Monday, May 25, 2009


One of the continuing themes of the health care reform debate over the past weeks has been the opportunity for cost savings in treating the chronically ill.

It seems like a no-brainer. Close to 90 percent of Medicare spending is for just 25 percent of beneficiaries, with almost half of the expenditures due to the top five percent of those covered. Three quarters of these high-cost patients suffer from multiple chronic conditions, with the number of physicians involved in a patient’s treatment typically more than the number of conditions. So, efforts to manage and coordinate care should show significant savings, right?

Not so, if the federal government is involved. A MedPAC report summarizing the results of four Medicare chronic care demonstration programs concluded: “Costs: Little evidence of cost neutrality or savings…Quality: Scattered evidence of success improving process, satisfaction, outcomes…”

None of this bodes well either for further chronic care demonstrations or for the great white hope of many Medicare policymakers: the medical home model, with—as defined by CMS—twenty-eight specific capabilities including electronic medical records, care coordination, treatment planning and reporting.

Aside from the lack of success so far, why should we be skeptical about savings from care coordination in Medicare? There are two simple answers.

First, the process of demonstration and evaluation is so lengthy that—even when an approach can reduce costs—general implementation may not occur for years.

Second, in order to encourage providers to participate, CMS has discovered that additional payments are necessary, thereby eliminating most or all the potential savings.

The attitude of physician organizations is clear. In announcing their support of the medical home model, the American Academy of Family Physicians (AAFP), the American Academy of Pediatrics (AAP), the American College of Physicians (ACP) and the American Osteopathic Association (AOA) demanded: “additional reimbursement for participating practices to adequately compensate for the increased physician and administrative staff time necessary to provide care…” In other words, if you want us to do things right, you’ll have to pay us more.

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