Lessons from Medicare’s Demonstration Projects on Disease Management, Care Coordination, and Value-Based Payment

Here are the lessons:

For disease management programs – 

On average, the 34 programs had little or no effect on hospital admissions. There was considerable variation in the estimated effects among programs, however (see figure below).

In nearly every program, spending was either unchanged or increased relative to the spending that would have occurred in the absence of the program, when the fees paid to the participating organizations were considered.

Programs in which care managers had substantial direct interaction with physicians and significant in-person interaction with patients were more likely to reduce Medicare spending than other programs. But, on average, even those programs did not achieve enough savings to offset their fees.

For value-based payment:

Only one of the four demonstrations of value-based payment has yielded significant savings for the Medicare program. In that demonstration, Medicare made bundled payments to hospitals and physicians to cover all services connected with heart bypass surgeries, and Medicare spending for those services declined by about 10 percent. The other demonstrations appear to have resulted in little or no savings for Medicare. One, the Physician Group Practice Demonstration, allowed large multispecialty physician groups to share in estimated savings if they reduced total Medicare spending for their patients. Another offered hospitals bonuses if they met certain criteria regarding the quality of care. The last (for which results are available only on a preliminary basis for the first year) allowed home health agencies to share in estimated savings if they reduced total Medicare spending for their patients and met certain targets for quality of care. 

Boys and girls, this stuff is much more complex than these demonstration projects can address.  Physicians really do their best out there.

We should modify our payment system.  First, we must make our payment system time based.  We have too many patients seen too quickly.  Second, we should invest in the best method for decreasing costs and increasing value – solid outpatient family medicine and internal medicine.

These programs, in my opinion, have too much complexity.  We can save much money by changing our payment system away from the RBRVS formulas.  RBRVS was an interesting idea, but too easy to "game".  We must value time.  We should put a modest value on subspecialized expertise, but much smaller than our current system.