CMS declares Group Practice Demo victory with $134M savings

Five years into its landmark experiment of paying physician groups to improve quality of care and reduce costs, the Centers for Medicare & Medicaid Services (CMS) has declared the Group Practice Demonstration a success. The program, which is so far credited with $134 million in health savings, will continue for another two years past January 2011 in the form of a new Physician Group Practice Transition demonstration.

"As we work to help bring care coordination to a broader set of providers through accountable care organizations, the lessons learned by this demonstration provide great insight into how to use Medicare's payment systems to improve quality while reducing costs," CMS Administrator Dr. Donald M. Berwick said in a statement. "We have learned to invest in sustained improvement over time, and that short-term comparisons between start-up costs and measureable results may fail to realize the long-term value of these efforts."

According to CMS, seven groups achieved benchmark performance on all 32 performance measures, and all 10 physician groups achieved benchmark performance on heart failure, coronary artery, and preventive care measures. Although these results show significant improvement from year one, when only two physician groups achieved benchmark performance on all measures, four groups got a share of $29 million in incentives out of the $36 million they saved Medicare.

Among these four, two groups, Marshfield Clinic in Wisconsin and University of Michigan Faculty Group Practice, received checks all five years. St. John's Health System, in Springfield, Mo., represents another multi-year bonus recipient. However, year five marks the first payout for Park Nicollet Health Services, in St. Louis Park, Minn., despite having hit all the quality targets for the previous three years.

"We improved their health, we kept them out of the hospital," Park Nicollet's Chief Medical Officer Steven Connelly told the Minneapolis Star Tribune. "But because we kept them away from admissions in the emergency room, we actually lost revenue on those patients. It's not a tenable business model. But if you transition into reimbursing for the quality of care delivered, then you have the benefit both to the organization and to the patient."

To learn more:
- read the press release from CMS
- see this article from MPR News
- see this article from the Milwaukee Journal Sentinel
- read this article from the Minneapolis Star Tribune
- check out this post from the New York Times