U.S. Government Allocates Over $665 Million to Drive Healthcare Innovation Through State-Led Reform Initiatives

In mid-December 2014, the U.S. Department of Health and Human Services (HHS) announced the launch of a second round of funding totaling more than $665 million, awarded to 28 states, three territories, and the District of Columbia as part of the State Innovation Models initiative. According to HHS regulations, these funds are to be used exclusively for “designing and testing innovative healthcare payment and service delivery models,” with the ultimate goal of improving overall quality of care while reducing costs for Medicare, Medicaid, and the Children’s Health Insurance Program. Combined with the first round of funding, which allocated $300 million to 25 states, this initiative will cover 38 regions across the United States, encompassing more than 61% of the population.

“In healthcare reform, states serve as laboratories for innovation and act as vital partners to one another,” stated Patrick Conway, M.D., Deputy Administrator and Chief Medical Officer of the Center, in an HHS announcement. “State governments purchase large-scale healthcare coverage for their employees and residents, exercise extensive regulatory oversight over healthcare providers and payers, and possess the capacity to convene multiple stakeholders to enhance statewide health service systems and oversee public health, social, and educational services. Through collaborative efforts, states can accelerate and transform health innovation.”

A recent report by Accenture Consulting on the first phase of the federal government’s national innovation model has revealed key areas that will fundamentally change the nature of healthcare investment:

Digital Tools and Telemedicine.Accenture’s report indicates that most states participating in national innovation models have invested in patient portals and tools to empower consumers in self-managing their health. For instance, Delaware plans to introduce a telehealth application that allows patients to access their personal electronic health records and explore healthcare delivery options. Furthermore, 19 states are striving to expand virtual care technologies to improve the quality of care.

Reform of the Payer Database.The report indicates that more than half of the states plan to establish or modify all-payer claims databases to provide greater accessibility for stakeholders and reduce redundancy. Washington State, for instance, is leveraging claims data to conduct patient risk assessments and evaluate cost-effectiveness.

Community Health Care Management.Each participating state has invested in patient-centered medical homes to enhance the effectiveness of primary care. Maryland utilizes human service navigators to coordinate primary care and social service programs. The integration of behavioral health and preventive care is also a key consideration in many states’ innovative initiatives. To control healthcare costs, many states have increased the number of community health workers.

“In a statement regarding this report, Kaveh Safavi, M.D., Global Managing Director of Accenture’s Healthcare Practice, stated: ‘These nationwide initiatives are part of a transformation—evolving from an inherently outdated healthcare system to a home- and community-centered care model that delivers healthier and more humanized services.’”

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