Press release



Second-year results from a groundbreaking hospital value-based purchasing demonstration project show substantial improvement in quality of care, leading to incentive payments totaling $8,690,447 to 115 top-performing hospitals, the Centers for Medicare & Medicaid Services (CMS) announced today.

Participants in the Premier Hospital Quality Improvement Demonstration reported significant improvement in quality of care across five clinical focus areas measured by more than 30 nationally standardized and widely accepted quality indicators.

The average improvement in the project’s second year was 6.7 percentage points, for total gains of 11.8 percentage points over the project’s first two years.

“CMS has been considering the integration of quality and payment systems as a way to maximize the value of Medicare payments,” said CMS Acting Administrator Leslie V. Norwalk, Esq.   “These latest results provide one more piece of solid evidence that pay-for-performance works.”

Launched in October 2003 by CMS and the Premier Inc. healthcare alliance, the value-based purchasing project is part of an overall shift in Medicare to pay based on value, not volume of services. 

The first national project of its kind, the Hospital Quality Improvement Demonstration (HQID) is designed to determine if economic incentives to hospitals are effective at improving the quality of inpatient care.  

“The Premier hospital demonstration is showing that even limited additional payments, focused on supporting evidence-based quality measures, can drive across-the-board improvements in quality, fewer complications, and reduced costs,” said Norwalk  .

“With results like these, which enable us to measure and improve the quality of care delivered to Medicare beneficiaries, tied to the public reporting of quality and pricing information that is easily accessible to consumers and providers, consumers will now have more tools than ever before to select providers that consistently deliver high quality, efficient care,” Norwalk said.  “At the same time, by paying for quality care, CMS supports hospitals, physicians, and other health care providers in their efforts to deliver the best care in the most efficient way possible.”

The Premier project involves more than 250 hospitals across the nation, which submit data to Premier for validation and analysis.  In turn, Premier submits the data to CMS.

Participating hospitals report process and outcome measures in five clinical areas – acute myocardial infarction (AMI), heart failure, coronary artery bypass graft (CABG), pneumonia, and hip and knee replacement and are scored based upon their performance in these clinical areas.

The value-based purchasing policies used in the demonstration project include financial incentives for the top 20 percent of high scoring hospitals in each of the five clinical areas.   The top 10 percent of all hospitals receive a 2 percent incentive payment for patients in that clinical area.  Hospitals in the second decile receive a 1 percent incentive payment.  Hospitals in the top 50 percent of each clinical area receive public recognition on the CMS website.

Hackensack  University Medical Center in Hackensack , NJ , was a top performer in all five areas for the second year in a row, providing high-quality care for 2,853 Medicare patients.   Their total award across the five clinical areas will be approximately $744,000.

Charleston  Area Medical Center in Charleston , WV , received the second highest incentive award, $701,000, for achieving top performance in four clinical areas.  Charleston Area Medical Center also received the highest single award, $432,901, in one clinical area for providing high quality care to 883 Medicare patients who had CABG procedures.  

The second largest single award totals $250,775 and will be provided to the Bone and Joint  Hospital in Oklahoma City , OK , for exceptionally high quality of care for patients receiving hip and knee replacement procedures.


The average composite quality scores, an aggregate of all quality measures within each clinical area, improved significantly between the inception of the program and the end of Year 2 in all five clinical focus areas:

  • From 87.5 percent to 94.4 percent for patients with AMI (heart attack)
  • From 84.8 percent to 93.8 percent for patients with coronary artery bypass graft.
  • From 64.5 percent to 82.4 percent for patients with heart failure.
  • From 69.3 percent to 85.8 percent for patients with pneumonia.
  • From 84.6 percent to 93.4 percent for patients with hip and knee replacement.

In addition, the range of variance among participating hospitals is closing, as those hospitals in the lower quality range continue to improve their quality scores and close the gap between themselves and the demonstration’s top performers.


For complete information about the HQID project and to view a list of those hospitals ranking in the top 50 percent in each focus area, visit