Medicare Providers Don’t Want Less Revenue

Roger Collier

Posted 2/9/12 on Health Care Reform Update

The Congressional Budget Office’s January issue brief on the failure of almost all of more than thirty Medicare demonstration projects to cut costs generated considerable discussion. Judging from the reactions of some health care policymakers, the CBO’s findings came as a surprise.

They shouldn’t have.

Aside from the fact that the results of virtually all of the demonstrations had previously been published, the failure to reduce Medicare spending is exactly what should have been expected.

Let’s take a look at the three payment models used by CMS for the demonstrations:

  1. Regular Medicare reimbursement plus a guaranteed no-risk fee or bonus for participating
  2. Regular Medicare reimbursement plus a fee or bonus dependent on performance
  3. Bundled payment for demonstration services

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