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Value-based payment penalties disproportionately impact safety net hospitals

Neither safety net nor non-safety net hospitals showed improvements in the four infections analyzed, including after VBC was implemented.

Jeff Lagasse, Associate Editor

Value-based incentive programs aimed at reducing health care-associated infections did not improve infection rates in either safety net or non-safety net hospitals, found a study by researchers at Boston Medical Center in collaboration with Harvard Pilgrim Health Care Institute.

Published in JAMA Network Open, the results also demonstrate persistent disparities in infection rates between the two hospital types, with higher rates of healthcare-associated infections in safety net hospitals.


In 2001, safety net hospitals were defined by the Institute of Medicine as hospitals that provide care to a large share of uninsured or Medicaid patients, regardless of their ability to pay. As a result, many safety-net hospitals are under more financial stress than non-safety-net hospitals and rely on supplemental funding from both the state and the federal government to remain operational. 

According to America's Essential Hospitals, the average operating margin for its national membership of safety net hospitals was 1.6% in 2017; for all hospitals nationwide, that rate was 7.8%.

Reducing healthcare-associated infections is a main target of quality improvement efforts across all health systems. The Affordable Care Act established two value-based incentive programs to target healthcare-associated infections that were put in place in 2014: the Hospital Value-Based Purchasing (HVBP) program, which rewards or penalizes the highest and lowest performing hospitals by up to two percent of total inpatient payments received, and the Health Care-Acquired Conditions Reduction Program (HACRP), which reduces payments by up to one percent for the lowest performing hospitals. 

These programs compare hospital performance for specific healthcare-associated infections based on data that hospitals and health systems publicly report to the Centers for Disease Control and Prevention National Healthcare Safety Network against national benchmarks.

For this study, the researchers analyzed data from 618 acute care facilities across the country, including 145 safety net hospitals, that reported data to the National Healthcare Safety Network and had implemented HACRP and HBVP between 2013 and 2018. The specific healthcare-associated infections investigated were central line-associated bloodstream infections; catheter-associated urinary tract infections; and surgical site infections after colon surgery and abdominal hysterectomy.

The results showed that neither safety net nor non-safety net hospitals showed improvements in the four infections analyzed, including after the value-based programs were implemented. Safety net hospitals had higher rates of central line-associated bloodstream infections, catheter associated urinary tract infections and surgical site infections after colon surgery compared with non-safety net hospitals both before and after value-based program implementation.

Insurance coverage provided through Medicaid and Medicare, while critical, does not typically cover the actual cost of care. This results in safety net hospitals relying on supplemental government funding to continue to provide necessary healthcare services to patients. Currently, the availability of these uncompensated care funds is decreasing, and could be eliminated, which would have a detrimental impact on safety net hospitals and other healthcare systems.


In June, The Department of Health and Human Services, through the Health Resources and Services Administration, released an additional $25 billion from the Provider Relief Fund to Medicaid, Children's Health Insurance Program providers and safety net hospitals. Safety net hospitals claimed a $10 billion chunk of that total.

The payment to each provider was at least 2% of reported gross revenue from patient care. The final amount each provider received was determined after the data was submitted, including information about the number of Medicaid patients they serve.

The $10 billion to safety net hospitals was distributed in June via direct deposit.

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