20 Years Of Experiments To Reduce Medicare Cost Have Failed Miserably

Grandma Old Lady

The Congressional Budget Office (CBO) released a memo yesterday reviewing programs conducted by the centre for Medicare and Medicaid Services (CMS) to reduce federal spending on Medicare (via Sarah Kliff of WonkBlog). The result? They were a complete wash.

Disease management and care coordination demonstrations focused on programs that aimed to improve quality of care for those with chronic illnesses, which were predicted to be costly. Value-based payment demonstrations focused on programs that provide incentives to health care providers in order to improve quality and efficiency of care.

The demonstrations ended up proving that Medicare spending for such programs was either unchanged, increased relative to the spending that would have occurred in the absence of such programs, or the programs achieved just enough in savings to offset their fees. 

Even though the programs did not succeed in saving money, the CBO pointed out that under the Patient Protection and Affordable Care Act, CMS could implement these programs nationwide with a simple nod from the secretary of health and human services.

The CBO says that while there are challenges in reducing Medicare expenditures, there were lessons  to be learned:

  • Gather timely data on the use of care, especially hospital admissions. CBO suggested that CMS improve its capability to provide programs with timely data on their patients’ use of services.
  • Focus on transitions in care settings. Providing education and support to patients in transition tends to decrease hospital admissions. 
  • Use team-based care by encouraging collaboration between care managers and physicians.
  • Target interventions toward high-risk enrollees. 
  • Limit the costs of intervention. Program’s fees and bonuses must be smaller than its reductions in regular Medicare expenditures.