Washington, D.C. — In an article published in JAMA Internal Medicine, Center for American Progress Senior Fellow Ezekiel Emanuel and Health Policy Director Maura Calsyn urge the secretary of Health and Human Services to expand a successful pilot program that changed how Medicare paid for certain common orthopedic and cardiac procedures such as knee and hip replacements. The paper outlines several ways that the secretary could expand the program under existing authority, without requiring additional legislation.
Medicare’s Acute Care Episode, or ACE, demonstration bundled payments for 37 common inpatient cardiac and orthopedic procedures at five hospitals. Bundled payments are an alternative to traditional fee-for-service payments that involve making one payment for an entire episode of care. In the ACE demonstration, the bundled payments led to improved coordination between hospitals and physicians and motivated hospitals to negotiate lower prices, without a negative effect on patient care. Overall, the ACE demonstration saved Medicare $319 per episode of care for a total of about $4 million in net savings.
“Enacting payment reform is critical to transforming the delivery system,” said Emanuel. “The results on the ACE demonstration project involving cardiac and orthopedic procedures demonstrates that bundled payments can lead to both lower cost and high-quality care. We urge the Centers for Medicare and Medicaid Services and other payers to adopt—and expand—these bundles as a critical step toward delivery system reform. It would be good for patients and for controlling costs and improving quality.”
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