Medicare's Acute Care Episode Demonstration: Effects of Bundled Payments on Costs and Quality of Surgical Care

Abstract

Objective: To evaluate whether participation in Medicare's Acute Care Episode (ACE) Demonstration Program-an early, small, voluntary episode-based payment program-was associated with a change in expenditures or quality of care.

Data sources/study setting: Medicare claims for patients who underwent cardiac or orthopedic surgery from 2007 to 2012 at ACE or control hospitals.

Study design: We used a difference-in-differences approach, matching on baseline and pre-enrollment volume, risk-adjusted Medicare payments, and clinical outcomes to identify controls.

Principal findings: Participation in the ACE Demonstration was not significantly associated with 30-day Medicare payments (for orthopedic surgery: -$358 with 95 percent CI: -$894, +$178; for cardiac surgery: +$514 with 95 percent CI: -$1,517, +$2,545), or 30-day mortality (for orthopedic surgery: -0.10 with 95 percent CI: -0.50, 0.31; for cardiac surgery: -0.27 with 95 percent CI: -1.25, 0.72). Program participation was associated with a decrease in total 30-day post-acute care payments (for cardiac surgery: -$718; 95 percent CI: -$1,431, -$6; and for orthopedic surgery: -$591; 95 percent CI: $-$1,161, -$22).

Conclusions: Participation in Medicare's ACE Demonstration Program was not associated with a change in 30-day episode-based Medicare payments or 30-day mortality for cardiac or orthopedic surgery, but it was associated with lower total 30-day post-acute care payments.

Keywords: Program evaluation; health policy/politics/law/regulation; surgery.

Figure 1

Cost and Quality before versus after Participating in the ACE Demonstration Compared with Matched Non‐ACE Control Hospitals [Color figure can be viewed at wileyonlinelibrary.com]