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Medicare

The Medicare program provides subsidized medical insurance for the elderly and for some disabled people. During 2012, enrollment in Medicare averaged about 50 million people. Gross spending (excluding administrative costs that are subject to appropriation) for the program was $551 billion. (Net spending, which has beneficiaries’ payments of premiums and some other receipts subtracted out, was $466 billion.) CBO anticipates that Medicare spending will rise rapidly over the next decade, spurred by the retirement of the baby boomers. The agency’s work on Medicare includes projections of future program spending, cost estimates of specific legislative proposals, and a range of analyses of policy options and issues affecting the program.
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Estimate of the Effects of Medicare, Medicaid, and Other Mandatory Health Provisions Included in the President's Budget Request for Fiscal Year 2013 - March 2012 Baseline

data or technical information

March 16, 2012

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Medicare - March 2012 Baseline

data or technical information

March 13, 2012

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H.R. 452, the Medicare Decisions Accountability Act of 2011

cost estimate

March 8, 2012

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H.R. 452, Medicare Decisions Accountability Act of 2011

cost estimate

March 7, 2012

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H.R. 3630, Middle Class Tax Relief and Jobs Creation Act of 2012

cost estimate

February 16, 2012

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Highway Investment, Job Creation, and Economic Growth Act of 2012

cost estimate

February 14, 2012

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Medicare—May 2013 Baseline

May 2013

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related publications


  • Lessons from Medicare's Demonstration Projects on Disease Management and Care Coordination

    January 18, 2012

  • Lessons from Medicare's Demonstration Projects on Value-Based Payment

    January 18, 2012
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Lessons from Medicare's Demonstration Projects on Disease Management, Care Coordination, and Value-Based Payment

report

January 18, 2012

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Highlights

In the past two decades, Medicare has conducted two broad categories of demonstrations aimed at enhancing the quality of health care and improving the efficiency of health care delivery in its fee-for-service program:

  • Disease management and care coordination demonstrations have sought to improve the quality of care of beneficiaries with chronic illnesses and those whose health care is expected to be particularly costly.
  • Value-based payment demonstrations have given health care providers financial incentives to improve the quality and efficiency of care rather than payments based strictly on the volume and intensity of services delivered.

CBO reviewed the outcomes of 10 major demonstrations that have been evaluated by independent researchers. The evaluations show that most programs have not reduced Medicare spending. Programs in which care managers had substantial direct interaction with physicians and significant in-person interaction with patients were more likely to reduce Medicare spending than other programs, but on average even those programs did not achieve enough savings to offset their fees. Results from demonstrations of value-based payment systems were mixed. In one of the four demonstrations examined, Medicare made bundled payments that covered all hospital and physician services for heart bypass surgeries; Medicare’s spending for those services was reduced by about 10 percent under the demonstration. Other demonstrations of value-based payment appear to have produced little or no savings for Medicare.

Demonstrations aimed at reducing spending and increasing quality of care face significant challenges in overcoming the incentives inherent in Medicare’s fee-for-service payment system, which rewards providers for delivering more care but does not pay them for coordinating with other providers, and in the nation’s decentralized health care delivery system, which does not facilitate communication or coordination among providers. The results of those Medicare demonstrations suggest that substantial changes to payment and delivery systems will probably be necessary for programs involving disease management and care coordination or value-based payment to significantly reduce spending and either maintain or improve the quality of care provided to patients.



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Lessons from Medicare's Demonstration Projects on Disease Management, Care Coordination, and Value-Based Payment

blog post

January 18, 2012


  • blog post

related publications


  • Lessons from Medicare's Demonstration Projects on Disease Management, Care Coordination, and Value-Based Payment

    January 18, 2012

  • Lessons from Medicare's Demonstration Projects on Value-Based Payment

    January 18, 2012
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  • Sign up for All CBO RSS Feeds

Lessons from Medicare's Demonstration Projects on Disease Management and Care Coordination

working paper

January 18, 2012

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Abstract

This paper summarizes the results of Medicare demonstrations of disease management and care coordination programs. Such programs seek to improve the health care of people who have chronic conditions or whose health care is expected to be particularly costly, and they seek to reduce the costs of providing health care to those people. In six major demonstrations over the past decade, Medicare’s administrators have paid 34 programs to provide disease management or care coordination services to beneficiaries in Medicare’s fee-for-service sector. All of the programs in those demonstrations sought to reduce hospital admissions by maintaining or improving beneficiaries’ health, and that reduction was a key mechanism through which they expected to reduce Medicare expenditures. On average, the 34 programs had no effect on hospital admissions or regular Medicare expenditures (that is, expenditures before accounting for the programs’ fees). There was considerable variation in the estimated effects among programs, however. Programs in which care managers had substantial direct interaction with physicians and significant in-person interaction with patients were more likely to reduce hospital admissions than programs without those features. After accounting for the fees that Medicare paid to the programs, however, Medicare spending was either unchanged or increased in nearly all of the programs.


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