The Centers for Medicare and Medicaid Services will continue to develop an expanded demonstration project testing a pay-for-performance approach for reimbursing the nation's hospitals.
The initiative is expected to build on the Hospital Quality Incentive Program, which CMS jointly operated with Premier Inc. and the Institute of Healthcare Improvement.
It’s one of several pay-for-performance demonstrations envisioned by CMS to test and refine the concept for use in other industry segments, said Mark Wynn, director of the division of payment policy demonstrations in CMS' Office of Research, Development and Information.
CMS is currently testing a pay-for-performance approach with 10 large group practices, each with at least 200 physicians. Demonstrations are being planned for medium-sized physician offices and nursing homes, Wynn said in a news conference in early October sponsored by Premier, and a project to demonstrate a pay-for-performance approach in home care also is in the works.
The projects are part of the effort to move the Medicare system to value-based purchasing.
The Premier-led incentive program, involving 250 hospitals, is a key piece of the pay-for-performance study because of its measureable results and quantified improvements in care, Wynn said.
"It's the first of the pay-for-performance initiatives to show results, and it's very important to us as we move toward the future of pay-for-performance," he said. "It provides a testbed for Medicare value-based purchasing, and we intend to use this as a platform to test the concept for the rest of the system."
CMS expects to develop a pay-for-performance proposal for Congress over the next several months. It faces a deadline of suggesting a plan for fiscal year 2009, which begins October 1, 2008.
CMS will sponsor an independent analysis of the Premier initiative. But initial results indicate that an incentive-based system can effectively encourage better care.
According to Premier's analysis, if all pneumonia, heart bypass, heart attack and hip and knee replacement patients received most or all of a set of widely accepted care processes, there would have been 5,652 fewer deaths, 6,000 fewer complications, 10,000 fewer readmissions and 1 million fewer inpatient days. Savings could have reached $1.4 billion, Premier estimates. "We know, on the basis of early results, that incentives for quality can work," Wynn said. "They can reduce Medicare’s costs and other payers’ costs as well."