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Tuesday, October 7, 2014

Shining Light on SIM: Understanding the State Innovation Models (SIM) Initiative

Caitlin Morris

Director of Affordability Initiatives

Update December 16, 2014: CMS announced the states and territories receiving Round Two State Innovation Model initiative awards


Today, we’re kicking off an occasional series of posts about the State Innovation Models (SIM) Initiative. Over the coming months, we’ll use the SIM Initiative to explore how states are engaging in innovative reforms geared at improving the quality and delivery of care and reducing costs. 

In this first post, we’ll provide a brief backgrounder on the initiative. In future posts we’ll delve into what’s happening on the ground, talk to health care stakeholders about how SIM is playing out in their states, highlight best practices, and flag key issues for advocates.  

In the post-Affordable Care Act world, states have become the laboratories for a vast range of payment and delivery reforms centered on achieving what’s known as “the triple aim”: better care, lower costs, and better health

State governments are rightly concerned with spiraling health care costs, a fragmented delivery system, and care that is too often low quality. Through its State Innovation Models (SIM) initiative, the Center for Medicare and Medicaid Innovation (CMMI) is playing an increasingly influential role in helping states address these issues. In December, CMMI is scheduled to announce $731 million in grants to encourage payment and delivery reforms at the state level. 

How states are experimenting with payment for and delivery of health care

State governments have numerous tools and policy levers at their disposal that make them a natural and necessary partner in efforts to transform the health care system. They are a huge payer of health care. They also have broad regulatory power over health care payers and providers, in addition to public health, social, and educational services. 

Across the country, states are using these tools and policy levers to experiment with a wide variety of reforms that touch on all aspects of the health care system. Some examples might include:

  • Building a stronger IT infrastructure to enhance payer and providers’ analytic capabilities
  • Implementing new care delivery models that integrate primary care and behavioral health
  • Piloting “super-utilizer” programs to increase care coordination and support of persons with certain risk factors, like homelessness or mental illness

The SIM initiative approach to seeding reform in the states

The Affordable Care Act created CMMI with the explicit goal of supporting “innovative payment and service delivery models to reduce program expenditures…while preserving or enhancing the quality of care.” The law provides for $10 billion in funding through fiscal year 2019 to support this goal and granted the Secretary of Health and Human Services broad latitude to scale up promising programs to the national level. 

The hallmark of the SIM initiative is large grants to states to develop and/or implement “State Health Innovation Plans.” These proposals lay out a state’s strategy and methods for transforming the way health care is delivered and paid for. The goal is to encourage states to coordinate numerous strategies for health system improvement across public and private payers into a single, comprehensive plan. In the first round of grants, CMMI awarded nearly $300 million to 25 states to design and/or implement State Health Care Innovation Plans. 

Round One Awards

In February 2013, CMMI awarded the first round SIM grants to 25 states in three categories

  1. Model testing: 3-year awards to states to implement their State Health Innovation Plans; 
  2. Model pre-testing: 1-year awards to states to continue work on their plans and; 
  3. Model design: 1-year awards to states to begin work on their innovation plans.  
Recipients of Round One Model Testing Grants Recipients of Round One Model Pre-Testing Grants Recipients of Round One Model Design Grants
Arkansas, Maine, Massachusetts, Minnesota, Oregon, and Vermont Colorado, New York, and Washington California, Connecticut, Delaware, Hawaii, Idaho, Illinois, Iowa, Maryland, Michigan, New Hampshire, Ohio, Pennsylvania, Rhode Island, Tennessee, Texas and Utah

Round Two Awards 

Round Two will provide up to an additional $730 million. Expanding on lessons from Round One related to creating a successful health reform strategy, Round Two focuses on providing funding to more states and the continued support of Round One Model Design states.  

CMMI is scheduled to announce these awards in December of 2014. They will fall into one of two categories:

  1. Model testing: Up to 12 states will be selected to receive awards totaling $700 million in available grant funding.
  2. Model design: Up to 15 states will be selected to receive awards totaling $30 million in available grand funding. 

Round 1 Model Pre-Testing and Model Design awardees are eligible for additional funding through either Model Design or Test Awards. 

What’s next for SIM?

With more than $1 billion dollars invested in funding state-led innovation in payment and delivery reform, the SIM Initiative is poised to wield immense influence on the changing landscape of health care in the United States. States are engaged in vast overhauls of their health care systems and each has approached the task in a different and unique way. Moving forward, as Round One Model Testing awardees move into the third and final year and a new set of grants is awarded, the critical work of implementing State Health Innovation Plans will be put to the test. 

Over the next few months, we’ll take a closer look at this process and the states engaged in it with the goal of gaining insight into a large, complex endeavor that has the potential to significantly change the way care is delivered and paid for.