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Medicare Distributes $12 Million in Bonuses for Hospital Quality Initiative

Janice Simmons, for HealthLeaders Media, August 18, 2009

The 230 hospitals participating in the Centers for Medicare and Medicaid Services and Premier healthcare alliance Hospital Quality Incentive Demonstration (HQID) value-based purchasing project raised their overall quality by an average of 17.2% during the fourth year of the project on delivery of 30 selected quality measures—and will share $12 million in bonuses, according to data released by CMS on Monday.

An estimated 4,700 heart attack patients have been saved during those four years, according to a Premier analysis of mortality rates at hospitals participating in the project. In addition, more than 1.5 million patients treated in five clinical areas at the participating hospitals also received about 500,000 additional recommended evidence based clinical quality measures—such as smoking cessation, discharge instructions and pneumococcal vaccination during that same timeframe which ended Sept. 30, 2007. The program itself will run through Sept. 30, 2009.

Additional research by Premier—using the Hospital Compare dataset showed that by March 2008, HQID participants scored on average 6.9 percentage points higher (94.64% to 87.36%) than non participants on 19 performance measures used by Hospital Compare, the government's scorecard for hospital quality.

The HQID project has served as a basis for CMS's proposal to Congress for a national value-based purchasing or pay for performance program. The project has also been cited as a test area for reform by the Senate Finance Committee as part of healthcare reform.

Overall, 1,258 awards were given to top providers in the fourth year of the project, a five fold increase from previous years due to a new payment model that placed bonuses on additional improvements. Through the project's first four years, CMS has awarded more than $36.5 million to top providers.

The new payment model is based on lessons learned during the first three years of the project, according to Susan DeVore, Premier's president and CEO, trying to move the payment system to pay-for-quality and not just volume "makes sense—especially when we have substantial evidence to prove that this payment model creates the right incentives to drive continuous improvement."


Janice Simmons is a senior editor and Washington, DC, correspondent for HealthLeaders Media Online. She can be reached at jsimmons@healthleadersmedia.com.

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