California safety-net hospitals likely to be penalized by ACA value, readmission, and meaningful-use programs

The Affordable Care Act includes provisions to increase the value obtained from health care spending. A growing concern among health policy experts is that new Medicare policies designed to improve the quality and efficiency of hospital care, such as value-based purchasing (VBP), the Hospital Readmissions Reduction Program (HRRP), and electronic health record (EHR) meaningful-use criteria, will disproportionately affect safety-net hospitals, which are already facing reduced disproportionate-share hospital (DSH) payments under both Medicare and Medicaid. We examined hospitals in California to determine whether safety-net institutions were more likely than others to incur penalties under these programs. To assess quality, we also examined whether mortality outcomes were different at these hospitals. Our study found that compared to non-safety-net hospitals, safety-net institutions had lower thirty-day risk-adjusted mortality rates in the period 2009-11 for acute myocardial infarction, heart failure, and pneumonia and marginally lower adjusted Medicare costs. Nonetheless, safety-net hospitals were more likely than others to be penalized under the VBP program and the HRRP and more likely not to meet EHR meaningful-use criteria. The combined effects of Medicare value-based payment policies on the financial viability of safety-net hospitals need to be considered along with DSH payment cuts as national policy makers further incorporate performance measures into the overall payment system.