CBO Report on Medicare Demos Draws Mixed Response

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."