U-M saves more than $22M during Medicare Physician Group Practice Demonstration Project

Aug 9 2011

Medicare patients received better care at the University of Michigan Health System, and U-M staff have saved more than $22 million on the cost of that care during a five-year demonstration project.

U-M's savings resulted from five years of participation in the Medicare Physician Group Practice Demonstration Project. It is Medicare's first Pay-for-Performance Demonstration Project to work directly with physician groups like the U-M Faculty Group Practice.

The project, which has now concluded, demonstrates potential benefits of Accountable Care Organizations, an initiative now written into the nation's health care reform law. Ten different groups participated in the project. Of those only two – the University of Michigan and the Marshfield Clinic in Wisconsin – earned savings during all five years of the demonstration project.

Numbers for the fifth and final year were released today. In the fifth year, U-M saved more than $5.4 million by reducing costs to Medicare through quality improvement strategies and redesigning care. U-M also scored a 98 percent grade on quality measures that were part of the project.

"By virtue of our success, U-M already has set up an ACO," says Caroline Blaum, M.D. Professor of Internal Medicine and Geriatrics; Associate Director, UM Faculty Group Practice; and Research Scientist at the VA Ann Arbor Healthcare System. "Over the course of this Demonstration, we have saved money and improved quality every year.

U-M, along with the other nine groups in this demonstration, began participating in another similar project in January. Known as the Medicare Transitions Demonstration, this project will continue to inform Medicare leadership about important components of ACO policy.

"Here at U-M, we will continue to focus on increasing the quality we provide for patients with chronic diseases, and we will add additional quality measures for patients with Chronic Obstructive Pulmonary Disease, and for older adults with falls, osteoporosis and anticoagulation medication," Blaum says.

"We will continue to improve our care coordination and care transitions for our patients with multiple diseases and with hospitalizations."

David Spahlinger, M.D., Senior Associate Dean for Clinical Affairs at U-M, says the results show there are ways to cut costs but also improve quality of care. U-M is proud to be among the institutions testing out the concepts that are crucial to the national redesign of health care.

Spahlinger said U-M achieved both of the project's aims: to provide the highest-quality care and reduce health care spending growth for all traditional Medicare patients, including those with costly chronic illnesses.

The five-year results were announced today in Washington, D.C., by the Centers for Medicare and Medicaid Services. CMS oversees the Medicare system and launched this demonstration project to promote investment in care management programs and redesigned care processes that might be used by doctors and hospitals nationwide.

SOURCE University of Michigan Health System