Rewarding Superior Performance

An additional tool for helping providers to improve their care is to reward and/or provide incentives for superior care. And, as part of this initiative, CMS is exploring this strategy via a demonstration project in which a hospital's superior performance on certain measures of quality is rewarded with a bonus payment. The Premier Hospital Quality Incentive Demonstration aims to see a significant improvement in the quality of inpatient care. Information about participating hospitals' performance will be posted on the CMS Web site for health-care professionals.

Under the demonstration, hospitals will receive bonuses based on quality measures selected for inpatients with specific clinical conditions: heart attack, heart failure, pneumonia, coronary artery bypass graft, and hip and knee replacements. Hospitals will be scored on the quality measures related to each condition measured in the demonstration. Composite scores will be calculated annually for each demonstration hospital. Separate scores will be calculated for each clinical condition by "rolling-up" individual measures into an overall score.

CMS will categorize the distribution of hospital scores into deciles to identify top performers for each condition. For each condition, all of the hospitals in the top 50 percent will be reported as top performers. Those hospitals in the top 20 percent will be recognized and given a financial bonus. By the end of the demonstration, we anticipate that participating hospitals will show improvement from performance in year one. In year three, hospitals will receive lower payments if they score below clinical baselines set in the first year for the bottom 20 percent of hospitals.