A Demonstration Project
A demonstration project slated to begin in four states next year may show just how steep that learning curve is. The Acute Care Episode (ACE) Demonstration would bundle virtually all payments of certain orthopedic and cardiovascular inpatient procedures at participating hospitals in Texas, Oklahoma, New Mexico, and Colorado. Hospitals and physicians still would receive separate fee-for-service payments, but a confidential report would detail their resource use. High-resource providers would incur penalties while low-resource providers would receive bonuses.
Dr. Siegal says it makes sense to begin a bundling pilot project with procedures that have defined treatment windows, such as hip replacements or open heart surgery. Other conditions will be far more difficult to contain within a neatly defined episode. “Clearly, we’re going to have to figure out what to do with heart failure and pneumonia and stroke because those are huge consumers of dollars,” he says.
Despite all the caveats and unknowns, hospitalists still may have much to gain if bundling follows in the footsteps of the successful diagnosis-related group (DRG) payment system. “I think that enlightened hospital CEOs are going to be looking to their hospitalists as their champions to really pull this off and make this work,” Dr. Torcson says, particularly as the stakes for hospitals increase.
Medicare’s Physician Quality Reporting Initiative, established by the 2006 Tax Relief and Health Care Act, already links a 1.5% financial incentive to increased performance. With bundled payments adjusted up or down by the proposed gainsharing and penalties for higher readmission rates, Dr. Torcson says, the equivalent of 3% to 5% of DRG payments could be at risk.
“I think it could be something potentially very beneficial to those hospitalist groups that get it right,” he says. “It’s kind of like before the Ice Age comes, if you’ve got your animal skins ready, those are the tribes that survive.” TH
Gretchen Henkel is a medical writer based in California.