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ACE demonstration improves care coordination and lowers costs

Case Management Monthly, March 1, 2010

This is an excerpt from a member only article. To read the article in its entirety, please login or subscribe to Case Management Monthly.

The Medicare payment system is in need of a change.

Case managers typically complain that they cannot get physicians to participate in measures that will help the hospital. For example, physicians have no financial incentive to reduce a patient’s LOS because CMS pays physicians for every day they see the patient.

That lack of incentive is what CMS hopes to eliminate with the Acute Care Episode (ACE) demonstration project. Instead of paying for hospital and physician ¬services ¬separately, the ACE demonstration program bundles payments for specific cardiac and orthopedic procedures into one lump sum. The ACE payment system operates much like the DRG system, in which CMS makes one payment to the hospital that covers the patient’s entire stay, only this system includes the physician payments in the bundle. It is up to the hospital to dole out the physicians’ share of the payment.

The AMA expressed hesitation about this payment model in a report issued at the 2009 annual meeting stating that it will work to “ensure that bundled payments, if implemented, do not lead to hospital-controlled payments to physicians.”

Extending the DRG concept to physician services encourages 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.

This is an excerpt from a member only article. To read the article in its entirety, please login or subscribe to Case Management Monthly.

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