Potential unintended financial consequences of pay-for-performance on the quality of care for minority patients

Objectives: The purpose of this study was to determine whether pay-for-performance (PFP) increases existing racial care disparities. Background: Medicare's PFP program provides financial rewards to hospitals whose care performance ranks in the highest quintile relative to peers and reduces funding to hospitals that rank in the lowest quintile. Pay-for-performance is designed to improve care but may disproportionately penalize hospitals caring for large minority populations. Methods: Using Medicare data, 3449 US hospitals were ranked by performance on PFP process measures for acute myocardial infarction (AMI), community-acquired pneumonia (CAP), and heart failure (HF). These rankings were compared with the percentage of African American (AA) patients in a center. We determined the eligibility for financial bonus (highest quintile ranking) or penalty (lowest quintile) among centers treating large AA populations (≥20%) versus not after adjusting for hospital facility (catheterization, percutaneous coronary intervention, surgery), academic status, number of hospital beds, location, patient volume, and region. Results: The percentage of AA patients treated by a center was inversely associated with performance for AMI and CAP (P < .01) but not HF (P = .06). Relative to hospitals with <20% AA, those with ≥20% AA were less likely eligible for financial bonuses and more likely to face penalties: for AMI, adjusted odds ratio (OR) 0.7 (95% CI 0.5-1.0) and 1.8 (1.4-2.4), respectively; for CAP, OR 0.5 (95% CI 0.3-0.6) and 2.3 (1.8-2.9), respectively; for HF, OR 1.0 (95% CI 0.7-1.2) and 1.2 (0.9-1.5), respectively. Conclusions: Hospitals with large minority populations may be at financial risk under PFP. Thus, PFP may worsen existing racial care disparities.