CBO: Pilot Programs Aren’t Working

The evaluations show that most programs have not reduced Medicare spending: In nearly every program involving disease management and care coordination, spending was either unchanged or increased relative to the spending that would have occurred in the absence of the program, when the fees paid to the participating organizations were considered.  Programs in which care managers had substantial direct interaction with physicians and significant in-person interaction with patients were more likely to reduce Medicare spending than other programs, but on average even those programs did not achieve enough savings to offset their fees….

Demonstrations aimed at reducing spending and increasing quality of care face significant challenges in overcoming the incentives inherent in Medicare’s fee-for-service payment system, which rewards providers for delivering more care but does not pay them for coordinating with other providers, and in the nation’s decentralized health care delivery system, which does not facilitate communication or coordination among providers.

Full report here. HT to Chris Jacobs. See Megan McArdle’s comments here.

Comments (5)

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  1. Elizabeth says:

    while I applaud pilot programs to ID creative solutions, they frequently have local and specific issues and elements that do not duplicate well in other scenarios.

  2. Davie says:

    They simply can’t keep working around the problem. People respond to incentives. Until those change, nothing else will.

  3. Devon Herrick says:

    Another fact the report failed to mention is that even where pilot projects work, their success is likely the result of a few dedicated individuals and the Hawthorne Effect. These factors make successful projects hard to replicate.

  4. Bruce says:

    No surprise here. This is the third time they have come to this conclusion.

  5. John R. Graham says:

    Plus you have the problem that a pilot program designed to save money will attract overwhelming interest from those who will lose income under the proposal.

    The iron law of health spending is that every last dollar of “unsustainable” spending that we decry is a dollar of income to someone who will fight tooth and nail to preserve it.

    So, as soon as you paint a big target by creating a pilot program, those interests will get to work to undermine it.

    The only way to address this problem is to put forward reforms where the Medicare beneficiaries themselves will profit from the savings, e.g. have some share of the savings added to their Social Security. As long as the savings are supposed to accrue to the government’s own account, nobody has an interest in ensuring that they are achieved.