The Centers for Medicare & Medicaid Services (CMS) has announced the results from three value-based purchasing (VBP) demonstrations, one for large physician practices, one for small and solo physician practices and one for hospitals. The agency simultaneously commissioned the launch of three additional VBP demonstrations.

CMS said that theVBP initiative is designed to tie Medicare payments to performance on quality and efficiency and is part of its effort to transform Medicare from a passive payer to an active purchaser of higher quality, more efficient healthcare.

The Hospital Quality Incentive Demonstration (HQID) is entering its fifth year. Physician practices participating in the Physician Group Practice (PGP) demonstration seek to improve quality for patients with chronic illnesses or requiring preventive care. Also, more than 560 small and solo physician practices participating in the Medicare Care Management Performance (MCMP) demonstration are being rewarded for providing quality care in the delivery of preventive care and care for patients with chronic illnesses.

HQID
The HQID is sponsored by Medicare in partnership with Premier, a U.S. hospital quality measurement organization. The demonstration, which began in 2003 with hospitals in 38 states, was designed to test payment incentives under Medicare to see if they would improve the safety, quality and efficiency of inpatient services.

According to the agency, participants raised overall quality by an average of 17 percentage points over four years, based on their performance on more than 30 nationally standardized  and widely accepted care measures for patients in five clinical areas – heart attack, coronary bypass graft, heart failure, pneumonia, and hip and knee replacements.

The agency is awarding incentive payments totaling $12 million in year four to 225 hospitals for top performance, top improvements and overall attainment in the five clinical areas. Through the first four years, CMS awarded more than $36.6 million to top performers. After the initial three years of the demonstration, CMS extended the project for three additional years to test new incentive models and ways to improve patient care.

PGP Demonstration
All 10 of the physician groups participating in the PGP Demonstration achieved benchmark performance on at least 28 of the 32 measures reported in year three of the demonstration, according to the agency. Two groups—Geisinger Clinic in Danville, Pa., and Park Nicollet Health Services in St. Louis Park, Minn.,—achieved benchmark performance on all 32 performance measures.

Over the first three years of the demonstration, the physician groups increased their quality scores an average of 10 percentage points on 10 diabetes measures, 11 points on 10 congestive heart failure measures, six points on seven coronary artery disease measures, 10 points on two cancer screening measures and one point on three hypertension measures.

As a result of their efforts to reduce the growth rate in Medicare expenditures, five physician groups will receive performance payments totaling $25.3 million as part of their share of $32.3 million of savings generated for the Medicare Trust Funds in performance year three, according to CMS.

MCMP Demonstration
In the first year of the MCMP demonstration, almost all of the 610 participating small and solo physician practices are being rewarded for performance on 26 quality measures.  CMS is awarding approximately $7.5 million dollars in incentive payments to more than 560 practices in California, Arkansas, Massachusetts and Utah. The average payment per practice is $14,000 but some practices earned as much as $62,500. Last year, CMS issued more than $1.5 million in incentives for reporting baseline quality measures.

The goal of the MCMP Demonstration is to promote the use of health IT to improve the quality of care for beneficiaries with chronic conditions. Doctors in small to medium sized practices who meet clinical performance standards on each measure are eligible to receive financial rewards under the MCMP Demonstration. The demonstration also provides an additional bonus to practices that report the data using an EHR certified by the Certification Commission for Health IT.

The agency said that 23 percent of practices were able to submit at least some of the measures from a certified EHR.

New Demonstrations
CMS said that new demonstration programs include the Nursing Home VBP Demonstration, the Medicare Hospital Gainsharing Demonstration and the Physician Hospital Collaboration Demonstration.

• Nursing Home VBP will reward facilities that improve or deliver quality care in four areas: nurse staffing, resident outcomes, avoidable hospitalizations and reduction of the scope and severity of deficiency citations. The demonstration will be conducted in 79 homes in New York, 62 in Wisconsin and 41 in Arizona. The demonstration project began last month and will run through June 2012.
• Gainsharing occurs when a hospital pays incentives to a physician who assists in saving internal hospital costs while improving quality and efficiency and is normally restricted in Medicare’s fee-for-service program. The demonstration, which began in October 2008, consists currently of two sites, Beth Israel Medical Center in New York City and Charleston Area Medical Center in West Virginia.
• The Physician Hospital Collaboration Demonstration, comprised of a consortium of 12 hospitals administered by the N.J. Hospital Association, began in July. This demonstration is designed to track patients beyond a hospital episode to determine the impact of hospital-physician collaborations on preventing short- and longer-term complications and duplication of services.