In an effort to reduce the fragmentation in seniors' health coverage, work on developing a comprehensive benefit option for Medicare—a new Part E—continues. As originally envisioned by Commonwealth Fund president Karen Davis and colleagues in an October 2005 Health Affairs article,⁽¹²⁾ beneficiaries who would choose to enroll in the option—which they named "Medicare Extra"—would no longer need to purchase a private drug plan, in addition to Medigap supplemental coverage, to meet their coverage needs.

The Fund is also supporting efforts to improve the value Medicare gets for the money it spends. In April 2005, CMS launched the Physician Group Practice Demonstration, Medicare's first pay-for-performance initiative for physicians. Projected to run through March 2008, the program provides incentives for large, multi-specialty group practices to improve the coordination of care for their fee-for-service beneficiaries. Ten PGP sites serving upwards of 200,000 beneficiaries have projects under way to test improvements to data systems, care management programs, and coordination-of-care efforts, among other interventions that Medicare does not directly reimburse. In April 2006, leaders from each site met with CMS officials to share their experiences and strategies.⁽¹³⁾ Participants will be able to use information learned about what works, and what does not, to refine their approaches during the demonstration's remaining two years.

Fund grantees are also assessing the potential of value-based purchasing strategies to improve care and efficiency. For example, the Urban Institute's Robert Berenson, M.D., and his staff have been working with purchasers, providers, and federal and state regulators to see how the pay-for-performance approach might mesh with Medicare's system for compensating physicians. Many stakeholders agree that pay-for-performance should proceed in areas where there is underuse of recommended care, and where validated measures to profile and reward performance exist.