Public, safety-net hospitals hit hardest by value-based purchasing

The transition from traditional fee-for-service healthcare to the value-based model may be disproportionately hurting safety-net hospitals, according to an analysis by Ashish K. Jha, M.D., a professor at the Harvard School of Public Health.

Based on the latest round of penalty and bonus data released by the Centers for Medicare & Medicaid Services, Jha found that a hospital's size and teaching status had a negligible effect. However, he said hospitals with the most low-income patients had their Medicare payments reduced by an average of 0.09 percent, while the hospitals with the lowest number of low-income patients received a bonus of 0.6 percent on average. Public hospitals fared especially poorly, with reductions of 0.10 percent, according to the analysis.

Jha cautioned that it was too early to draw conclusions as to whether CMS' criteria are unfair to public, safety-net hospitals. "My suspicion is that much of the difference is driven by differences in patient experience scores. The challenge for all of us is to understand why safety-net hospitals generally have worse patient experience scores," he wrote. "Is it that poorer or minority patients are just less likely to give high scores on patient experience? Or are safety-net hospitals not doing as good of a job on patient-centered care?"

The analysis also found a less significant regional difference in how well hospitals fared. Hospitals in the Northeast (which had an average penalty of 0.06 percent) and West (with an average penalty of 0.10 percent) generally did slightly worse than those in the Midwest, which saw an average gain of 0.01 percent, and the South, which was only penalized an average of 0.01 percent.

These differences can become more significant, Jha added, when variables are added together. "A large urban public hospital in the Northeast with a high DSH [disproportionate share hospital] index gets an average penalty of about 0.30 percent of their Medicare payments," he wrote. "Is that a lot?  No – but it's not irrelevant for a safety-net hospital that may be operating with razor thin financial margins."

To learn more:
- read Jha's analysis