CMS awards $24.5M to hospitals in Medicare P4P pilot project

Participants in P4P pilot reap CMS benefits. Source: National Pay-for-Performance Summit

The Centers for Medicare & Medicaid Services (CMS) has awarded a total of $24.5 million to its highest-performing members in a Medicare pay-for-performance demonstration project, according to officials from the hospital consortium Premier.

The three-year project, a partnership between CMS and Premier, involved 250 hospitals, which reported on 30 clinical quality measures, according to Kaiser Daily Health Policy Report. According to the results, fifteen hospitals have moved from “worst to first” rankings, moving from the bottom to the top fifth of hospitals in one or more clinical areas.  These hospitals improved by an average 32.6 percentage points in quality scores over three years.

The top-performing 112 hospitals earned a total of $7 million in incentive payments for substantial and continual advancement in quality of care.  For the third year of Hospital Quality Incentive Demonstration (HQID), Sacred Heart Medical Center, in Spokane, Wash., received the highest quality incentive payment of $385,342 for achieving top performance in four of the five clinical areas. 

Premier officials said the hospitals, which served 1.1 million patients, achieved a 15.8 percent average increase in overall quality. “The findings from the first three years of the project clearly show that transparency with rewards for quality achieves a higher level of performance in American hospitals,” said Premier President and CEO Richard Norling.

Researchers found over the course of the project the variation in quality scores between the highest- and lowest-performing member hospitals had declined, reported Premier.

Hospitals participating in HQID include small/large, urban/rural, and teaching/non-teaching facilities that have volunteered to report their quality data for the following five high-volume inpatient conditions using national measures of quality care: acute myocardial infarction (AMI/heart attack); coronary artery bypass graft; heart failure; pneumonia; and hip and knee replacement.  More than 30 nationally defined, standardized, risk-adjusted measures representing process of care, and patient outcomes, are being tracked to evaluate whether the care provided consistently meets accepted evidence-based practice standards.

"Given these results, it is time to take the next step and implement hospital value-based purchasing (VBP) for the Medicare program, so that citizens across the nation can benefit from improved safety and quality [and] get the right care, every time,” Acting CMS Administrator Kerry Weems stated in a press release.

In November 2007, CMS submitted a proposal to Congress to implement Medicare VBP.  Within that proposal, a percentage of a hospital’s payment for each discharge would be contingent on the hospital’s actual performance on a specific set of measures.  Currently, Medicare pays a set amount for each discharge, whereas under VBP, amounts would be linked to quality of services provided, not just quantity of service, according to Premier.

The quality measures were developed by government and private organizations, such as the National Quality Forum, the American Hospital Association and the Leapfrog Group.