MAY 3, 2005 -- In another sign that Medicare is moving toward a "pay for performance" system, Centers for Medicare and Medicaid Services Administrator Mark B. McClellan on Tuesday trumpeted the preliminary results of a pilot program showing that the lure of higher payments goaded hospitals into improving their quality of care. Separately, federal officials and medical society representatives announced the release of a "starter set" of measures of care given by doctors outside the hospital.
In tracking the performance of 270 hospitals on 34 measures of care for five medical conditions, the pilot found "improvements across the board, regardless of a hospital's initial performance on the quality measures," McClellan said.
The findings show that even relatively small increases in payment improve hospital quality, the CMS chief said in remarks to the annual Washington meeting of the American Hospital Association (AHA).
He added that gains in quality could mean lower costs. "For example, there should be fewer unnecessary hospital readmissions if there is better care in the initial patient stay," he said. "But most of all, the patients are going to benefit through better care and better health."
The results pertained only to the first year of the three-year pilot, known as the Premier Hospital Quality Incentive Demonstration. The analysis was performed by Premier Inc., the hospital consortium whose members are taking part in the study.
Of the 34 measures, 27 related to specific processes of care that hospitals should have used to deliver quality care. A perfect score meant the facility performed the process 100 percent of the time for the particular condition involved.
Overall, scores for process measures in the first year improved in the demo: 89.9 percent to 92.6 percent for acute myocardial infarction; 85.7 percent to 90 percent for coronary artery bypass surgery; 64.1 percent to 76.2 percent for heart failure; 84.9 percent to 90.5 percent for hip and knee surgery; and 70 percent to 90 percent for pneumonia treatment.
Hospitals in the top 10 percent of scores for a medical condition get a 2 percent increase in payment and those in the next highest 10 percent of performance get 1 percent. Other above-average hospitals get recognition but no bonus, CMS said. The payments will be made in September after the agency audits the Premier data.
Poor performers may see lower payments. "At the end of the first year, baselines will be set for the bottom 20 percent and bottom 10 percent," Premier said. "These baseline levels remain static, and CMS and Premier believe that all hospitals will be above the baselines by the final year of the demonstration. If any hospitals do remain below the preset 10 percent baseline in the third year of the demonstration, they will get a 2 percent reduction in Medicare payments for the clinical area involved, and those between the preset 20 and 10 percent baseline will get a 1 percent reduction."
GOP leaders in Congress, the Bush administration, the Medicare Payment Advisory Commission, and the hospital industry all favor a move toward performance-based payment of hospitals, but details of such a system remain to be worked out. "Hospitals support the concept of rewarding excellence in the quality of patient care and this demonstration shows that payment incentives can work," said Carmela Coyle, AHA's senior VP for policy. But Coyle said switching to quality-based payment will require legislation and working out such details as how to deal with facilities that perform very small numbers of procedures for a medical condition.
Hospitals are much farther along than physicians in gathering performance data. Almost all hospitals have reported data on 10 performance measures after Congress said in the Medicare overhaul law (PL 108-173) that it would pay them more if they collected such information and submitted it to CMS.
Doctors may be on the way to getting such a starter set of measures. The Ambulatory Quality Alliance (AQA) on Tuesday announced 26 "ambulatory care" measures that health plans and employers should begin using with physicians to measure and improve the quality of their care.
The set includes measures of preventive care including vaccinations, prenatal care, and screening for cancer; treatment of chronic conditions including coronary artery disease, heart failure, diabetes, asthma, and depression; and two measures addressing the efficiency of care.
The alliance includes the Agency for Healthcare Research and Quality, the American Academy of Family Physicians, the American College of Physicians, and America's Health Insurance Plans. CMS isn't part of the alliance, but the agency endorses the measures, an agency spokesman said.
The package "is a milestone for all those who wish to have a valid, reliable set of performance measures for physicians' offices, group practices, and other ambulatory care settings," McClellan said. "CMS supports the AQA's continued efforts to implement valid, reliable measures that benefit consumers and clinicians by enhancing the quality of the nation's health care."