Providing financial incentives to hospitals has resulted in significant gains in quality of care for patients with acute myocardial infarction, heart failure, and pneumonia, and for those undergoing coronary artery bypass graft and hip and knee replacement, according to the third-year results from a Medicare demonstration project.
For example, from 2003 to 2006, hospitals who participated in the demonstration project improved their composite quality scores by 15.8% on average for the five clinical areas measured. The third-year results of the demonstration were released in June.
The Hospital Quality Incentive Demonstration was launched in October 2003 by officials at the Centers for Medicare and Medicaid Services and Premier Inc., an alliance of not-for-profit hospitals and health care systems. The demonstration, which involves more than 250 hospitals in 36 states, was designed to test whether offering bonuses to top-performing hospitals would improve safety, quality, and efficiency of care.
“These Premier results show that value-based purchasing can achieve excellent results in Medicare,” Kerry Weems, acting CMS administrator, said in a statement. “Given these results, it is time to take the next step and implement hospital value-based purchasing for the Medicare program so that citizens across the nation can benefit from improved safety and quality.”
CMS officials submitted a proposal to Congress last year that calls for the implementation of value-based purchasing for hospitals within Medicare. Under the plan, a percentage of each hospital's payment per discharge would be tied to the hospital's performance on a set of clinical measures. New legislation would be required to implement these changes, according to the agency.
In the meantime, CMS has extended the hospital demonstration project for another 3 years.
During the first 3 years, hospitals in the top 20% in each of the five clinical areas received bonuses. The top 10% of hospitals received a 2% incentive payment; those in the second decile received a 1% payment. And all hospitals that performed in the top 50% in each clinical area received public recognition on the CMS Web site. Beginning with the fourth-year results, hospitals also will be rewarded for meeting a certain quality threshold.
From October 2003 to the end of 2006, hospitals on average showed improvements for all five high-volume inpatient conditions, based on an aggregate of all quality measures in each clinical area.
For example, the average composite quality score rose from 87% to 96% for patients with acute myocardial infarction, from 85% to 97% for patients undergoing coronary artery bypass graft, and from 64% to 89% for patients with heart failure. For patients with pneumonia, the composite quality score rose from 69% to 90% for hospitals in the demonstration project. In addition, the composite quality score rose from 85% to 97% for patients who underwent hip and knee replacement.
In the third year of the demonstration project, which ended in 2006, CMS awarded a total of $7 million in incentive payments to 112 top-performing hospitals. Over the course of the first 3 years of the project, CMS has paid out more than $24.5 million in incentives.