The Fund' Program on Medicare's Future is exploring how Medicare can encourage better performance throughout the health care system. Recently, the Fund and the Centers for Medicare and Medicaid Services brought together participants in the Medicare Physician Group Practice Demonstration to share strategies and refine approaches. The three-year demonstration offers practices the opportunity to earn performance payments for improving their efficiency and quality of care.

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or more than 40 years, Medicare has helped the nation's elderly and disabled obtain the health care they need, while protecting the most vulnerable among them from financial hardship. Medicare faces many challenges as it begins its fifth decade, as program costs continue to rise and its beneficiaries' needs continue to evolve. Through its Program on Medicare's Future, The Commonwealth Fund works to:
enhance Medicare's ability to carry out its traditional mission of ensuring access and affordability.
identify ways in which Medicare can become more effective and efficient, so that it can serve both as an example and a means of disseminating better performance throughout the health care system.
The Medicare Modernization Act of 2003 made major changes to the Medicare program, adding a new Part D prescription drug benefit and expanding the role of private plans through the new Medicare Advantage option. Many Medicare beneficiaries who previously lacked drug coverage were able to obtain it under Part D. But low-income beneficiaries who previously were covered under Medicaid have had to cope with an abrupt transition to a very different Medicare program; others who were without drug coverage, meanwhile, have not yet enrolled in Part D.
Medicare drug coverage is available only through private plans—either standalone prescription drug plans, available for those enrolled in traditional Medicare, or Medicare Advantage drug plans, available for those enrolled in Medicare managed care. Medicare Advantage added several new features to Medicare, including regional preferred provider organizations, special-needs plans, and a bidding process intended to generate lower plan premiums and program savings.
Apart from these legislated changes, Medicare faces increasing pressure to increase the quality, appropriateness, and efficiency of the care provided to beneficiaries. Currently, officials are seeking to develop approaches that encourage these improvements through the program's payment and regulatory mechanisms. Over the past year, the Fund has been monitoring the impact of these changes on Medicare beneficiaries, identifying areas of concern, and developing appropriate policy options.
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Stuart Guterman
Senior Program Director