The CMS Acute Care Episode Demonstration

By Cary Gutbezahl, MD

Every Good Idea has Downside Implications

Medicare’s Acute Care Episode Demonstration Project (ACE) has attracted a lot of attention as a way of encouraging greater physician and hospital alignment – presumably to lower the cost of delivering healthcare.

Hospitals like the idea of ensuring that physicians share the hospital’s concerns to reduce unnecessary utilization, supply control and improving patient safety. Physicians like the idea of the potential for gainsharing. Of course, each side has concerns about control and the degree of cooperation they will face from their new partners.

Stated and Unstated Goals of ACE

That’s all well and good. But the ACE demonstration has implications beyond the stated purpose of the project. Implications that could run counter to providing better care and counter to reducing the financial impact of malpractice legal issues.

Let’s realize that Medicare’s purpose is not just to lower government costs but to place the physician and the hospital in the position of deciding what is needed to treat the patient.

On the surface, this sounds nice.

The public certainly does not want the government deciding whether a patient needs a consultation or a test. But they are giving the physician-hospital partnership the authority to make these decisions under conditions of financial influence!

How is this financial influence different from the financial influence of pharmaceutical companies and medical device manufacturers?

Reality says that financial pressures will shape decision-making, thereby taking some chances with patient welfare that might not be taken if there were no financial influence. Critics of capitation have argued that patients suffer when care is limited by financial influence on the decision-makers. Yet isn’t the government’s purpose in proposing ACE to alter decision-making by transferring financial responsibility to others?

The ACE project also has implications for patient satisfaction with both their doctor and hospital experience.

Remember that Medicare, in response to a beneficiary complaint, instituted the Important Message from Medicare process. This unfunded burden on hospitals requires that hospitals notify patients, close to the time of discharge, that the patient has a right to appeal the discharge order to the QIO if they feel they are being discharged sooner than is appropriate for the patient.

Trouble Brews When Patients Trust in Providers is Put in Doubt

Won’t the ACE payment result in an increase in the patient’s concern that their interests are being subordinated to the physician’s or the hospital’s financial interests?

How will these concerns affect the patient’s assessment of their satisfaction with the hospital?

This payment also may have an impact on the roles that physician’s play in a patient’s care. For example, some surgical specialists have gotten used to consulting hospitalists to provide non-surgical care for the patient. Will new financial constraints place pressure on surgeons to resume the former practice of assuming all care responsibility of patients?

Another intentional consequence of ACE is a reduction in the number of consultants involved in a patient’s care. On the surface, this reduces confusion and cost. But financial interests change behavior in unintended ways. Internists may reduce the frequency of referrals to subspecialists, such as cardiologists and pulmonologists. The only problem is that common sense suggests that people who specialize in cardiology have a higher level of expertise in cardiology than a general internist. Could ACE cause internists to stretch themselves beyond their expertise resulting in harm to some patients?

New malpractice liability concerns might arise from the ACE project

Tests may be conducted to identify risks that when identified, alter treatment decisions. Financial incentives are intended to influence decisions on whether the test is necessary for the patient’s care. Hospitals and physicians are likely to develop guidelines for when tests are necessary. In many cases, there is not sufficient research to inform these decisions. Yet, without guidelines, practices will vary and errors will be made. When guidelines are developed, they will probably include cost benefit analysis, which depend upon probabilistic information. As with all probabilities, sometimes a patient is the rare event. Although physicians make these judgments now, they do so without any financial incentive influencing their decision. Won’t the presence of financial incentives influence a jury trial assessing whether the physician erred in not ordering a test?

Every change has intended and unintended consequences.

The demonstration project should look for unintended consequences, as well as the intended ones. Patients are entitled to know the full effect for how such a change in the healthcare system, while seemingly benign, could well have significant impact on their lives.

Every payer is looking for ways to cut costs, and surely costs must be cut. But instituting financial incentives to care givers to favor their own income rather than delivering safe, quality healthcare to every patient needs to have plenty of professional and public scrutiny. Otherwise, the only benefactors will be the attorneys handling yet another wave of medical malpractice cases.

The unintended demons should be carefully analyzed as this demonstration project moves forward.

Filed Under: Featured Articles • Hospital Leadership

Tags: Acute Care Episode Demonstration Project, CMS Policy, Featured Article, Featured Articles, Medical malpractice