The Medicare Acute Care Episode (ACE) Demonstration for certain inpatient orthopedic and cardiovascular procedures implemented in early 2009 may offer valuable insights for providers wishing to participate in the CMMI Bundled Payments for Care Improvement Initiative (Bundled Payments) announced August 23, 2011. Please see the September 1 issue of the Health Law Update for information on this initiative.

The ACE Demonstration is very similar to Model 4 of the Bundled Payments Initiative in that participating providers will receive a single payment for both Part A and Part B services furnished during an inpatient stay. The five health systems participating in the ACE Demonstration are: Baptist Health System (San Antonio, Texas), Exempla St. Joseph Hospital (Denver, Colorado), Hillcrest Medical Center (Tulsa, Oklahoma), Oklahoma Heart Hospital (Oklahoma City, Oklahoma) and Lovelace Health System (Albuquerque, New Mexico).

The ACE Demonstration allows participating Medicare beneficiaries to share 50 percent of the savings that are realized under the program, up to a maximum of the annual Part B premium, currently $1,157. CMS publishes the current shared savings amount by Diagnosis Related Groups (DRG) for each participating health system.

The Bundled Payments initiative would allow participating providers, rather than the Medicare beneficiaries, to share in savings generated under the program. Nevertheless, providers contemplating applying for the Bundled Payments initiative may wish to review the ACE Demonstration for an understanding of the potential shared savings that might be realized under the initiative.