# Presentation: 174196

## CMS-Premier Hospital Quality Incentive Demonstration Project		

- Stephanie Alexander
- Senior Vice President
- Premier Inc.
- Healthcare Informatics
- www.qualitydemo.com

- Alexander 2004

**Notes:**
Moderator: Now I would like to introduce Stephanie Alexander, senior vice president in charge of the Healthcare Informatics unit of Premier, Inc. Stephanie will tell us a little bit about Premier and give us an overview of the Hospital Quality Incentive Demonstration Project, a national pay for performance effort involving Premier, CMS and hospitals across the nation. Thanks for joining us today, Stephanie.

Stephanie: Thank you NAME, I’m delighted to be here.

ADVANCE SLIDE

## About Premier

- Premier, Inc., is a strategic alliance owned by 200 of the United States’ leading not-for-profit hospitals and healthcare systems.
- These systems operate or are affiliated with nearly 1,500 hospitals and hundreds of other healthcare sites.

**Owners**
**Affiliates**

- Alexander 2004

**Notes:**
Stephanie: First, I’d like to tell you a little bit about Premier because it’s relevant to why we’re involved with this demonstration project. Premier is an alliance of not-for-profit hospitals and healthcare systems focused on improving healthcare. As an alliance, we strive to help healthcare organizations achieve high levels of quality and financial performance. 

A number of years ago, our alliance and Board of Directors made a strategic decision to invest in the development of a clinical comparative database called Perspective. Today, Perspective is the largest, most comprehensive clinical comparative database of its kind in the nation, with approximately 400 hospitals actively submitting data. The FDA recently renewed its contract with Premier to use Perspective as an analytic tool. And Perspective is the foundation of the CMS demonstration I’m about to describe.

One important note: Any hospital in America can participate in Perspective. At present, about 12 percent of subscribers do not belong to the Premier alliance.

Moderator: Thanks for the helpful background, Stephanie. Could you tell us how Premier got involved in the demonstration project?

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## Is there a business case for quality in hospitals?

**Performance **

**Top Performers**

**Lowest**

**Hospitals**

**Performance**
**Group**

**Innovation **
**Group**

**Opportunity**
**Group**

*Top decile in performance*
*(low cost and high quality)*

*Bottom quartile in performance *
*(high cost, low quality)*

- Alexander 2004

**Notes:**
Stephanie: Premier is built around the idea that quality and financial performance are inseparable within healthcare. We have an intense interest in proving that high quality and low cost are not mutually exclusive and in identifying best practices that help hospitals achieve top performance in both areas. 

To that end, we have conducted a number of improvement collaboratives with our members. This graphic represents what we have learned. Typically, we find that a small group of hospitals fall into what we describe as an Innovation Group. These are hospitals with top performance and a focus on performance improvement. We leverage their knowledge and passion to engage the larger number of hospitals in the next group, the Performance Group. 

I’d like to quickly share some of the results from these collaboratives.

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## CABG Performance

- Source: Premier PerspectiveTM

- Alexander 2004

**Notes:**
Stephanie: This chart shows results for each of the three groups I just described. What we see are significant variations between top performers and the other two groups; for example, an average cost differential of nearly $10,000 per case.

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## Non-collaborators’ financial performance

- Source: Premier PerspectiveTM

- Alexander 2004

**Notes:**
Stephanie: The next four slides show quality and cost differences between participants and non-participants over a period of time. Here we see CABG cost per case for non-participants rising significantly over a two-year period.

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## Collaborators’ financial performance

- Source: Premier PerspectiveTM

- Alexander 2004

**Notes:**
Stephanie: Over the same time period, hospitals participating in the CABG collaborative had lower baseline costs and had a much smaller increase in costs.

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## CMS/Premier Hospital QualityIncentive Demonstration Project

- A three-year effort linking payment with quality measures
- Top performers identified in five clinical areas
- Acute Myocardial Infarction
- Congestive Heart Failure
- Coronary Artery Bypass Graft
- Hip and Knee Replacement
- Pneumonia
- 278 participating hospitals nationwide

- Alexander 2004

**Notes:**
Stephanie: Around the same time that we were seeing these results, we learned that CMS was interested in developing a pay for performance project involving hospitals. Our Board of Directors and Quality Improvement Committee, which includes CEOs from healthcare systems across America, urged us to move forward in discussions with CMS in the belief that such a project could have a significant positive impact on healthcare quality.  

We shared our results with CMS and engaged in discussions with the agency over, really, about a two-year period. What we developed is a three-year project that pays incentives to top-performing hospitals and establishes a performance baseline to push low-performers to improve. 

278 participating hospitals are submitting data in five clinical areas covering 34 specific measures. These clinical areas represent high volume conditions and procedures that entail considerable cost for hospitals.

