Physician Incentive Demo Delivers ACO Lessons

An incentive program within large physician groups delivered better care for patients and lower costs for Medicare, according to an analysis by the Centers for Medicare and Medicaid Services.

While federal officials and participants alike hailed the groups’ achievements in quality improvement and cost savings, some observers questioned whether the project’s results could be duplicated by smaller group practices.

The CMS this month released the results from the Medicare Physician Group Practice Demonstration (PGP), which ran from April 2005 through March 2010. CMS officials said the 5-year program has helped shape their thinking on accountable care organizations.

"Our experience under the demonstration was that physician groups are willing to engage in pay-for-performance incentive programs when the quality measures are consistent with clinical practice and high-quality care," said CMS spokesman Donald McLeod.

The 10 organizations in the PGP were asked to meet 32 quality measures in four areas: diabetes, heart failure, coronary artery disease, and preventive care. There were also group-specific quality improvement targets. In addition, the groups were required to generate Medicare cost savings of at least 2% of their target expenditures in order to earn incentive payments.

Participants included Billings (Mont.) Clinic; the Everett (Wash.) Clinic; the Forsyth Medical Group in Winston-Salem, N.C.; the Geisinger Health System in Danville, Pa.; Middlesex Health System in Middletown, Conn.; Park Nicollet Health System in Minneapolis, Minn., St. John’s Health System in Springfield, Mo.; Marshfield (Wis.) Clinic; University of Michigan (Ann Arbor) Faculty Group Practice; and Dartmouth-Hitchcock (N.H.) Clinic.

In the project’s fifth year, 7 of the 10 participating groups achieved all 32 quality measures, and the remaining 3 achieved at least 30. However, only four groups generated enough savings to cash in on the incentive payments ($29.4 million/group). Half of the group’s incentive payments were based on achieving quality measures and half on cost savings.

Geisinger saw a 1.4% increase in expenditures, compared with the national average of 5.5%, according to Dr. Thomas R. Graf, associate chief medical officer of population health for Geisinger.

"If medical costs for Medicare beneficiaries anywhere in the United States were typically going down, we wouldn’t have a health care crisis," Dr. Graf said. "We think, actually, we’re on the right track."

Despite the increase in costs, Geisinger decreased its rehospitalization rates by 40% through an expanded medical home program, Dr. Graf said. General rehospitalization rates decreased by 20%. The hospital also saw a 237% increase in the use of preventive services, from 9.2% of Medicare patients in 2007 to 31% in 2011.

Middlesex Health System officials said the demonstration gave them the chance to get their feet wet in a system that represents the future of health care.

"This was an opportunity to be involved in a program that was ahead of the curve and that was likely where health care was going," said Dr. Arthur McDowell, vice president of clinical affairs at Middlesex Hospital.

However, Dr. McDowell said the necessary investments could make it harder for smaller practices to become a part of the movement.

"The amount of infrastructure that you would need to implement to really do it well would require significant amount more investment, and without seeding that investment or taking significant risk, it becomes harder for smaller organizations," Dr. McDowell said.

The American Academy of Family Physicians shared similar concerns.

Participants in the demonstration were all large, well-established health systems. With half of the AAFP’s membership working in practices of five or fewer physicians, academy officials said the demonstration results may not apply to those physicians.

"How this information translates to the rest of the health care system, particularly small practices, I think remains a big unknown," said Dr. Glen Stream, president-elect of the AAFP. "We have to make sure that [rural] practices and the patients that they serve are taken care of in whatever process evolves in this ACO environment."

As the models for accountable care organizations take shape, the CMS continues to investigate incentive payment methods and effective systems of quality measurement. "This demonstration ... provides CMS with an accessible group of physician practices that can provide input as we develop alternative accountable care organization payment models," noted Mr. McLeod.

All 10 of the demonstration participants have stayed on to participate in a 2-year PGP Transition Demonstration, which started in January. The transition demonstration focuses on primary care and includes quality assessment using a national, rather than regional, benchmark.

