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CMS Demo Will Bundle Physician & Hospital Payments

January 21, 2009
Healthcare Finance News CMS demo will bundle physician and hospital payments By Diana Manos, Senior Editor 01/07/09 The federal government is inching closer to value-based healthcare, a proposition that has been heavily endorsed by the Bush Administration and promoted by the incoming Obama Administration. The Centers for Medicare & Medicaid Services has announced site selections for its new Acute Care Episode (ACE) demonstration to begin early this year. The demonstration will test the use of bundled payments for hospital and physician services for a select set of frequently provided inpatient episodes of care. The demonstration will also test the effect that transparent price and quality information has on how beneficiaries chose inpatient care. CMS will try to show that bundling payments for one episode of care to include Medicare Part A hospital stay reimbursement and Part B physician services can help align incentives for providers and improve the quality of care for Medicare beneficiaries. CMS has selected the Baptist Health System in San Antonio, Texas, the Oklahoma Heart Hospital in Oklahoma City, Okla. , Exempla Saint Joseph Hospital in Denver, Colo. , Hillcrest Medical Center in Tulsa, Okla. and Lovelace Health System in Albuquerque, N.M. , to participate in the demonstration. The demonstration was only open to applicants from Texas, Oklahoma, New Mexico and Colorado. Each site will be actively marketed to both beneficiaries and referring physicians, CMS officials said. "We are always looking for ways to improve Medicare, both in efficiency and in better care for patients, and this new demonstration promises to be a big step in that direction," said CMS Acting Administrator Kerry Weems. "Too often, there are missed opportunities to coordinate care, which can adversely impact Medicare beneficiaries' health. This important demonstration brings hospitals, physicians and patients together in an innovative cooperative effort to improve the quality of care." CMS will be using 28 cardiac and nine orthopedic inpatient surgical services and procedures as part of the demonstration. The elective procedures were selected because volume has historically been high, there is sufficient marketplace competition to ensure interested demonstration applicants, the services are easy to specify and quality metrics are available, according to CMS. "CMS expects to demonstrate how to better coordinate inpatient care and achieve savings in the delivery of that care that can ultimately be shared between hospitals, physicians, beneficiaries and Medicare," Weems said. "The Acute Care Episode demonstration reflects CMS' ongoing commitment to break down silos in healthcare by creating better care teams and improved communications between caregivers and their patients. This demonstration is another important step to develop new value-based purchasing approaches by rewarding healthcare providers who provide the right care at the right time." A study released Wednesday by the National Center for Policy Analysis found that lack of competition in the healthcare marketplace is creating "a huge and avoidable burden on consumers, affecting both costs and quality of care."