Lessons from Medicare’s 

Demonstration Projects on Disease Management, 

Care Coordination, and Value-Based Payment 

An important part of the national debate about how to 

manage federal spending in the decades ahead has 

focused on spending for Medicare, which is expected to 

account for a large and ever-increasing share of the federal 

budget. Medicare provides health insurance to almost 

everyone who is 65 or older and to people under age 65 

who receive Social Security Disability Insurance benefits 

(after a waiting period) or have certain serious health conditions. Many observers point out that improving the 

effectiveness of Medicare spending might allow both for 

reductions in federal spending from its projected path 

and for improved health care for Medicare beneficiaries.

Since 1967, the program has had the authority to conduct demonstrations that examine new ways to deliver 

and pay for health care. That authority was extended in 

2010, under the Patient Protection and Affordable 

Care Act (Public Law 111-148), with the creation of the 

Center for Medicare and Medicaid Innovation within 

the Centers for Medicare & Medicaid Services (CMS). 

Under that law, CMS can expand a demonstration—and 

even implement it nationwide—without further approval 

from the Congress if the Secretary of Health and Human 

Services determines that such expansion would either 

reduce spending without reducing quality of care or 

improve quality of care without increasing spending.

In the past two decades, CMS has conducted two broad 

categories of demonstrations aimed at enhancing the 

quality of health care and improving the efficiency of 

health care delivery in Medicare’s fee-for-service program. 

B 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. 

B 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. 

This Congressional Budget Office (CBO) issue brief 

reviews the outcomes of 10 major demonstrations—6 in 

the first category, 4 in the second—that have been evaluated by independent researchers.1

 The types of programs 

in those demonstrations could be implemented nationally either through the innovation center or through 

further legislation.

The evaluations show that most programs have not 

reduced Medicare spending: In nearly every program 

involving disease management and care coordination, 

spending was either unchanged or increased relative to 

the spending that would have occurred in the absence of 

the program, when the fees paid to the participating organizations were considered. Programs in which care managers had substantial direct interaction with physicians 

1. For more complete discussions of the demonstration projects, 

see Lyle Nelson, Lessons from Medicare’s Demonstration Projects on 

Disease Management and Care Coordination, Congressional 

Budget Office Working Paper 2012-01 (January 2012), and 

Lessons from Medicare’s Demonstration Projects on Value-Based 

Payment, Congressional Budget Office Working Paper 2012-02 

(January 2012).

ISSUE BRIEF

JANUARY 2012
2 LESSONS FROM MEDICARE’S DEMONSTRATION PROJECTS ON DISEASE MANAGEMENT, CARE COORDINATION, AND VALUE-BASED PAYMENT JANUARY 2012

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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. 

Disease Management and 

Care Coordination 

In six major demonstrations, organizations were paid to 

provide disease management or care coordination to 

beneficiaries in Medicare’s fee-for-service program (see 

Table 1). The demonstrations comprised 34 programs 

operated by disease management companies, which provide such services to private insurers and employers; 

hospital-based health systems; and other health care providers. In some cases, providers formed partnerships with 

disease management companies or other organizations.

The programs used nurses as care managers to educate 

patients about their chronic illnesses, encourage them to 

follow self-care regimens, monitor their health, and track 

whether they received recommended tests and treatments.2

 In most programs, the care managers were not 

integrated into physicians’ practices, and their contact 

with patients was primarily by telephone. In some programs, however, the care managers either were employed 

in physicians’ offices or had direct interaction with 

physicians through other means (such as accompanying 

patients to visits with their doctors). The care managers 

in such programs also typically had considerable inperson interaction with patients, in addition to telephone 

contact. Some programs attempted to provide additional 

education and monitoring when patients were discharged 

from a hospital, but most were limited by a lack of timely 

data on patients’ hospitalizations. A few programs placed 

monitoring devices in beneficiaries’ homes to electronically transmit information about patients’ symptoms and 

physiological measurements to care managers.

