Value-based payments disproportionately impact safety-net hospitals

Value-based payments disproportionately impact safety-net hospitals

Press releases may be edited for formatting or style | July 09, 2020 Business Affairs
A new study led by researchers at Boston Medical Center, in collaboration with Harvard Pilgrim Health Care Institute, shows that value-based incentive programs aimed at reducing health care-associated infections did not improve infection rates in either safety-net or non-safety-net hospitals. Published in JAMA Network Open, these results also demonstrate persistent disparities between infection rates at safety-net and non-safety net hospitals, with higher rates of health care-associated infections in safety-net hospitals.

"While these value-based programs intend to use financial incentives and penalties to encourage hospitals to improve patient outcomes, our data demonstrate that the programs aren't actually resulting in any benefits for patients. In addition, because infection rates remain higher at safety-net hospitals compared to non-safety net hospitals, more safety-net hospitals are required to pay financial penalties," said Heather Hsu, MD, MPH, the study's first author who is a pediatrician at Boston Medical Center. "This may have unintended consequences on the financial stability of safety-net hospitals and health care systems, and the services they are able to provide for their patients."

In 2001, safety-net hospitals were defined by the Institute of Medicine as hospitals that provide care to a large share of uninsured or Medicaid patients, regardless of their ability to pay. As a result, many safety-net hospitals are under more financial stress than non-safety-net hospitals and rely on supplemental funding from both the state and the federal government to remain operational. According to America's Essential Hospitals, the average operating margin for its national membership of safety-net hospitals was 1.6 percent in 2017; for all hospitals nationwide, that rate was 7.8 percent.

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Reducing health care-associated infections is a main target of quality improvement efforts across all health care systems. The Affordable Care Act established two value-based incentive programs to target health care-associated infections that were put in place in 2014: the Hospital Value-Based Purchasing (HVBP) program, which rewards or penalizes the highest and lowest performing hospitals by up to two percent of total inpatient payments received, and the Health Care-Acquired Conditions Reduction Program (HACRP), which reduces payments by up to one percent for the lowest performing hospitals. These programs compare hospital performance for specific health care-associated infections based on data that hospitals and health care systems publicly report to the Centers for Disease Control and Prevention National Healthcare Safety Network against national benchmarks.

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