Saving dollars while improving care: U-M did both in Medicare project, new study says

Dartmouth analysis shows success of physician group demonstration project that gave rise to ACO model of care

ANN ARBOR, Mich., Sept. 13, 2012 /PRNewswire-USNewswire/ -- In a nationwide program that aimed to provide better care at a lower cost for Medicare participants, the University of Michigan made the most progress in reducing costs and improved the quality of care patients received.

The gains were largest among patients who rely on both Medicare and Medicaid for their health coverage – a high-cost group that needs more coordinated care. 

Those findings come from a new independent analysis published this week in the Journal of the American Medical Association by researchers from the Dartmouth Institute for Health Policy and Clinical Practice.

The researchers say their findings show the power of new health care delivery models that reward providers for coordinating and improving care – especially for the sickest, costliest patients in the health care system.

That formula for rewarding coordination, quality and cost containment forms the foundation for Accountable Care Organizations, or ACOs, that are now springing up around the country, spurred on by federal health care reform.

In the new analysis, the Dartmouth researchers looked at results from the five-year Physician Group Practice demonstration project, which took place from 2005 to 2010 and involved 10 large physician groups across the country.

The U-M Faculty Group Practice, composed of the physicians who are faculty within the University of Michigan Medical School, was one of the 10 groups that participated in this program.

An earlier analysis of the five-year project showed that U-M's coordinated care and attention to quality measures led to at least $22 million in savings to Medicare, and gave patients better care as measured by a number of specific targets, such as blood pressure control. Because of this performance, U-M shared in the savings with Medicare. In 2011, the U-M Health System formed a Pioneer ACO to continue this effort on an even broader scale.

Now, the new study finds that U-M was able to decrease annual spending by $2,499 for each patient who had both Medicare and Medicaid coverage. These "dual eligible" patients, as they are called, tend to have medical costs that are higher than people who use Medicare alone – as a group, they account for 31 percent of all Medicare spending and 39 percent of all Medicaid spending.

Across all 10 participating physician groups, the average savings for all dual eligible patients in the program was $532 per patient per year, far more than the $59 per patient per year that was saved on the care of those who were covered by Medicare alone.

U-M FGP executive director David Spahlinger, M.D. attributes a large part of U-M's success to the U-M Complex Care Management Program that was launched as part of the project.

"Their focus on transition calls, needs assessment for ongoing care management, development of comprehensive care plans, integration with primary care sites and medication reconciliation played a role in the resource reductions of this vulnerable population," he says. "We know that quality improved in addition to our cost reductions, making this a double win for patients and the agencies that provide their coverage."

According to the Dartmouth researchers, decreased spending in all 10 participating groups was achieved in large part through reductions in acute care hospitalizations, readmissions, procedures, and home health care. Reductions in spending were similar across diagnosis groups, indicating that changes in spending were due to better care management overall, rather than disease-specific interventions.

For more about U-M's participation in the Medicare Physician Group Practice demonstration project, please visit

For more about the UMHS ACO, in partnership with IHA, visit and

SOURCE University of Michigan Health System

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