CMS hasn’t yet decided which procedures will be covered, but officials say they’ve learned from past experience to begin with well-defined episodes of care. “Back in the ’90s, we did a bundled demonstration for bypass procedures and also for cataract procedures,” says Cynthia Mason, project manager with the CMS Medicare Demonstrations Group. “What we learned from that is obviously it’s easier both for Medicare, as well as for the providers, to predict utilization when you have a more standardized package of services. You also need a variety and large number of services in order to give you opportunities for looking at efficiencies and improvements in the system.”
Upfront Investment, Immediate Savings, Improved Quality
Early opinions have been mostly positive among the ACE participants. Hillcrest Medical Center in Tulsa, Okla., was first out of the gate in May 2009. Over the project’s first year, Hillcrest CEO Steve Dobbs estimates that the 490-bed hospital has saved CMS about $750,000; half of that sum has been passed along to patients. The hospital itself has spent about $550,000 in marketing, start-up costs, corporate support, and paying third-party claims. But recent investments have led to double-digit gains in patient volume (24% in cardiology and cardiovascular surgery, and a whopping 37% in orthopedics), margins in orthopedics are up, and direct negotiations between participating doctors and national vendors have netted additional savings. As a reward for help with cost-cutting, Hillcrest recently passed along two gain-sharing checks totaling $130,000 to be split among six independent orthopedists.
“What’s actually driving this program is the supply cost savings from all of our national partners,” Dobbs says. A big question is whether the negotiated savings—and hence the gain-sharing—could be maintained over a greatly expanded pilot project. “If this goes nationwide and everybody’s in it, do you get the same benefit? I don’t know the answer to that right now,” he says.
Dobbs is careful to point out that success is not measured by patient volume and supply costs alone. Hillcrest’s gain-sharing plan stipulates that physicians must reach the 90% threshold for a range of quality metrics. For one previously problematic category—stopping antibiotics 24 hours post-surgery—Dobbs says both the orthopedics and cardiovascular surgery departments have dramatically increased their compliance rates.
Baptist Health System in San Antonio, which began its own demonstration in June 2009, has reported savings of $2.2 million for its 1,275-bed, four-campus health system. So far, the roughly 20 hospitalists employed by IPC: The Hospitalist Company who work within the Baptist Health System have not directly participated in the project. But Felix Aguirre, MD, FHM, IPC’s vice president of medical affairs in San Antonio, says the demonstration has had a definite impact on efficiency.
“Since the demonstration project has come up, it seems like everybody is obeying the evidence-based guidelines now,” says Dr. Aguirre, a member of SHM’s Public Policy Committee and Team Hospitalist. “So it’s not keeping the hip replacement patient in for five days, it’s what the guidelines say: three days.”
Some kinks still need to be worked out. Baptist has had trouble with double payments and other claims-related issues, Dr. Aguirre says. Hillcrest’s Dobbs complains that he has heard virtually no feedback from CMS. Medicare’s Mason says officials have been “very pleased” with the project’s progress so far, but concedes that a delay in updating a claims processing system has pushed back the launch at two other demonstration sites until Nov. 1.
At one of those sites, 361-bed Exempla St. Joseph Hospital, the three-year demonstration will encompass only cardiology and cardiovascular surgery. Dr. Kettering, a former SHM board member who serves as executive sponsor and director of St. Joseph Hospital’s ACE demo, says the shared-savings program will be limited to cardiovascular surgery for the first year to ensure the system is running smoothly. In the second or third year, however, hospitalists who care for eligible patients could theoretically benefit from a similar gain-sharing agreement, if they meet certain agreed-upon, evidence-based metrics. In that circumstance, she says, hospitalists would begin to learn the ropes and become directly involved in quality outcomes. Extending the model beyond ACE, their primary role could expand dramatically to that of learning how to operate bundling across the continuum of care.