CMS’s pay-for-performance hospital demonstration project and employer-led programs to reward physicians for quality are showing promising results in improving quality and reducing costs, says an issue brief by the nonpartisan Alliance for Health Reform. With more than 100 pay-for-performance programs now underway, the brief singled out CMS’s Premier Hospital Quality Incentive Demonstration, which rewards the top 20% of hospitals that have exemplary scores on 33 indicators for five disorders and reduces Medicare reimbursement for those hospitals that fall below certain thresholds. In the first nine months of the project, the average improvement for the 260 participating hospitals was 6.6%, with the largest gains made in community-acquired pneumonia and heart failure.
As the popularity of pay-for-performance programs grows, there will be considerable debate on the size and structure of incentives and penalties required to spur quality without punishing those who take care of the sickest patients as well as how to establish safeguards to prevent over- or under-utilization of services as providers compete for bonuses.
