A new study comparing quality of care in safety-net and non-safety-net hospitals determined pay-for-performance (P4P) awards are based on impractical measurement conclusions and creates an uneven payment system.

"Safety-net hospitals may not get the economic benefits from public reporting and pay-for-performance that other hospitals do," the researchers said in the study, "Comparison of Change in Quality of Care Between Safety-Net and Non-Safety-Net Hospitals."

"Our study suggests that safety-net hospitals may be unable to compete for performance bonuses. This has the potential to have deleterious effects on existing financial and clinical disparities in performance," they said.

P4P determines bonuses based on the decile ranking for the hospitals based on 33 reported measures of quality. Hospitals in the top decile received 2 percent of their Medicare diagnosis related group (DRG) payments, the second decile received 1 percent.

The comparison study observed reported data from 2004-2006. During the third year of the study hospitals with a performance level below the 9th and 10th deciles were financially penalized, 1 percent and 2 percent respectively, the study said.

"For example, hospitals in the 10th decile for percentage of Medicaid patients (mean of 54.5 percentMedicaid patients) would have received bonuses across the three clinical conditions worth 0.3 percent of their total DRG payments in 2004. In 2006, under the CMS pay-for-performance demonstration rules, these hospitals on average would have incurred a performance penalty of 0.1 percent for acute myocardial infraction (AMI) and heart failure and a reduction in their pneumonia bonus (from 0.3 percent to 0.2 percent)," the study said.

The following table shows the performance change and the difference between hospitals with a low and high amount of Medicaid patients collectively from 2004-2006:

Characteristic	Low	High	Difference (%)
	(Change in performance)
Medicaid patients percent	5	40
AMI
Aspirin at admission	1.8	0.9	50
Aspirin at discharge	4.4	1.4	68
ACE inhibitor for LV dysfunction	9.2	6.0	35
Beta blocker at admission	4.4	2.9	34
Beta blocker at discharge	6.4	3.1	52
Composite AMI score	3.8	2.3	39
Heart Failure
Assessment of LV function	7.7	5.9	23
ACE inhibitor for LV dysfunction	9.2	9.0	2
Composite heart failure score	8.0	6.6	18
Pneumonia
Oxygenation assessment	1.4	1.5	-7
Pneumococcal vaccination	27.4	22.7	17
Timing of initial antibiotic therapy	7.1	6.4	10
Composite pneumonia score	9.3	8.0	14

"Over time, trends such as these could damage the reputations of safety-net hospitals and worsen their financial status, potentially reducing their ability to further respond to quality-improvement incentives," the researchers said.

Being a safety-net hospital with a large patient base consisting of Medicaid beneficiaries prevents hospitals from being able to improve their performance levels as easily as non-safety-net-hospitals. The ability to improve on the quality measures is the determinant on how much a hospital is paid in bonuses.

"The small differences in payments over the short term may translate into much larger differences over the long-term, because poor financial performance could lead to smaller investments in quality improvements that in turn, further worsen both financial and clinical performance. With lower baseline performance and few resources to invest in improvement, incentives designed to stimulate quality improvement may exacerbate existing disparities, with rich hospitals getting richer and poor hospitals becoming poorer," the researchers said.

The solution the researchers provide is that "pay-for-performance could be redesigned to minimize unintended consequences. For example, providing improvement-based bonuses or paying each time appropriate care is delivered, rather than basing payment on achieving target thresholds, may reduce safety-net hospitals’ disadvantages."

The researchers defined safety-net hospitals as hospitals delivering care to a large percentage of Medicaid patients. The study compared 3,665 hospitals enrolled in the P4P demonstration from 2004-2006, looking specifically at only 10 measurements that applied to 3 out of 5 clinical conditions in the demonstration. The lead investigator was Dr. Rachel Werner, Philadelphia Veterans Affairs Medical Center, Division of General Internal Medicine at the University of Pennsylvania.

Address: University of Pennsylvania, 3451 Walnut Street, Philadelphia, PA 19104; (215) 898-5000, www.upenn.edu.

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