Are Medicare Pay-for-Performance Benefits Worth the Risk?

September 10, 2015 | SPH in the News

By Jacqueline DiChiara
September 10, 2015

Medicare pay-for-performance (P4P) incentives are inadvertently averting money away from those financially aching hospitals primarily serving minorities and the economically disadvantaged to instead inflate the revenues of those hospitals serving a more financially prosperous population of patients. Such is confirmed by recent research from David U. Himmelstein, MD, FACP, Lecturer in Medicine at Harvard Medical School and Professor at the City University of New York School of Public Health at Hunter College, and Steffie Woolhandler, MD, MPH, FACP, Lecturer in Medicine at Harvard Medical School, Professor in the CUNY School of Public Health at Hunter College, and Adjunct Clinical Professor at Albert Einstein College of Medicine.

“Medicare’s [P4P] program, which does not adjust for patients’ socioeconomic status, assumes that bonuses and penalties will prod substandard providers to improve or see their patients migrate to higher-quality options,” state Himmelstein and Woolhandler. “However, when quality problems are due to a hospital’s financial distress and patients cannot go elsewhere, penalizing low scorers may well punish patients and exacerbate quality disparities.

Prescribing a starvation diet for safety-net hospitals that are strapped for cash and are quality challenged makes no sense unless the goal is to close them.”

Medicare pay-for-performance (P4P) incentives are inadvertently averting money away from those financially aching hospitals primarily serving minorities and the economically disadvantaged to instead inflate the revenues of those hospitals serving a more financially prosperous population of patients. Such is confirmed by recent research from David U. Himmelstein, MD, FACP, Lecturer in Medicine at Harvard Medical School and Professor at the City University of New York School of Public Health at Hunter College, and Steffie Woolhandler, MD, MPH, FACP, Lecturer in Medicine at Harvard Medical School, Professor in the CUNY School of Public Health at Hunter College, and Adjunct Clinical Professor at Albert Einstein College of Medicine.

“Medicare’s [P4P] program, which does not adjust for patients’ socioeconomic status, assumes that bonuses and penalties will prod substandard providers to improve or see their patients migrate to higher-quality options,” state Himmelstein and Woolhandler.

“However, when quality problems are due to a hospital’s financial distress and patients cannot go elsewhere, penalizing low scorers may well punish patients and exacerbate quality disparities. Prescribing a starvation diet for safety-net hospitals that are strapped for cash and are quality challenged makes no sense unless the goal is to close them.”