Study shows CMS penalties, incentives lead to performance improvements of safety-net hospitals

Improvements in the performance and readmission rates of safety-net hospitals under the Hospital Readmission Reduction Program (HRRP) and Value-Based Purchasing (VBP) program reflect the programs' penalties, according to a recent study from Emory's Rollins School of Public Health.  

Led by Jason Hockenberry, PhD, in the Department of Health Policy and Management at Emory's Rollins School of Public Health, the research team examined trends in Medicare payment adjustments made to safety-net hospitals under HRRP and VBP programs between fiscal year 2013 and 2016. The team studied 3,016 US hospitals using data from the Centers for Medicare and Medicaid Services (CMS). 

In October 2012, CMS began rewarding hospitals that provide high-quality care for their patients through the new VBP program. This program shifts financial incentives away from a supply-driven model to a patient-centered health care model based on value that incorporates a number of care-related factors, including patient satisfaction and health outcomes. 

Similarly, the HRRP levies financial penalties against hospitals with readmission rates that are deemed excessive. The rates are compared with actual readmission rates in a given period to determine an adjustment factor. Penalties are assessed when the observed rate exceeds the expected rated.  

The research team matched each hospital's disproportionate share payment percentage, which is the payment made to hospitals based on the share of low income patients they treat, to the payment adjustments hospitals received from 2013-2016.  

Results indicated a performance improvement of safety-net hospitals on the HRRP between 2013 and 2016. In the HRRP, which has a larger potential penalty, safety-net hospital performance is now on par with non-safety net hospitals. However, there is still a small, but persistent gap in the VBP adjustments between safety-net and other hospitals, though both groups of hospitals have improved overall.

"The evidence to date suggests that safety-net hospitals are steadily improving on these metrics," explains Hockenberry. "In particular, safety-net hospitals have closed the gap in readmissions, and now their excess readmission rates are, on average, indistinguishable from non-safety-net hospitals. The questions that remain are how the safety-net hospitals changed their approach to patient care to achieve such stark reductions in readmissions, and why they had not taken such approaches before these policies."