Medicare Payment Reform Could Exacerbate Inequities

While most of the recent health reform debate and subsequent law has addressed health insurance, not health care, some care delivery issues have found media and legislative attention, albeit from a cost containment rather than a human rights perspective. Consequently, the health reform law includes some changes to provider payments under Medicare (the only insurance program under public control at the federal level and thus within reach of government initiatives), such as paying hospitals according to performance criteria ("hospital value-based purchasing program") in order to address geographical differences in spending levels, and promoting so-called accountable care organizations (these ideas received a big boost in the debate by the now famous Dartmouth Atlas researchers as well as the writings of Atul Gawande (for an indication of the controversial nature of their data and arguments, see the recent debate in The New York Times here and here).

How poor and marginalized patients might fare under these largely cost-driven reforms has received little discussion, even in light of the coming reduction of Disproportionate Share Hospital (DSH) payments to hospitals serving poor patients. So Tuesday’s media report by Reuters about new disparities research, led by an NYU researcher and published in PLoS Medicine, should be of interest. Here are excerpts from the news article and the paper’s abstract.

Medicare Changes Could Shortchange Vulnerable Hospitals
Tue Jun 29, 2010
(Reuters Health) – The U.S. government’s plan to base Medicare payments to hospitals on certain quality-of-care measures could end up transferring funds away from hospitals in the nation’s poorest, underserved areas, an analysis published Tuesday suggests.
The findings, researchers say, raise the possibility that the so-called "pay-for-performance" initiative could inadvertently worsen existing healthcare disparities.
"We need to be mindful of whether hospitals’ have a level playing field to begin with," Blustein said.
The Centers for Medicare and Medicaid Services, the federal agency that administers the Medicare program, has acknowledged that pay-for-performance has the potential to worsen the situation of hospitals that have long faced problems in meeting performance goals. And it has said that it will monitor the distribution of funds as the new payment program is implemented to see if some hospitals are being put at a disadvantage.
But Blustein and her colleagues say their findings argue for a more "proactive" approach — one that, from the outset, tries to limit the chances of worsening healthcare inequalities.

Hospital Performance, the Local Economy, and the Local Workforce: Findings from a US National Longitudinal Study
From the abstract:
Conclusion: Hospital performance on clinical process measures is associated with the quantity and quality of local economic and human resources. Medicare’s hospital pay-for-performance program may exacerbate inequalities across regions, if implemented as currently proposed. Policymakers in the US and beyond may need to take into consideration the balance between greater efficiency through pay-for-performance and socioeconomic equity.

Citation: Blustein J, Borden WB, Valentine M (2010) Hospital Performance, the Local Economy, and the Local Workforce: Findings from a US National Longitudinal Study. PLoS Med 7(6): e1000297.