• Report

Medicare physician group practices: Innovations in quality and efficiency


Trisolini, M., Pope, G., Kautter, J., & Aggarwal, J. (2006). Medicare physician group practices: Innovations in quality and efficiency. (Fund Report). New York, NY: The Commonwealth Fund.


The Centers for Medicare and Medicaid Services initiated the Physician Group Practice (PGP) Demonstration to provide participating practices the opportunity to earn performance payments for improving the quality and cost-efficiency of health care delivered to Medicare fee-for-service (FFS) beneficiaries. This report discusses experiences of the participating practices, as well the implications for the Medicare program and the health care system overall. To date, the PGP demonstration experience has shown that it is possible for large, multi-specialty group practices to respond to a hybrid set of quality improvement and cost-containment incentives layered on top of an FFS payment system. PGPs have used the demonstration to expand data systems, care management programs, coordination-of-care efforts, and other interventions that are not directly reimbursed. At the same time, the PGP demonstration system retains many of the positive features of FFS reimbursement, such as the patient’s free choice of provider and reduced incentives for undertreatment.