Research Activities April 2013, No. 392
Adding incentive payments to pay-for-performance hospital program boosts payments to hospitals treating more disadvantaged patients
Patient Safety and Quality
Concerns have emerged that, by rewarding only high performance, hospital pay-for-performance programs might disproportionately benefit hospitals serving less disadvantaged patient populations, since lower performing hospitals tend to care for poorer patients. In Phase 2 of the Medicare and Premier Hospital Quality Incentive Demonstration (HQID), the structure of incentive payments to hospitals caring for disadvantaged patients was altered from one rewarding only high performance (Phase 1) to another rewarding high performance, moderate performance, and improvement. A study of this change found that in Phase 2, the gap in incentive payments was not significant for the receipt of any payment, but it remained significant for payments per discharge. Although the payment gap per discharge narrowed in Phase 2, a significant gap persisted between hospitals with greater or lesser percentages of disadvantaged patients, according to researchers from Cornell University and New York University.
They estimated that in Phase 2 of the HQID, hospitals with the least disadvantaged patients received approximately 20 percent more in incentive payments per discharge than hospitals with the most disadvantaged patients. This gap was much smaller than it would have been had payments been made based on high-quality performance alone rewarded in Phase 1. Analysis of Phase 2 payments also showed that of the three classes of awards, incentive payments for improvement made up the largest share of total payments to hospitals serving the most disadvantaged patient populations. This study was supported by AHRQ (HS18546).
See "The effect of Phase 2 of the Premier Hospital Quality Incentive Demonstration on incentive payments to hospitals caring for disadvantaged patients," by Andrew M. Ryan, Ph.D., Jan Blustein, M.D., Ph.D., Tim Doran, M.D., and others in the August 2012 HSR: Health Services Research 47(4), pp. 1418-1436.