The U.S. Department of Health and Human Services (HHS) announced today that it plans to award a second round of Health Care Innovation Awards to researchers who have ideas about lowering health care costs and providing patients with better care. The $1 billion in grants will be awarded to applicants whose ideas have a "high likelihood of driving health care system transformation and delivering better outcomes," HHS says. Organizations from both the private and public sectors are eligible to participate.

According to HHS, this round of awards will be granted to proposals in four specific areas: rapidly reducing costs for patients with Medicare and Medicaid, improving health care for special needs patients, developing and testing new financial and clinical models for health care providers, working to emphasize preventive and comprehensive care, and population health.

The Health Care Innovation Awards are made possible under the Affordable Care Act (ACA), which provides for the development of tools to avoid medical mistakes, keep people healthy, reward quality medical care, and create a new health care information technology infrastructure.

HHS claims the ACA's provisions to reduce costs are already working: Medicare spending increased only 0.4 percent per beneficiary in 2012, far below historical averages.

In 2012, the Centers for Medicare and Medicaid Services (CMS) awarded 107 Health Care Innovation Awards, including one to the Courage Center in Minnesota, which is helping change the way adults with disabilities receive primary care, and to Welvie LLC in Ohio, which is working to help Medicare beneficiaries make more informed healthcare choices, HHS says.

CMS will accept letter of intent to apply for a grant from June 1 to June 28, and will accept applications from June 14 to August 15.

This latest attempt to reduce health care costs comes after a government report released on May 8 that showed the disparity in what hospitals charge for care from state to state and city to city.