Medicare policies designed to pay less to poorly performing hospitals could hit institutions that serve a disproportionate number of black and poor patients, a new analysis shows.
The study, in Wednesday’s issue of Health Affairs, looked at hospitals across the country, comparing those that delivered the lowest quality and most expensive care to those that provided the highest quality and most efficient care.
There were big demographic differences between the two groups, with the “worst” hospitals treating a larger proportion of black and Medicaid patients. “Worst” hospitals were also most likely to be in the South, while many in the “best” category were in the Northeast.
The Centers for Medicare and Medicaid Services is embarking on a new payment system for hospitals, designed to reward those that offer better quality care. The system will pay more to those hospitals that hit higher quality targets and pay less to those that underperform.
But the study offers some cautions that paying hospitals on the basis of quality could harm vulnerable populations and even force closure of hospitals in underserved communities. Dr. Ashish Jha of the Harvard School of Public Health said the current system, in which the government pays hospitals regardless of the quality of care, is deeply flawed. But reforming the system through broad financial incentives could have unintended consequences.
“The issue is, and the reason why this stuff doesn’t function perfectly as a marketplace, is when hospitals struggle or as hospitals close down, patients die as a consequence,” Jha, who led the study, said in a telephone interview. “We have to have a slightly more thoughtful approach to this than just … let the market sort it out.”
Jha’s team looked at just under 4,500 hospitals during 2005. They found that Medicare patients in the “worst” hospitals were more likely to die after suffering heart attacks and were significantly less likely to get treatments proven to work, such as giving flu shots to pneumonia patients and ACE inhibitor drugs to patients with congestive heart failure.
The “worst” hospitals treated twice the proportion of black patients—15 percent versus 7 percent—and a higher percentage of Medicaid patients—23 percent versus 15 percent—than institutions in the “best” category. Both groups of hospitals tended to be in cities, but poor performers were more likely to be smaller and for-profit.
The study shows that poor, minority communities may be doubly disadvantaged. They already have the worst hospital care, and their hospitals may now have fewer resources to improve. In general, safety net hospitals tend to have the smallest operating margins, making them the most vulnerable to small pay cuts.
Nancy Foster, the vice president for quality and patient safety at the American Hospital Association, says the study shows why CMS may need to refine its system of paying hospitals for performance. Because poor, minority communities tend to have more illness and have patients with fewer outside supports, she said that it may be unfair to expect their hospitals to deliver the same care as institutions that treat healthier and richer populations.
“Improvement in care is a good thing,” Foster said. “We just think that there has to be some caution in proceeding to ensure that those hospitals and those providers … are being rewarded based on their own performance and not just based on the fact that they are lucky in their patient population.”
CMS spokesman Brian Cook said the system already considers such factors.
“The CMS Value-Based Purchasing program isn’t just about meeting a certain one-size-fits-all benchmark on the quality of care hospitals provide—it’s about improving the quality for every patient relative to where a hospital begins,” Cook said in an e-mail.
“Our program takes into account patient traits such as gender, age, and health status when patients enter the hospital because we recognize that less affluent populations may have particular needs and we want to help hospitals treat those patients well and be successful.”
Jha said that he does not intend the study as a rebuke to the value-based purchasing concept. In fact, his study cites several pilot programs that showed that financial incentives were effective in improving the quality of low performers. But he said that the data suggest that CMS needs to be careful as it moves forward.
“My hope and goal is not to shut all these safety net hospitals down,” he said. “We need to think about how we can help them get better.”