Study: Medicare hospital rating system doesn't do enough to account for social risk factors

stethoscope on money
A new study found hospitals with a low rating from Medicare were in medically underserved areas. (Getty/Maudib)

Medicare may be underpaying hospitals serving disadvantaged communities because of a skewed rating system, a new study finds.

The study, published Thursday in the journal Medical Care, examined the nationwide Medicare Hospital Compare rating system that could influence Medicare reimbursement. The goal was to examine the relationship between the ratings and neighborhood social risks such as unemployment and education level.

Researchers linked 2017’s Medicare Hospital Compare ratings for 3,608 hospitals with block group data from the 2015 American Community Survey, an annual census on factors that include income, employment and housing, among other characteristics.

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A hospital gets a summary score that includes its effectiveness on measures such as mortality, hospital readmission, patient experience and efficiency of care. The ratings do not consider any social risk factors.

“Lower hospital summary scores were associated with caring for neighborhoods with high social risk,” the study said.

The study comes as the healthcare industry is exploring how to tackle social determinants of health. Insurers and hospitals have started to invest in programs that address housing or food instability.

But there are major barriers to providers and payers to fully invest in such benefits.

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While federal regulators gave Medicare Advantage plans more flexibility to offer supplemental benefits such as meals or transportation, major bureaucratic hurdles make such benefits difficult for payers to offer.

Researchers also questioned whether the hospital rating system is sending the wrong message to providers.

Failing to account for neighborhood social risk in hospital ratings “may reinforce hidden disincentives to care for medically underserved areas in the United States,” the study said.

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