Pay-for-Performance Improves Quality of Care in Hospitals, CMS Says
Connecting Medicare hospital payments to the quality of care can "significantly improve" care, according to first-year results of the CMS/Premier Hospital Quality Incentive Demonstration, CMS officials said on Monday, the New York Times reports. The three-year test program, which began in 2003 and includes 270 hospitals throughout the country, so far has awarded 123 "top performers" a total of $8.85 million, marking the first time Medicare has paid performance bonuses, the Times reports.
The program assesses care for Medicare beneficiaries with any one of the following conditions: a joint replacement, coronary artery bypass graft, heart attack, heart failure or pneumonia. Hospitals participating in the program were evaluated on 33 clinical measures, such as whether patients received proper treatment and the outcome of the procedure (Abelson, New York Times, 11/15).
Hospitals finishing in the top 10% in a set category were given a 2% bonus in addition to their Medicare payments for that category. Hospitals finishing in the top 20% were given a 1% bonus (CQ HealthBeat, 11/14). Hospitals finishing in the bottom two categories for a condition are required to improve their ratings by the third year or their payments will be reduced by 1% or 2%, the Times reports.
Hospitals' scores for the 33 indicators improved by 7%, and nearly all participating hospitals showed some improvement, according to Richard Norling, CEO of Premier, a not-for-profit hospital alliance that is managing the project.
The lives of an estimated 235 heart attack patients were saved because of improved quality, according to Premier.
A similar program for physicians who treat Medicare beneficiaries began this year, the Times reports.
Carmela Coyle, an executive at the American Hospital Association, said that the results indicate that rewarding hospitals more for quality and having them focus on ways to treat patients improves care, adding, "I think [the program] shows rewarding excellence works" (New York Times, 11/15).
CMS Administrator Mark McClellan said, "We are seeing that pay-for-performance works. We are seeing increased quality of care for patients, which will mean fewer costly complications -- exactly what we should be paying for in Medicare" (CQ HealthBeat, 11/14).
Brent James, who directs quality initiatives at Intermountain Health Care -- a Salt Lake City hospital system that participated in the study -- praised the project. However, he noted that although the system improved care for patients with pneumonia, it still lost money because Medicare pays less when patients have fewer complications and do not need extensive care. James suggested that future programs should have the government more directly share the cost savings from quality improvements (New York Times, 11/15).
The quality results are available online.