Most programs targeted beneficiaries who had at least 

one chronic condition, and most used various criteria to 

exclude beneficiaries who were not expected to be high 

users of health care services. In some demonstrations, 

each program was allowed to develop its own criteria for 

eligibility. For example, many programs restricted participation to beneficiaries who had a recent hospital stay, 

high past Medicare expenses, high anticipated Medicare 

expenses (as estimated by predictive modeling), or some 

combination of those factors. The demonstrations generally excluded beneficiaries receiving hospice services and 

those in treatment for complex conditions, such as endstage renal disease, that were unrelated to the interventions being tested. Some programs excluded beneficiaries 

who were in long-term care facilities or who had 

cognitive impairments. 

Effects on Hospital Admissions and Spending 

All of the demonstration programs that focused on disease management and care coordination sought to reduce 

hospital admissions by maintaining or improving Medicare beneficiaries’ health, and because hospitalizations are 

expensive, that reduction was expected to be the key 

mechanism for reducing Medicare spending. For many of 

the programs, the estimated effects on hospital admissions and spending are quite imprecise because they had 

so few enrollees. On average, the 34 care coordination 

and disease management programs had little or no effect 

on hospital admissions or regular Medicare spending 

(that is, excluding the programs’ fees), although the 

2. The terms disease management and care coordination generally 

are used interchangeably in programs that provide such services, 

although some experts reserve the latter term for programs that 

also seek to improve the flow of information among providers and 

assist patients as they make transitions from one care setting to 

another (from the hospital to home, for example). 
JANUARY 2012 LESSONS FROM MEDICARE’S DEMONSTRATION PROJECTS ON DISEASE MANAGEMENT, CARE COORDINATION, AND VALUE-BASED PAYMENT 3

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Table 1.

Medicare Disease Management and Care Coordination Demonstrations

Source: Congressional Budget Office.

Note: CHF = congestive heart failure; CAD = coronary artery disease.

a. In demonstrations in which fees were at risk, the programs were allowed to keep only that portion of the fees that was offset by a 

reduction in Medicare spending. In the Demonstration of Care Management for High-Cost Beneficiaries, the programs were not allowed 

to keep the entire fee unless they reduced Medicare spending for their beneficiaries by at least 5 percent, net of the fee.

b. Dual-eligible beneficiaries are covered by Medicare and Medicaid at the same time.

estimated effects varied considerably from one program 

to another. Nineteen programs had no more than a 5 percent effect on hospital admissions in either direction (see 

Figure 1); eleven reduced admissions by at least 6 percent—seven by 6 percent to 15 percent and four by 

15 percent or more. For four programs, hospital admissions increased by at least 6 percent; for two of those programs, admissions rose by at least 15 percent. Fewer 

programs reduced regular Medicare spending than cut 

the number of hospital admissions. 

To reduce total Medicare spending (that is, after including the fees), a disease management or care coordination 

program was required to cut expenditures by more than 

enough to offset its fee. In four demonstrations, the fees 

were at risk—that is, the participating programs were 

allowed to retain their fees only to the extent that those 

fees were offset by reductions in regular Medicare spending.3

 CMS has not released information about how much 

money the programs were allowed to retain, but the evaluations imply that most would have been required to 

return substantial portions. The evaluations indicate that 

only 2 of the 18 programs with fees at risk reduced total 

Medicare spending noticeably, 1 program increased total 

spending, and the others had no discernible effect on 

total spending. Most of the 16 programs whose fees were 

not at risk increased total Medicare spending, although 

for some there was no discernible effect.

The 34 programs did not have systematic effects on measures of the process of delivering health care. Those 

measures varied from one demonstration to another but 

typically included the percentage of beneficiaries who 

received general preventive services (such as influenza 

vaccinations) and services recommended for people with 

a given condition (such as annual eye examinations for 

people with diabetes). Although the programs increased 

the percentage of beneficiaries who reported being taught 

self-management skills, they had little or no effect on the

Demonstration

Number of

Programs

Fees at 

Riska Target Population

Medicare Coordinated Care Demonstration 15 No Various; most commonly patients with CHF, CAD, chronic 

