Lessons from Demonstration Projects

In his latest Observation Deck, JHC Editor Mark Thill talks about the “Lessons from Medicare’s Demonstration Projects on Disease Management, Care Coordination and Value-Based Payment,” produced by the Congressional Budget Office (http://www.cbo.gov/ftpdocs/126xx/doc12663/01-18-12-MedicareDemoBrief.pdf). Specifically, based off of the report’s findings, healthcare stakeholders may need to rethink conventional wisdom.

In nearly all of the disease management and care coordination demonstrations, CBO reported that spending was either unchanged or increased relative to the spending that would have occurred in the absence of the program. It’s true that programs in which care managers had “substantial direct interaction” with physicians and significant in-person interaction with patients were more likely to reduce Medicare spending than other programs. “But on average, even those programs did not achieve enough savings to offset their fees,” said the CBO.

In Disease Management and Coordination:

On average, the 34 care coordination and disease management programs had little or no effect on hospital admissions or regular Medicare spending (that is, excluding the programs’ fees), although the estimated effects varied considerably from one program to another. Nineteen programs had no more than a 5 percent effect on hospital admissions in either direction; eleven reduced admissions by at least 6 percent—seven by 6 percent to 15 percent and four by 15 percent or more. For four programs, hospital admissions increased by at least 6 percent; for two of those programs, admissions rose by at least 15 percent. Fewer programs reduced regular Medicare spending than cut the number of hospital admissions.

In Value-Based Payment Demonstrations:

In the PGP demonstration, 5 of the 10 physician groups received bonuses in the third and fourth years because they achieved estimated savings, 4 groups received bonuses in the second and fifth years, and 2 groups received bonuses in the first year. Although CMS has announced the amount paid in bonuses to each physician group in each year, those figures do not reveal the effects of the demonstration on overall Medicare spending. A detailed analysis of the demonstration is currently available only for the first two years. That analysis showed that, for patients in the 10 group practices during the second year, average Medicare spending excluding the bonuses paid to physician groups was about 1 percent below projections; with bonuses included, average Medicare spending was just 0.1 percent below projections— about $7 per beneficiary. First-year savings were estimated to be smaller, and similar estimates are not yet available for other years or for individual practices.

 

Thill provides some CBO constructive findings that may yield positive results in his Observation Deck (click here).