Medicare Acute Care Episode (ACE) Demonstration

The 3-year ACE demonstration tested the use of a global payment for an episode of care as an alternative approach to payment for service delivery. The global payment covered all Part A and Part B services, including physician services, pertaining to the inpatient stay for Medicare fee-for-service beneficiaries.


The goal of the Acute Care Episode (ACE) demonstration was to use a bundled payment to better align the incentives for both hospitals and physicians, leading to better quality and greater efficiency in the care that is delivered. The demonstration also tested the effect that transparent price and quality information had on beneficiary choice for select inpatient care.

Initiative Details

There were 28 cardiac and 9 orthopedic inpatient surgical services and procedures included in the bundled payment demonstration. These elective procedures were selected because volume has historically been high; there was sufficient marketplace competition to ensure interested demonstration applicants; the services were easy to specify, and quality metrics were available for them.

The ACE demonstration was open to applicants from Texas, Oklahoma, New Mexico, and Colorado. Each demonstration site, or “Value-Based Care Center,” was actively marketed to both beneficiaries and referring physicians. Baptist Health System in San Antonio, Texas; Oklahoma Heart Hospital LLC in Oklahoma City, Okla.; Exempla Saint Joseph Hospital in Denver, Colo.; Hillcrest Medical Center in Tulsa, Okla.; and Lovelace Health System in Albuquerque, N.M., were selected to participate in the demonstration.


Latest Evaluations

Additional Information

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