Home » Dr. Jayne » Currently Reading:

Curbside Consult with Dr. Jayne 10/11/11

October 10, 2011 Dr. Jayne 1 Comment

The bean counters in my organization are all abuzz about how we might be able to mimic the financial results of the Medicare Physician Group Practice Demonstration project. For those of you who may have been living under a pay-for-performance rock, the PGP Demonstration was the first Medicare P4P initiative and dates back to legislation passed back over a decade ago.

The Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 authorized this project to encourage coordination of Medicare Part A (hospital) and Medicare Part B (outpatient) services; to promote efficient and effective care through care management and process redesign; and to reward physicians for improving health outcomes.

The five year demonstration project involved ten physician groups (approximately 5,000 physicians) who continued to be paid regular Medicare rates but also earned performance payments of up to 80% of the amount saved. The other 20% savings was kept by the Medicare Trust Fund. (Hopefully, they put that savings in the proverbial Lock Box, but I doubt it.)

Over the life of the program, quality measures were factored in and by year five, 50% of the performance payments were based on cost efficiency and 50% on quality. The 220,000 Medicare beneficiaries involved (aka patients) were tagged to a participating group “if the group provided the plurality of their office or other outpatient evaluation & management services during the performance year.” Patients averaged five visits at the group during the year.

Spending was risk-adjusted and quality was measured based on 32 indicators, starting with diabetes and adding heart failure, coronary artery disease, hypertension, and cancer screening. Groups were scored against national benchmarks and the measures were developed by CMS in conjunction with various well-respected quality organizations.

Over the life of the project, payments have varied. In performance year one, two groups shared $7.3 million. The next year four groups shared $13.8 million. Years three and four both had five groups receiving payments – $25.3 million and $31.7 million respectively. Year five had four groups sharing $29.4 million in payments.

It’s not just about the money though – the groups have also demonstrated increases in quality that should translate to increases in quality of life for the patients involved. In year five, all ten groups reached benchmark levels on at least 30 of the 32 measures with seven groups hitting them all.

Each group was able to design their own mechanism to drive towards desired outcomes. Strategies included:

  • Packing as much evidence-based care as they could into each patient visit
  • Protocol-driven medication management
  • Increased patient education
  • Streamlining transitions of care
  • Leveraging technology such as automated outreach, registries, and scheduling as well as EHR

So why are the financial folks excited? They read blurbs in email blasts or in fluff journals (or possibly on cutting edge, thoughtful, and sassy websites like HIStalk) and say to themselves, “Hey, I’m sure we can do that too!” If only it were that easy.

Glassy-eyed by the thoughts of millions coming in the door, they forget that out of 50 possible group-year payment opportunities, only 20 have resulted in an incentive payment. That’s one in five. Would those same money-crunchers invest in a new diagnostic device that only had a one in five chance of breaking even?

I’d like to see data on how much these health systems spent trying to hit the benchmarks needed to achieve the quality measures. And for those who didn’t receive incentive payments, how close were they? Were there wide gaps, or in the words of Maxwell Smart did they miss it by “that much?”

Those looking to mimic these outcomes also should note that the up-front costs for this program were borne by the participants. Although they may have been able to use grant money or other funding sources, there was no pot of gold at the beginning of the rainbow. There had to be substantial organizational commitment to these projects and the willingness to take a loss and continue pressing forward.

Transforming the way we deliver care is definitely a marathon, not a sprint. Organizations need to commit to being in it for the long haul. They can’t be in it in a flavor of the month way, which we see all too frequently. Participants need to be sure they’re willing to go all-in not only financially but philosophically. The faint of heart need not apply – groups with a history of shuffling leadership every time a loss appears will have a hard time stabilizing. Groups with a history of cutting ‘expensive’ staff (aka nurses) will struggle.

Leadership needs to be supportive of the initiative at every juncture – even if it means finally dealing with those difficult physicians who refuse to use the EHR properly, antagonize the care coordinators, or fail to comply with order sets and evidence-based protocols. Substantial technology investments need to be pursued despite lack of short-term ROI. IT staff who can interact with clinicians, understand their needs, and deliver support models that work will be in high demand.

The groups participating in this project already had well-seasoned structures for looking at issues of quality, cost, and access and were able to engage and energize these teams to move forward in a coordinated fashion. They weren’t acting on a whim. They had clear priorities and direction and strategically reduced barriers to achieving that mission.

Unfortunately, I see far too many groups and providers at both the macro and micro level motivated to go after the money without understanding the hard work and resources (financial and other) needed to succeed. They also fail to understand the time it takes to properly implement programs on this scale. For those of you working in organizations like these, you have my sympathy. For those of you on the other end of the spectrum who have dynamic, engaged, and visionary leaders, you have my admiration.


E-mail Dr. Jayne.

HIStalk Featured Sponsors


Currently there is "1 comment" on this Article:

  1. Does this mean that the health of the individuals was actually improving, or was there something else being attributed to the outcomes based providers? I think the true idea/mission here is that people are going to live longer healthier lives. Sure a byproduct will be cost savings to the government and providers, and that is great to the country as a whole but I think we are all better off living longer.

Text Ads

Recent Comments

  1. Looks like the House rep for Spokane and one of the Senators from Washington State are engaged: https://mcmorris.house.gov/posts/mcmorris-rodgers-blasts-va-cerner-for-patient-harm-at-spokane-va https://www.murray.senate.gov/murray-mcmorris-rodgers-secure-va-commitment-to-hold-town-halls-for-veterans-in-eastern-washington/ That…

  2. The thing I'm focusing on are the department(s) these have hit: Marketing & Customer Experience. The database community has believed…

  3. How Cerner fumbles VA and rolls out at DHA without issue, and Congress to my knowledge doesn't as why, so…

  4. Yikes. Oracle/Cerner just can't get the break on this one. Mr. H, could you please run a poll on how…

  5. That BH ER experience matches mine even years before the pandemic - went in with a suicidal friend, and they…


Founding Sponsors


Platinum Sponsors






















































Gold Sponsors