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

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

The analysis has clear implications for health policy going forward. 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 (ACOs) and bundled payments. Congress also created a new Innovation Center within CMS to test other models of care. The idea behind the newly formed Innovation Center is that Medicare officials will be able to expand successful projects without having to return to Congress for approval.

Dr. Glen R. Stream, president of the American Academy of Family Physicians, said he expects that the leadership within Medicare will use the CBO analysis to improve future pilot projects. He said he’s hopeful that the work that the Innovation Center is undertaking will yield better results because its projects focus on broader care delivery concepts, such as the patient-centered medical home, rather than targeting only certain chronic conditions, as was done in several past demonstrations.

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. However, those programs generally 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. However, in order 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. Medicare was able to achieve those savings in large part because officials negotiated bundled payments that were lower than the traditional fee-for-service payments, according to CBO. The other projects, which offered bonuses for meeting quality standards or reducing spending, did not achieve significant savings for the Medicare program, CBO wrote.

01/30/12