Demonstrations are experiments that test Medicare policy changes without permanently changing the Medicare program. They allow policymakers to learn about the potential impact and operational challenges of a proposed modification to Medicare, but in a more controlled environment and on a limited basis. Since demonstrations can affect hundreds of thousands of beneficiaries and providers and involve millions of dollars, they are often controversial. This paper describes the basics of Medicare demonstrations, including what they are, how they are initiated, and why they are undertaken. The paper also explores the relationship between demonstrations and other research projects. The primary challenges in designing and implementing demonstrations and how the results of demonstrations are incorporated into Medicare are examined. Finally, this document highlights key demonstrations in Medicare history and their impact on the Medicare program.
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