Study: Some Hospitals at Disadvantage Under Pay-for-Performance Model

Pay-for-performance models will exaggerate regional disparities in care and further penalize hospitals serving low-income communities, according to a study published in the journal PLoS Medicine, Reuters reports.

The study found that hospital quality variations are significantly associated with a region's economic and workforce resources (Norton, Reuters, 6/29).

For the study, researchers from New York University Medical School analyzed performance for two common cardiac conditions -- heart attack and heart failure -- at 2,705 hospitals between 2004 and 2007. They also looked at regional variation for five factors: poverty, unemployment, provider shortage, non-high school graduates in the work force and college graduates in the work force.

Study Findings

Using quality measures from the Hospital Quality Alliance, the researchers found that clinical performance for the conditions varied across facilities and that hospitals located in disadvantaged regions delivered poorer quality care than facilities located in wealthier and better-educated communities.

The researchers note that although overall performance for heart attack and heart failure improved across the study, quality at hospitals in disadvantaged regions continued to "lag significantly behind" better-advantaged peer institutions. The researchers determined that these facilities would receive reduced reimbursement under a pay-for-performance system.

Noting that nearly 33% of the hospitals studied were in "locationally disadvantaged" counties, the researchers warn that a pay-for-performance model may "exacerbate inequalities" across regions by rewarding hospitals located in regions that are rich in economic and human resources, and punishing facilities that are in disadvantaged locations (Blustein et al., PLoS Medicine, June 2010).

Recommendations

Although CMS, which is poised to implement a pay-for-performance system within Medicare in 2013, says that it will scrutinize the distribution of funds to determine whether hospitals are being disadvantaged, the study's authors stress that the agency must take a more proactive approach.

To divorce hospital quality from locational factors, the researchers say policymakers must be cognizant of whether hospitals have a "level playing field to begin with," and suggest using a hospital's baseline score to measure improvement, rather than compare a "low-attaining" facility with institutions that may start at a higher baseline.

Additionally, the researchers say CMS could reward quality improvement regardless of a hospital's starting point (Reuters, 6/29).