Moderator: Now that we understand how the project evolved, why don’t you tell us how the project works.

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## Identifying Top Performers

*Composite Quality Index* will identify hospitals performing in the top two deciles in each clinical focus group
- Composed of two components:
- Composite Process Rate
- Risk-Adjusted Outcomes Index
- Clinical conditions without outcomes indicators use only the Composite Process Rate

- Alexander 2004

**Notes:**
Stephanie: Once we’ve collected all of the data, we have to determine who the top performers are. We do this through the use of a “Composite Quality Index.” As the name indicates, the index is a combination of the various measures for each clinical condition. We break the index into two components – process and outcome.

Most of the measures are process measures. We weight the process and outcome measures to create the composite score.

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## Widely accepted quality measures

- The CMS/Premier quality measures are based on clinical evidence and industry recognized metrics, including:
- All 10 indicators from the National Voluntary Hospital Public Reporting Initiative
- 27 indicators from the National Quality Forum (NQF).
- 24 indicators from CMS 7th Scope of Work.
- 15 indicators from JCAHO Core Measures.
- 3 indicators proposed by The Leapfrog Group.
- 4 indicators from the Agency for Healthcare Research and Quality’s (AHRQ) patient safety indicators.

- Alexander 2004

**Notes:**
Stephanie: The measures used in the project are widely accepted as important to quality of care. The measures come from the NQF, JCAHO, 7th Scope of Work, the Leapfrog Group, AHRQ and others.

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## Medicare Payment Incentives

- Incentive payment threshold changes annually for each clinical condition
- Top decile performers in a given clinical area receive a 2 percent payment supplement per condition
- Second decile performers receive a 1 percent payment supplement per condition.
- Reduced payments in year 3:
- 1% reduction if < year one ninth decile
- 2% reduction if < year one tenth decile

- Alexander 2004

**Notes:**
Stephanie: Using the composite quality index we just described, the project identifies top performers each year. 

The project defines top performers as those in the top two deciles. Top-decile performers will receive a 2 percent additional Medicare payment for the patients in the given clinical focus area. Performers in the second decile will receive a 1 percent additional Medicare payment. Payment takes place after each year of the project is complete.

The top 50 percent will receive public recognition on the CMS Web site and in other forums.

Moderator: Could you tell us a bit more about the incentive payments? Isn’t there a performance threshold that hospitals must meet to avoid payment reductions?

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## Anticipated payment scenario

- Alexander 2004

**Notes:**
Stephanie: There is a performance threshold. It is established after the first year at the 9th decile – represented by the red line on this slide. But it’s important to understand that the project is designed to raise every hospital’s performance in such a way that the entire group improves. As this example shows, the lowest performing hospitals in the third year my be scoring much higher than the lowest performing hospitals were in the first year.

We also expect to see compression of the performance deciles as the lower performing hospitals come closer to 100 percent performance on each measure. The top performing hospitals are already at or very near 100 percent performance on many measures.

The potential for reduced payments exists only in the third year of the project. Any hospital below the threshold established in Year 1 would face a reduction of 1 percent for performance in the 9th decile from Year 1 or 2 percent for performance in the 10th decile from Year 1. We strongly believe that this will not happen to any hospital in the project. We believe that a rising tide will lift all boats, as the expression goes. 

Moderator: That was very helpful. Have you collected enough data now to see any performance trends among the participating hospitals?

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## Slide 12

- Alexander 2004

**Notes:**
Stephanie: Now that we have a few months of project data, we are able to compare it to the baseline data we collected before the project started. Again, we weren’t collecting all of the measures, but we can look at the clinical measures where we have baseline data. In general, what we’re seeing is that performance is already going up. In this example, each of the process measures and the overall composite score for Heart Failure had improved at the end of the first quarter of the project compared to the baseline.

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## Slide 13

- Alexander 2004

**Notes:**
Stephanie: Finally, this slide gives an early preview of second quarter project data. We’re analyzing this data now, but we continue to see improvement. This chart represents the composite quality score for all 34 measures. The blue bar represents 1st-quarter performance. The red bar represents cumulative performance for the 1st and 2nd quarters. As you can see, overall performance has improved from top to bottom.

Moderator: Why do you think performance has been improving?

Stephanie: It’s a combination of competition, organizational focus, public scrutiny and incentives. The hospital CEOs are competitive. They want to do well, particularly when the results are public. Of course they want the incentive payments too.

Moderator: What lessons have you learned from the project so far?

Stephanie: Most importantly we’ve learned that hospitals are not just willing but in many cases eager to participate in these sorts of efforts. A lot of hospital leaders believe in quality improvement and want to improve the payment system to reward high quality providers.
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