Too many demonstration projects create competing incentives for ACOs, hospitals

Medical

A glut of demonstration projects is creating a rift between hospitals and accountable care organizations, as both sides attempt to navigate complicated, and sometimes unbalanced, bundled payment initiatives.

Medicare's demonstration projects run the gamut, ranging from episode-based models to procedure-based models, while ACOs are focused on population-based care. Those models can be at odds with one another, particularly for hospitals that are simultaneously enrolled in an ACO and episode-based payment initiatives, according to a post for [email protected] by Gail Wilenskey, an economist and senior fellow at Project HOPE.

Wilensky highlights the Bundled Payment for Improvement Initiative (BCPI), which includes four different payment models for inpatient and post-acute care. Hospitals that reduce costs and improve care for a condition covered under the BCPI model get to keep the savings.

Meanwhile, ACOs that generally focus on primary care are left with little incentive to reduce readmissions for BCPI covered conditions, since they no longer receive a piece of the savings. Previous reports have indicated that BCPI payments may be more effective compared to ACOs in facilitating lower-cost, high quality care.

The result, Wilensky says, could actually be more readmissions. She says the next administration should limit the number of ongoing demonstration projects, and instead institute new payment methodologies based on lessons learned up to this point.

Several new demonstration projects have begun this year, including a new bundled payment initiative for hip and knee replacements, and a project to improve oncology care that began in June.

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