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Medicare Demonstration Projects Fall Short on Savings


 

Over the last 2 decades, policy makers have proposed several ways to change how health care is delivered in the Medicare program, but a new analysis from the nonpartisan Congressional Budget Office shows that those efforts have failed to yield significant savings.

The CBO analyzed 10 major Medicare demonstrations involving disease management and care coordination or some type of value-based payments and found that most of the projects didn't save money.

The analysis has implications for health policy. Under the Affordable Care Act, Congress required the Centers for Medicare and Medicaid Services to pursue new payment and care delivery models including accountable care organizations and bundled payments. Congress also created the Innovation Center within the CMS to test other models of care. The idea behind the center is that Medicare officials can expand successful projects without having to return to Congress for approval.

Dr. Glen R. Stream, president of the American Academy of Family Physicians, said the Innovation Center may yield better results because its projects focus on broader care delivery concepts, such as the patient-centered medical home, rather than only certain conditions.

Looking at the six disease management and care coordination projects that Medicare had already undertaken, CBO analysts found that on average there was little to no effect on hospital admissions or regular Medicare spending. The demonstrations were more likely to reduce costs if they used care managers who had significant, direct contact with physicians and patients, but those programs didn't save enough money to cover the cost of the extra services provided. For example, in programs with significant in-person or telephone interaction between care management and patients there was an average 7% drop in hospital admissions and a 3% reduction in regular Medicare spending. But to offset the cost of the care management fees, the programs would have had to reduce regular Medicare expenditures by 13%.

In the four demonstrations that focused on changing the financial incentives for health care providers, only one project produced significant savings. A project that offered bundled payments to physicians and hospitals for heart bypass surgery reduced Medicare expenditures related to heart bypass by about 10% without an adverse impact on patient outcomes.

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