Why CMS Must Adjust Medicare for Socio-demographics

Withholding as much as 3% of Medicare reimbursements for hospitals with higher 30-day readmissions will penalize many hospitals that are serving a disproportionate share of poor patients.

We would be hard pressed to find anyone in medicine or academia or walking down a street chewing gum who believes that socio-demographic data such as income, education, age, and Zip code don't factor into health outcomes.

Money matters in everything else we do. Why should healthcare be exempted?

The fact is, data shows that it's tough to be poor and stay healthy in the United States. It's tough to follow a physician's guidelines if you can't afford the medication, or if English is not your first language.

It's tough to take that recommended daily walkabout in a neighborhood with no streetlights or sidewalks. It's tough to recover from a respiratory ailment in a moldy apartment. It's tough to eat right when the only store in your neighborhood sells Lotto tickets, Doritos, and dusty cans of Vienna sausages.

And yet, the Centers for Medicare & Medicaid Services is ignoring reams of data and defying common sense when it mandates that many hospitals serving low-income areas must be held to the same standards on 30-day readmissions as hospitals in more affluent areas.

NQF Wants Risk-Adjusted Outcomes, Costs, Payments

On its face, there is admirable altruism in the federal government's insistence that health outcomes should not depend upon a patient's income or neighborhood. CMS has a legitimate concern that creating different expectations for health outcomes based on socio-demographics will create a tiered delivery system that holds hospitals serving the poor to a lower standard of care.

Unfortunately, withholding as much as 3% of Medicare reimbursements for hospitals with higher 30-day readmissions, which CMS did with more than 2,600 hospitals this past year, will penalize many hospitals that are serving a disproportionate share of poor patients.

The policy also is countervailing to the federal government's acknowledgement that safety-net hospitals have special dispensation for their mission and the marginalized patients they serve.

A study in The American Journal of Respiratory and Critical Care Medicine found that newly imposed readmissions penalties for chronic obstructive pulmonary disease will disproportionately harm hospitals that serve the poor.

Researchers evaluated three years of readmissions data on 3,018 hospitals that cared for patients with COPD and found that teaching hospitals and safety-net hospitals will be penalized more frequently, in large part because of their patient mix.

Study author Michael Sjoding, MD, a pulmonary and critical care fellow in the University of Michigan Medical School, says he understands what CMS wants, but fears the strategy could do more harm than good. "Some people think it's a backwards approach," Sjoding says. "Depending upon your perspective, some people would say you've identified hospitals that are struggling. We need to put more resources in these hospitals to help them get better."

While the emphasis on reducing readmissions over the past three years is prompting some hospitals to improve care coordination post-discharge, Sjoding says "it's hard to say what is going to happen in three or five years to these hospitals that are getting penalized 3% of their Medicare reimbursement every year. I worry that those hospitals aren't going to have the resources to provide good care to all of their patients, not just the patients with these conditions."

Sjoding says CMS should compare 30-day readmission rates at "peer hospitals" when determining readmissions penalties, rather than attempting to risk-adjust a patient base.

"The focus should be on highlighting hospitals in certain areas of the country that are providing exceptional care compared to their peers in inner cities or among large academic medical centers," he says. "It is an unfortunate reality that, especially in the case of readmissions, so many of the factors that drive readmissions are related to these social determinants of health that patients who come from advantaged backgrounds don't have a problem with. The unfortunate reality is we have to be realistic about this."

The reality right now, is that CMS's readmissions penalties take funding from hospitals that need it the most, further harming their ability to lower readmissions, and subjecting them to additional funding penalties.

"Until we figure it out, these hospitals are really suffering the brunt of this," Sjoding says. "I don't have the answer myself, but in the short term what is happening seems a little unfair."