Medicare: Incentives to Providers Pay Off

The Centers for Medicare & Medicaid Services (CMS) announced Dec. 10, 2010 the results of three health care demonstrations that it says provide strong evidence that offering providers financial incentives to improve patient care increases quality of care and can reduce the growth in Medicare expenditures. The Physician Groups Improve Quality and Share Savings demonstrations included one for large physician practices, one for small and solo physician practices, and one for hospitals.

Under the Physician Group Practice (PGP) demonstration, physician groups earn incentive payments based on the quality of care they provide and the estimated savings they generate in Medicare expenditures. According to CMS, all 10 of the participating physician groups achieved benchmark performance on at least 29 of the 32 measures reported in year four of the demonstration, and five of the physician groups will receive performance payments totaling $31.7 million.

“These groups have been leaders in organizing care delivery to improve quality and reduce expenditure growth,” CMS Administrator Donald Berwick, M.D., said. “Now we want to raise the bar. We want to support these practices to demonstrate just how much American medicine can achieve if we put the right incentives in place.”

Small Physician Practices Earn Incentive Payments

More than 500 small and solo physician practices participating in the Medicare Care Management Performance (MCMP) demonstration are being rewarded for providing high quality care in the delivery of preventive care and care for patients with chronic illnesses. CMS is awarding approximately $9.5 million in incentive payments to practices in California, Arkansas, Massachusetts, and Utah. The average payment per practice is $18,100, but some practices earned as much as $62,500, CMS said.

The goal of the MCMP demonstration is to promote the use of health information technology (HIT) to improve the quality of care for beneficiaries with chronic conditions. The demonstration also provides a bonus to practices that report the data using an electronic health record (EHR) certified by the Certification Commission for Health Information Technology (CCHIT). Twenty-six percent of practices were able to submit at least some of the measures from a certified EHR.

Hospitals Continue to Improve Quality

Hospitals participating in the Hospital Quality Incentive Demonstration (HQID) improved performance across the board, CMS reports. Hospitals were measured and scored based on their performance on more than 30 standardized and widely accepted care measures for patients in six clinical areas: heart attack, coronary bypass graft, heart failure, pneumonia, hip and knee replacements, and the Surgical Care Improvement Project (SCIP). CMS is awarding incentive payments totaling $12 million in year five to 212 hospitals for top performance, top improvements, and overall attainment in the six clinical areas.

The HQID demonstration, which began in 2003 with hospitals in 38 states, was designed to test whether paying hospitals for performance on an array of quality metrics would shift the performance upward across the whole group of hospitals.

Through the first five years, CMS awarded more than $48 million to top performers. After the initial three years of the demonstration, CMS extended the project for three additional years to test new incentive models and ways to improve patient care.

According to CMS, an independent evaluation suggests that the HQID demonstration contributed to quality increases. However, quality also increased substantially for similar hospitals that were not participating in the demonstration but had reported quality information on Hospital Compare. Only a small portion (10 percent to 17 percent) of the increase in quality for hospitals that did participate in the demonstration can be attributed to the pay for performance incentives. Participants that received incentive payments raised their quality score by an average of 18.3 percentage points over 5 years. Participating hospitals that did not meet their benchmarks and did not receive incentive payments improved their average quality score by 18 percentage points.

Additional information on these demonstrations is available on the CMS demonstrationswebpage.

Source: CMS press release

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