On Thursday, Health and Human Services (HHS) Secretary Kathleen Sebelius announced a new opportunity available to help states develop and test improvements to their health care systems that would bolster health care quality and reduce expenditures.

Officials say the State Innovation Models initiative, which is made possible through the Affordable Care Act, will offer financial and technical support for states to design innovative health programs for Medicare, Medicaid and Children’s Health Insurance Program (CHIP) beneficiaries. The initiative will provide a competitive funding opportunity for up to 30 states. 

“As a former governor, I’ve seen states in action and know what great laboratories they are for innovations we can put into practice nationwide,” said Secretary Sebelius.

[See also: HHS gives 81 innovation awards in second round.]

According to federal officials, state governments, with their ongoing relationships with stakeholders across their healthcare systems, have the ability to accelerate the performance of delivery system and payment models that can improve the quality and affordability of healthcare. 

Through this initiative, officials say states will work with a broad coalition – including employers, insurers, community leaders and service organizations, health care providers, consumers and tribal governments – to design or test multi-payer payment and delivery system improvements to health care systems while eliminating unnecessary spending.  

Given the broad scope of these multi-payer models, officials expect that successful innovations will benefit both privately and publicly insured residents of participating states.

Many states are already engaged in these efforts, officials point out. Examples of ongoing healthcare innovation include statewide primary care networks supported by advanced health information technology systems and models that coordinate care seamlessly across primary care providers, specialists and hospitals.  

[See also: CMS announces new ACO initiatives.]

The State Innovation Models initiative, with support from the Center for Medicare and Medicaid Innovation at the Centers for Medicare & Medicaid Services (CMS), will build upon this work to achieve greater results through state-federal partnership.

States can apply for either Model Testing awards to assist in implementing their already developed models, or Model Design awards that will provide funding and technical assistance as they determine what type of system improvements would work best for them. Up to five states will be chosen for the initial round of Model Testing awards and up to 25 states will be chosen for Model Design awards.  

Up to $275 million is available in funding, including for $50 million for Model Design and $225 million for Model Testing.

State Innovation Models initiative applications will be evaluated and reviewed by an independent review panel, CMS and its independent Office of the Actuary.

“These awards are an incentive for states to, recruit partners, and accelerate the work that many of them are already doing to improve healthcare and lower costs,” said CMS Acting Administrator Marilyn Tavenner.

[See also: HHS announces $162 million in state HIE grants.]

For more information on the State Innovation Models initiative and to learn more about how states can reform health care payment and delivery, click here.