# Presentation: 525564

## Medicare’s Healthcare Quality Incentive Strategies  

**Sheila H. Roman, MD, MPH**
**Trent Haywood, MD, JD**
**CMS**
**September 27,  2005**

## Overview of Today’s Presentation

**CMS focus on public reporting and pay for performance demonstrations**
**MB Update in MMA**
** ****Hospital Quality Incentive Demonstration with Premier, Inc.**

## Calls for Medicare to Provide Payment for Quality 

- IOM report 2002
- Health Affairs article, former HCFA administrators, 2003
- MedPAC report 2004
- Private sector efforts
- Bridges to Excellence
- Leapfrog Group

**Notes:**
Letter to Health Affairs on Medicare Quality of Care:
2003

“Decisive change will occur only when Medicare, with the full support of the Administration and Congress, creates financial incentives that promote pursuit of improved quality.”

## Medicare Demonstrations

- A demo is a way for CMS to send a new message, to test new payment methods
- Medicare demonstrations linking payment to quality
- Premier hospital quality incentive demo
- Care management performance demo
- Physician group practice demo

## Hospital Quality Alliance (HQA): Improving Care Through Information

- End-game:
- excellent quality care
- To get there:
- one robust, nationally standardized and prioritized set of measures reported by every hospital in the country, accepted by all purchasers, overseers and accreditors;
- Collaborations, standardization, oversight, incentives

## Differential Marketbasket payment update, sec. 501

- “each subsection (d) hospital shall submit to the Secretary quality data (for a set of 10 indicators established by the Secretary as of November 1, 2003) that relate to the quality of care furnished by the hospital in inpatient settings in a form and manner, and at a time, specified by the Secretary.”
- If such hospital does not submit data...”the applicable (payment) percentage increase ... shall be reduced by O.4 percentage points”

## Hospital Public Reporting

##                   HQA:  Current Status

- “Starter set” of 10 measures (bolstered by MMA market basket payment update incentive to PPS hospitals)
- Over 4,000 hospitals reported in November, 2004
- More clinical measures (10 to 17 to 20 through September 2005)

## The first national project to measure hospital performance and offer additional Medicare payment for top quality care
“Pay for quality”
Can economic incentives effectively improve quality of care?

- “Pay for quality”
- Can economic incentives effectively improve quality of care?

- CMS/Premier Hospital Quality Incentive Demonstration Project

**Notes:**
The next logical step from “pay for reporting” is to actually analyze the data and pay hospitals based on the quality of care they provide.

Our demonstration project is the first national test of the impact that economic incentives have on the quality of care. 

This groundbreaking project will influence how quality is measured and rewarded at our nation’s hospitals.

The participating hospitals are demonstrating tremendous leadership by volunteering to break new ground in the quality movement.

## HQID Hospital Participation

- Voluntary
- Eligibility: Hospitals in Premier Perspective system as of March 31, 2003
- 278 hospitals participating
- Demonstration Project: Pilot test of concept
- May be expanded in the future

## CMS/Premier HQI – Over 270 National participating hospitals

## HQID: Expanded Set of Measures

- Use of 34 measures
- Expands 10 measure “Starter Measure Set” in HQA
- Drawn largely from NQF endorsed hospital performance measure sets
- Uses both process and outcome measures
- Includes 2 AHRQ PSIs

## A three-year effort linking payment with quality measures (launched October, 2003)
Top performers identified in five clinical areas
Acute Myocardial Infarction
Congestive Heart Failure
Coronary Artery Bypass Graft
Hip and Knee Replacement
Community Acquired Pneumonia

- Top performers identified in five clinical areas
- Acute Myocardial Infarction
- Congestive Heart Failure
- Coronary Artery Bypass Graft
- Hip and Knee Replacement
- Community Acquired Pneumonia

**Indicators within AMI, CABG, HF, and CAP represent all patients (all payers). Hip and knee replacement indicators apply only to Medicare patients.**

- HQI demonstration project

**Notes:**
The demonstration project will last three years. 

Hospitals will submit data in five clinical areas covering 34 specific measures.

These clinical areas represent high volume conditions and procedures that entail considerable cost for hospitals.

## HQID Hospital Scoring

- Hospitals scored on quality measures related to each condition
- Individual measures “rolled-up” into overall composite score for each condition
- Composed of two components:
- Composite Process Rate
- Risk-Adjusted Outcomes Index
- Categorized into deciles by condition to determine top performers

## The Hospital Quality Incentive Demonstration

- Bonuses for top 2 deciles for each condition
- Top decile given 2% bonus of their Medicare DRG payments for that condition
- Second decile given a 1% bonus
- Possible penalty in third year if below baseline threshold

## HQID: Year 3 Quality Score Must Exceed Baseline

- Demonstration baseline
- Clinical thresholds set at year one threshold scores
- Lower 9th and 10th deciles
- If performance in year 3 does not exceed baseline, hospital will receive payment penalty
- 1% lower DRG payment for conditions below 9th decile baseline level
- 2% lower DRG payment for conditions below 10th decile baseline level

## Anticipated payment scenario

**Notes:**
Steph
State the example

Then pass over to Chuck for the Bon Secours specific information

## CMS/Premier HQI ProjectAlready showing improvement

## CMS/Premier HQI ProjectReduction in Variation

-  Positive trend in both upper and lower scores of range
-  Reduction in variance (narrowing of range)
-  Median moving upward

## Challenges to Incentives for Quality Performance

- Selection of measures/off label use of measures
- Dynamic measurement environment
- Measures maintenance
- Hospital Burden
- Unintended consequences
- Time lags
- Validation/Scoring methodology
- Need for proof of effectiveness

## Next Frontiers

- Measurement of other dimensions of quality
- Scoring methodologies
- Benchmarking
- Incentives/Payment for quality
- Health Information Technology
- Improve health care systems

## Thank you!

**Sheila H. Roman, MD, MPH**
**410-786-6004**
**sheila.roman@cms.hhs.gov**