Hospitals Showing Improvements Earn Monetary Rewards From CMS

The federal government is awarding $8.85 million to hospitals that showed measurable improvements in care during the first year of its Premier Hospital Quality Incentive demonstration, a voluntary Medicare pay-for-performance demonstration project involving more than 260 hospitals.

In the program, top performing hospitals received bonuses based on their performance of evidence-based quality measures for inpatients with the five conditions: acute myocardial infarction, heart failure, pneumonia, coronary artery bypass graft, and hip and knee replacement.

According to the Centers for Medicare and Medicaid Services (CMS), the $8,851,000 in bonuses included $1,756,000 distributed to 49 hospitals for heart attack care, $1,818,000 to 52 hospitals for heart failure, $1,139,000 to 52 hospitals for pneumonia, $2,078,000 to 27 hospitals for heart bypass, and $2,061,000 to 43 hospitals for hip and knee replacement.

Hospitals that scored in the top 10 percent for a given condition received a 2 percent bonus on their Medicare payments for that condition. Hospitals in the second 10 percent were given a 1 percent bonus. Hospitals in the remainder of the top percents got recognition for their quality but no bonus.

According to CMS, composite quality scores were calculated for each demonstration hospital by combining individual measures into an overall quality score for each clinical condition. The agency then categorized the distribution of hospital quality scores into deciles to identify top performers for each condition.

At the end of the first year, baselines were set for the bottom 20 percent and bottom 10 percent. If any hospitals are below the 10 percent baseline in the third year of the demonstration, they will get a 2 percent reduction in Medicare payments for the clinical area involved. Hospitals falling between 10 and 20 percent will get a 1 percent reduction.

“However, we anticipate that most hospitals will exceed the baseline level, and that few, if any, hospitals would get a payment reduction,” said CMS Administrator Mark McClellan, M.D, M.P.H.

“We are examining the first-year data and working with our partners in the quality improvement community to share and apply the lessons learned,” McClellan said. “But the major early finding is that the project did substantially improve important areas of health care quality at the participating hospitals.” ▪