An incentive program within large physician groups delivered better care for patients and lower costs for Medicare, according to an analysis by the Centers for Medicare and Medicaid Services.

While federal officials and participants alike hailed the groups’ achievements in quality improvement and cost savings, some observers questioned whether the project’s results could be duplicated by smaller group practices.

The CMS this month released the results from the Medicare Physician Group Practice Demonstration (PGP), which ran from April 2005 through March 2010. CMS officials said the 5-year program has helped shape their thinking on accountable care organizations.

"Our experience under the demonstration was that physician groups are willing to engage in pay-for-performance incentive programs when the quality measures are consistent with clinical practice and high-quality care," said CMS spokesman Donald McLeod.

The 10 organizations in the PGP were asked to meet 32 quality measures in four areas: diabetes, heart failure, coronary artery disease, and preventive care. There were also group-specific quality improvement targets. In addition, the groups were required to generate Medicare cost savings of at least 2% of their target expenditures in order to earn incentive payments.

Participants included Billings (Mont.) Clinic; the Everett (Wash.) Clinic; the Forsyth Medical Group in Winston-Salem, N.C.; the Geisinger Health System in Danville, Pa.; Middlesex Health System in Middletown, Conn.; Park Nicollet Health System in Minneapolis, Minn., St. John’s Health System in Springfield, Mo.; Marshfield (Wis.) Clinic; University of Michigan (Ann Arbor) Faculty Group Practice; and Dartmouth-Hitchcock (N.H.) Clinic.

In the project’s fifth year, 7 of the 10 participating groups achieved all 32 quality measures, and the remaining 3 achieved at least 30. However, only four groups generated enough savings to cash in on the incentive payments ($29.4 million/group). Half of the group’s incentive payments were based on achieving quality measures and half on cost savings.

Geisinger saw a 1.4% increase in expenditures, compared with the national average of 5.5%, according to Dr. Thomas R. Graf, associate chief medical officer of population health for Geisinger.

"If medical costs for Medicare beneficiaries anywhere in the United States were typically going down, we wouldn’t have a health care crisis," Dr. Graf said. "We think, actually, we’re on the right track."

Despite the increase in costs, Geisinger decreased its rehospitalization rates by 40% through an expanded medical home program, Dr. Graf said. General rehospitalization rates decreased by 20%. The hospital also saw a 237% increase in the use of preventive services, from 9.2% of Medicare patients in 2007 to 31% in 2011.

Middlesex Health System officials said the demonstration gave them the chance to get their feet wet in a system that represents the future of health care.

"This was an opportunity to be involved in a program that was ahead of the curve and that was likely where health care was going," said Dr. Arthur McDowell, vice president of clinical affairs at Middlesex Hospital.

However, Dr. McDowell said the necessary investments could make it harder for smaller practices to become a part of the movement.

"The amount of infrastructure that you would need to implement to really do it well would require significant amount more investment, and without seeding that investment or taking significant risk, it becomes harder for smaller organizations," Dr. McDowell said.

The American Academy of Family Physicians shared similar concerns.

Participants in the demonstration were all large, well-established health systems. With half of the AAFP’s membership working in practices of five or fewer physicians, academy officials said the demonstration results may not apply to those physicians.

"How this information translates to the rest of the health care system, particularly small practices, I think remains a big unknown," said Dr. Glen Stream, president-elect of the AAFP. "We have to make sure that [rural] practices and the patients that they serve are taken care of in whatever process evolves in this ACO environment."

As the models for accountable care organizations take shape, the CMS continues to investigate incentive payment methods and effective systems of quality measurement. "This demonstration ... provides CMS with an accessible group of physician practices that can provide input as we develop alternative accountable care organization payment models," noted Mr. McLeod.

All 10 of the demonstration participants have stayed on to participate in a 2-year PGP Transition Demonstration, which started in January. The transition demonstration focuses on primary care and includes quality assessment using a national, rather than regional, benchmark.

