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Medicare Physician Payment: Care Coordination Programs Used in Demonstration Show Promise, but Wider Use of Payment Approach May Be Limited

GAO-08-65 Published: Feb 15, 2008. Publicly Released: Feb 15, 2008.
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Highlights

Congress mandated in 2000 that the Centers for Medicare & Medicaid Services (CMS) conduct the Physician Group Practice (PGP) Demonstration to test a hybrid payment methodology for physician groups that combines Medicare fee-for-service payments with new incentive payments. The 10 participants, with 200 or more physicians each, may earn annual bonus incentive payments by achieving cost savings and meeting quality targets set by CMS in the demonstration that began in April 2005. In July 2007, CMS reported that in the first performance year (PY1), 2 participants earned combined bonuses of approximately $7.4 million, and all 10 achieved most of the quality targets. Congress mandated that GAO evaluate the demonstration. GAO examined, for PY1, the programs used, whether the design was reasonable, and the potential challenges in broadening the payment approach used in the demonstration to other physician groups. To do so, GAO reviewed CMS documents, surveyed all 10 groups, and conducted interviews and site visits.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Centers for Medicare & Medicaid Services The Administrator of Centers for Medicare and Medicaid Services (CMS) should provide participating physician groups with interim summary reports that estimate participants' progress in achieving cost-savings and quality-of-care targets.
Closed – Implemented
The Centers for Medicare and Medicaid Services (CMS) provided participating physician groups in the Physician Group Practice Demonstration with their first interim summary reports and data sets the first week of April 2008. CMS intends to continue issuing these interim reports and data sets to participating physician groups on a quarterly basis. These reports and data sets will encompass the following information: assigned beneficiary demographics; hospital utilization; risk adjustment information; and quality of care gaps.

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Topics

Fee-for-service plansFeesHealth care cost controlHealth care costsHealth care programsHealth care reformHealth policyMedicaidMedicarePaymentsPerformance managementPerformance measuresPhysiciansProgram evaluationProgram managementQuality assuranceQuality controlQuality improvementStrategic planningTotal quality management