The second of the Congressional Budget Office reports on Medicare demonstrations focuses on Value-Based Payment. (CBO Report) Four demonstrations are covered, one that bundled payments to hospitals and physicians for services related to heart bypass surgeries. The second was the Physician Group Practice Demonstration, which was a shared savings model, assuming certain quality standards were met. The third gave hospitals bonuses for quality performance and the last, which has only preliminary data available, allows home health care agencies to share in savings if they deliver quality care and reduce total Medicare expenditures.
While there were not a large number of demonstrations, the CBO was trying to assess the evidence for both pay-for performance and bundled payment approaches. Pay-for-performance is a value-based method which assumes that better quality in the long-run means lower costs, a very questionable assumption. Bundled payments are a more pure economic strategy which seeks to align the interests of all providers delivering care for at least a particular episode for an individual patient in seeing that that care is delivered as cost-effectively as possible. The bundled payment demonstration is the only one that appears to show clear savings; it reduced Medicare spending by 10% over that for comparable beneficiaries whose care was compensated for by the usual Medicare reimbursement system.
The Physician Group Practice Demonstration has actually been extended. Almost all of the groups showed at least small improvements in processes of care outcomes, but most created minor savings at best. The demonstration has been revamped based on “lessons learned”, so maybe more savings are in sight. Most of the groups are also going to participate in the ACO/shared savings program. The hospital quality incentives program ended recently and showed minor process of care increases, but no savings. And the home health care agency demo is really in its infancy, so there is no basis to judge it, although no quality or cost impact has been seen so far. In fairness, this is a small sample-size of demos, but it doesn’t give one confidence that CMS’ current value-based purchasing efforts will have much impact.