Changes Should be Made to CMS Hospital Value-Based Programs to Reduce Health Disparities and Improve Outcomes

Recently, Health Affairs posted a research article, “CMS Hospital Value-Based Programs: Refinements Are Needed to Reduce Health Disparities and Improve Outcomes.” The article analyzed the Hospital Readmissions Reduction Program (HRRP), the Hospital Value-Based Purchasing (VBP) Program, and the Hospital-Acquired Condition (HAC) Reduction Program penalty results for various groups of hospitals and assessed the impact of patient and community health equity risk factors on hospital penalties.

Analyses for each individual program included data from, respectively, 3,073 hospitals, 2,674 hospitals and 3,113 hospitals and reflected observation periods between 2016 and 2019. During fiscal year 2021, program penalties were more common among certain hospital types and hospitals with certain characteristics, such as hospitals with a greater number of beds, major teaching hospitals and hospital groups with a higher percentage of Medicare disproportionate share hospital patients.

After the analysis, the authors found statistically significant positive relationships between hospital penalties and several factors that impact hospital performance but that are outside of a hospital’s control. Some of those identified factors include medical complexity, uncompensated care, and the portion of hospital catchment area populations who live alone. The authors also found that those factors were sometimes worse for hospitals operating in areas with historically underserved populations.

For example, hospitals with the highest average medically complex patients received significantly more penalties under all three programs, though to varying degrees. Fewer people living alone was significantly associated with fewer penalties under the HAC Reduction Program. Additionally, hospitals with the largest uncompensated care costs were more likely to be penalized under HRRP, while those in the second-highest quartile were more likely to be penalized under the HAC Reduction Program.

These findings may indicate that the CMS programs may not properly account for health equity factors at the community level and that changes to these programs, including an explicit incorporation of patient and community health equity risk factors, as well as continued monitoring may help to ensure that the programs work as intended. The authors did point to steps that CMS has taken that may help to improve these, including adopting dual-eligible peer groups in the HRRP.

The authors concluded that while “CMS’ hospital value-based programs serve an important role in incentivizing value and improvement in care delivery,” refinements “are needed to ensure that these programs work as intended and that they support the reduction of health disparities and improve outcomes.”