Valerie A. Lewis

Spending Differences Associated With the Medicare Physician Group Practice Demonstration

CONTEXT The Centers for Medicare & Medicaid Services (CMS) recently launched accountable care organization (ACO) programs designed to improve quality and slow cost growth. The ACOs resemble an earlier pilot, the Medicare Physician Group Practice Demonstration (PGPD), in which participating physician groups received bonus payments if they achieved lower cost growth than local controls and met quality targets. Although evidence indicates the PGPD improved quality, uncertainty remains about its effect on costs. OBJECTIVE To estimate cost savings associated with the PGPD overall and for beneficiaries dually eligible for Medicare and Medicaid. DESIGN Quasi-experimental analyses comparing preintervention (2001-2004) and postintervention (2005-2009) trends in spending of PGPD participants to local control groups. We compared estimates using several alternative approaches to adjust for case mix. SETTING Ten physician groups from across the United States. PATIENTS AND PARTICIPANTS The intervention group was composed of fee-for-service Medicare beneficiaries (n = 990,177) receiving care primarily from the physicians in the participating medical groups. Controls were Medicare beneficiaries (n = 7,514,453) from the same regions who received care largely from non-PGPD physicians. Overall, 15% of beneficiaries were dually eligible for Medicare and Medicaid. MAIN OUTCOME MEASURE Annual spending per Medicare fee-for-service beneficiary. RESULTS Annual savings per beneficiary were modest overall (adjusted mean

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114, 95% CI,

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12-

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216). Annual savings were significant in dually eligible beneficiaries (adjusted mean

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532, 95% CI,

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277-

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786), but were not significant among nondually eligible beneficiaries (adjusted mean

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59, 95% CI,

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166 in savings to

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47 in additional spending). The adjusted mean spending reductions were concentrated in acute care (overall,