CMMI’s Costly Failures Spotlight Inefficiencies in Federal Medicare Innovation Efforts

The Center for Medicare and Medicaid Innovation (CMMI), established under the Affordable Care Act, was tasked with reducing Medicare and Medicaid spending while improving care through innovative payment and service delivery models. However, despite significant funding and resources, CMMI has largely failed to meet these objectives, resulting in increased federal spending rather than cost savings. From 2011 to 2020, rather than reducing costs as projected, CMMI's initiatives increased net spending by $5.4 billion and are forecasted to add at least another $1 billion by 2030.

CMMI launched 49 pilot programs over its first decade, but only six achieved statistically significant savings, with limited fiscal impact. While one of its programs related to ambulance transport generated $1.1 billion in projected savings, another, the Medicare Advantage Value-Based Insurance Design model, caused losses exceeding four times that amount in less than half the duration. This poor performance reveals inefficiencies in CMMI’s approach to testing and scaling reform models within Medicare and Medicaid.

Moreover, CMMI has drawn criticism for overstepping its regulatory authority by implementing broad mandatory payment reforms nationally rather than limiting experiments to smaller, controlled settings. In some instances, it bypassed required evaluations to maintain failing programs. Stakeholder engagement has also been minimal; expert recommendations have been routinely ignored, and public input is seldom solicited.

The agency operates with approximately 500 employees and receives $10 billion in mandatory funding per decade. Given its track record, there is a growing call from policymakers for Congress and the current administration to reconsider or terminate CMMI, framing it as an example of inefficient government expenditure and bureaucratic overreach in the healthcare sector.

Addressing CMMI’s shortcomings is relevant to U.S. insurance professionals as it impacts Medicare and Medicaid payment models, cost containment strategies, and regulatory compliance. Eliminating or reforming CMMI could foster more effective innovation processes and improve accountability in federal healthcare programs.