Medicare P4P project improves hospital quality, reduces cost, mortality rate trends

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Hospital quality continues to improve while patient mortality rates and costs are declining among participants in a Centers for Medicare & Medicaid Services (CMS) pay-for-performance (P4P) demonstration project, according to an analysis by the Premier healthcare alliance.

According to the analysis of 1.1 million patient records from participating Hospital Quality Incentive Demonstration (HQID) hospitals, if all hospitals across the United States were to achieve the three-year cost and mortality improvements for pneumonia, heart bypass, heart failure, heart attack (acute myocardial infarction), and hip and knee replacement patient populations, they could save an estimated 70,000 lives per year and reduce hospital costs by more than $4.5 billion annually.

"Our work with hundreds of hospitals across the nation provides evidence of how the U.S. healthcare system is showing improvements and patients are getting higher quality healthcare," said Richard Norling, president and CEO of Premier. "The findings from this analysis clearly suggest that, through the reliable delivery of basic care processes, improving clinical quality and safely reducing costs is attainable for all hospitals across the country."

On average, the median hospital cost per patient for participants in the CMS, Premier HQID project declined by over $1,000 across the first three years of the project, whereas the median mortality rate decreased by 1.87 percent.

"Our experiences with this P4P demonstration have provided us with invaluable guidance as we continue to pursue and develop value-based purchasing incentives," said Kerry Weems, acting administrator for CMS.

The analysis is based on data from hospitals in the CMS, Premier HQID project, which began in October 2003. Through that project, which has been extended by CMS for an additional three years (through 2009), Premier collects a set of more than 30 evidence-based clinical quality measures from over 250 hospitals across the country. The quality measures were developed by government and private organizations.

For hospitals participating in the HQID project, the median Composite Quality Score improved by an average of 17.3 percent across all clinical areas from the program’s inception in October 2003 through June 2007, Premier said.