Hospital associations and trade groups are lobbying federal officials to account for how "the disease of poverty" impacts the health of patients—and costs hospitals.
The Missouri Hospital Association (MHA) is in the vanguard of a lobbying campaign to convince Congress and the Centers for Medicare & Medicaid Services to risk adjust hospital readmissions penalties for the socioeconomic and sociodemographic status of patients.
MHA has developed an augmented version of the CMS risk-adjustment model for the Hospital Readmissions Reduction Program (HRRP) to give greater weight to factors associated with a patient's economic resources and the poverty level in a patient's neighborhood.
The MHA's augmented risk-adjustment model shows that 43% to 88% of variation in quality measures between Missouri hospitals is tied to Medicaid status and the communities where patients live.
The financial stakes are high.
Last year, the 30-day readmissions penalty totaled $420 million, with the Medicare reimbursement reduction spread across 2,592 hospitals.
Pressing CMS and Congress to change the risk-adjustment model for HRRP is a top priority at MHA this year, President and CEO Herb Kuhn says.
"When we launched this effort in February, we had letters of support for our initiative from the American Hospital Association, the Association of American Medical Colleges, the Catholic Health Association, and the Federation of American Hospitals."
Since that time, "we have had a number of really good conversations with a number of our colleagues at state hospital associations across the country who are looking very aggressively at this in their own states—states like Ohio, Pennsylvania, Massachusetts, Maryland and many others."
Modest Results So Far
On June 7, the House of Representatives passed the Helping Hospitals Improve Patient Care Act of 2016 (H.R. 5273). A section of the legislation gives the secretary of the Department of Health and Human Services authority to revise the CMS risk adjustment model for hospital readmission penalties.
Related: House Passes Hospitals Improve Patient Care Act
"We view it as a good first step. It is not as robust as we would like it to be; but, finally, we are seeing a recognition in Congress that we have to move in this direction," Kuhn says.
Mat Reidhead, vice president of research and analytics at MHA, says the hospital association's augmented risk-adjustment model for HRRP gives a much more accurate reflection of the costs associated with treating economically disadvantaged patients.
"Our model differs from the CMS models in two key characteristics. First, in addition to all of the patient's clinical history, we also risk adjusted two sociodemographic factors: whether the patient qualifies for Medicaid and the poverty rate in the patient's neighborhood."
"The second key difference, is that we nest our model at the patient's neighborhood level in order to capture community-level effects that in most cases are far outside of a hospital's traditional sphere of influence."
"By doing this," Reidhead says, "we are attempting to capture effects that might influence the patient's risk of readmission that are attributable to their neighborhood, like whether the patient lives in a neighborhood with access to healthy food, whether there are social support systems available to the patient, whether there is reliable transportation for follow-up care and transitional care opportunities, and the list goes on and on."
Hospitals Penalized
HRRP is unfairly punishing hospitals, particularly safety net hospitals, Kuhn says.
Disparity-Busting Payment Reform, Validated
"What we see, and what the growing body of evidence shows, is that hospitals are being penalized for treating and caring for socially complex patients. The risk models don't risk adjust for the patient's community or the disease of poverty."
Developing accurate risk-adjustment models is crucial to the success of shifting from fee-for-service delivery of medical services to value-based reimbursement, he says.
"The disease of poverty is real, and it has a real impact. As we continue to move more of our payment system to value-based payment, it is incumbent upon us to make sure that the risk-adjustment models are as accurate as they possibly can be."
"A lot of money is being put behind these programs. And with the era of transparency, we are creating impressions about good hospitals vs. bad hospitals. We've got to have risk adjustment as accurate as possible," Kuhn says.
Christopher Cheney is the CMO editor at HealthLeaders.