Medicare Payment Penalties and Safety Net Hospital Profitability: Minimal Impact on These Vulnerable Hospitals

Bazzoli, Gloria J.; Thompson, Michael P.; Waters, Teresa M.

doi:10.1111/1475-6773.12833

Cited by 34 publications

(39 citation statements)

References 14 publications

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“…The important findings of this research are that there is evidence that there has been a decline in readmissions across the board, and in some cases with more substantial changes for vulnerable populations. Although previous studies using pre-HRRP data raised concerns that the policy might disproportionally penalize vulnerable hospitals and patients [2–4], post-HRRP studies found that the HRRP penalty did not significantly affect the financial performance of vulnerable hospitals in particular (e.g., safety-net hospitals [8]). Together with our findings, this suggests that HRRP appears to be creating the right incentives for reducing readmissions not only overall but also for vulnerable populations.…”

Section: Resultsmentioning

confidence: 99%

“…These changes could affect readmission rates. Because Medicaid expansion took effect in 2014, our paper and other studies on HRRP [7, 8, 14, 28, 29] generally chose the sample period up to 2014 to avoid this potential problem. However, it is possible that hospitals, patients and insurance companies had already made changes during or before 2014.…”

Section: Discussionmentioning

confidence: 99%

“…Definitions of population vulnerability in the literature generally depend on the quartile of patient income or insurance types such as Medicaid [2, 3, 8]. We used similar definitions to stratify the data into the four types of vulnerable populations as listed in the Background section.…”

Section: Methodsmentioning

confidence: 99%

“…A 2017 study using 2008–2014 Virginia hospital data found a decrease in AMI readmissions as well as no changes in the age, race/ethnicity, health status, and socioeconomic status of patients admitted for AMI [7]. Bazzoli, Thompson and Waters, using 2013–2014 national-level data for 2720 hospitals, found evidence that safety-net hospitals incurred higher HRRP penalties than non-safety-net hospitals but that the increase in their penalty rate did not significantly affect their total margins, as safety-net hospitals appeared to rely on non-patient care revenues to offset the higher penalties [8]. These additional funds, however, may come from sources that address important community needs, such as local health promotions or other community benefit programs.…”

Section: Introductionmentioning

confidence: 99%

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Impact of the Medicare hospital readmissions reduction program on vulnerable populations

Gai

Pachamanova

2019

BMC Health Serv Res

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BackgroundThe Hospital Readmissions Reduction Program (HRRP) was established by the 2010 Patient Protection and Affordable Care Act (ACA) in an effort to reduce excess hospital readmissions, lower health care costs, and improve patient safety and outcomes. Although studies have examined the policy’s overall impacts and differences by hospital types, research is limited on its effects for different types of vulnerable populations. The aim of this study was to analyze the impact of the HRRP on readmissions for three targeted conditions (acute myocardial infarction, heart failure, and pneumonia) among four types of vulnerable populations, including low-income patients, patients served by hospitals that serve a high percentage of low-income or Medicaid patients, and high-risk patients at the highest quartile of the Elixhauser comorbidity index score.MethodsData on patient and hospital information came from the Nationwide Readmission Database (NRD), which contained all discharges from community hospitals in 27 states during 2010–2014. Using difference-in-difference (DD) models, linear probability regressions were conducted for the entire sample and sub-samples of patients and hospitals in order to isolate the effect of the HRRP on vulnerable populations. Multiple combinations of treatment and control groups and triple difference (DDD) methods were used for testing the robustness of the results. All models controlled for the patient and hospital characteristics.ResultsThere have been statistically significant reductions in readmission rates overall as well as for vulnerable populations, especially for acute myocardial infarction patients in hospitals serving the largest percentage of low-income patients and high-risk patients. There is also evidence of spillover effects for non-targeted conditions among Medicare patients compared to privately insured patients.ConclusionsThe HRRP appears to have created the right incentives for reducing readmissions not only overall but also for vulnerable populations, accruing societal benefits in addition to previously found reductions in costs. As the reduction in the rate of readmissions is not consistent across patient and hospital groups, there could be benefits to adjusting the policy according to the socioeconomic status of a hospital’s patients and neighborhood.

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Section: Resultsmentioning

confidence: 99%

Section: Discussionmentioning

confidence: 99%

Section: Methodsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Impact of the Medicare hospital readmissions reduction program on vulnerable populations

Gai

Pachamanova

2019

BMC Health Serv Res

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“…With a poor performance rating also impacting patient confidence, hospitals are searching for affordable ways to reduce HAIs. 14 – 17 …”

Section: Introductionmentioning

confidence: 99%

Sternal-Wound Infections following Coronary Artery Bypass Graft: Could Implementing Value-Based Purchasing be Beneficial?

