Medicare-participating hospitals treating the largest portion of Black patients receive lower payments, potentially undermining the care being delivered to their patients, according to a study published last week in the Journal of General Internal Medicine.
After adjusting for hospital characteristics and case mix, the 10% of hospitals serving the greatest share of Black Medicare inpatients saw $283 lower mean per patient day revenue than all other hospitals from 2016 to 2018, researchers from UCLA, Johns Hopkins and Harvard wrote.
Those 574 Black-serving hospitals also ran tighter operations, pulling in $111 less in mean per patient day profit than the remaining 5,166 hospitals.
Researchers wrote that the differences are at least partially due to patients’ insurance coverage. Black patients are more often uninsured or covered by Medicaid, which usually has lower reimbursement rates than Medicare.
That trend is a holdover of the decisions of Civil Rights-era Congress, which purposefully assigned seniors to a federal plan and the poor to a state-run program. That structure has persisted through Affordable Care Act expansions and now threatens the financial stability of hospitals serving Black patients. Researchers have said that the system meets the definition of “disparate impact” and therefore is a form of structural racism.
"Our multi-tiered health insurance system continues to assign a lower dollar value to the care of Black patients,” researchers wrote in the journal. “That system embodies the legacies of slavery and discrimination, the persistence of institutional traditions and healthcare financing policies that perpetuate Black people’s disadvantage.”
The team’s analysis leaned on data collected via the Centers for Medicare and Medicaid Services (CMS)’ Healthcare Cost Report Information System, American Hospital Association annual survey data and the Medicare Case Mix Index file.
Alongside characterizing hospitals’ mix of finances and race, the team employed models adjusting for hospitals’ teaching status, urban or rural location, census region, ownership type, size and Case Mix Index.
The top 10% of Black-serving hospitals had an average of 43.7% Black patients compared to the average 5.2% for the remaining 90% of hospitals. The Black-serving hospitals had a higher portion of Medicaid discharges (14.2% versus 9.5%), were often located in the South and had more annual patient discharges. They were also more often urban and teaching hospitals, but less often nonprofits.
Prior to adjustment, total reimbursements for patient care were 21.6% lower on average at the Black-serving hospitals. Median and mean profits per patient day before adjustment were $8 and −$17, respectively, as opposed to $64 and $126 at the other hospitals.
With these numbers in mind, the researchers estimated that it would take an extra $14 billion, or $26 million per hospital, to bring Black-serving hospitals on par with the rest of the industry in 2018.
“Health financing reforms should assure that hospital payment reflects patients’ care needs rather than their race and repair the damage of past policies by preferentially directing new capital funds to resource-starved facilities that have long served Black communities,” the researchers concluded.