The State Innovation Models (SIM) Program: An Overview

Van Vleet A, Paradise J
Publication Year: 2014
Patient Need Addressed: Behavioral health, Care Coordination/Management, Chronic Conditions
Population Focus: Medicaid beneficiaries
Demographic Group: Adult
Intervention Type: Service redesign
Type of Literature: Grey

The primary goal of the Affordable Care Act (ACA) is to increase access to healthcare by expanding health insurance coverage, but another major thrust of the law is support for innovation in healthcare delivery and payment aimed at improving patient care and population health and reducing healthcare costs. The ACA-established Center for Medicare and Medicaid Innovation (Innovation Center) within the Centers for Medicare and Medicaid Services (CMS) is testing an array of alternative payment and service delivery models through numerous demonstration and pilot programs designed to lower costs for Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP) while maintaining or improving the quality of care for beneficiaries. This fact sheet provides an overview of one of these programs – the State Innovation Models (SIM) initiative.

Insights Results

Overview of article/model

  • This article provides an overview of CMS-funded State Innovation Models (SIMs) for Round 1 testing and the key dimensions of the 6 awarded state programs
  • SIMs are state-wide models funded by federal grants to states to design and test innovative, state-based multi-payer healthcare delivery and payment systems. A premise of the SIM initiative is that states have important policy and regulatory authorities and the ability to convene a broad array of public and private stakeholders
  • CMS gave preferences to state proposals that relied on already-existing CMS approaches (e.g., Medicare Shared Savings Program, ACOs). All proposals were required to meet the following requirements among others: 1) Estimate the proposal’s anticipated cost savings, specifically for Medicare, Medicaid and CHIP; 2) Provide an evidence base for the state’s approaches; 3) Describe how the community health and prevention would be integrated; 4) Describe coordination with other initiatives in the state; and 5) Specify procedures for data collection, performance monitoring and reporting
  • Each state that received a SIM award is expected to develop an evaluation plan that includes monitoring all populations and payers involved in the state’s initiative. CMS will also conduct a national evaluation focused on Medicare, Medicaid and CHIP enrollees that will assess each state’s model and compare state models
  • 6 states were awarded funding for Round 1 testing: Arkansas, Maine, Massachusetts, Minnesota, Oregon, and Vermont. 3 states were awarded Pre-testing funding to refine their innovation plans. Those states were Colorado, New York and Washington. 16 states received Model Design awards to plan and develop innovation plans over 6 months
  • All 6 awarded states include Medicaid/CHIP, Medicare, and commercial payers as participating payers. Oregon is the only state to include public employees as a participating payer
  • All 6 awarded states incorporated patient-centered medical homes in their designs. All but Arkansas included ACOs and all but Massachusetts and Vermont included a new workforce model/team-based care approach. Notably, only Arkansas and Maine included health homes and only Maine included behavioral health homes in the design. Overall, Maine was the only state to include all 5 delivery system features evaluated
  • All 6 awarded states incorporated primary care & specialty care as a care linkage in their testing. All states except Arkansas provided a link between primary care and behavioral health. All states except Arkansas and Massachusetts linked primary care and long-term care. All states except Arkansas and Vermont linked primary care and public health. All states except Arkansas and Massachusetts linked primary care and community organizations/social services. Oregon was the only state to link primary care and oral health
  • Most Innovation Plans involve an emphasis on improving care for high-risk, high-cost populations For example, Arkansas and Maine are using Medicaid health homes or a similar model to coordinate care among providers for individuals with multiple chronic conditions
  • All 6 states are using multiple payment models. All states except Maine are using a per-member-per-month payment. All states except Massachusetts have incorporated a shared savings payment model. All states except Arkansas have included a shared savings and risk payment model. Arkansas, Oregon, and Vermont have included an episode-based/bundled payment model. Maine, Minnesota, and Oregon have included a prospective payment or partial/global capitation payment model. Massachusetts, Oregon and Vermont have included bonus payments as a payment model Overall, Oregon is the only state to use all 6 payment models
  • A key purpose of the alternative payment models is to change provider financial incentives with many states linking provider payment to performance rather than volume (e.g., bonus payments, shared savings). For example, payers in Massachusetts are offering bonus payments to providers who demonstrate quality primary care performance
  • The recently launched Innovation Accelerator Program (IAP) is a collaboration involving CMS’ Center for Medicaid and CHIP Services, Innovation Center, Medicare-Medicaid Coordination Office, and other federal offices. The IAP was created to provide states with resources and technical assistance in areas such as data analytics and adoption of common quality metrics and opportunities for state-to-state learning, to support Medicaid-focused delivery system and payment reforms aligned with efforts in Medicare and the commercial market


    • Oregon, Maine and Vermont have begun to release quarterly progress reports on the implementation of their Innovation Plans

    Key takeaways/implications

    • States are using multi-payer collaborations to leverage greater impact from existing Medicaid innovations like Minnesota’s Medicaid ACOs and Maine’s Medicaid health homes, for both Medicaid and other payers
    • States are capitalizing on other payers’ innovations like Medicare’s bundled payments for care improvement to benefit Medicaid. The coordinated participation of multiple payers in state delivery system and payment reforms enhances the potential of these efforts to strengthen the role of primary care, foster more integrated care for high-need, high-cost beneficiaries, and drive improvement in quality and outcomes in Medicaid
    • It will be important to monitor and consider other modes of funding moving forward. For instance, up to $700 million will be used to fund up to 12 Model Testing awards and the remainder will fund up to 15 Model Design grants