lung disease, or diabetes

Medicare Health Support Pilot 8 Yes Patients with CHF or diabetes

Demonstration of Care Management for 

High-Cost Beneficiaries

6 Yes Various; all with high Medicare costs before the 

demonstration, high predicted costs, or both; some with 

particular chronic conditions

Demonstration of Disease Management for 

Dual-Eligible Beneficiariesb

1 Yes Dual-eligible beneficiaries with CHF, CAD, or diabetes

Demonstration of Informatics for Diabetes 

Education and Telemedicine

1 No Patients with diabetes

Demonstration of Disease Management for 

Severely Chronically Ill Beneficiaries

3 Yes Patients with advanced-stage CHF, CAD, or diabetes

3. The programs in one demonstration could not retain the entire 

fee unless they reduced Medicare spending by at least 5 percent, 

net of the fee.
4 LESSONS FROM MEDICARE’S DEMONSTRATION PROJECTS ON DISEASE MANAGEMENT, CARE COORDINATION, AND VALUE-BASED PAYMENT JANUARY 2012

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Figure 1.

Effects of 34 Disease Management and 

Care Coordination Programs on 

Hospital Admissions

(Percentage change in hospital admissions)

Source: Congressional Budget Office.

Note: Bars with lighter shading represent programs with fewer 

than 400 enrollees. The estimates for those programs are 

less precise than the estimates for the other programs.

percentage who reported that they were adhering to 

prescribed self-care regimens.

Factors Associated with Reduced Hospital 

Admissions and Spending 

Programs whose fees were at risk had greater financial 

incentives to reduce hospital admissions and spending. 

Among the 34 programs, however, the 18 whose fees 

were at risk produced little or no effect on hospital admissions or regular Medicare spending and were similar in 

that respect to the 16 programs whose fees were not at 

risk (see Table 2). Other design elements or program 

features—such as the extent and type of care managers’ 

interactions with physicians and patients—apparently 

were more important determinants of whether reductions 

in hospital admissions and spending occurred. 

Hospital admissions fell by an average of 7 percent and 

regular Medicare spending declined by an average of 

6 percent for programs in which care managers had substantial direct interactions with physicians. In contrast, 

there was no effect, on average, on hospital admissions or 

spending resulting from programs in which care managers had little or no direct interaction with physicians. The 

estimated average reductions in regular spending for 

those programs were insufficient to yield net savings for 

Medicare, however, because the programs would have 

had to reduce regular expenditures by 13 percent, on 

average, to offset their fees.

Significant in-person interaction between care managers 

and patients also was associated with reductions in hospital admissions and regular Medicare spending.4

 Hospital 

admissions were lower by an average of 7 percent, and 

regular Medicare spending was reduced by an average of 

3 percent, for programs in which care managers had substantial interaction with patients in person and by telephone. Programs in which the interaction was primarily 

by telephone exhibited little or no effect, on average, for 

either outcome. Again, however, the estimated average 

reductions in regular spending for those programs were 

insufficient to yield net savings for Medicare because the 

programs also would have had to reduce regular expenditures by 13 percent, on average, to offset their fees.

Value-Based Payment Demonstrations

Independent evaluations have been conducted for three 

major demonstrations that tested interventions designed 

to improve the quality and efficiency of care delivered in 

the Medicare fee-for-service program by altering the 

financial incentives available to providers:

B In the Physician Group Practice (PGP) Demonstration, 

10 large practices were permitted to keep some of 

the estimated savings if they reduced total Medicare 

spending for their patients; 

-30 -20 -10 0 10 20 30

-30 -20 -10 0 10 20 30

Programs with

Reductions of

15 Percent or More

Programs with

Reductions of

6 Percent to

15 Percent

Programs with

Changes Between

-5 Percent and

+5 Percent

Programs with Increases of

6 Percent to 15 Percent

Programs with Increases of

at Least 15 Percent

4

2

7

19

2

4. In four of the eight programs in which care managers had 

substantial in-person interaction with patients, the care managers 

also had substantial direct interaction with physicians. 
JANUARY 2012 LESSONS FROM MEDICARE’S DEMONSTRATION PROJECTS ON DISEASE MANAGEMENT, CARE COORDINATION, AND VALUE-BASED PAYMENT 5

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Table 2.

