Association of the Hospital Value-Based Purchasing Program with Condition-Specific Mortality: Experience from the First Five years of Medicare’s Pay-for-Performance Program

Medicare’s Hospital Value Based Purchasing Program (HVBP), implemented since 2013, aims to improve inpatient care quality using hospital financial incentives. In 2014, performance on 30-day mortality for acute myocardial infarction (AMI), heart failure (HF), and pneumonia were added to the multiple other quality measures used in determining the size of hospital penalties or bonuses for Inpatient Prospective Payment System (IPPS) hospitals - the hospitals targeted by HVBP. Prior studies used control hospitals that were systematically different from hospitals in which HVBP was implemented, raising concerns that these differences may confound the estimation of changes resulting from the HVBP. We stratified IPPS hospitals based on the extent of their reliance on Medicare patients and using publicly reported data on hospital performance from 2009-2016 examined the association between HVBP incentives and changes in 30-day mortality by comparing pre- to post-HVBP changes in hospital 30-day mortality among high vs. low Medicare share hospitals. We examined 30-day mortality changes for three admission cohorts – acute myocardial infarction (AMI), heart failure (HF) and pneumonia – that were all introduced into the HVBP in 2014. We obtained mortality data from the Centers for Medicare and Medicaid Services’ (CMS’) Hospital Compare, information on hospital type from the CMS Final Impact Rule, and hospital characteristics data from the American Hospital Association Annual Survey. Our anlytic sample comprised 1,915 eligible IPPS hospitals from 2009-2016 (1,659 (256) high (low) Medicare share hospitals). We evaluated the association of the HVBP with the mortality outcomes using a difference-in-differences approach, whereby pre- vs. post-HVBP changes in the outcome in high Medicare share hospitals were contrasted with corresponding changes in low Medicare share hospitals. Specifically, we used a linear (hospital-level) random effects regression model and adjusted for hospital characteristics and year effects to account for secular trends in the mortality outcomes. Given potential changes in 30-day readmission rate for AMI, HF, and pneumonia associated with the Hospital Readmission Reduction Program (HRRP) - another CMS incentive program that was introduced alongside the HVBP in 2010 - there may have been unintended spillover effects on 30-day mortality for the aforementioned conditions. As a sensitivity analysis, we re-estimated variants of our main models that included 30-day risk-adjusted readmission rate for the corresponding admission cohort as an additional covariate. We found that introduction of the HVBP was associated with a relative increase in 30-day AMI mortality (0.27%, 95% confidence interval (CI) [0.01%, 0.53%]) and 30-day mortality for pneumonia admissions (0.29%, 95% CI [0.10%, 0.48%]), but no change in 30-day mortality for HF admissions in high Medicare share hospitals vs. low Medicare share hospitals. Additionally, we did not find evidence of spillover effects from changes in readmission rates due to the HRRP (i.e., higher mortality rates for targeted conditions). The lack of improvement in patient mortality through five years of the HVBP program suggests that careful re-evaluation of the program is warranted, especially in the light of previous work in behavioral economics which show that financial incentives can be detrimental for motivation and can lead to worse hospital performance.