Payment Tied to Patient Experience Improvement Benefits Hospitals Serving Minority Patients

Although hospitals in Medicare’s Value-Based Purchasing (VBP) program already receive patient experience points based on the 3 components of achievement, improvement, and consistency, a new study concluded that putting more emphasis on improvement points could benefit hospitals in the VBP program that are serving minority patients. Marc N. Elliott, PhD, a senior principal researcher at the RAND Corporation, and colleagues, published their findings in Health Affairs.

The study analyzes how the 3 components affected reimbursements for 3152 inpatient prospective payment system hospitals in 2015, including their impact on low-performing and high-minority hospitals. The study found that achievement accounted for 96% of the differences among hospitals in total Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) measures of the patient experience of care. Thirty percent of a hospital’s VBP Total Performance Score is based on performance on HCAHPS.

The VBP program, which is administered by CMS, was established by the Affordable Care Act (ACA) as a pay-for-performance program that reimburses providers for both what they do and how well they do it. In its third year of existence, the hospital VBP program affected 1.5% of hospitals’ base operating payments (an estimated $1.4 billion), but that is set to increase to 2% in 2017.

Although pay-for-performance programs are associated with faster rates of quality improvement in targeted processes of care, some hospital administrators and policy makers have expressed concerns that pay-for-performance programs might cause undesired effects by redistributing payments away from providers who are already resource constrained, have lower performance, and require resources to improve quality.

For example, incentive programs usually emphasize performance achievement thresholds that providers must meet or exceed to get incentive payments, or performance must be in the top quartile of distribution or higher. Thus, providers with performance ratings that fall well below a threshold might decide they cannot reach the threshold and therefore not invest in quality improvement activities.

“A potential undesired effect of pay-for-performance programs is the exacerbation of disparities in patient care experiences,” the authors wrote.

The study concluded that the HCAHPS payment structure in the CMS hospital VBP program is working as intended: to reduce undesired effects and to increase engagement by lower-performing hospitals in quality improvement. Improvement and consistency points play small but important roles in HCAHPS scores and corresponding incentive payments. Consistency points substantially increase the scores for below-average hospitals, with consistency points contributing a larger and less variable proportion of these hospitals’ total HCAHPS points than improvement points or achievement points under the VBP program.

“Although achievement had the biggest influence on payments, payments related to improvement and consistency were more beneficial for low-performing hospitals that disproportionately served minority patients,” the authors concluded. “The findings highlight the important inducement that paying for improvement provides to initially low-performing hospitals to improve care and the role this incentive structure plays in minimizing resource redistributions away from hospitals serving minority populations.”