CBO Report on Medicare Demos Draws Mixed Response

A Congressional Budget Office report critical of the Medicare fee-for-service demonstration projects in disease management, care coordination, and value-based payments has received mixed reviews from stakeholders who acknowledge the report's significance while contending that it contains no surprises for the healthcare industry.

Meanwhile, officials at the Centers for Medicare & Medicaid Services, which oversees the demonstration projects, have remained almost silent. CMS provided only a short e-mail statement to HealthLeaders Media on Friday night.

The 30-page CBO report, released last week, reviews the independent evaluations of 10 major demonstration projects—six in disease management and care coordination, and four in value-based payments. According to the CBO, "the evaluations show that most programs have not reduced Medicare spending."

Among the mixed bag of findings:

• Disease management and care coordination programs where physicians had direct interaction with care managers, as well as their patients, were more likely to reduce Medicare spending.
• On average the programs did not produce enough savings to offset their fees.
• The programs had little or no effect on hospital admissions.
• Three of the four value-based payment (VBP) demonstrations produced almost no savings for Medicare.
• A heart bypass VBP demo that bundled Medicare payments to cover hospital and physician services reduced Medicare spending for those services by about 10%.

The report "is important for the industry because it provides a rich level of detail for each demonstration project. It's information we just haven't seen before," says Tracey Moorhead, president and CEO, of Care Continuum Alliance, an advocacy and research group whose members are involved in population health, including disease and care management, wellness and prevention, health information technology, and pharmacy benefits.

Morehead adds that despite some of the findings, the report reinforces what works, including greater integration and support for physician-led care models. "We're on the right track. We're developing a road map of what works with the Medicare population."

She says the big takeaway for the healthcare industry is that to be successful in managing the health of the Medicare population "we need more patient data on a timely basis." The report notes that demonstrations that were able to collect timely data were "better able to coordinate and manage their patients' care." It adds that "those efforts could be strengthened if CMS improved its ability to provide programs with timely data on their patients' use of services."

Blair Childs, the senior vice president of public affairs for Premier Healthcare Alliance, which participated in one of the VBP demonstrations, says he wasn't surprised by the report. "I could have told you what it would say," he told HealthLeaders Media. "We're in the very early phases of changing the broken fee-for-service system. It will take time to get all the parts to work property to achieve lower costs and higher quality."

He challenged some of the report findings noting that "how much the government paid for healthcare and what the demonstration projects were designed to do are different. The CBO report doesn't look at the goals of the demos and if those goals were achieved."

The Premier Hospital Quality Incentive Demonstration (HQID) tested whether incentives would make a difference in improving the quality of care. According to an e-mail from Alven Weil, the Premier spokesperson, the demo "was never designed to determine whether incentives would lower overall Medicare costs." He added that "we did see a reduction in costs in the hospitals participating in HQID, (but) those did not directly translate to Medicare savings, at least (not) in the short term."

The report does concede that "demonstrations aimed at reducing spending and increasing quality of care face significant challenges in overcoming the incentives inherent in Medicare's fee-for-service payment system, which rewards providers for delivering more care but does not pay them for coordinating with other providers."

It suggests that "substantial changes to payment and delivery systems will probably be necessary for programs involving disease management and care coordination or value-based payment to significantly reduce spending and either maintain or improve the quality of care provided to patients."

The CBO report also identifies three improvements CMS could make in the design and evaluation of the demonstration projects program:

• Use randomized designs or well-matched comparison groups to identify the effects of any particular intervention, and to identify what strategies are effective.
• Report evaluation findings quickly and consistently. If demonstrations are meant to be models for practice, the results should be current and comparable.
• Make sure the number of Medicare beneficiaries in a demonstration project is large enough to yield meaningful results.

Neither CMS or the Department of Health and Human Services provided specific comments on the report findings. In an e-mail statement Erin Shields, director of communications for healthcare at HHS, said: "The Department tests a wide range of demos, not just for cost savings but also for quality improvement.

These demos were started under prior administrations and while not all of these demos have been successful, there are important lessons learned for what works and what doesn't. As the Obama Administration moves forward testing new, stronger payment models in partnership with private industry, we're confident that they will achieve cost savings and quality improvements."