**GAO-08-65**                      Published: Feb 15, 2008. Publicly Released: Feb 15, 2008.                  

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## Highlights

Congress mandated in 2000 that the Centers for Medicare & Medicaid Services (CMS) conduct the Physician Group Practice (PGP) Demonstration to test a hybrid payment methodology for physician groups that combines Medicare fee-for-service payments with new incentive payments. The 10 participants, with 200 or more physicians each, may earn annual bonus incentive payments by achieving cost savings and meeting quality targets set by CMS in the demonstration that began in April 2005. In July 2007, CMS reported that in the first performance year (PY1), 2 participants earned combined bonuses of approximately $7.4 million, and all 10 achieved most of the quality targets. Congress mandated that GAO evaluate the demonstration. GAO examined, for PY1, the programs used, whether the design was reasonable, and the potential challenges in broadening the payment approach used in the demonstration to other physician groups. To do so, GAO reviewed CMS documents, surveyed all 10 groups, and conducted interviews and site visits.

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## Topics

Health Care

Fee-for-service plansFeesHealth care cost controlHealth care costsHealth care programsHealth care reformHealth policyMedicaidMedicarePaymentsPerformance managementPerformance measuresPhysiciansProgram evaluationProgram managementQuality assuranceQuality controlQuality improvementStrategic planningTotal quality management