Congressional Budget Office V. Lessons from Medicare's Demonstration Projects on Disease Management, Care Coordination, and Value-Based Payment

Lessons from Medicare's Demonstration Projects on Disease Management, Care Coordination, and Value-Based Payment 1 (January 2012)

handle is hein.congrec/cbo10622 and id is 1 raw text is: ........ ISSUE BRIEF
JANUARY 2012
Lessons from Medicare's
Demonstration Projects on Disease Management,
Care Coordination, and Value-Based Payment

An important part of the national debate about how to
manage federal spending in the decades ahead has
focused on spending for Medicare, which is expected to
account for a large and ever-increasing share of the federal
budget. Medicare provides health insurance to almost
everyone who is 65 or older and to people under age 65
who receive Social Security Disability Insurance benefits
(after a waiting period) or have certain serious health con-
ditions. Many observers point out that improving the
effectiveness of Medicare spending might allow both for
reductions in federal spending from its projected path
and for improved health care for Medicare beneficiaries.
Since 1967, the program has had the authority to con-
duct demonstrations that examine new ways to deliver
and pay for health care. That authority was extended in
2010, under the Patient Protection and Affordable
Care Act (Public Law 111-148), with the creation of the
Center for Medicare and Medicaid Innovation within
the Centers for Medicare & Medicaid Services (CMS).
Under that law, CMS can expand a demonstration-and
even implement it nationwide-without further approval
from the Congress if the Secretary of Health and Human
Services determines that such expansion would either
reduce spending without reducing quality of care or
improve quality of care without increasing spending.
In the past two decades, CMS has conducted two broad
categories of demonstrations aimed at enhancing the
quality of health care and improving the efficiency of
health care delivery in Medicare's fee-for-service program.

Disease management and care coordination demon-
strations have sought to improve the quality of care of
beneficiaries with chronic illnesses and those whose
health care is expected to be particularly costly.
Value-based payment demonstrations have given
health care providers financial incentives to improve
the quality and efficiency of care rather than payments
based strictly on the volume and intensity of services
delivered.
This Congressional Budget Office (CBO) issue brief
reviews the outcomes of 10 major demonstrations-6 in
the first category, 4 in the second-that have been evalu-
ated by independent researchers.' The types of programs
in those demonstrations could be implemented nation-
ally either through the innovation center or through
further legislation.
The evaluations show that most programs have not
reduced Medicare spending: In nearly every program
involving disease management and care coordination,
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 orga-
nizations were considered. Programs in which care man-
agers had substantial direct interaction with physicians
1. For more complete discussions of the demonstration projects,
see Lyle Nelson, LessonsfJomA ledicai's Demonstuion J/roiects on
)ease Janagememn and (-;r Coordination, Congressional
Budget Office Working Paper 2012-01 (January 2012), and
Lessonsf o nz edicare' Demonstration Irqjects on } Iie-Based
I-tayinent, Congressional Budget Office Working Paper 2012-02
(January 2012).

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