After reviewing the outcomes of 10 major Medicare demonstrations, the Congressional Budget Office has found most produced little or no savings to the federal health insurance program.
The CBO reviewed six disease management and care coordination demos, and four-value based payment demos.
The first group of six disease management and care coordination demos comprised 34 programs operated by disease management companies. In nearly each of these demos, spending remained stagnant or increased at the same rate it would have without the program in place.
Programs in which care managers had more direct contact with physicians and patients were more likely to reduce costs than other programs. For instance, hospital admissions fell by an average of 7 percent and regular Medicare spending declined by an average of 6 percent for programs with more direct contact. Still, these savings are not enough to offset fees — programs would have to achieve savings of 13 percent to do that.
Value-based payment demos had mixed results. Only one of the four — bundled payments covering all services related to heart bypass surgeries — reduced Medicare spending at all. It cut costs by about 10 percent. The three other demos produced little or no savings. These include the Physician Group Practice demo, Premier Hospital Quality Incentive and Home Health Pay-For-Performance demo.
The CBO has concluded that the key factor associated with demos' success is the nature of the incentive offered to providers. Demos that paid bonuses to providers based on quality scores, estimated savings, or both, produced little to no savings. The success of the bundled payment demo was largely attributed to the competitiveness of hospitals' local markets and providers' strategic decisions —factors that influence the size of the discount offered to Medicare in bundled-payment rates.
Read the entire CBO report on Medicare demonstration projects (pdf).
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The CBO reviewed six disease management and care coordination demos, and four-value based payment demos.
The first group of six disease management and care coordination demos comprised 34 programs operated by disease management companies. In nearly each of these demos, spending remained stagnant or increased at the same rate it would have without the program in place.
Programs in which care managers had more direct contact with physicians and patients were more likely to reduce costs than other programs. For instance, hospital admissions fell by an average of 7 percent and regular Medicare spending declined by an average of 6 percent for programs with more direct contact. Still, these savings are not enough to offset fees — programs would have to achieve savings of 13 percent to do that.
Value-based payment demos had mixed results. Only one of the four — bundled payments covering all services related to heart bypass surgeries — reduced Medicare spending at all. It cut costs by about 10 percent. The three other demos produced little or no savings. These include the Physician Group Practice demo, Premier Hospital Quality Incentive and Home Health Pay-For-Performance demo.
The CBO has concluded that the key factor associated with demos' success is the nature of the incentive offered to providers. Demos that paid bonuses to providers based on quality scores, estimated savings, or both, produced little to no savings. The success of the bundled payment demo was largely attributed to the competitiveness of hospitals' local markets and providers' strategic decisions —factors that influence the size of the discount offered to Medicare in bundled-payment rates.
Read the entire CBO report on Medicare demonstration projects (pdf).
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