Study: Health care providers penalized for patient hardships

In an era of medical payment reform, reimbursement to health care providers is increasingly tied to post-treatment health. Now a new study of people who are readmitted to hospitals suggests that providers are being penalized for factors beyond their control.

There's little debate that race, ethnicity, language and income influence a patient's access to health care — and even their recovery — following treatment. But so far, most pay-for-performance models don't account for these differences.

A new national study looked at preventable hospital readmissions at 43 free-standing children's hospitals. The analysis showed that some facilities face payment penalties not necessarily because they provide poor quality care, but because their patient populations experience many hardships.

Gretchen Cutler, a scientific investigator at Children's Hospitals and Clinics of Minnesota and co-author of the study, says excessive readmissions can be explained by a patient's inability to afford medications after being discharged from the hospital or because they can't find transportation for a follow-up medical visit.

"As long as we know these factors make a difference in readmissions, it's not fair to penalize hospitals specifically for the patients they serve," Cutler said.

Several states have implemented readmission penalties for childrens hospitals. Minnesota has not done so yet and it's not clear if it will. But payment reform is a hot topic in the Legislature.

The federal government already reduces Medicare payments to adult hospitals that have excessive 30-day readmissions.

Cutler says that can add up to millions of dollars in lost payments and can further limit access to care in vulnerable communities.

"It think it is a big deal because of the financial consequences for hospitals who may already be struggling," she said.

But there doesn't appear to be an easy fix for leveling the playing field among hospitals that serve different populations.

State Health Economist Stefan Gildemeister says adjusting payments to account for so-called "social determinants of health" could hide poor-quality care.

"We have to be really careful as we think about risk adjusting performance measures that we don't mask disparities that exist," he said. "And that we don't eliminate the chance for us to really understand them better."

Minnesota has some of the worst health disparities in the nation between people of color and whites. Gildemeister says if poor care is a factor, the state needs to be able to detect that in provider data.

Minnesota and other states are looking for ways to make payment reform more fair to providers.

Dr. Helen Burstin, chief scientific officer for the National Quality Forum in Washington, D.C., says one proposal would pay providers based on the progress they make at improving the health of their patients over time. Another would pay them based on the performance of similarly-matched peer organizations.

"You might be able to look at hospital groupings by the proportion of poor patients they may have and only compare them to like hospitals that have the same proportion of poor patients," she said. "So again a bit of a level playing field in that potential way."

Some hospitals are even getting money to help their patients in non-medical ways.

Anna Youngerman, senior director of advocacy and health policy at Children's Hospitals and Clinics of Minnesota, says Children's has hired four to five new care coordinators who help families with their transportation issues and connect them with services if they have legal, housing or school issues that get in the way of their medical care.

"Even though those aren't services that we can control or that we have the ability to influence, we can play a connecting role," she said.

The proliferation of new payment strategies is a sign of what's at stake for providers. For now, there are lots of experiments. But in a few years health systems will have a much larger financial stake in the health of their patients as their payments are increasingly tied to results rather than the number of services they provide.