NCPA - National Center for Policy Analysis


January 26, 2007

Some 266 hospitals participating in a Medicare experiment that pays them more to follow medical recommendations have steadily improved the quality of patient care, says Reed Abelson in the New York Times.

Under the experiment:

  • Hospitals can earn a bonus only if they rank among the top 20 percent in at least one of five areas of patient care: joint replacement, coronary artery bypass graft, heart attack, heart failure or pneumonia.
  • Medicare officials are expected to award performance bonuses of $8.7 million to the 115 hospitals that were the top performers for the second year, based on 30 quality measures.

So far the program has been a success.  However, some hospitals are beginning to raise questions about the measures being used:

  • One hospital, for example, said it found itself focusing on how it was delivering care instead of looking at how patients were actually faring; the scoring system rewarded it for following the recommended medical treatments more frequently but did not take into account the need to make overall improvements that actually improve care.
  • Hospitals also say that some of the measures need to change more quickly when new research shows different treatments are better; in one example, doctors were already using a new drug to treat some heart attack patients, although they were being penalized for a time for not following the treatments established under the experiment.

Nonetheless, most view the experiment as a victory, and not only because of the financial gain.  Some hospitals have been motivated more by the public reporting of its results, and others say the program was as successful as it was because of the sharing of information among institutions about what worked and what did not.

Source: Reed Abelson, "Bonus Pay by Medicare Lifts Quality," New York Times, January 25, 2007.

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