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Penalties for Treating Low-Income Patients Under Scrutiny

By Kerry Young, CQ Roll Call

September 6, 2016 -- Senators will face pressure this fall to confront a difficult question as Medicare officials increasingly tie hospitals' payments to the quality of care that medical professionals deliver: Should hospitals that treat a large number of poor people face different criteria than hospitals whose patients are more affluent?

Medicare, the nation's largest single purchaser of medical services, is pegging a growing share of its payments to judgments about how well senior citizens and people with disabilities are served by medical professionals. Hospitals that fail to meet quality standards are penalized.

The link between income and health is driving a debate about whether the Centers for Medicare and Medicaid Services (CMS) should make any allowances for the challenges of treating people living in poverty.

Many of the measurements that CMS intends to use to judge the quality of hospitals' care track how patients fare for 30 days after being discharged from hospitals or nursing and rehabilitation centers. People who receive low wages or suffer from homelessness may fall ill during this time for reasons unrelated to the quality of medical services provided to them. Hurdles include being unable to buy food or medicines or to travel to a doctor's office for follow-up visits.

Failing to account for these obstacles can lead to unfair financial hits on hospitals that serve the poor, some industry groups and their congressional allies argue. GOP Rep. James B. Renacci of Ohio, who supports this view, enlisted 44 fellow Republicans and 41 Democrats to back a bill that proposed a socioeconomic adjustment for the Medicare payment penalties. His measure was folded into a larger Ways and Means Medicare package that sailed through the House on a voice vote in June.

Renacci and several Ways and Means colleagues, including Democrat Danny K. Davis of Illinois, will press for the Senate to take this measure up in the fall as a step toward providing relief for so-called safety-net hospitals.

"These institutions ought to be given a little bit of latitude," Davis said in an August interview. "We are trying to the extent possible to even the playing field. Some institutions are taking on more of a burden than others."

The Ways and Means bill proposes a path to grouping hospitals according to a measure of how many of their patients qualify for both Medicare and the Medicaid program for people with low incomes.

Lawmakers and the next presidential administration will likely continue to wrestle with the question of socioeconomic status and Medicare's quality measures as the agency seeks to base payment rates for other medical professionals, such as doctors, on patients' experiences.

Some of the nation's leading research groups are in the midst of analyses expected to yield critical information. The nonprofit National Quality Forum is conducting a two-year study on socioeconomic factors and performance measures.

So far, CMS has revealed some reluctance about adjusting the quality measures, while allowing that poverty could influence medical results. The agency says it doesn't "want to mask potential disparities or minimize incentives to improve the outcomes of disadvantaged populations."

Agency officials included this phrase in three recent Medicare payment rules. It serves as the agency's stock reply to requests for socioeconomic adjustments for quality measures that are currently used for hospitals and eventually intended for skilled nursing centers and rehabilitation centers, which are places where people are sent to recover after strokes, surgeries and illnesses.

Still, CMS officials clearly continue to struggle with the issue. The Department of Health and Human Services (HHS) asked the National Academy of Medicine to analyze socioeconomic adjustments and Medicare measures. The academy was tasked with considering how to define such an adjustment, and is weighing factors such as a patient's ability to follow medical instructions.

The average penalty for a safety-net hospital, which is one that serves a disproportionate share of poor people, runs about $191,000 if too many patients are readmitted. Those penalties are higher than the $158,000 average penalty for all hospitals, said Arnold Epstein, deputy assistant secretary for planning and evaluation at HHS, in a presentation to the National Academy of Medicine panel. Safety-net hospitals tend to be larger, which may account for some of the difference. HHS officials declined to be interviewed, citing work underway on a report for Congress on this topic.

It's unclear how much of the problem for patients in safety-net hospitals can be attributed to poverty.

However, a leading researcher in the field of quality metrics says his review of the issue persuaded him to support some allowances for poverty.

"We don't actually want to create two standards of care," says Ashish K. Jha, the director of the Harvard Global Health Institute, in an interview.

"We want organizations like hospitals to be responsible for delivering good care for poor patients as well as for wealthy ones," Jha says. "However, what we don't want to do is punish organizations just because they have more poor patients."

The financial hit from readmission penalties is expected to rise as CMS officials continue implementing the program, which was created by the 2010 health care overhaul to measure the quality of care for seniors.

CMS estimated that the readmissions program will save Medicare $528 million in fiscal 2017, an increase of approximately $108 million from the current year. That's due in part to the addition of coronary bypass patients to the group whose readmissions can drive down a hospital's payments. CMS already applies penalties if patients are readmitted after heart attacks or heart failure, pneumonia, certain knee or hip surgeries, or a lung condition sometimes linked to smoking known as chronic obstructive pulmonary disease.

The hospital penalties represent just part of the emerging debate over the issue of socioeconomic adjustments to Medicare payments.

The question also affects ongoing work at CMS to devise a framework for assessing the quality of what's called post-acute care, the roughly $60 billion that Medicare spends on home health care and specialty centers where people recover after initial hospitalizations for serious illnesses and surgeries.

And, perhaps even more significantly, CMS officials will need to decide whether to make allowances for the poverty of patients as the agency implements last year's congressional overhaul of Medicare payments for doctors.

CMS is creating a complex set of measures, known as the merit-based incentive payment system, for doctors' reimbursements.

Doctors participating in the new payment system could see their reimbursement cut or raised by as much as 4 percent in 2019 based on assessments of the quality of their care. By 2022, the potential penalties and gains would rise to 9 percent. These payment adjustments will reflect how well or poorly physicians scored on CMS' quality measurements in previous years.

Groups including the California Medical Association asked CMS to revise the current draft proposal to make allowances for doctors with many poor patients.

Steven Larson, president of the California group, told CMS that failing to aid physicians who treat a large share of low-income people "could force them to avoid caring for patients who have the greatest needs."

The stakes are even higher for people on Medicare whose doctors may be impacted by penalties, says David Nerenz, the director of the Center for Health Policy and Health Services Research at Detroit's Henry Ford Health System.

"It's hard to pick up and move a hospital that's been for a hundred years in an inner-city area, but doctors are more mobile," Nerenz says. "You may find a real problem in finding physicians willing to go to or stay in underserved areas."

Still, researchers and lawmakers say that the push for quality measures could improve the quality of care provided for people on Medicare. HHS estimates that 565,000 hospital readmissions were prevented over a five-year period due to efforts to avoid the penalty.

And hospital officials are thinking more deeply about what happens to patients when they head back to their communities, says Elna Nagasako, a physician and researcher at the Washington University School of Medicine in St. Louis who has published work in the journal Health Affairs on socioeconomic factors and readmission rates.

Hospitals are finding new ways to collect information about the challenges that can erode a poor person's health after a hospital stay and communicate those findings to other medical professionals.

Nagasako says there may need to be a more standardized approach, for example, to understanding where a patient will live after discharge. Patients staying temporarily with relatives may be considered to have a home by some doctors, yet they may face some of the same challenges as someone living in a shelter. In other cases, even people living in their own homes may lack basic necessities, she says.

"Technically they may have a roof over their head, but they may not have running water or the landlord may not have taken care of mold," Nagasako says.

Doctors and other health professionals need to be sensitive while seeking this kind of information.

Patients may wonder why questions about their environments are being asked along with more routine medical queries, such as a blood pressure check, Nagasako says.

"It's something that may not have been covered in medical school," she says.

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