Medicare Pilot Program Fails to Achieve Significant Cost Control

See this post by Megan McArdle. Excerpts:

"In 2005, under the Bush administration, the government authorized a Medicare pilot program that selected ten groups for an experiment in improving quality and controlling costs. This was a forerunner of some of the cost-control rules in Obamacare, with groups given bonuses for meeting around fifteen quality measures, and for spending at least 2% less than conventional Medicare spent on a similar group of patients that lived nearby. This is something of a forerunner to the Accountable Care Organization (ACO) model that is one of the prime means by which Obamacare's supporters expect it to control costs.

The results are now in. The medical groups seem to have had little trouble meeting the quality metrics (though there are half as many as are contained in the new law.) But the cost control, not so much:

In 2010, the final year, just four of the 10 sites, all long-established groups run by doctors, slowed their Medicare spending enough to qualify for a bonus, according to an official evaluation not yet made public. Two sites saved enough to get bonuses in all five years, the evaluation shows, but three did not succeed even once.
This sounds a lot like random variance to me; some groups have better experience, some worse, but the program does not seem to have achieved anything like the sort of consistent cost reduction that has been promised for the new bill."