Effects of Program Design on Hospital Admissions and Regular Medicare 

Spending in the Disease Management and Care Coordination Demonstrations

Source: Congressional Budget Office.

a. Regular Medicare spending excludes fees paid to the programs.

b. The estimates in this column exclude one program that operated under a fixed overall budget instead of being paid a per-enrollee fee.

c. This classification excludes three programs that relied primarily on the use of home-monitoring devices that electronically transmit 

information about patients’ symptoms and other data about patients’ health status to care managers.

B In the Premier Hospital Quality Incentive Demonstration, 278 hospitals were offered bonuses if their scores 

on quality-of-care measures were in the top tier of participating hospitals; and

B In the Medicare Participating Heart Bypass Center 

Demonstration, Medicare made bundled payments to 

cover all inpatient hospital and physicians’ services for 

coronary artery bypass graft surgeries conducted at 

seven participating hospitals. 

Preliminary results also are available for the first year of a 

fourth project—the Home Health Pay-for-Performance 

Demonstration—which allowed 273 home health agencies to keep some of the estimated savings if they reduced 

total Medicare spending for their patients and met certain 

criteria regarding quality of care.

The four demonstrations differed considerably from 

one another in terms of the number and types of participating organizations and the financial incentives offered 

(see Table 3). The PGP, Premier, and Home Health demonstrations sought to increase quality and efficiency by 

giving bonuses to health care providers that met several 

criteria for the quality of care or reduced Medicare spending. The Heart Bypass demonstration, by contrast, 

sought to improve quality and efficiency by aligning the 

financial incentives offered to hospitals and physicians 

through a system of bundled payments; participating 

institutions and physicians were not eligible for bonus 

payments tied to quality of care or efficiency of delivery.

The criteria used to judge performance differed in the 

three demonstrations in which providers could receive 

bonuses. Each group of physicians in the PGP demonstration could share in the estimated savings if the group 

reduced total Medicare spending for its patients, and the 

share was higher if the group met certain targets for quality 

of care. In the Home Health demonstration, the estimated 

savings achieved in each region were distributed to the 

home health agencies in the region with the highest quality 

scores and the greatest improvement in such scores.

Design Feature

Program Fees Put at Risk 

Yes 18 0 -1 -11

No 16 -2 1 -13

Substantial Direct Interaction

Between Care Managers and Physicians

Yes 7 -7 -6 -13

No 27 0 0 -11

Interaction Between Care 

Managers and Patientsc

By telephone and in person 8 -7 -3 -13

Primarily by telephone 23 1 0 -11

All Programs 34 -1 0 -11

Number of 

Programs

Average Effects (Percent)

Change in Regular

Offset Programs' Feesb Hospital

Admissions

Regular Medicare

 Spendinga (Percent)

Medicare Spending Needed to
6 LESSONS FROM MEDICARE’S DEMONSTRATION PROJECTS ON DISEASE MANAGEMENT, CARE COORDINATION, AND VALUE-BASED PAYMENT JANUARY 2012

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Table 3.

Value-Based Payment Demonstrations

Source: Congressional Budget Office.

a. Results are available only for the first year of the two-year demonstration

b. Physicians who treated heart bypass patients while they were hospitalized.

However, the bonuses paid to hospitals in the Premier 

demonstration depended only on quality scores and not 

on whether savings were achieved. 

Effects on Spending and Quality of Care

The Heart Bypass demonstration was the only valuebased payment demonstration that yielded significant 

savings for the Medicare program. Bundled payments 

reduced Medicare’s expenditures for heart bypass surgeries by about 10 percent, and there were no apparent 

adverse effects on patients’ outcomes. By contrast, the 

PGP demonstration had little or no net effect on Medicare spending, after accounting for the bonuses paid, and 

the Premier demonstration had no net effect on Medicare 

spending. The evaluators reported that those two demonstrations slightly improved quality of care based on the 

measures adopted for those demonstrations. Preliminary 

results for the Home Health demonstration indicate that 

it had little or no effect on Medicare spending or quality 

of care in the first year.

