New programs for delivering health care can improve quality while reducing costs, especially for some of the nation's most vulnerable patients, according to a new study conducted by The Dartmouth Institute for Health Policy and Clinical Practice.
The study "Spending Differences Associated with the Medicare Physician Group Practice Demonstration" was published last week in The Journal of the American Medical Association and found that Medicare's Physician Group Practice Demonstration program saw spending grow at a reduced rate for all participants in the program and at a significantly reduced rate for "dual eligibles," defined as patients eligible for both Medicare and Medicaid, over a six-year period, according to TDI faculty member Carrie Colla.
Mandated in 2000, the PGP Demonstration marks the first Medicare pay-for-performance initiative and offers physicians incentives to collaborate on health care delivery and improve quality and cost efficiency of Medicare services, according to the website of the Centers for Medicare and Medicaid Services.
The PGP Demonstration program is similar to an "accountable care organization," a term coined by study co-author and TDI faculty member Elliott Fisher to describe a group of providers, including primary care physicians, collaborating as an organization to improve care and lower costs. TDI analyzed the PGP Demonstration program one of the delivery systems promoted by the Affordable Care Act that was upheld by the Supreme Court this summer for rates of success.
"There is a lot of interest right now in alternative payment models in an effort to try to control the escalation and growth of health care costs and improve qualities," study author and TDI faculty member David Wennberg said. "We asked the question, Is there any evidence that these types of programs work?'"
The study used Medicare claims data to examine the spending of organizations accepted into the PGP Demonstration program, according to Colla. Sifting through the data associated with the PGP Demonstration program, researchers sought to uncover whether the program saved money and whether specific sub-populations benefitted more than others, Wennberg said.
The study examined the trends in cost-growth rates from organizations participating in the PGP Demonstration program from 2005 to 2009 and used cost-growth rate trends from these same organizations from 2001 to 2004 as a baseline comparison, according to Wennberg.
The researchers found modest reductions in overall spending, amounting to about $114 per person per year, or 1 percent of beneficiaries' total costs, but discovered significant savings of about $532 per person per year, or 5 percent of total costs, in the dual eligible group, according to Colla. The study also found variation in savings among individual practices participating in the PGP Demonstration program.
Most dual eligible patients are very poor, medically disabled or have mental health issues, and researchers questioned whether new delivery systems would be beneficial for vulnerable populations like dual eligibles, according to Wennberg.
"It's clear from our study that savings experienced are beneficial," Wennberg said. "It's good to know that vulnerable populations do not look disadvantaged and have opportunities."
The study found that most savings resulted from changes in hospitalization, such as decreased readmissions, improved care management and better care coordination, Colla said.
"Combined with the results on quality, the reductions in spending show promise for these types of reforms that align incentives between patient providers and payers," Colla said.
Tuck professor Robert Hansen said that the study demonstrates how different innovations and programs may work better for different subsets of people.
"There is not going to be a silver bullet for everything," Hansen said. "Dual eligibles are very high cost patients, and for the bigger set of non-dual eligibles on regular Medicare, we're going to have to try something else."
Lack of coordination in the health care system is currently "rampant," and the study reveals relevant possibilities for improving quality and reducing cost, Hansen said. TDI plans to continue to monitor the PGP Demonstration program while beginning to survey all American accountable care organizations, according to Fisher.
Hansen said that the next step in the effort is to examine the reason for variation across the different practices that participated in the PGP Demonstration program.
"Is [the variation] random noise or is it because some organizations were using management techniques that enable them to get better savings than others?" Hansen said. "This is probably going to spur a large number of studies yet to come."
