Development and Implementation of a Maryland State Program Providing Hospital Payment Incentives for Reduction in Readmission Disparities

BACKGROUND: Social factors are a key determinant of hospital readmission. We describe the development of the country's first statewide policy providing hospitals with financial incentives to reduce readmission disparities. OBJECTIVE: To describe the development and evaluation of a novel program that measures hospital-level disparity in readmission and rewards hospitals for improvement. RESEARCH DESIGN: Observational study using inpatient claims. PARTICIPANTS: Baseline data included 454,372 all-cause inpatient discharges in 2018 and 2019. Of the included discharges, 34.01% involved Black patients, 40.44% involved female patients, 33.1% involved patients covered by Medicaid, and 11.76% involved patients who were readmitted. Mean age was 55.18. MEASURES: The key measure was the percentage change over time within the hospital in readmission disparity. Readmission disparity was measured using a multilevel model that gauged the association between social factors and readmission risk at a given hospital. Three social factors (Race, Medicaid coverage, and Area Deprivation Index) were combined into an index reflecting exposure to social adversity. RESULTS: Of the State's 45 acute-care hospitals, 26 exhibited improved disparity performance in 2019. LIMITATIONS: The program is limited to inpatients within a single state; the analysis does not provide evidence on the causal relationship between the intervention and readmission disparities. CONCLUSION: This represents the first large-scale effort in the US to link disparities to hospital payment. Because the methodology relies on claims data, it could easily be adopted elsewhere. The incentives are directed to within-hospital disparities, thus mitigating concerns about penalizing hospitals with patients with greater social exposure. This methodology could be used to measure disparity in other outcomes.