Step 1. Calculate each state's Incentive Coefficient. The median value for IMR (denoted as “M”) is computed for baseline year 2009. States are then divided into two broad categories: states above and below the median IMR in 2009. The assessed year is denoted as “t” and refers to either year 2011 or 2012.

Case 1. If the state is above the median value in 2009 in the base year

Scenario 1. If the state's IMR in the assessed year t decreased from its 2009 value (ie, IMR has improved) but remains above the 2009 baseline median:     $\mathrm{IC}=100*\left\{\frac{{\mathrm{IMR}}_{2009}-{\mathrm{IMR}}_t}{{\mathrm{IMR}}_{2009}-\mathrm{M}}\right\}$   We found 10 such states in 2011 and 8 such states in 2012.

Scenario 2. If the state's IMR in assessed year t decreased from its 2009 value (ie, IMR has improved) and is now below the median:     $\mathrm{IC}=100+100*\left\{\frac{\mathrm{M}-{\mathrm{IMR}}_t}{\mathrm{M}}\right\}$   We found 4 such states in 2011 and 6 such states in 2012.

Case 2. If the state is below the median value in 2009

Scenario 3. If the state's IMR in the assessed year t remains below the median IMR and drops below their own 2009 value (ie, shows improvement), the state's IC is as follows:     $\mathrm{IC}=100+\left\{100*\frac{{\mathrm{IMR}}_{2009}-{\mathrm{IMR}}_t}{{\mathrm{IMR}}_{2009}}\right\}*100*\left\{\frac{\mathrm{M}-{\mathrm{IMR}}_t}{\mathrm{M}}\right\}$   We found that there were 11 states in this category in 2011 and 12 states in 2012.

Scenario 4. If the state's IMR in the assessed year t increased from its baseline 2009 IMR but remains below the median, the state's IC is 100. We found 3 such states in 2011 and 2 such states in 2012.

In addition, there were two additional scenarios in which no incentive was to be given, ie, the state's IMR in the assessed year was worse than the baseline, and its baseline value was already above the median, or if the state's IMR in the assessed year was below the baseline median but its IMR increased above the baseline median.

Step 2. Sum all the Incentive Coefficients for all states.

Step 3. Divide each state's Incentive Coefficient by the sum of all Incentive Coefficients for that assessed year to obtain the state's share.

Step 4. Multiply the total allocation of the IGH for the assessed year by the state's share.