The Heart Bypass demonstration yielded savings because 

Medicare was able to negotiate bundled-payment rates 

with the seven hospitals and the relevant physicians on

their medical staffs that were lower than the separate payments that they otherwise would have received. Indeed, a 

key criterion used to choose hospitals for the demonstration was the savings projected on the basis of their proposed bundled-payment rates. Hospitals and physicians 

were willing to accept discounted payments because of 

competitive pressures in their markets. Each hospital that 

applied for the demonstration anticipated that being 

named a Medicare Participating Heart Bypass Center 

would help boost its volume of bypass surgeries and that 

participating in the demonstration could improve its 

chances of being chosen by Medicare to participate in any 

subsequent national program of bundled payments. 

Those hospitals also anticipated that the alignment of 

their financial incentives with those of physicians would 

result in more efficient delivery of care. 

In the PGP demonstration, 5 of the 10 physician groups 

received bonuses in the third and fourth years because 

they achieved estimated savings, 4 groups received 

bonuses in the second and fifth years, and 2 groups 

received bonuses in the first year. Although CMS has 

announced the amount paid in bonuses to each physician 

group in each year, those figures do not reveal the effects

Demonstration

Participating 

Organizations Incentive Offered

Effects on Medicare 

Spending

Pay for Performance

Physician Group Practice 10 Physician group practices Keep some of estimated 

reductions in total Medicare 

spending, partly on the basis of 

quality of care

Little or none

Premier Hospital Quality 

Incentive

278 Hospitals Receive bonus for meeting 

quality-of-care targets

None

Home Health Pay-forPerformance273 Home health agencies Keep estimated reductions in 

total Medicare spending, if 

quality-of-care targets are met

Little or none in the first yeara

Bundled Payments

Medicare Participating Heart 

Bypass Center

7 Hospitals and relevant 

physiciansb

Bundled payments negotiated 

for coronary bypass surgeries

10 percent decline in spending 

on bypass surgery
JANUARY 2012 LESSONS FROM MEDICARE’S DEMONSTRATION PROJECTS ON DISEASE MANAGEMENT, CARE COORDINATION, AND VALUE-BASED PAYMENT 7

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of the demonstration on overall Medicare spending. A 

detailed analysis of the demonstration is currently available only for the first two years. That analysis showed 

that, for patients in the 10 group practices during the 

second year, average Medicare spending excluding the 

bonuses paid to physician groups was about 1 percent 

below projections; with bonuses included, average 

Medicare spending was just 0.1 percent below projections—about $7 per beneficiary. First-year savings were 

estimated to be smaller, and similar estimates are not yet 

available for other years or for individual practices.

Moreover, those estimates probably overstate the amount 

of savings attributable to the demonstration because some 

of the physician groups appear to have changed diagnostic coding practices in a way that increased the risk scores 

of their patients relative to those of a comparison group.5

(Risk scores measure expected spending per patient. 

Changes in risk scores from the base period to each year 

of the demonstration were used to adjust the spending 

projections.) Several group practices reported that they 

began encouraging physicians to code all appropriate 

diagnoses on claims in order to identify and manage the 

care of patients with chronic illnesses and to increase 

the accuracy of their risk-adjusted spending projections. 

Consequently, risk scores increased more rapidly for the 

patients in the demonstration groups than for patients in 

the comparison groups. The evaluation could not determine how much of that difference was attributable to 

changes in coding by the group practices, but the data 

reported by some groups indicate that at least some of 

the increase in risk scores resulted from such a change in 

coding.

Factors Associated with Reduced Spending

The key factor associated with success in the demonstrations of value-based payments was the nature of the 

incentive offered to providers. The bundled-payment 

demonstration achieved savings for the Medicare program, but the demonstrations that paid bonuses to providers on the basis of their quality scores, estimated savings, or both, produced little or no savings. The 

estimated savings in the Heart Bypass demonstration 

were in the range of 5 percent to 10 percent for five of the 

seven hospitals and were about 20 percent for the other 

two. Those differences were attributable to variations in 

the discounts that hospitals and physicians were willing 

to offer Medicare in their bundled-payment rates, which 

depended on such factors as the competitiveness of the 

local markets and providers’ strategic business decisions. 

