The global payment covers all Medicare Part A and Part B services for Medicare fee-for-service patients requiring inpatient stays for specified procedures, or “episodes.” These episodes are restricted to select cardiovascular or orthopedic procedures. Two of the five sites are running the demonstration in both categories, while the other three involve only cardiac care or orthopedics.
The hospitals must meet and exceed certain quality benchmarks to participate. They commit to a lower payment from Medicare, while physicians can get as much of a 25% bonus on top of their full Medicare payment per episode. The bonus comes from gain-sharing, where the hospital and physicians share savings from lowering the costs of medical devices used in the procedures by opening fresh negotiations with suppliers.
“To me, that's been the magic of this whole program,” says Michael Zucker, senior vice president and chief development officer at Baptist Health. “We can impact costs and quality when we are aligned.”
During the past 18 months, Baptist Health has reaped $4 million total in device and supply savings, passing on $558,000 to the 150 physicians participating. The nearly 2,000 patients who have received surgeries under the program have received $600,000 back, or about $300 a patient, Zucker says. “If you were to take the ACE program away today, people would resist,” he says.
There have been bumps in the road, mostly getting the program started. Two of the sites launched the demo a year and a half late. Exempla St. Joseph Hospital in Denver and Lovelace Health System, Albuquerque, both started on Nov. 1. The CMS says these programs will run a full three years.
Both organizations say the CMS and the contractor managing the project delayed the start because of technical problems.
The ACE demo project is being managed by TrailBlazer Health Enterprises, a Dallas-based subsidiary of Blue Cross and Blue Shield of South Carolina. TrailBlazer has been a CMS contractor for 40 years and has about 1,000 employees. In 1999, the South Carolina Blues purchased TrailBlazer from Blue Cross and Blue Shield of Texas.
Sheila Stewart, director of the ACE demonstration project at TrailBlazer, says the program has been tricky only in the sense that it is a new way of paying claims. But it has not required any additional staff, and about four people are dedicated to the project, although other employees work on it.
CMS officials say the delays at Exempla St. Joseph and Lovelace were caused by issues in transferring billing processes from a previous contractor to TrailBlazer and ramping up for the switch to bundled payments. The delay was not caused by the hospitals, according to the CMS.
TrailBlazer's job is to ensure hospital claims get paid, while the hospital is responsible for paying physicians for their services. TrailBlazer provides weekly data reports to each facility, telling them which physician claims were filed for which beneficiaries. TrailBlazer also provides monthly and quarterly summaries on admissions, beneficiaries and total Part B payments.
So a participating physician files a claim for a procedure to Medicare, then the claim gets flagged as services provided to a patient in the ACE demo. This claim doesn't get paid. Instead, it goes into a “common working file” at TrailBlazer that captures Part A and Part B—hospital and physician—claims for ACE episodes of care. Then the TrailBlazer Part B system processes the claim and pays the hospital the full amount.
Every week, TrailBlazer sends an encrypted disk via overnight delivery to each hospital detailing the week's claims. The hospital then double-checks the data and pays out the amount due to the physicians.
Sending the data by overnight delivery instead of electronically causes a one-week lag in payments, according to providers, but the files cannot be sent over unsecure e-mail or other common systems because of federal patient privacy laws. Stewart says TrailBlazer could set up a secure electronic system to handle the data, but that the hospitals prefer using overnight delivery.
Stewart says some hospitals struggled at first to handle the reports because of their complexity. While TrailBlazer provided educational training to each hospital, she said some hospitals provided more training than others.
“It's a little difficult, but it's claims,” Stewart says. “Claims processing is not simple.”
Last month, HHS' office of the inspector general issued a report finding that inpatient rehabilitation centers incorrectly coded 24 out of 51 claims reviewed for discharged and transferred patients in 2007, resulting in TrailBlazer making $162,000 in overpayments to the facilities in four Southern states. TrailBlazer has since corrected flaws in its system and recovered $155,355 of the overpayments, according to the report. The outstanding amount has also been refunded, according to the report.
Meanwhile, all five of the organizations participating in the ACE project say they are happy overall with outcomes so far.
“Since the launch, it's gone with barely a hitch,” says Dr. Lisa Kettering, vice president of medical affairs and chief medical officer at Exempla St. Joseph, which has three cardiac surgeons participating so far.
Already, Exempla St. Joseph has seen a bump in some quality measures, including timing in administrating antibiotics. As for cost, in only two months, the hospital has captured about 20% of the total savings it had earmarked for the year for the program, meaning it is well ahead of projections. As with other hospitals, the savings result from the hospital and physicians joining forces to drive down medical device costs, Kettering says. “The early savings are robust,” she says.
However, Kettering says the hospital is covering the full cost of each of the surgeon's Part B claims for patients because it hasn't yet received the funds from TrailBlazer, adding that it is something that was anticipated.
“We have full faith in the system,” she says. Stewart says she is unaware of any unpaid claims.