Case Management

CMW mentor moment: ACE demonstration project could change how CMS pays hospitals and physicians

Case Management Weekly, January 13, 2010

The following article is an excerpt from HCPro’s resource for hospital case managers—CaseManagementMentor.com—a free blog dedicated to connecting hospital case managers to industry pacesetters, peers, and best practices.

Before CMS institutes a new national regulation, it often tests it on a smaller group. These demonstration projects identify weaknesses in the new rules and allow CMS to make necessary tweaks and changes. Demonstration projects also allow other facilities that are not involved in the project to learn from their peers. A recent example of this is the Recovery Audit Contractors (RAC) demonstration period.

One of the current demonstration projects that could have a large effect on case management and coordination of care is the Medicare Acute Care Episode (ACE) Demonstration project.

Essentially ACE changes how Medicare pays for healthcare services. Instead of paying the hospital and physicians separately, CMS bundles both payments into a lump sum. The payment system operates much like the DRG system where the one payment will cover the patient’s entire stay, rather than each individual service.

Extending the DRG concept to pay for physician services would encourage physicians to work with hospitals to control costs and improve quality, stated the June 2008 Medicare Payment Advisory Commission’s Report to Congress: Reforming the Delivery System.

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