How Medicare's ideas become reality

Demonstration projects offer path for pilots

Writing in American Medical News, Charles Fiegl explores how CMS uses demonstration projects to test new ideas—and why many of the most promising pilots die on the vine.

According to Fiegl, the demos provide an avenue to pilot reforms and innovations without making dramatic systemic changes. A number of former demo projects paved the way for current rules within the Medicare program:

  • The DRG system was originally a pilot to improve hospital efficiency led by New Jersey;
  • The physician quality reporting system (PQRS) grew out of the Premier pay-for-performance project; and
  • The influenza vaccine demonstration from 1988 to 1992 led to the flu shot becoming a covered benefit.

However, many projects still fizzle out because of workplace considerations (the demo's champion leaves CMS), D.C. machinations (the political climate prevents expanding a pilot across Medicare), or simply failing to produce results.

Fiegl also suggests that some winning demos have been inexplicably shelved. For example, a demo to bundle hospital and physicians payments for heart bypass surgery in the mid-1990s was roundly hailed and saved, well, a bundle—but the effort was abandoned despite its seeming success.

CMS officials also are shifting some demonstrations to its new $10 billion innovation center, according to Bruce Vladeck, a former Medicare administrator. Vladeck tells American Medical News that the new center is likely to focus more closely on demos to craft payment policies—"a much better way to do things and a real change in course from over the last 20 years" (Fiegl, American Medical News, 11/28)

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