Innovation in Medicare and Medicaid will be central to health reform's success.

The health reform legislation signed into law by President Barack Obama contains numerous payment reform provisions designed to fundamentally transform the nation's health care system. Perhaps the most noteworthy of these is the establishment of a Center for Medicare and Medicaid Innovation within the Centers for Medicare and Medicaid Services. This paper presents recommendations that would maximize the new center's effectiveness in promoting reforms that can improve the quality and value of care in Medicare, Medicaid, and the Children's Health Insurance Program, while helping achieve health reform's goals of more efficient, coordinated, and effective care.