Skip to main content

Could Medicare Quality Payment Plans Create Inequality?

 |  By jsimmons@healthleadersmedia.com  
   July 01, 2010

In the healthcare reform debate, hospital pay-for-performance has received plenty of discussion—how it could impact health outcomes, how it could promote efficiency, how it could change care coordination. But a nagging question remains: could use of pay for performance end up taking funding away from hospitals across the country providing care in poor, underserved areas?

Beginning in 2013, the first step of pay-for-performance implementation starts—when hospitals will have some revenues withheld by Medicare and then returned if they meet specific clinical targets.

However, pay-for-performance assumes that hospitals will all have the same economic and human resources that they need to perform or to improve their performance, says Jan Blustein, MD, PhD, a New York University professor of health policy and medicine, and two of her colleagues in a new Public Library of Science (PLoS) journal study.

In a way, there are similarities between implementing pay-for-performance in hospitals and implementing the “No Child Left Behind“ initiative several years ago for education, Blustein says in an interview. “I think it’s very challenging,” she says. “One of the problems is we know very little about what helps and what works.”

In education, schools are told to do better—“but there is no science there. We really don’t know what works in the school,” she says. While there is some evidence that teachers matter, “there’s not a lot of evidence to support that.”

“And the same thing is true in healthcare. We know a lot about what works to improve a patient’s health, but we really don’t know about what works to improve organizational performance.” Some may use consultants heavily, or others may work with groups of hospitals. “Perhaps that’s a good thing to do. But I think that we really don’t know.”

But, if the resources aren’t there for the hospital to make improvements, would those hospitals end up losing money in the long run based on performance? In other words, they ask, could the government be rewarding well-funded hospitals at the expense of poorer hospitals that provide critical services to support the need of the underserved?

To test this assumption, Blustein’s team looked at the link between local economic and human resources and hospital performance for two common heart conditions—acute myocardial infarction and heart failure—for 2,705 hospitals between 2004 and 2007. They calculated hospitals’ scores using the same methodology proposed for Medicare’s new pay for performance reimbursement plan.

They also examined regional variation for five factors: poverty, unemployment, provider shortage, non high school graduates in the work force, and college graduates in the work force.

They found that although overall performance scores for heart attack and heart failure improved during the study, quality at hospitals in disadvantaged regions still continued to “lag significantly behind” more advantaged hospitals.

Hospitals in those counties, for instance, with widespread poverty throughout the population had lower average performance scores for treating heart failure and heart attack than those in affluent counties. Hospitals in areas that had a lower percentage of college graduates in the workforce also had lower average performance scores.

Noting that nearly 33% of the hospitals studied were in disadvantaged counties, the researchers said that a pay for performance model may “exacerbate inequalities” across regions by rewarding hospitals located in regions that are rich in economic and human resources—and punishing facilities that are in disadvantaged locations.

They determined that in the long run, even though these facilities in underserved areas could demonstrate improvements over the four yeas, they still would end up receiving reduced reimbursement under a pay for performance system for failing to reach the levels of more affluent hospitals.

Although the Centers for Medicare and Medicaid Services said that it will be scrutinizing the distribution of funds to determine whether hospitals are being disadvantaged, the study’s authors stress that the agency must take a more “proactive approach” now to consider changes.

As an alternative, Blustein and her colleagues suggest, that hospitals receive credit for their levels of improvement achieved—regardless of their starting point. That could help hospitals in economically disadvantaged areas, where many of the hospitals starting at a lower-performing baseline exist.

Also, changing the model so that improvement is assessed over a longer time frame “could help make the program more equitable” as well, they said.

“Holding providers accountable is not an unreasonable approach to quality improvement,” the researchers conclude, but it should be done “in a way that attends to the profound inequalities in local circumstances that shape life in the 21st century.”

Janice Simmons is a senior editor and Washington, DC, correspondent for HealthLeaders Media Online. She can be reached at jsimmons@healthleadersmedia.com.

Tagged Under:


Get the latest on healthcare leadership in your inbox.