Using financial incentives to reward quality patient care results in better care and fewer costly complications, initial results of a demonstration project by Premier and the CMS show.
The three-year demonstration project to determine the effects of pay-for-performance programs on quality-of-care began in October 2003 and involves 272 hospitals and healthcare facilities across the country. Additional results of the project will be released next week in Las Vegas, but Premier's initial report last week revealed a few commonalities among top-performing hospitals.
"Leadership and culture are critical, clinicians need to be actively engaged in assuring best practices and focusing on process improvement is key," said Stephanie Alexander, senior vice president of Premier, an alliance of more than 200 not-for-profit hospital and healthcare systems.
The median performance composite score, a measure of improvement for hospitals that is calculated by combining the process of care and outcome measures from chosen clinical focus areas, went up 7.5% overall in the project's first year. Participants receive a score for each process. A perfect process score is 100, meaning a hospital performed the process correctly 100% of the time. The score for each measure is combined with the other measures' score to create a composite score.
"We are seeing improvements across the board, regardless of a hospital's initial performance on the quality measures," CMS Administrator Mark McClellan said in announcing the results last week.
Premier tracked participating hospitals on a set of 34 processes and outcomes of care for five common clinical conditions that account for a substantial portion of Medicare costs: acute myocardial infarction, coronary artery bypass graft, heart failure, hip and knee replacement and pneumonia. Using the project's results, Medicare will reward high performers with bonuses of $7 million per year, while poorly performing hospitals could face financial penalties in the third and final year. The CMS expects to make payments for first-year results in September 2005.
As part of the demonstration, a hospital will receive Medicare bonus payments if it meets pre-assigned quality measures. Hospitals are scored on measures for each medical condition, with the top 10% of hospitals given a 2% bonus on their Medicare payments for each condition. Hospitals in the second 10% tier are to receive a 1% bonus, while hospitals in the remainder of the top 50% will get recognition but no bonus.
At the end of the first year, Premier set performance baselines for the bottom 20% and the bottom 10%. These levels remain static, though those hospitals are expected to be above the baselines by the final year of the demonstration, Premier has said. If any hospitals are below the 10% baseline in the third year of the demonstration, they will get a 2% reduction in Medicare payments for the clinical area involved, and those between 20% and 10% will get a 1% reduction in payment.
"Both Premier and CMS believe that all hospitals involved in the project will be above the baselines by the third and final year of the demonstration," Alexander said. "Part of the advantage of the demonstrations is that hospitals are getting input from more successful hospitals and are picking up ideas as the process continues."
The CMS is already digging into the initial results, which must be audited and validated by the agency.
The most dramatic improvements by individual hospitals were seen in care provided to heart-failure and pneumonia patients (See chart), Premier officials said. Nineteen hospitals improved their quality score for care of heart-failure patients by more than 30%, 18 facilities improved their score for care of pneumonia patients by more than 20%, and 17 hospitals improved their score for hip- and knee-replacement patients by more than 15%.
The site-visit portion of the study -- which will involve Premier-appointed clinicians and physicians visiting a number of participating hospitals to analyze practices and methods -- promises to reveal more information, Alexander said. Providers who participated say involvement in the project has taught them a valuable lesson.
"Learning from others," said Donna Isgett, vice president of clinical effectiveness at McLeod Health, Florence, S.C., one of the top performers involved in the demonstration project. "By that I mean the collaboration between hospitals during this study has been helpful for everyone."