The Congressional Budget Office (CBO) released a report last month that surprised many who follow the federal Medicare program’s twists and turns. Health policy experts have contended for years that covering disease management and coordinated care services has the potential to both improve care quality and reduce Medicare expenditures, particularly for people with chronic conditions such as coronary artery disease or diabetes. But, the CBO’s financial analysis of the six major Medicare demonstration programs providing such coverage found this to be untrue.
The service delivery models the demonstration programs were testing had already been identified as “best practices” and in most cases, the participating providers were experienced organizations that were selected in part based on their likelihood of success. Nevertheless, after accounting for fees Medicare paid the programs, Medicare spending was either unchanged or increased in nearly all programs.
The CBO calculated that, to offset the fees charged to the Medicare program, a demonstration would have to reduce regular Medicare expenditures (i.e., expenditures before accounting for program fees) an average of 11%. And while programs with risk-based payment structures had a greater financial incentive to reduce Medicare expenditures than did those providing services on a no-risk basis, these differences had little or no effect on the number of hospital admissions or regular Medicare expenditures. Click here for additional information.
