5 Operational Challenges of Participating in CMS’s ACE Demo

Developing gainshare criteria, identifying quality metrics, and standardizing implant buying practices were some of the challenges Baptist Health System faced when participating in CMS’ Acute Care Episode (ACE) demonstration pilot, which aligned payment for services delivered across episodes or “bundles” of care, explains Michael Zucker, FACHE, senior vice president and chief devlopment officer for Baptist Health System.

Participating in CMS’s ACE Demo has not been without its challenges. One of them was early identification of those patients who fell into the ACE DRGs. Many patients who present through the emergency room (ER) aren’t initially coded with a DRG until after a discharge. We needed to be aware of those patients in the system so we could assign our nurse navigators within each hospital to effectively case-manage these patients through their course of care.

Development of the gainshare criteria was another challenging area. If you get 100 surgeons in a room, everybody has a different idea on how the allocation of the gainshare should work. With data collection and analysis, we realized where we were lacking in our hospital information systems in terms of our ability to collect this type of cost information at the patient level and the service line level. We fell short and needed to do many manual calculations.

The standardizations of our implants and negotiations with our vendors proved to be another one of the most challenging areas. As we looked at our implant costs — orthopedic knees, for example — we had as much as $2,000 variation in the pricing of some of our joints. In fact, the one that had the most market share within our system actually had the highest price. You’d think we’d be able to negotiate with the one with the highest market share, but there was no rhyme or reason to the variability of our pricing. Ultimately, with the support of the physicians, we took the six major vendors within the Baptist Health System for knee implants and eliminated the two with the least amount in market share. Those two accounted for about 15 percent of the total implant market share for knees. By doing that, Baptist Health System knew we risked losing those physicians who were using those two implants, but it also gave us a little bit of a swag in the market because the other four vendors all of a sudden realized that we weren’t kidding around. We were willing to cut vendors and we needed some aggressive pricing from them.

Quality metrics was another area that took many discussions and many meetings — defining what those metrics should be and on what levels. We finally reached consensus on that. And finally, designing and building an infrastructure within our system to support the ongoing management and collection of data within our system proved to be a much bigger challenge and also one that would incur costs that were greater than anticipated.

Source: Case Study in Bundled Payments — The Baptist Health System Experience, March 19, 2012

Case Study in Bundled Payments: The Baptist Health System Experience is essential reading before filing letters of intent and applications for CMS’s new bundled payment program.

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