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Several Centers for Medicare and Medicaid Services (CMS) programs aim to transform how health care is delivered by adjusting Medicare inpatient hospital payments through a system of rewards and penalties based on performance on measures of quality. These programs are the Hospital Readmissions Reduction Program, the Hospital Value-Based Purchasing Program, and the Hospital-Acquired Condition Reduction Program. We analyzed value-based program penalty results for various groups of hospitals across these three programs and assessed the impact of patient and community health equity risk factors on hospital penalties. We found statistically significant positive relationships between hospital penalties and several factors that affect hospital performance but that hospitals cannot control-namely, medical complexity (as measured by Hierarchical Condition Categories scores), uncompensated care, and the portion of hospital catchment area populations who live alone. Moreover, these environmental conditions can be worse for hospitals that operate in areas with historically underserved populations. This suggests that the CMS programs might not adequately account for health equity factors at the community level. Refinements to these programs (including an explicit incorporation of patient and community health equity risk factors) and continued monitoring will help ensure that the programs work as intended in a fair and equitable fashion.
Kahn et al. (Sat,) studied this question.