This paper summarizes the results of Medicare demonstrations of disease management and care
coordination programs. Such programs seek to improve the health care of people who have
chronic conditions or whose health care is expected to be particularly costly, and they seek to
reduce the costs of providing health care to those people. In six major demonstrations over the
past decade, Medicare’s administrators have paid 34 programs to provide disease management or
care coordination services to beneficiaries in Medicare’s fee-for-service sector. All of the
programs in those demonstrations sought to reduce hospital admissions by maintaining or
improving beneficiaries’ health, and that reduction was a key mechanism through which they
expected to reduce Medicare expenditures. On average, the 34 programs had no effect on
hospital admissions or regular Medicare expenditures (that is, expenditures before accounting for
the programs’ fees). There was considerable variation in the estimated effects among programs,
however. Programs in which care managers had substantial direct interaction with physicians and
significant in-person interaction with patients were more likely to reduce hospital admissions
than programs without those features. After accounting for the fees that Medicare paid to the
programs, however, Medicare spending was either unchanged or increased in nearly all of
the programs.
