Safety Net Hospitals Being Squeezed by Wrong Measures?

Safety net hospitals are having a harder time in the new health care funding landscape- this is not news.  One of new truths is Value Based Purchasing (VBP). VBP promises to reimburse hospitals based on the value of care  as opposed to simply providing a fee for services rendered. Safety net hospitals serve patients with a lower socioeconomic status and uninsured patients (especially undocumented patients who are not covered by the Affordable Care Act).  Is it fair to grade these hospitals on the same curve as better financed hospitals who treat patients with private insurance?

Teresa Coughlin and Adele Shartzer wrote a very important and thorough post at the Health Affairs blog, The Challenges Of Rewarding Value Over Volume Without Penalizing Safety-Net Hospitals , that outlines both the research and policy proposals that address that complicated problems that value based purchasing creates for safely net hospitals.

Much of the research focuses on the Hospital Readmission Penalty Program (HRPP) which penalizes hospitals, based on a complicated algorithm, up to 3% of Medicaid payments for excessive readmission rates.  As Coughlin and Shartzer explain “in essence for selected medical conditions (including heart failure, …), it penalizes hospitals whose risk-adjusted 30-day Medicare readmissions rate are greater than the national average.”

Coughlin and Shartzer pose the question that is becoming a daily reality and fear at many safety net hospitals:

“While the HRPP penalties may not be appreciably higher at safety-net hospitals, by eating into their already thin profit margins, they could potentially limit these hospitals’ ability to implement the very changes needed to reduce readmissions. This begs the question: Is there a way to lessen the adverse impact of the HRPP penalty on safety-net hospitals without tacitly endorsing lower quality care for vulnerable populations?”

The first question is how much socioeconomic status explains the difference in readmission rates at different hospitals.

One study that looks at New York City (NYC) Hospitals concluded that socioeconomic status (SES) had a minimal impact on readmission.  The study by Blum, Egorova, Sosunov, et al, concluded “We examined whether inclusion of a measure of community SES, in NYC, in the 30-day CHF models impacted hospital-level profiling. The impact of the community-level measure of SES on 30-day CHF readmission models was small. As such, even in NYC, where differences in SES status are stark, inclusion of this measure had minimal impact on hospital-level RSRR.”

On the other hand Gilmen and his team conclude in a 2015 Study  “Taken together, these results indicate that safety-net hospitals are providing better health outcomes than other hospitals yet are more likely to be penalized under a program that intends to improve and reward high performance.”

Another  study that looks into the role SES plays in readmission rates is a 2015 work by Sheingold et al “Understanding Medicare Hospital Readmission Rates And Differing Penalties Between Safety-Net And Other Hospitals.”  They are specifically trying to answer the policy question- should safety net hospitals be graded on a different scale because of the special challenges for their patients and communities- by trying to understand what the data says about the difference in readmission rates between hospitals. 

What is interesting in this study was how much remains unknown about what causes discrepancies in readmission rates. 

According to Sheingold et al “In this study we found that patient characteristics, including clinical and socioeconomic factors, explained approximately 60 percent of the observed differential in readmission rates between high- and low-DSH hospitals. Consistent with previous research,⁷ we found that a substantial share of the differential was due to unmeasured factors. The results from our second set of analyses suggest that one of these other factors may be differences in the quality of care across hospitals.”

Sheingold et al also found that “The data suggest that at least in the first few years, safety-net hospitals did not have disproportionately high penalties, compared to other hospitals.”  

We can draw a few tentative conclusions from these studies.  First SES does play an important role in grading readmission rates of hospitals.  What is less clear is how that difference plays out given the funding algorithm used by HRPP. 

Yet when one takes a step back from the specific policy question involved in HRPP, we find ourselves with a question on social values.  If SES effects readmission rates more at safety net hospitals what are we doing to address that inequality at the level of patient care? This is a question that gets played out in the details of federal and state Medicaid policy.  One such battleground is exactly how a safety net hospital is defined.

 In the next blog we will look at how the definition of a safety net hospital becomes an important political fight in addressing that very question.