Value-Based Payments Affected by Hospital Risk Stratification
Monday, March 15th, 2021

According to a new report, value-based fines for safety-net hospitals went down when hospitals in the Hospital-Acquired Condition Reduction Program (HACRP) were graded using social risk. During last year’s fiscal period, researchers analyzed efficiency results and hospital expense reports for more than 3,000 hospitals involved in the HACRP.

The study grouped hospitals into five categories by evaluating their “proportion dual,” or the ratio of patients participating in both Medicare and Medicaid, to determine the effect of HACRP social risk stratification on value-based fines. Proportion duel is a cause that has been linked to poor health results. Instead of the lowest-performing quartile overall, penalties were allocated to the hospitals in each quartile with the lowest performance.

Just over 30% of safety-net hospitals were penalized prior to stratification, versus 25% following stratification, resulting in a net savings of more than $30 million. Patients with particularly medically complicated conditions were most likely to be moved from penalized to non-penalized status at safety-net hospitals.

Post-stratification, public hospitals, hospitals in Medicaid extension states, and hospitals caring for the greatest number of patients with racial/ethnic minority groups or patients with disabilities were least likely to be penalized.

As CMS introduces value-based payment systems, social risk stratification can aid in the development of fair quality measures to ensure hospitals are not penalized solely for serving populations with higher poverty and social risk factors.

As a result, comparing all HACRP hospitals as a single entity could worsen health inequalities by denying Medicare funds to hospitals that care for more at risk patients.

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