Safety-Net Hospitals More Likely Than Other Hospitals To Fare Poorly Under Medicare’s Value-Based Purchasing

TLDR

Medicare’s value‑based purchasing program, which added mortality measures in 2014, may financially disadvantage safety‑net hospitals relative to other hospitals. The study examined whether adding mortality measures in 2014 disproportionately impacted safety‑net hospitals nationwide. The authors suggest that increasing the weight of mortality in the VBP payment algorithm would lessen the disadvantage faced by safety‑net hospitals. Safety‑net hospitals were penalized more often than other hospitals, with 63 % receiving payment reductions versus 51 % of other hospitals, yet their mortality performance was similar to that of other hospitals.

Abstract

Medicare’s value-based purchasing (VBP) program potentially puts safety-net hospitals at a financial disadvantage compared to other hospitals. In 2014, the second year of the program, patient mortality measures were added to the VBP program’s algorithm for assigning penalties and rewards. We examined whether the inclusion of mortality measures in the second year of the program had a disproportionate impact on safety-net hospitals nationally. We found that safety-net hospitals were more likely than other hospitals to be penalized under the VBP program as a result of their poorer performance on process and patient experience scores. In 2014, 63 percent of safety-net hospitals versus 51 percent of all other sample hospitals received payment rate reductions under the program. However, safety-net hospitals’ performance on mortality measures was comparable to that of other hospitals, with an average VBP survival score of thirty-two versus thirty-one among other hospitals. Although safety-net hospitals are still more likely than other hospitals to fare poorly under the VBP program, increasing the weight given to mortality in the VBP payment algorithm would reduce this disadvantage.