensive health care transformation.

According to the project's website, the states will be testing programs intended to curb heath care costs, "while maintaining or improving quality of care" in federal entitlement programs.

In addition, HHS announced that Colorado, New York and Washington will receive State Innovation Model pre-testing awards that will help those states continue to develop comprehensive innovation plans. 



States in all categories will have six months to submit their State Health Care Innovation Plans to CMS, in order to qualify for an anticipated second round of Model Testing awards.

In a news release, HHS Secretary Kathleen Sebelius said, "As a former governor, I understand the real sense of urgency that states feel to improve the health of their populations while also reducing total health care costs, and it's critical that the many elements of health care in each state—including Medicaid, public health and workforce training—work together" (Wayne, Bloomberg Businessweek, 2/21; Daly, Modern Healthcare, 2/21; Monegain, Government Health IT, 2/22). 

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