Medicare Pilot Savings Project Yields Mixed Results

By Author: Ruskin Booth
Total Articles: 14
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In 2005 The Center for Medicare and Medicaid Services (CMS) launched a pilot project geared to measure the success of group physician practices. Five years later the results are mixed, as practices have increased quality but have failed to reduce costs as much as predicted.

“If health care reform is to be successful,” notes Alan Weinstock, insurance broker at MedicareSupplementPlans.com, “then it is important that it improve quality as it lowers health care costs, especially for seniors on Medicare.”

Medicare Pilot Savings Project

Over the past five years CMS has run a pay-for-performance, shared savings demonstration project with ten physician groups. The goal was to test two of the basic beliefs behind health care reform: that raising quality lowers costs and that group practices offer the best vehicle for weaning physicians from fee-for-service medicine.

The project measured the physician groups’ adherence to 32 different procedures which had previously proved successful in lowering costs and improving patient outcomes. These included health care procedures such as routine eye and foot ...
... exams for diabetics, administering beta blockers during congestive heart failure hospitalizations and ensuring patient compliance with medication schedules for blood pressure and cholesterol control.

In addition, the CMS provided funds to offset some of the start-up costs. These included paying for nurse practitioners to monitor Medicare patients while encouraging them to take their medications. If the group practices steadily improved their performance each year while keeping costs from rising over other Medicare providers in their region, they received 80 percent of Medicare’s savings.

By 2008 CMS found that every physician group involved had achieved high levels of performance and achieved benchmarks on 28 of the 32 quality measures. In addition, five groups had reduced costs.

Debate Continues Over Pilot Projects

While the Government Accountability Office (GAO) noted that the Medicare program showed promise, the Congressional Budget Office (CBO) projected only a $1.3 billion in savings from all the demonstration projects recommended in the bill. However, the CBO admitted there was no real way of determining the outcome since several of the programs weren’t yet designed or they had no track record.

The question now is whether the CMS will be able to extend the positive outcomes from the project to the wider medical community. “The largest majority of physician practices in the country,” notes Weinstock, “have fewer than 200 physicians. These smaller practices may have more difficulty absorbing the start-up and operating costs of the programs involved.”

The overall goal is to move Medicare away from the fee-for-service model. Unfortunately, to have any kind of positive impact on Medicare requires much faster action.

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