CMS Premier Hospital Quality Demonstration Project

The Centers for Medicare and Medicaid Services (CMS) Premier Inc. Healthcare Alliance Hospital Quality Incentive Demonstration (HQID) project is the first national pay-for-performance project to measure hospital performance and offer additional Medicare payment to hospitals for top quality care. The demonstration, which began October 1, 2003, involves a CMS partnership with Premier, a nationwide healthcare quality and cost improvement alliance of more than 2,100 not-for-profit hospitals. During the demo, CMS rewarded the top performing hospitals – in terms of improved coordination of care for chronically ill and high-cost beneficiaries – by increasing their payment for Medicare patients.

The program is voluntary and uses 34 measures, drawn largely from the National Quality Forum endorsed hospital performance measures set, as a basis of examining and rating each hospital. Five clinical focus areas or groups (CFGs) are the evidence-based quality measures used as the basis for hospital top performers:

Acute myocardial infraction (AMI)
Congestive heart failure
Pneumonia
Coronary artery bypass graft
Hip and knee replacements

For each CFG, Premier collects data from each participating hospital for a number of process measures, such as the timely administration of antibiotics and outcome measures, such as mortality. The scores for each measure are blended to create a Composite Quality Score, an aggregate of all quality measures within each clinical area, for each CFG. A composite quality score is calculated annually for each demonstration hospital with a minimum sample of 30 cases in a measured clinical quality area. Hospitals receive separate scores for each clinical condition by “rolling-up” individual process and outcome measures into an overall quality score. CMS then categorizes the distribution of hospital quality scores into deciles to identify top performers for each condition. For each condition, all of the hospitals in the top quality 50 percent of hospitals are publicly reported on CMS’ website.

Bonuses are given based on top performers for each condition. Top 2 deciles are given a 1-2 percent bonus of their Medicare DRG payments for that condition. If the performance in year three does not exceed baseline, the hospital will receive a payment penalty as a cut of 1-2 percent lower DRG payments for conditions below the 9th or 10th percent baseline level.

Results:

For hospitals participating in the HQID project, the average Composite Quality Score improved by 4.4% between the project’s second and third year for total gains of 15.8% over the project’s first three years:
- From 87.5% to 96.1%for patients with AMI;
- From 84.8% to 97.4% for patients with coronary artery bypass graft;
- From 64.5% to 88.7% for patients with heart failure;
- From 69.3% to 90.5% for patients with pneumonia;
- From 84.6% to 96.9% for patients with hip and knee replacement.
The cost of the incentive bonuses to Medicare for the first three years was about $24.5 million;
The bonus incentive payments ranged from $900 to $847,000 across the first three years of the project with an average payment of $70,000;
182 providers have received an incentive payment in at least one clinical area over the three years;
Premier estimates that approximately 2,500 lives were saved in the care of heart attack patients alone across the first three years of the project;
In addition, patients received approximately 300,000 additional recommended evidence-based clinical quality measures, such as smoking cessation, discharge instructions and pneumococcal vaccination, during that same timeframe;
CMS extended the project for three additional years to test the effectiveness of new incentive models and ways to improve patient care. The extension will continue to track hospital performance in the clinical areas of pneumonia, heart bypass, heart attack (acute myocardial infarction), heart failure, and hip and knee replacement. New measures such as the AHRQ PSI Composite measure, length of stay, and complications will be tested in these clinical areas. In addition, new areas will be added for testing such as Surgical Care Improvement Project SCIP and Ischemic Stroke. The extension will also allow the testing of new payment models.

***Submitted Eugene Kroch, Ph.D., VP - Chief Scientist, Premier, Inc., Eugene_Kroch@PremierInc.com

Published: January 26, 2009