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Medicare Physician Group Practice demonstration project racks up $38.7 million in savings

The Centers for Medicare & Medicaid Services said last week that the 10 physician group practices participating in year four of the Medicare pay-for-performance demonstration project recorded estimated savings of $38.7 million in Medicare expenditures.

As a result, five practices received performance payments of $31.7 million for their part in achieving the savings for the Medicare Trust Fund.

"These groups have been leaders in organizing care delivery to improve quality and reduce expenditure growth," said CMS Administrator Donald Berwick, MD. "Now we want to raise the bar. We want to support these practices to demonstrate just how much American medicine can achieve if we put the right incentives in place."

CMS is working to transition the physician groups into the shared savings program established in the Affordable Care Act.

The results from year 4 of the five-year project showed all 10 physician groups achieved benchmark performance on at least 29 of the 32 measures reported in year four of the demonstration. Three groups – Geisinger Clinic in Danville, Pa., the Marshfield Clinic in Marshfield, Wis., and Park Nicollet Health Services in St. Louis Park, Minn. – achieved benchmark performance on all 32 performance measures.

All 10 groups also achieved benchmark performance on the 10 heart failure and seven coronary artery measures. Over the first four years of the demonstration, the physician groups increased their quality scores an average of 10 percentage points on 10 diabetes measures, 13 percentage points on the seven heart failure measures, 6 percentage points on the seven coronary artery disease measures, 9 percentage points on two cancer screening measures and 3 percentage points on three hypertension measures.

"It has taken a lot of hard work by clinic staff as we continually strive to improve care, but that work has been rewarded as the clinic this year exceeded 100 percent of the quality measures," said Theodore A. Praxel, MD, medical director of quality improvement and care management at the Marshfield Clinic.

For its performance in year 4, the Marshfield Clinic will receive more than half of the total incentives payments, or approximately $16 million, according to information provided by the practice.

"The clinic is receiving a bonus payment of about $16.15 million which will be used to fund further changes and improvements in how Marshfield Clinic delivers care to all of our patients," Praxel said. "The performance payment Marshfield Clinic receives will allow us to continue beneficial healthcare activities that are not currently reimbursed by most insurers right now."

Other physician groups earning incentive payments based on their performance were the Dartmouth-Hitchcock Clinic in Manchester, N.H., Geisinger Clinic, St. John's Health System in Springfield, Mo., and the University of Michigan Faculty Group Practice. Over the four years of the project, physician groups have realized nearly $98 million savings for Medicare and have qualified for more than $78 million in incentive payments.

The Physician Group Practice Demonstration is the first pay-for-performance initiative for physicians under the Medicare program. The demonstration creates incentives for physician groups to coordinate the overall care delivered to Medicare patients, rewards them for improving the quality and cost efficiency of healthcare services and creates a framework to collaborate with providers to the advantage of Medicare beneficiaries.

The goals of the demonstration are to encourage coordination of Part A and Part B services; promote cost efficiency and effectiveness through investment in care management programs, process redesign, and tools for physicians and their clinical care teams; and reward physicians for improving health outcomes.

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