Other Lessons 

The results of the demonstrations illustrate the challenges 

of developing, implementing, and evaluating policies that 

reduce Medicare expenditures while improving or maintaining quality of care. Given the heterogeneity of the 

demonstrations and their constituent programs, other 

features may be associated with success or failure that 

were tested only in a few settings or noted only in a 

few public reports. The following approaches taken in 

various projects have been cited by observers as helpful 

in attaining the demonstrations’ goals: 

B Gather timely data on the use of care, especially 

hospital admissions. Programs that collected timely 

data on when their patients’ health problems developed or became exacerbated and where they were 

treated seemed better able to coordinate and manage 

their patients’ care. Those efforts could be strengthened if CMS improved its capability to provide 

programs with timely data on their patients’ use of 

services. 

B Focus on transitions in care settings. Programs that 

smoothed transitions (for example, by providing additional education and support to patients moving from 

a hospital to a nursing facility or between a primary 

care provider and a specialist) tended to have fewer 

hospital admissions.

B Use team-based care. Demonstrations that provided 

close collaboration between care managers and 

physicians—especially those with larger teams that 

included pharmacists, who could help patients manage their medications—appeared to have fewer 

hospital admissions.

B Target interventions toward high-risk enrollees. Programs that targeted interventions to beneficiaries they 

identified as being at greatest risk of being hospitalized—on the basis of medical condition, prior hospitalization, or predictive modeling—appeared to have 

fewer hospital admissions. 

5. To arrive at a projection for Medicare spending, average spending 

for a physician group’s patients was calculated for a base year 

(before the demonstration) and then increased by a factor that 

matched growth in average spending for a comparison group of 

beneficiaries in the local market area. 
8 LESSONS FROM MEDICARE’S DEMONSTRATION PROJECTS ON DISEASE MANAGEMENT, CARE COORDINATION, AND VALUE-BASED PAYMENT JANUARY 2012

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B Limit the costs of intervention. To achieve federal 

budgetary savings, a program’s fees or bonuses must be 

smaller than its reductions in regular Medicare expenditures. There was nearly a threefold difference in the 

Medicare fees paid to different organizations that 

combined telephone and in-person contact to coordinate care, an indication that some organizations were 

able to deliver such interventions much more efficiently than others. 

The Medicare demonstrations reviewed here also offer 

several lessons for designing and evaluating demonstrations in the future. First, rigorous evaluations that use 

randomized designs or well-matched comparison groups 

offer the best chance for identifying the effects of any particular intervention. Medicare savings could be over- or 

underestimated if the comparison group does not strictly 

match the demonstration group; as a result, policymakers 

might inadvertently choose to expand some unsuccessful 

programs but terminate some successful ones. A rigorous 

design need not require a rigid or lengthy evaluation process. Indeed, a rigorous design that leads quickly to concrete answers can facilitate rapid-cycle learning by showing where strategies are or are not working effectively. 

Second, evaluation findings should be reported consistently and promptly. If demonstrations are to serve as 

models for practice, the results should be current and 

comparable. Third, to the extent possible, the number of 

Medicare beneficiaries in a demonstration should be large 

enough to yield estimates that are sufficiently precise to 

permit conclusions to be drawn about the programs’ 

effects on costs, the use of care, and health outcomes. 

Fourth, demonstrations that create incentives for participating providers to improve their diagnostic coding practices must account for the fact that similar incentives for 

improved coding do not apply to the comparison group. 

If that fact is not accounted for, improper conclusions 

could be drawn about the effects of the demonstration on 

Medicare spending. Last, publicly available reports 

should provide as much information as possible—and as 

consistently as possible—on the features of the programs 

being tested. Such information is critical to explaining 

why some programs succeed or fail, and it can be critical 

to policymakers, health care providers, and organizations 

that seek to increase the value of care delivered to 

Medicare beneficiaries. 

This brief was prepared by Lyle Nelson of CBO’s 

Health and Human Resources Division. Useful 

comments were provided by Randall Brown of 

Mathematica Policy Research, Michael Chernew and 

David Cutler of Harvard University, and Mary Kapp 

of the Centers for Medicare & Medicaid Services. 

The assistance of external reviewers implies no 

responsibility for the final product, which rests solely 

with CBO. This brief and other CBO publications 

are available at the agency’s Web site (www.cbo.gov).

Douglas W. Elmendorf 

Director