Alexander 2004

CMS-Premier Hospital Quality Incentive Demonstration Project

Stephanie AlexanderSenior Vice PresidentPremier Inc.Healthcare Informaticswww.qualitydemo.com

Alexander 2004

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

Is there a business case for quality in hospitals?

Performance Top Performers Lowest

Hospitals PerformanceGroup

Innovation Group Opportunity

Group

Top decile in performance

(low cost and high quality)

Bottom quartile in performance

(high cost, low quality)

Alexander 2004

CABG Performance

Innovation Group

Performance Group

Opportunity Group

Number of Hospitals (Premier-PerspectiveTM) 7 46 17

Isolated CABG Procedures: Discharges 4,024 11,853 5,397

Wage- and Severity-Adjusted Average Cost $16,043 $20,123 $26,321

Risk-Adjusted Inpatient Mortality 2.78% 2.92% 3.29%

Return to OR 0.62% 2.12% 2.43%

Aspirin used During Hospitalization 91.39% 67.65% 54.57%

Source: Premier PerspectiveTM

Alexander 2004

Non-collaborators’ financial performance

Jan 98Feb 98

Mar 98Apr 9

8May 98

Jun 98Jul 98

Aug 98Sep 98

Oct 98Nov 98

Dec 98Jan 99

Feb 99Mar 9

9Apr 9

9May 99

Jun 99Jul 99

Aug 99Sep 99

Oct 99Nov 99

Dec 99Jan 00

Feb 00Mar 0

0Apr 0

0May 00

Jun 00Jul 00

Aug 00Sep 00

15000

16000

17000

18000

19000

20000

21000

22000

23000

24000

Month

Wa

ge

-Ad

jus

ted

Co

st

Average Wage-adjusted Cost per Case for CABG: Non-collaborators

Source: Premier PerspectiveTM

Alexander 2004

Collaborators’ financial performance

Source: Premier PerspectiveTM

Jan 98Feb 98

Mar 98Apr 9

8May 98

Jun 98Jul 98

Aug 98Sep 98

Oct 98Nov 98

Dec 98Jan 99

Feb 99Mar 9

9Apr 9

9May 99

Jun 99Jul 99

Aug 99Sep 99

Oct 99Nov 99

Dec 99Jan 00

Feb 00Mar 0

0Apr 0

0May 00

Jun 00Jul 00

Aug 00Sep 00

15000

16000

17000

18000

19000

20000

21000

22000

23000

24000

Month

Wa

ge

-Ad

jus

ted

Co

st

Average Wage-adjusted Cost per Case for CABG: Collaborators

Alexander 2004

CMS/Premier Hospital QualityIncentive 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

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

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

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

Anticipated payment scenario

1st Decile

Hospital

Hospital

Hospital

Year One Year Two Year Three

Top Performance Threshold

Payment Adjustment Threshold

2nd Decile

3rd Decile

4th Decile

5th Decile

6th Decile

7th Decile

8th Decile

9th Decile

10th Decile

1st Decile

2nd Decile

3rd Decile

4th Decile

5th Decile

6th Decile

7th Decile

8th Decile

9th Decile

10th Decile

1st Decile

2nd Decile

3rd Decile

4th Decile

5th Decile

6th Decile

7th Decile

8th Decile

9th Decile

10th Decile

Condition XCondition X

Condition X

Alexander 2004

Heart Failure: Pre-release vs 4Q03 Median Comparisons Premier HQI Demonstration Project Participants

Preliminary Data

32.19%

83.08%

75.00%

51.61%

60.47%

38.10%

85.81%

77.97%

64.27%65.79%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

100.00%

Discharge instructions LVF assessment ACEI for LVSD Adult smokingcessation counseling

Composite QualityScore

Measure

Rat

e Pre-Release

4Q03

Alexander 2004

Composite Score: All 34 HQI Project MeasuresHQI Project Time Period: 4Q03 vs 4Q03 - 1Q04

83.0%

76.9%

69.7%

65.4%

86.5%

66.6%

71.3%

78.3%

84.1%87.2%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Top 2nd Median 8th Bottom

Decile Threshold

Co

mp

os

ite

Sc

ore