Safety-Net Hospitals Penalized By Pay-for-Performance Bonuses, Study Finds

Main Category: Public Health
Article Date: 15 May 2008 - 8:00 PDT

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Pay-for-performance bonus payments for U.S. hospitals might penalize safety-net hospitals, which serve large numbers of low-income patients and lack funds to improve quality ratings, according to a study published on Wednesday in the Journal of the American Medical Association, Bloomberg reports. For the study, led by Rachel Werner, a physician and health economist at the Philadelphia Veterans Affairs Medical Center, researchers examined changes from 2004 to 2006 in Medicare hospital quality ratings for the treatment of various medical conditions at more than 4,000 facilities.

Researchers conducted a simulation of reimbursements for all U.S. hospitals based on performance bonuses used in a Medicare demonstration program that involves 250 facilities. Under the program, hospitals in the top 10% in quality ratings receive Medicare reimbursement performance bonuses of 2%, and facilities in the next 10% receive performance bonuses of 1%. The program penalizes hospitals in the bottom 10%.

According to the study, in the simulation, hospitals that served the largest numbers of low-income patients made the smallest improvements in quality ratings and received the smallest performance bonuses.

Werner said, "Safety-net hospitals need a lot more help, and I don't think we should leave it up to the whims of the market to see if they can compete," adding, "We should not back away from pay-for-performance measures that have been adopted, but they may need to be applied differently to safety-net hospitals" (Goldstein, Bloomberg, 5/13).

An abstract of the study is available online.

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