Press Releases



The Centers for Medicare & Medicaid Services (CMS) today announced that it is soliciting proposals for the Medicare Health Care Quality Demonstration, a 5-year project to find ways to identify, develop, test, and disseminate major and multifaceted improvements to health care systems at the area or regional level.


“This is a major initiative to use innovative payments to improve health and reduce costs for everyone in an area, not just for Medicare beneficiaries but for all Americans,” said CMS Administrator Mark B. McClellan, M.D., Ph.D.  “We are allowing providers and communities to take advantage of Medicare payment reforms to redesign care delivery from the ground up, where they have the opportunity to structure that care and payment in a way that focuses on outcomes.”


The demonstration seeks to improve quality while increasing efficiency through major, regional-level health care system redesign.   By modifying payment systems and providing incentives for better quality and lower costs, health care organizations and their communities will have new financial support to adopt and use decision support tools (e.g., evidence-based guidelines, shared decision-making tools), reduce unwarranted variation in practice, measure outcomes and enhance cultural competence in the delivery of care.  These reforms hold the potential for significant improvements in quality and outcomes.  


Projects and strategies that may be approved under the demonstration will be expected to demonstrate how they achieve safety, effectiveness, efficiency, patient-centeredness, timeliness and equity: the six aims for improvement in quality identified by the Institute of Medicine in its Crossing the Quality Chasm.  Demonstrations that achieve such improvements in quality, including efficiency, can qualify for greater Medicare payments to the participating health care providers in the area.


Physician groups, integrated delivery systems, or regional coalitions of such groups or systems are invited to apply.


“Under the Health Care Demonstration, we will be able to make payments across providers and settings to help achieve the improvements in population outcomes we know are possible to achieve in our health are system,” said McClellan.


Applicants may propose a variety of payment methodologies to cover demonstration services and to provide incentives for improving quality and efficiency of care, provided that the proposal achieves budget neutrality.


Proposals will be considered in two groups.  Applicants wishing to be considered in the first group must submit their proposals no later than January 30, 2006.  However, given the breadth of this project, many system redesigns will take longer to develop.  Therefore, applicants wishing to be considered in the next round of application reviews should submit a letter of intent no later than ­­­­­­­­­­­­­­­­­­­January 30, 2006.  Applications for the second group will be due September 29, 2006.


For further information, please visit the CMS web site at