The Medicare Physician Group Practice (PGP) demonstration is Medicare's first physician pay-for-performance (P4P) initiative. The demonstration establishes incentives for quality improvement and cost efficiency. Ten large physician groups are participating in the demonstration, which started on April 1, 2005, and will run for 3 years. Previous funding arrangements, like the volume performance standard (VPS) and the sustainable growth rate (SGR) did not provide incentives to slow the growth of services. The Medicare PGP demonstration is an attempt to overcome these limitations.
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