On May 16, 2008, the Centers for Medicare and Medicaid Services (CMS) announced a new Acute Care Episode (ACE) demonstration for hospitals to test the use of a bundled payment for both hospital and physician services for certain heart rhythm episodes of care. The ACE demonstration is specifically designed to align financial incentives across providers and offer flexibility to hospitals and physicians by bundling all related inpatient services into an “episode of care.”
| CMS will conduct a teleconference for potential applicants and other interested parties on June 4, 2008 from 3:00–4:30 p.m. EST, offering the opportunity to ask questions about the ACE demonstration and for CMS to clarify issues in both the solicitation and the demonstration project itself. The call-in number for the teleconference is 1-888-982-4492 (participant passcode “Acute Care”). Questions? Contact CMS at
(410) 786-6654 or by e-mailing acedemonstration@cms.hhs.gov. |
An episode of care is defined as Part A and Part B services furnished during an inpatient stay for Medicare fee-for-service (FFS) beneficiaries for certain procedures. This is achieved by paying a single, global payment that can be used as the health care groups deem most appropriate.
Typically, during an episode of care, Medicare patients receive care from multiple physicians and sometimes across multiple care settings. Currently, CMS pays the hospital a single prospectively-determined amount under the Inpatient Prospective Payment System (IPPS) for all the care it furnishes to the patient during an inpatient hospital stay. The physicians who care for the patient during the stay are paid separately under the Medicare Physician Fee Schedule for each service they perform.
The ACE demonstration will test whether improvements in quality of care result from aligning payment incentives between hospitals and physicians in such a way that they must coordinate care on a case-by-case basis.
The demonstration provides an opportunity for Value-Based Care Centers to develop efficiencies in the care they provide to beneficiaries through increasing market share, quality improvement in clinical pathways, improved coordination of care among specialists, and "gainsharing." Gainsharing, or provider incentive programs, allow physicians and hospitals to share remuneration for implementing and coordinating improvements in efficiency and quality.
Selected ACE Demonstration Procedures
A total of 28 inpatient surgical cardiac procedures have been selected for inclusion in the bundled payment demonstration, along with 9 orthopedic services. The 12 procedures listed in the table below are related to heart rhythm management. According to CMS, these elective procedures were selected because:
- profit margins and volume have historically been high
- there is sufficient marketplace competition to ensure interested demonstration applicants
- the services are easy to specify, and
- quality metrics are available for them
| MS-DRG | Description |
| 226 | Cardiac defibrillator implant w/o cardiac catheterization w/ MCC |
| 227 | Cardiac defibrillator implant w/o cardiac catheterization w/o MCC |
| 242 | Permanent cardiac pacemaker implant w/ MCC |
| 243 | Permanent cardiac pacemaker implant w/ CC |
| 244 | Permanent cardiac pacemaker implant w/o CC/MCC |
| 250 | Percutaneous cardiovascular procedure w/o coronary artery stent or AMI w/MCC |
| 251 | Percutaneous cardiovascular procedure w/o coronary artery stent or AMI w/o MCC |
| 258 | Cardiac pacemaker device replacement w/ MCC |
| 259 | Cardiac pacemaker device replacement w/o MCC |
| 260 | Cardiac pacemaker revision except device replacement w/ MCC |
| 261 | Cardiac pacemaker revision except device replacement w/ CC |
| 262 | Cardiac pacemaker revision except device replacement w/o CC/MCC |
Eligible Applicants
Potential applicants for this demonstration are limited to health care groups, specifically physician-hospital organization (PHOs), with at least one physician group and at least one hospital that routinely provides at least one of the procedures listed in the table above. A PHO is defined as an affiliation between a hospital with at least one physician group. Also, applicants must:
- meet particular procedure volume thresholds
- have established quality improvement mechanisms, and
- be located in Medicare Administrative Contractor (MAC) Jurisdiction 4 (Texas, Oklahoma, New Mexico and Colorado)
In addition, to qualify applicants must have also received the full IPPS annual payment update for reporting quality measures to CMS since at least fiscal year 2006. Eligible applicants are required to continue participating in quality data collection efforts throughout the demonstration and meet additional quality reporting and monitoring standards as specified on the ACE demonstration webpage.
Demonstration Period of Performance
The ACE demonstration is scheduled to begin operation in January 2009. CMS and the ACE demonstration implementation contractor will work with demonstration sites to set up and market the demonstration in advance of implementation in January 2009. Payment will be made under the demonstration for patients admitted on or after January 1, 2009 and discharged before December 31, 2011.
CMS will conduct an informational teleconference for potential applicants and other interested parties on June 4, 2008 from 3:00 to 4:30 p.m. EST. The teleconference will be an opportunity to ask questions about the ACE demonstration and for CMS to clarify issues in both the solicitation and the demonstration project itself. The call-in number for the teleconference is 1-888-982-4492 (participant passcode “Acute Care”). During the interim, if you have questions or need further guidance, please contact CMS at (410) 786-6654 or acedemonstration@cms.hhs.gov.
The Heart Rhythm Society will monitor the demonstration as it progresses to assess the effectiveness of the bundled payment approach.
