Minorities Might Suffer Under New Medicare Payment System

Medicare Payment System May Widen Disparities in Care for Minorities

The worst performing hospitals in the United States, with low quality and high cost of care, have significantly higher populations of elderly black, Hispanic, and Medicaid patients compared to high-quality, low-cost hospitals, according to a new study in Health Affairs, and this may affect how these hospitals are reimbursed by Medicare.

Medicare’s new value-based purchase program will put higher-performing hospitals in a position to benefit financially, while the worst institutions will need to improve on both costs and quality to avoid incurring financial penalties and exacerbating disparities in care, say the report’s researchers, who were supported by the Commonwealth Fund.


“Hospitals that can simultaneously provide high-quality care and manage their costs well are likely to come out ahead under health reform,” the study says. “That’s because the law authorizes the Centers for Medicare and Medicaid Services to make higher payments to hospitals that achieve better performance and cut reimbursements for those that fail to improve.”


Nearly 15% of patients cared for in the “worst” hospitals are black, compared to just 6.8% in the “best” hospitals. Similarly, the hospitals faring worse in terms of performance have higher Hispanic and Medicaid populations, at 4% and 23%, respectively, compared to the better performing hospitals’ populations of 1% and 15%.


The new system may end up prolonging a vicious cycle, as it will financially penalize badly performing hospitals, which may result in continued high costs paired with low quality of care. However, it might be necessary to give incentive to provide better care, as patients with acute myocardial infarction or pneumonia who were admitted to the low-cost, low-quality hospitals had 12% to 19% higher odds of death than those admitted to the best hospitals, with patients at the worst hospitals at 7% to 10% higher odds.

Lower-performing hospitals are typically small public or for-profit institutions in the South, while the higher-performing facilities are typically non-profit institutions in the Northeast, the researchers found.

View the Health Affairs study here.

Written by Alyssa Gerace