Brandt

Blüher

Lankiewicz

et al. 2020

JHEOR

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Background/Objectives: Sternal-wound infections (SWIs) are rare but consequential healthcare-associated infections following coronary artery bypass graft surgery (CABG). The impact of SWIs on the cost of health care provision is unknown. The aim of this study was to quantify the burden of CABG-related SWIs across countries with mature health care systems and estimate value-based purchasing (VBP) levels based on the local burden. Methods: A structured literature review identified relevant data for 14 countries (the Netherlands, France, Germany, Austria, the United Kingdom, Canada, Italy, Japan, Spain, the United States, Brazil, Israel, Taiwan, and Thailand). Data, including SWI rates, CABG volume, and length of stay, were used to populate a previously published Markov model that simulates the patient’s CABG-care pathway and estimates the economic (US$) and care burden of SWIs for each country. Based on this burden, scenarios for VBP were explored for each country. A feasible cost of intervention per patient for an intervention providing a 20% reduction in the SWI rate was calculated. Results: The SWI burden varied considerably between settings, with SWIs occurring in 2.8% (the United Kingdom) to 10.4% (the Netherlands) of CABG procedures, while the costs per SWI varied between US$8172 (Brazil) to US$54 180 (Japan). Additional length of stay after SWI was the largest cost driver. The overall highest annual burden was identified in the United States (US$336 million) at a mean cost of US$36 769 per SWI. Given the SWI burden, the median cost of intervention per patient that a hospital could afford ranged from US$20 (US$13 to US$42) in France to US$111 (US$65 to US$183) in Japan. Conclusions: SWIs represent a large burden with a median cost of US$13 995 per case and US$900 per CABG procedure. By tackling SWIs, there is potential to simultaneously reduce the burden on health care systems and improve outcomes for patients. Mutually beneficial VBP agreements might be one method to promote uptake of novel methods of SWI prevention.

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Health Equity Adjustment and Hospital Performance in the Medicare Value-Based Purchasing Program

Liu,

Sandhu,

Joynt Maddox

et al. 2024

JAMA

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ImportanceMedicare’s Hospital Value-Based Purchasing (HVBP) program will provide a health equity adjustment (HEA) to hospitals that have greater proportions of patients dually eligible for Medicare and Medicaid and that offer high-quality care beginning in fiscal year 2026. However, which hospitals will benefit most from this policy change and to what extent are unknown.ObjectiveTo estimate potential changes in hospital performance after HEA and examine hospital patient mix, structural, and geographic characteristics associated with receipt of increased payments.Design, Setting, and ParticipantsThis cross-sectional study analyzed all 2676 hospitals participating in the HVBP program in fiscal year 2021. Publicly available data on program performance and hospital characteristics were linked to Medicare claims data on all inpatient stays for dual-eligible beneficiaries at each hospital to calculate HEA points and HVBP payment adjustments.ExposuresHospital Value-Based Purchasing program HEA.Main Outcomes and MeasuresReclassification of HVBP bonus or penalty status and changes in payment adjustments across hospital characteristics.ResultsOf 2676 hospitals participating in the HVBP program in fiscal year 2021, 1470 (54.9%) received bonuses and 1206 (45.1%) received penalties. After HEA, 102 hospitals (6.9%) were reclassified from bonus to penalty status, whereas 119 (9.9%) were reclassified from penalty to bonus status. At the hospital level, mean (SD) HVBP payment adjustments decreased by $4534 ($90 033) after HEA, ranging from a maximum reduction of $1 014 276 to a maximum increase of $1 523 765. At the aggregate level, net-positive changes in payment adjustments were largest among safety net hospitals ($28 971 708) and those caring for a higher proportion of Black patients ($15 468 445). The likelihood of experiencing increases in payment adjustments was significantly higher among safety net compared with non–safety net hospitals (574 of 683 [84.0%] vs 709 of 1993 [35.6%]; adjusted rate ratio [ARR], 2.04 [95% CI, 1.89-2.20]) and high-proportion Black hospitals compared with non–high-proportion Black hospitals (396 of 523 [75.7%] vs 887 of 2153 [41.2%]; ARR, 1.40 [95% CI, 1.29-1.51]). Rural hospitals (374 of 612 [61.1%] vs 909 of 2064 [44.0%]; ARR, 1.44 [95% CI, 1.30-1.58]), as well as those located in the South (598 of 1040 [57.5%] vs 192 of 439 [43.7%]; ARR, 1.25 [95% CI, 1.10-1.42]) and in Medicaid expansion states (801 of 1651 [48.5%] vs 482 of 1025 [47.0%]; ARR, 1.16 [95% CI, 1.06-1.28]), were also more likely to experience increased payment adjustments after HEA compared with their urban, Northeastern, and Medicaid nonexpansion state counterparts, respectively.Conclusions and RelevanceMedicare’s implementation of HEA in the HVBP program will significantly reclassify hospital performance and redistribute program payments, with safety net and high-proportion Black hospitals benefiting most from this policy change. These findings suggest that HEA is an important strategy to ensure that value-based payment programs are more equitable.

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Medicare Payment Penalties and Safety Net Hospital Profitability: Minimal Impact on These Vulnerable Hospitals

Abstract: Safety net hospitals appear to rely on nonpatient care revenues to offset higher penalties for the years studied. While reassuring, these funding streams are volatile and may not be able to compensate for cumulative losses over time.

Cited by 34 publications

References 14 publications

Impact of the Medicare hospital readmissions reduction program on vulnerable populations

Impact of the Medicare hospital readmissions reduction program on vulnerable populations

Sternal-Wound Infections following Coronary Artery Bypass Graft: Could Implementing Value-Based Purchasing be Beneficial?

Health Equity Adjustment and Hospital Performance in the Medicare Value-Based Purchasing Program

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