An incentive program within large physician groups delivered better care for patients and lower costs for Medicare, according to an analysis by the Centers for Medicare and Medicaid Services.

While federal officials and participants alike hailed the groups’ achievements in quality improvement and cost savings, some observers questioned whether the project’s results could be duplicated by smaller group practices.

The CMS this month released the results from the Medicare Physician Group Practice Demonstration (PGP), which ran from April 2005 through March 2010. CMS officials said the 5-year program has helped shape their thinking on accountable care organizations.

"Our experience under the demonstration was that physician groups are willing to engage in pay-for-performance incentive programs when the quality measures are consistent with clinical practice and high-quality care," said CMS spokesman Donald McLeod.

The 10 organizations in the PGP were asked to meet 32 quality measures in four areas: diabetes, heart failure, coronary artery disease, and preventive care. There were also group-specific quality improvement targets. In addition, the groups were required to generate Medicare cost savings of at least 2% of their target expenditures in order to earn incentive payments.

Participants included Billings (Mont.) Clinic; the Everett (Wash.) Clinic; the Forsyth Medical Group in Winston-Salem, N.C.; the Geisinger Health System in Danville, Pa.; Middlesex Health System in Middletown, Conn.; Park Nicollet Health System in Minneapolis, Minn., St. John’s Health System in Springfield, Mo.; Marshfield (Wis.) Clinic; University of Michigan (Ann Arbor) Faculty Group Practice; and Dartmouth-Hitchcock (N.H.) Clinic.

In the project’s fifth year, 7 of the 10 participating groups achieved all 32 quality measures, and the remaining 3 achieved at least 30. However, only four groups generated enough savings to cash in on the incentive payments ($29.4 million/group). Half of the group’s incentive payments were based on achieving quality measures and half on cost savings.

Geisinger saw a 1.4% increase in expenditures, compared with the national average of 5.5%, according to Dr. Thomas R. Graf, associate chief medical officer of population health for Geisinger.

"If medical costs for Medicare beneficiaries anywhere in the United States were typically going down, we wouldn’t have a health care crisis," Dr. Graf said. "We think, actually, we’re on the right track."

Despite the increase in costs, Geisinger decreased its rehospitalization rates by 40% through an expanded medical home program, Dr. Graf said. General rehospitalization rates decreased by 20%. The hospital also saw a 237% increase in the use of preventive services, from 9.2% of Medicare patients in 2007 to 31% in 2011.

Middlesex Health System officials said the demonstration gave them the chance to get their feet wet in a system that represents the future of health care.

"This was an opportunity to be involved in a program that was ahead of the curve and that was likely where health care was going," said Dr. Arthur McDowell, vice president of clinical affairs at Middlesex Hospital.

However, Dr. McDowell said the necessary investments could make it harder for smaller practices to become a part of the movement.

"The amount of infrastructure that you would need to implement to really do it well would require significant amount more investment, and without seeding that investment or taking significant risk, it becomes harder for smaller organizations," Dr. McDowell said.

The American Academy of Family Physicians shared similar concerns.

Participants in the demonstration were all large, well-established health systems. With half of the AAFP’s membership working in practices of five or fewer physicians, academy officials said the demonstration results may not apply to those physicians.

"How this information translates to the rest of the health care system, particularly small practices, I think remains a big unknown," said Dr. Glen Stream, president-elect of the AAFP. "We have to make sure that [rural] practices and the patients that they serve are taken care of in whatever process evolves in this ACO environment."

As the models for accountable care organizations take shape, the CMS continues to investigate incentive payment methods and effective systems of quality measurement. "This demonstration ... provides CMS with an accessible group of physician practices that can provide input as we develop alternative accountable care organization payment models," noted Mr. McLeod.

All 10 of the demonstration participants have stayed on to participate in a 2-year PGP Transition Demonstration, which started in January. The transition demonstration focuses on primary care and includes quality assessment using a national, rather than regional, benchmark.