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Value-Based Payments May Lead to Systematic Penalization of Safety-Net Hospitals
“The programs are not leading to any meaningful improvements in patient safety and are contributing to inequity in our healthcare system.”
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Reducing healthcare-associated infections is a main target of quality improvement efforts across all healthcare systems. In fact, the Affordable Care Act established two value-based incentive programs to target healthcare-associated infections in 2014: the Hospital Value-Based Purchasing (HVBP) program, which rewards or penalizes the highest- and lowest-performing hospitals by up to 2% of total inpatient payments received, and the Healthcare-Acquired Conditions Reduction Program (HACRP), which reduces payments by up to 1% for the lowest-performing hospitals. These programs compare hospital performance against national benchmarks for specific healthcare-associated infections based on data publicly reported to the Centers for Disease Control and Prevention’s National Healthcare Safety Network.

However, a new study from Boston Medical Center and Harvard Pilgrim Healthcare Institute shows that value-based incentive programs aimed at reducing healthcare-associated infections did not improve infection rates in either safety-net or non-safety-net hospitals. Published in JAMA Network Open, the results also demonstrate persistent disparities between infection rates at safety-net and non-safety-net hospitals, with higher rates of healthcare-associated infections in safety-net hospitals.

“While these value-based programs intend to use financial incentives and penalties to encourage hospitals to improve patient outcomes, our data demonstrate that the programs aren’t actually resulting in any benefits for patients,” says Heather Hsu, MD, MPH, first author and a pediatrician at Boston Medical Center.

"Our data demonstrate that value-based incentive programs aren't actually resulting in any benefits for patients" Click To Tweet

In addition, because infection rates remain higher at safety-net hospitals compared to non-safety net hospitals, more safety-net hospitals are required to pay the financial penalties. In 2001, safety-net hospitals were defined by the Institute of Medicine as hospitals that provide care to a large share of uninsured or Medicaid patients, regardless of their ability to pay. As a result, many safety-net hospitals are under more financial stress than non-safety-net hospitals — the average operating margin for safety-net hospitals was 1.6% in 2017, compared to 7.8% for all hospitals nationwide, according to America’s Essential Hospitals — and rely on supplemental funding from both the state and the federal government to remain operational.

“These incentive programs may have unintended consequences on the financial stability of safety-net hospitals and healthcare systems and the services they are able to provide for their patients,” says Hsu.

Neither safety-net nor non-safety-net hospitals showed improvements in infection rates

Researchers analyzed data from 618 acute care facilities (including 145 safety-net hospitals) across the country that reported data to the CDC’s National Healthcare Safety Network and had implemented HACRP and HBVP between 2013 and 2018. It investigated four common types of healthcare-associated infections, including central line-associated bloodstream infections, catheter-associated urinary tract infections, and surgical site infections after colon surgery or abdominal hysterectomy.

The results showed that neither safety-net nor non-safety-net hospitals showed improvements in rates of the infections during the study period, including after the value-based programs were implemented. And safety-net hospitals had higher rates of central line-associated bloodstream infections, catheter-associated urinary tract infections and surgical site infections after colon surgery compared with non-safety-net hospitals — both before and after value-based program implementation.

"These incentive programs may have unintended consequences on the financial stability of safety-net hospitals and the services they are able to provide for their patients" Click To Tweet

Insurance coverage provided through Medicaid and Medicare, while critical, does not typically cover the actual cost of care. Consequently, safety-net hospitals rely on supplemental government funding to continue to provide necessary services to patients. But the availability of these uncompensated care funds is decreasing, and could be eliminated, which would have a detrimental impact on safety-net hospitals and other healthcare systems that are responsible for caring for many underserved and under-resourced patients. 

The researchers note that adding in a social risk factor adjustment before assessing penalties based on reported outcomes data may help avoid systematic penalization of safety-net hospitals, without setting lower quality standards in these institutions.

“Right now, the programs are not leading to any meaningful improvements in patient safety and are contributing to inequity in our healthcare system by disproportionately penalizing safety-net hospitals,” says Hsu. “We hope that these results can serve as a starting point to re-evaluate and redesign value-based incentive programs.”

Read next: The critical role of safety-net health systems »


Jenny Eriksen Leary


Jenny is the associate director of media relations at Boston Medical Center and has more than 15 years of experience in healthcare communications and public relations.