Improving Quality And Coordination Of Care Can Cut Medicare Costs

Armen Hareyan's picture

In just the first year of a special effort organized by the federal agency that runs the Medicare system, the University of Michigan Health System was able to significantly improve both the quality and efficiency of care that Medicare beneficiaries received at its hospitals and health centers, while also saving the Medicare system millions of dollars.

These results were announced today by the federal Centers for Medicare & Medicaid Services, together with results from nine other large physician groups that are also participating in the Physician Group Practice Medicare Demonstration Project, the first Medicare Physician Pay for Performance Demonstration.

All 10 physician groups improved quality of care for Medicare beneficiaries who have diabetes, by achieving nationally recognized benchmarks for diabetes care quality. The U-M Faculty Group Practice, which includes all the physicians on the U-M Medical School faculty who treat patients at U-M facilities, achieved 95 percent of its targets for providing specific, proven treatments and preventive measures to people with diabetes.


In addition, UMHS improved care for its Medicare patients with many other types of chronic diseases, especially those who may have more than one disease, by redesigning care to enhance coordination and efficiency. Working together, the FGP and the U-M Hospitals and Health Centers developed and implemented programs that not only contributed to better care, but also saved Medicare money.

"Defining the best way to practice medicine for our patients is advancing from theory to a proven reality, as this project demonstrates. Now we have a year of data from CMS to show that doing the right thing for our patients is win-win. I'm looking forward to more validation in coming years for redesigning patient care processes to improve clinical quality," says David Spahlinger, M.D., FGP executive medical director.

The PGP Medicare Demonstration project provided an opportunity to share in the savings resulting from more efficient and effective care delivery. As a result, UMHS saved Medicare $3.5 million in savings the first performance year, from April 1, 2005 to March 31, 2006, largely from inpatient Medicare expenditures. Under a CMS formula, UMHS will be able to keep $2.7 million of these savings.

"We proved that you don't have to reduce the quality of care to cut Medicare costs.