States are on the front lines of health reform. The Affordable Care Act (ACA) acknowledged this by authorizing several grant programs for states to promote its implementation in addition to the many programs that already existed. Recently, the Department of Health and Human Services has awarded hundreds of millions of dollars in grants to states, territories, and other governmental entities to develop innovation programs, improve access to and quality of health care in rural areas, prevent and fight chronic diseases and promote effective rate review programs.

Innovation Grants

At the end of last year, the Centers for Medicare & Medicaid Services (CMS) announced awards of nearly $700 million in grants to states and territories. Pursuant to § 3021 of the ACA (42 U.S.C. § 1315a), these grants will fund state-level initiatives to design and test new and innovative models for health care payment and service delivery. Eleven states will receive portions of $622 million over the next four years to test innovation plans that are already fully designed. Another 17 states, three territories, and DC will receive a total of $42 million to design, refine, and submit their innovation plans to CMS over a period of 12 months. More information on these grants is available here.

These awards represent the second round of innovation grants to governmental entities under § 3021. More than two-thirds of states now have received innovation grants from the Center for Medicare & Medicaid Innovation (CMMI). Through fiscal year 2019, CMMI will continue to award and administer grants up to its $10 billion appropriation.

Access to Health Care in Rural Areas

Over the course of 2014, HHS’s Health Resources and Services Administration (HRSA) awarded a total of over $22 million to over 100 recipients in rural communities in 42 states. These grants are to help local health systems coordinate provider networks, improve quality and efficiency and promote the availability and use of telehealth resources. Read more here.

Prevention of Chronic Diseases

All 50 states, DC, other jurisdictions, and community organizations received a total of over $210 million during fiscal year 2014 from the Centers for Disease Control and Prevention (CDC) to fight chronic diseases. These grants support efforts like promotion of public health programs to prevent obesity, diabetes, and heart disease, fostering partnerships to improve community health and combating racial and ethnic health disparities. More information is available here.

Rate Review

In September 2014, CMS also announced approximately $25 million in grants to states to improve their health insurance rate review processes. Implemented by the Center for Consumer Information and Insurance Oversight (CCIIO), this set of awards is one of several phases of grants designed to help states “improve their reviews of proposed health insurance premium increases, take action against insurers seeking unreasonable rate hikes and ensure consumers receive value for their premium dollars,” as well as to fund data centers to promote transparency. These grants were offered pursuant to § 1003 of the ACA (42 U.S.C. § 300gg-94)—“Ensuring that consumers get value for their dollars.” Beginning in 2010, CMS has awarded a total of approximately $250 million in rate review grants. A thorough description of the grant program is available here.

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We anticipate that these grants and testing models will continue in 2015. These programs create exciting challenges for the governmental recipients, but also opportunities for other entities that can offer expertise and assistance. Many of these new programs will test models and systems that are already working in the private sector. Those who already have experience in managed care, risk based payments, and population health may be able to serve states, territories and other governmental entities to help modernize their healthcare delivery systems. And through these innovative grant programs, the federal government is encouraging and facilitating these public-private partnerships.

Joe Records is an associate at Crowell & Moring LLP. He is admitted in Maryland only.