Email Alert
September 29, 2011
By Keith Wright*
On August 8, 2011, the Centers for Medicare & Medicaid Services (CMS) announced the results of the Physician Group Practice (PGP) Demonstration project.1 In the release, CMS Administrator Donald Berwick, MD, heralded the five year program as a model for accountable care organizations (ACOs) that will participate in the Medicare Shared Savings Program (MSSP).2 CMS also announced—under authority provided in Section 3022 of the Patient Protection and Affordable Care Act—that the original ten PGP Demonstration participants will participate in a two-year extension program. The extension program, called the PGP Transition Demonstration, will continue providing participants with incentives under a shared savings model.3
The PGP Transition Demonstration will attempt to replicate the PGP Demonstration's earlier successes. Over the PGP Demonstration's five-year period, seven of the ten participants earned performance incentive payments that totaled more than $110 million. Furthermore, seven of the ten participants in the fifth year were able to increase quality performance measures and exceed all CMS benchmarks.4 CMS remains "optimistic that these groups that participated in both the initial PGP Demonstration and the PGP Transition Demonstration will continue to show improved quality and generate shared savings for the Medicare program."5
However, participants may find success more difficult because of a decreased sharing ratio in realized savings and increased requirements for earning full performance incentives. Under the initial PGP Demonstration, participants were eligible to receive 80% of recognized savings as an incentive payment.6 The PGP Transition Demonstration reduces the sharing ratio to 50%.7 CMS has also increased the number of quality measures to forty-one. By the fifth year of the initial PGP Demonstration, participants were only required to meet thirty-two quality performance benchmarks.8 However, this is still below the sixty-five quality measures that will be required under the MSSP.9
In relation to ACOs, CMS stated that the PGP Transition Demonstration will provide "additional performance data and insight into the sustainability of results to consider when designing and refining the [MSSP]."10 In this respect, the PGP Transition Demonstration continues to test important concepts that are essential to MSSP. This includes "the important role primary care providers play in coordinating care to achieve better quality and cost outcomes"11 and basing performance payments on meeting quality goals while realizing cost savings for the Medicare Program.12
Nevertheless, even some of the successful participants in the PGP Demonstration have expressed concern that the PGP Demonstration successes will not translate to the MSSP.13 Other large integrated healthcare providers, such as Mayo Clinic and the Cleveland Clinic, also raised this concern.14 The main distinction to these providers are what is viewed as unnecessarily complicated proposed rule implementing the MSSP and increased regulatory oversight of ACOs.15
The PGP Transition Demonstration began on January 1, 2011. During the two-year period of the PGP Transition Demonstration, participants will also have the option of transitioning to the MSSP or an initiative in the Innovation Center.16
1 Press Release, Physician Group Practice Demonstration Succeeds in Improving Quality and Reducing Costs, CMS (Aug. 8, 2011).
2 Id.
3 Id.
4 Id.
5 Id.
6 Press Release, Medicare Physician Group Practice Demonstration, Physicians Groups Continue to Improve Quality and Generate Savings Under Medicare Physician Pay-for-Performance Demonstration, CMS (July 2011).
7 Diana Trebino et al., The Physician Group Practice Demonstration Bonus Methodology Specifications, CMS (March, 2011).
8 Musetta Leung et al., Physician Group Practice Transition Demonstration Quality Measurement and Reporting Specifications, CMS (July 15, 2011).
9 76 Fed. Reg. 19570 (Apr. 7, 2011).
10 See Leung, supra note 8.
11 See Press Release, CMS, supra note 1.
12 Id.
13 Sam Baker, Demonstration Project Seen as Model for ACOs, The Hill (Aug. 8, 2011).
14 Rebecca Adams, Model ACO Health Centers Skeptical of Proposed Rule, The Commonwealth Fund (May 6, 2011).
15 Id.
16 Physician Group Practice Transition Demonstration Design Overview, CMS (July 14, 2011).
*We would like to thank Keith Wright, Esquire (Kitch Drutchas Wagner Valitutti & Sherbrook, Detroit, MI), for authoring this email alert.