Changes in racial disparities under public reporting and pay for performance Rachel M. Werner

Can market-based QI decrease disparities? Disparities stem in part from location of care –Opportunity to reduce disparities by improving performance among low-quality providers –Public reporting and P4P may reduce disparities

Market-based QI may increase disparities Consumer-driven increases –Limited access to information –Limited access to high-quality providers Provider-driven increases –Limited resources to improve quality –Selection of low-risk patients

How does P4P affect resource- poor hospitals? Werner RM, Goldman LE, Dudley RA. Comparison of change in quality of care between safety-net and non-safety-net hospitals. JAMA 2008;299:

Financial resources are important for QI Resource-poor hospitals (i.e. safety-net hospitals) may not be able to invest in quality improvement Low-performance at baseline reduces economic rewards Rich become richer while poor become poorer

Objective To examine changes in disparities in quality of care between safety-net and non-safety-net hospitals under public reporting To estimate the financial impact of P4P at safety-net hospitals

Empirical approach Publicly available data on hospital performance – All acute care non-federal hospitals in U.S. –3,665 hospitals –2004 to 2006 Compare changes in performance across % safety-net care at hospitals –% Medicaid

Hospital performance measures 3 condition-specific composites: –Acute myocardial infarction Aspirin at admission Aspirin at discharge ACE-inhibitor for LV dysfunction Beta-blocker at admission Beta-blocker at discharge –Heart failure Assessment of LV function ACE-inhibitor for LV dysfunction –Pneumonia Oxygenation assessment Pneumococcal vaccination Timing of initial antibiotic therapy

Hospital performance in 2004 Percent safety-net:

Adjusted changes in hospital performance Change in performance (2004 to 2006) Non- safety-net Safety-net Difference Acute myocardial infarction * Heart failure * Pneumonia *** *.05>p-value≥.01; ***p-value<.001 Adjusted for: hospital characteristics, baseline performance, states fixed-effects

Changes in top-ranked hospitals Low Middle High % Safety-net Low Middle High % Safety-net Low Middle High % Safety-net

Changes in top-ranked hospitals Low Middle High % Safety-net Low Middle High % Safety-net Low Middle High % Safety-net

Pay-for-performance simulation CMS hospital P4P demonstration project In 2004, hospital receive bonuses based on relative performance In 2006, hospitals face penalties for not achieving performance above threshold

Changes in % bonus % Safety-net

Changes in % bonus % Safety-net

Summary Safety-net hospitals had smaller improvements in performance between 2004 and 2006 Safety-net hospitals were less likely to be identified as top-performers by 2006 Under P4P, safety-net hospitals would have substantially smaller payments by 2006

Implications Hospitals serving a disproportionate share of minority and low income patients are in worse financial condition at baseline In setting of public reporting or P4P, widening performance gap could further worsen finances Declining finances may further worsen clinical quality

Does “cream-skimming” increase disparities? Werner RM, Asch DA, Polsky D. Racial profiling: the unintended consequences of coronary artery bypass graft report cards. Circulation. 2005;111:

Physician response to public reporting In 1991, New York State began publicly rating cardiac surgeons based on their mortality rates Composition and risk profiles of patients undergoing CABG has changed –Harder for high-risk patients to find a surgeon –Schneider and Epstein 1996 –The number and severity of patients transferred out of NY increased –Omoigui et al 1996 –Lower illness severity of patients receiving CABG in report cards states compared to other states –Dranove et al 2003

Statistical discrimination Because of clinical uncertainty physicians use beliefs about a group to make decisions about an individual

Statistical discrimination in the setting of public reporting Physicians may avoid patients with high unmeasured severity If surgeons believe racial and ethnic minorities will have worse outcomes, surgeons will preferentially treat white patients after report cards are released

Empirical approach All patients admitted with AMI in New York –n = 310,412 Compared to a national sample of patients admitted with AMI –n = 618,139 Differences in CABG use between white vs. black and white vs. Hispanic over 2 time periods: –Before report cards ( ) –After report cards ( )

Changes in racial disparities after public reporting

Summary There was a relative increase in disparities in CABG use after public reporting No relative change in complements (cardiac catheterization) or substitutes (angioplasty) Relative change in CABG use for both blacks and Hispanics

Implications Racial/ethnic minorities have lower rates of CABG use before public reporting Public reporting may cause increased pressure for physicians to perform well If race is a signal for severity, racial disparities may increase –Quality may worsen for subgroups of patients even as overall quality increases

Reducing racial disparities with market-based incentives Changes in financial incentives –Reward improvements in care in addition to relative rank –Provide direct subsidies for quality improvement Changes in measures –Directly reward reduced disparities –Stratified performance measures