Does Medicare Value-Based Purchasing Exacerbate Racial Care Disparities?

January 09, 2024 - Thirty-day mortality rates were higher for acute myocardial infarction and pneumonia at hospitals with higher shares of Black patients, suggesting that Medicare’s Hospital Value-Based Purchasing (VBP) Program may exacerbate racial care disparities.

Black adults in the United States tend to face worse health outcomes for acute medical conditions compared to White adults. Care delivered to Black adults is concentrated at hospitals that often lack resources and have rocky finances, partly due to structural racism.

The VBP program financially rewards or penalizes hospitals based on 30-day mortality rates for certain clinical conditions. While intended to improve quality of care, the pay-for-performance program has disproportionately penalized hospitals that care for high proportions of Black adults.

Researchers used Medicare Provider and Analysis Review files from 2008 to 2018 and data from the 2020 American Hospital Association Annual Survey to assess 30-day mortality among Medicare fee-for-service beneficiaries hospitalized for acute myocardial infarction, heart failure, and pneumonia.

Almost 3,000 hospitals participated in the VBP program between its implementation in 2011 and 2018. Around 20 percent of hospitals had a high proportion of Black patients. High-proportion Black hospitals were more likely to be large, publicly owned, teaching hospitals, and had a higher share of inpatient days reimbursed by Medicaid compared to other hospitals.

During the study period, risk-adjusted 30-day mortality for acute myocardial infarction was higher at high-proportion Black hospitals compared to the other hospitals. Before the VBP program, quarterly 30-day mortality rates decreased by 0.08 percentage points at high-proportion Black hospitals. After implementation, rates declined by 0.02 percentage points.

At other hospitals, 30-day mortality rates for acute myocardial infarction fell by 0.06 percentage points pre-VBP and 0.03 percentage points post-VBP. When comparing high-proportion Black and other hospitals, there was no differential change in mortality rates for acute myocardial infarction after VBP program implementation.

The mortality rate for heart failure was similar at high-proportion Black hospitals and other hospitals during the study period.

Quarterly rates at high-proportion Black hospitals increased by 0.06 percentage points pre-VBP and decreased slightly by 0.01 percentage points post-VBP. At other hospitals, quarterly rates grew by 0.07 percentage points pre-VBP and declined by 0.02 percentage points post-VBP. There was no differential change in mortality between the two cohorts after VBP program implementation.

Mortality rates for pneumonia were higher at high-proportion Black hospitals than others. During the pre-VBP period, 30-day mortality increased at high-proportion Black hospitals by 0.02 percentage points and decreased by 0.08 percentage points in the post-VBP period.

At other hospitals, mortality increased in the pre-VBP period by 0.03 percentage points and decreased by 0.07 percentage points after implementation. There was no differential change in 30-day mortality for pneumonia between high-proportion Black and other hospitals—similar to the other conditions.

Overall, the VBP program did not lead to a differential change in mortality for any of the targeted conditions, researchers found. However, the findings did highlight widening inequities and gaps in mortality in Black adults with pneumonia.

Past studies have shown that the VBP program and other value-based payment programs consistently penalize high-proportion Black hospitals more than other hospitals. This is likely because the VBP program does not account for the social and economic risk of hospitals’ patient populations.

Additionally, hospitals serving lower-income patients from historically marginalized backgrounds may have fewer resources to meet the requirements of pay-for-performance incentives.

“As CMS considers ways to advance health equity, strategies beyond paying for performance may be required to improve outcomes at resource-constrained hospitals that care for racial and ethnic minority populations, particularly given our finding that mortality rates for acute myocardial infarction and pneumonia remain higher at sites caring for a high proportion of Black adults compared with other hospitals, whereas site-based inequities in outcomes for pneumonia have actually widened among Black adults,” researchers wrote.

Incorporating health equity adjustments into value-based payment programs is critical to ensuring these models do not exacerbate care disparities.