Pay Experiment Worked Best in Dual-Eligibles

Abstract

T he Medicare Physician Group Practice Demonstration, which was the inspiration for current accountable care organization pilots, achieved only “modest” overall savings, according to an analysis published in 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 only Medicare was $59 per year, which was not statistically significant ( JAMA 2012;308:1015-23). The findings could foreshadow the performance of ACOs, since the PGPD pilot also allowed physicians to share in savings if they could lower costs while improving quality and care coordination. ACO pilots were included in the Affordable Care Act in part because of promising results from the PGPD. In the program, 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 had to show improvement on 32 quality measures that included chronic care management. Researchers at Dartmouth College analyzed 2001-2009 Medicare administrative data. The growth rate of spending for dual-eligible beneficiaries in the PGPD sites was 9.7%, compared with 15.3% for control practices during the study. The difference came mostly from fewer acute care hospitalizations, procedures, and home health care services for the dual-eligibles, the researchers wrote. Since the savings were similar across diagnosis groups, the researchers suggested that they were probably 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 for medical reasons and lower readmissions for both medical and surgical admissions among dual-eligible beneficiaries. The researchers found significant variation in how PGPD sites 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. Results of the latest analysis show an encouraging trend in lowering costs for beneficiaries who are dually eligible for Medicare and Medicaid programs, said Dr. Donald M. Berwick, former Centers for Medicare & Medicaid administrator and former president and CEO of the Institute for Healthcare Improvement. That group is critical because they account for more than $300 billion in annual costs and 40% of state Medicaid expenditures, Dr. Berwick noted in an editorial ( JAMA 2012;308:1038-9). While the ACO model holds a lot of promise, it is not the only option reforming the way care is delivered, he wrote. Whether federal officials are encouraged or discouraged by the PGPD experience, a lot more innovations than ACOs alone will be needed to emerge successfully from this fraught time, said Dr. Berwick. 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 nor approval of the manuscript. The study authors reported having no financial conflict of interest. CfA