Health Policy$ense

Payment and Care Innovation at the VA

Building upon, and differing from, Medicare reforms

At first glance, it appears that the new Veterans Affairs (VA) Center for Innovation for Care and Payment shares much in common with the Center for Medicare and Medicaid Innovation (CMMI). Both are charged with implementing payment and care models that address rising costs, while maintaining or improving quality of care.

However, lest anyone think that the centers are duplicative, or that the VA Center could use the CMMI “playbook” for the traditional Medicare program to achieve similar results among veterans, Adjunct Senior Fellow Joshua Liao, Ashok Reddy, and Stephan Fihn distill important differences in a New England Journal of Medicine Perspective.

Many of the differences in center priorities stem from how the VA and Medicare are funded and the provider financial incentives built into these systems. Incentives in the traditional Medicare program, in which providers are paid on the basis of the volume of services delivered, create susceptibility to overprovision of care; in contrast, the VA, with global budgets and capitated payments, has incentives that create susceptibility to underprovision of care. Given this fundamental distinction, Liao and colleagues point out that the new VA Center will (and should) have different priorities, test different models of payment, and target different clinical conditions than those implemented among Medicare fee-for-service beneficiaries through CMMI. The table below summarizes this viewpoint.


Source: The VA MISSION Act — Creating a Center for Innovation within the VA. New England Journal of Medicine 2019; 380:1592-1594.

The Perspective elaborates on these themes and also discusses what the new VA Innovation Center can learn from CMMI.  It is well worth reading in its entirety.