The Medicare Physician Group Practice Demonstration, which was the inspiration for the accountable care organization pilots currently underway, achieved only "modest" overall savings, according to an analysis published in the Sept. 12 issue of JAMA.
On average, the Physician Group Practice Demonstration (PGPD) saved the Medicare program $114 annually per beneficiary. However, the biggest savings came from low-income beneficiaries who were dually eligible for both the Medicare and Medicaid programs. Physician groups enrolled in the pilot project were able to save the Medicare program $532 on average (or 5%) for dual-eligible beneficiaries.
The average savings for beneficiaries who were eligible for Medicare only was a $59 per year, which was not statistically significant (JAMA 2012;308:1015-23).
The findings could foreshadow the performance of accountable care organizations (ACOs), since the PGPD pilot also allowed physicians to share in savings if they could lower costs while improving quality and care coordination.
The three ACO pilots now underway were included in the Affordable Care Act in part because of promising results from the PGPD. Under the PGPD, 10 physician practices could earn up to 80% of any savings to the Medicare program, provided they generated at least 2% in savings. In addition, they also had to show improvement on 32 quality measures that included preventive care and chronic care management.
Researchers at Dartmouth College analyzed Medicare administrative data from 2001 through 2009 to determine the per-beneficiary savings from the program and to see how it varied among Medicare beneficiaries and so-called dual eligibles.
While the savings for Medicare-only beneficiaries were small, the PGPD sites did well at reducing costs for dual-eligible beneficiaries, according to the study. The spending growth rate for dual-eligible beneficiaries in the PGPD sites was 9.7% compared with 15.3% for local control practices between the preintervention and postintervention periods, resulting in an average annual per beneficiary savings of $532.
The 5% decrease in Medicare spending among dual-eligibles came mostly through fewer acute care hospitalizations, procedures, and home health care services, the researchers wrote. Since the savings were similar across diagnosis groups, the researchers suggested that the savings were likely due to better overall care management, rather than disease-specific interventions.
The results highlight the "potential benefits of the ACO model for patients with serious or complex illness, a group for whom improved quality and coordination is especially important," the researchers wrote.
The PGPD practices also had lower 30-day hospital readmission rates on average for medical reasons and lower readmissions for both medical and surgical admissions among dual-eligible beneficiaries, according to the study.
The researchers also found significant variation in how each PGPD site performed, which also could hold clues for future ACO success.
For instance, some sites were able to achieve large spending reductions, while others saw their costs increase compared to local control practices. The researchers speculated that the size of the institution could play a role, with larger systems having the advantage because they already had health information technology systems in place and generally had more resources to invest in improvements in care.
"The remarkable degree of heterogeneity across participating sites underscores the importance of timely evaluation of current payment reforms and a better understanding of the institutional factors that lead to either success or failure in effecting changes in health care practices," the researchers wrote.
The research was funded by a grant from the National Institute on Aging, the Dartmouth Atlas Project, and the Commonwealth Fund. The funders had no role in the design and conduct of the study, or approval of the manuscript. The study authors reported having no financial disclosures.