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Does Pay-for-Performance Improve Surgical Outcomes? An Evaluation of Phase 2 of the Premier Hospital Quality Incentive Demonstration

Shih, Terry MD; Nicholas, Lauren H. PhD; Thumma, Jyothi R. MPH; Birkmeyer, John D. MD; Dimick, Justin B. MD, MPH

doi: 10.1097/SLA.0000000000000425
Original Articles

Objective: We sought to determine whether the changes in incentive design in phase 2 of Medicare's flagship pay-for-performance program, the Premier Hospital Quality Incentive Demonstration (HQID), reduced surgical mortality or complication rates at participating hospitals.

Background: The Premier HQID was initiated in 2003 to reward high-performing hospitals. The program redesigned its incentive structure in 2006 to also reward hospitals that achieved significant improvement. The impact of the change in incentive structure on outcomes in surgical populations is unknown.

Methods: We examined discharge data for patients who underwent coronary artery bypass (CABG), hip replacement, and knee replacement at Premier hospitals and non-Premier hospitals in Hospital Compare from 2003 to 2009 in 12 states (n = 861,411). We assessed the impact of incentive structural changes in 2006 on serious complications and 30-day mortality. In these analyses, we adjusted for patient characteristics using multiple logistic regression models. To account for improvement in outcomes over time, we used difference-in-difference techniques that compare trends in Premier versus non-Premier hospitals. We repeated our analyses after stratifying hospitals into quintiles according to risk-adjusted mortality and serious complication rates.

Results: After restructuring incentives in 2006 in Premier hospitals, there were lower risk-adjusted mortality and complication rates for both cardiac and orthopedic patients. However, after accounting for temporal trends in non-Premier hospitals, there were no significant improvements in mortality for CABG [odds ratio (OR) = 1.09; 95% confidence interval (CI), 0.92–1.28] or joint replacement (OR = 0.81; 95% CI, 0.58–1.12). Similarly, there were no significant improvements in serious complications for CABG (OR = 1.05; 95% CI, 0.97–1.14) or joint replacement (OR = 1.12; 95% CI, 1.01–1.23). Analysis of the “worst” quintile hospitals that were targeted in the incentive structural changes also did not reveal a change in mortality [(OR = 1.01; 95% CI, 0.78–1.32) for CABG and (OR = 0.96; 95% CI, 0.22–4.26) for joint replacement] or serious complication rates [(OR = 1.08; 95% CI, 0.88–1.34) for CABG and (OR = 0.92; 95% CI, 0.67–1.28) for joint replacement].

Conclusions: Despite recent enhancements to incentive structures, the Premier HQID did not improve surgical outcomes at participating hospitals. Unless significantly redesigned, pay-for-performance may not be a successful strategy to improve outcomes in surgery.

Phase 2 of Medicare's flagship pay-for-performance program, the Premier Hospital Quality Incentive Demonstration, did not result in improved surgical outcomes with respect to mortality rates or serious complication rates in coronary artery bypass, hip replacement, and knee replacement after adjusting for temporal and secular trends in non-Premier hospitals.

From the Center for Healthcare Outcomes and Policy, University of Michigan, Ann Arbor.

Reprints: Terry Shih, MD, Center for Healthcare Outcomes & Policy, 2800 Plymouth Rd, Building 16, Office 100N-07, Ann Arbor, MI 48109. E-mail:

Disclosure: Supported by grants to Dr Shih from the National Institutes of Health (5T32HL07612309) and Drs Dimick, Nicholas, and Birkmeyer from the National Institute of Aging (R01AG039434). Drs Dimick and Nicholas are also supported by career development awards from the Agency for Healthcare Research and Quality (K08HS017765) and the National Institute on Aging (K01AG041763), respectively. The views expressed herein do not necessarily represent the views of the US Government.

Drs Dimick and Birkmeyer are consultants and have an equity interest in ArborMetrix, Inc, which provides software and analytics for measuring hospital quality and efficiency. The company had no role in the study herein. The authors declare no conflicts of interest.

© 2014 by Lippincott Williams & Wilkins.