Today HHS Secretary Kathleen Sebelius announced the first round of organizations receiving Health Care Innovation awards. These awards were funded from the Innovation Center created in Obamacare. The awards will support 26 projects nationwide that HHS claims will “save money, deliver high quality medical care and enhance the health care workforce.”

Today’s awards total $122.6 million and the awardees announced today expect to reduce health spending by $254 million over the next three years. The new projects include collaborations of leading hospitals, doctors, nurses, pharmacists, technology innovators, community-based organizations, and patients’ advocacy groups, among others, located in urban and rural areas that will begin work this year to address health care issues in local communities. The Innovation Center is administering these awards through cooperative agreements.

In describing these awards, the Innovation Center on its website say:

“Descriptions and project data (e.g. gross savings estimates, population served, etc.) are 3 year estimates provided by each organization and are based on budget submissions required by the Health Care Innovation Awards application process. While all projects are expected to produce cost savings beyond the 3 year grant award, some may not achieve net cost savings until after the initial 3-year period due to start-up-costs, change in care patterns and intervention effect on health status.” (emphasis added)

In other words, the Innovation Center is spending $122 million to possibly save $254 million – which would be a net savings of $132 million over three years ($44 million per year). However, CMS has no guarantee built in to ensure that taxpayers actually see return on their investment.

HHS’s announcement of 26 new grants today is a missed opportunity to truly prioritize innovation. Over a three year period HHS will spend taxpayer dollars without any guarantee of return on investment. HHS’ own website admits that, despite spending hundreds of millions of dollars, projects ‘may not achieve net cost savings’ for taxpayers during the project period. As I said in an oversight report with Sen. Barrasso, Warning: Side Effects, ‘Instead of letting bureaucrats gamble with billions of taxpayer dollars,’ in the Innovation Center, ‘Congress should have adopted proven, common-sense measures to help millions of seniors who depend on the program.’

Additionally, this week Centers for Medicare & Medicaid Services Administrator Marylyn Tavenner sent Dr. Coburn this letter, responding to two separate letters requesting information about and expressing concern regarding the Centers for Medicare and Medicaid Innovation (Innovation Center). 

Read the letter from Senators Coburn, Enzi, and Hatch sent November 10, 2011. The senators sent a follow-up letter on April 26, 2012.