Quality. Yesterday DHHS and CMS announced a three-year demonstration project to provide financial incentives to participating hospitals that provide high quality care for Medicare patients. The project will track performance data for "heart attack, heart failure, pneumonia, coronary artery bypass graft and hip and knee replacements. Measures include prescription of aspirin for heart attack and bypass graft patients and timely administration of antibiotics for pneumonia patients." As described in the DHHS press release:

Hospitals will be scored on the quality measures related to each condition, and those hospitals in the top 10 percent for a given condition will be given a 2 percent bonus on their Medicare payments. Hospitals in the second 10 percent will be given a 1 percent bonus. Hospitals in the remainder of the top 50 percent will be given recognition for their quality but no bonus.

Premier Inc. will do the data tracking, and -- although this was unclear from the DHHS press release -- Premier's press release intimated that the demonstration will not be limited to the approximately 500 facilities that already track and report quality-of-care data through Premier's tracking system. Incentives will total $7 million per year for the 300 participating hospitals -- that's an average of $23,333 per hospital. As a percentage of any decent sized hospital's operating budget, that's a relatively paltry incentive. (By way of comparison, some hospitals are paying individual signing bonuses of $25,000 to get nurses in high-demand specialties.) Obviously, DHHS and CMS want to point to something they can say they are doing to improve health care quality, but in the current budget environment, the cash for something splashier apparently just isn't there . . . even for a program that CMS chief Tom Scully says will partly pay for itself by reducing hospital readmissions.

The most surprising part of this story came out in Robert Pear's article in today's New York Times. As any regular reader of The Times could have told Secretary Thompson or CMS chief Tom Scully, Premier has been under investigation for the past year by state and federal officials for possible antitrust violations. That's not enough to scuttle Premier as a partner in this project, but is it credible that no one at CMS -- including Scully, who "said he knew little about the investigations until a journalist made inquiries at his office today" -- had pulled up The Times' multi-part series on Premier and its competitors in the lucrative hospital-supply industry before inking this deal?