There are better ways to identify safety-net hospitals than by using the “safety-net index” developed by MedPAC for that purpose, ASH has written to the Centers for Medicare & Medicaid Services in response to that suggestion in a request for information that CMS included in its proposed FY 2024 inpatient prospective payment system regulation.

In its comment letter on that proposed regulation, ASH devoted an entire section to the question of how best to identify safety-net hospitals.  That section is as follows:

In the proposed rule’s request for information, CMS seeks stakeholder feedback on better ways to define safety-net hospitals for the purpose of more effectively supporting the first pillar in its strategic plan:  advancing health equity.  CMS notes in the preamble that “Although various approaches exist to identifying ‘safety-net providers,’ this term is commonly used to refer to health care providers that furnish a substantial share of services to uninsured and low-income patients.”  CMS goes on to acknowledge that “The Medicare statute also includes special payment provisions for other hospitals in underserved communities, including sole community hospitals, which are the sole source of care in their areas, as well as Critical Access Hospitals and Rural Emergency Hospitals” and concludes that “Given the critical importance of safety-net hospitals to the communities they serve, it is important to be able to identify these hospitals for policy purposes.”  Finally, CMS presents a detailed look at two potential methods for identifying safety-net hospitals:  MedPAC’s proposed safety-net index and area-level indices, specifically the Area Deprivation Index.

ASH believes there is value in applying different definitions to different policy goals, and in this response we use the term “safety-net hospital” to mean a hospital among those best able to address current disparities in health equity.  It seems an appropriate term for this purpose because the “safety net” metaphor reflects the role of hospitals from the perspective of patients who might otherwise fall through the health care delivery system’s cracks.  If we are to address health equity, ASH believes we must identify those hospitals that are best positioned to help individuals suffering from health care disparities.  We see this as distinct from the policy goal of financially supporting hospitals that provide a disproportionate share of their care to low-income and uninsured individuals.  We believe this interpretation of the concept of “safety-net hospital” is necessarily defined by a hospital’s ability to serve disadvantaged individuals and that to identify such hospitals we must start by identifying the communities such an undertaking needs to reach.  It is from this perspective that ASH offers our views on some of the tools CMS suggests.

MedPAC’s Safety-Net Index:  ASH’s View

ASH believes MedPAC’s proposed Medicare safety-net index, while doing a good job of identifying hospitals deserving of additional financial support from Medicare, falls short as a means of identifying safety-net hospitals as defined in this request for information.  Understandably, MedPAC’s focus was on targeting Medicare resources to hospitals that care for low-income Medicare beneficiaries but it does so without regard for the role those same hospitals play in the lives of other low-income individuals.  It also does not seek to identify the extent to which needy communities rely on individual hospitals.

While ASH believes MedPAC’s safety-net index could be refined into a useful tool for identifying Medicare DSH safety-net hospitals, we believe it needs improvements if it is to be useful for identifying safety-net hospitals in general.  Specifically, the index – currently the sum of hospitals’ low-income Medicare share, uncompensated care share, and Medicare share – should be expanded to also include the hospital’s Medicaid share, which is a critical measure of hospitals’ financial dependence on government payment policies that are beyond its control.

The Area Deprivation Index:  ASH’s View

While ASH lauds the notion of identifying challenged communities through the use of area-level indices, we find less merit in any approach based on use of the area deprivation index (ADI).  As part of our long-standing interest in finding better ways of identifying hospitals that should receive Medicare DSH payments and how those payments should be calculated we have explored numerous methodologies over the years and based on that work have concluded that the ADI is not an appropriate tool for identifying recipients of supplemental Medicare funding that would have the greatest impact on health inequities.  Others share ASH’s concern about the ADI, as the February 2023 Health Affairs article “ACO Benchmarks Based On Area Deprivation Index Mask Inequities” explains:

Using national ADI benchmarks may mask disparities and may not effectively capture the need that exists in some of the higher cost-of-living geographic areas across the country. The ADI is a relative measure for which included variables are: median family income; percent below the federal poverty level (not adjusted geographically); median home value; median gross rent; and median monthly mortgage. In some geographies, the ADI serves as a reasonable proxy for identifying communities with poorer health outcomes. For example, many rural communities and lower-cost urban areas with low life expectancy are also identified as disadvantaged on the national ADI scale. However, for parts of the country that have high property values and high cost of living, using national ADI benchmarks may mask the inequities and poor health outcomes that exist in these communities.

The article also offers examples where CMS’s use of ADI for similar purposes produces questionable results.  Among them:

…New York City has both the richest and poorest congressional districts in the country (see exhibit 1). The South Bronx is considered the poorest congressional district in the country. The U.S. Small-area Life Expectancy Estimates Project uses census data from 2010 to 2015 to calculate life expectancy at birth at the census tract level, which we note is older data and a larger geographic area than the census block group used in ADI. Using this life expectancy measure, we see that much of the South Bronx has life expectancy between 69 and 75 years, which is in the lowest two quintiles nationally. The Upper East Side, which is part of the most affluent congressional district in the country, has life expectancy in the high 80s, which is the top quintile nationally. Under CMS’s MSSP regulations—with the exception of only a few census block groups in the South Bronx—these areas in New York all fall into the more advantaged percentiles in national rankings of ADI, obscuring inequality and the needs of populations in the area.

ADI’s two main shortcomings when evaluating its use in this context are its use of proxy information (including housing) rather than directly trying to identify community residents’ health status and its use of national rather than local or regional comparisons of equity.

An Alternate Area-Level Index:  ASH’s “Health Equity Index”

ASH has long searched for better ways to define, identify, and reimburse true safety-net hospitals for the work they do.  Through years of testing different data sources and modeling countless criteria and approaches we have developed our own methodology for doing what CMS seeks in this request for information:  a better way to identify those safety-net hospitals best positioned to address health equity.  We call our methodology our “Health Equity Index.”

As CMS describes in the preamble to the proposed rule, area-level indices “are intended to capture local socioeconomic factors correlated with medical disparities and underservice.”  ASH’s search for a means of identifying individual hospitals that are essential to access to care in their communities led us through a variety of indices, including ADI, the Social Needs Index, the Social Deprivation Index, and other such measures.  Most recently we developed our own index – what we call our “Health Equity Index” – working with the CDC’s “PLACES” data and found it could be used to do a better, more precise job of identifying true safety-net hospitals than any of these other measures.  PLACES data stands out from the others for creating a health equity index because it does not fit the description of an area-level index CMS uses in the preamble.  It is not intended to capture factors associated with medical disparities; it is intended to capture the medical disparities themselves.  We believe this distinction makes it much better suited for identifying the areas with the greatest opportunities to improve health.

Using a subset of available PLACES data, ASH’s Health Equity Index is built on what we call a “Composite Health Disparity Score” that is created for each zip code.  This Composite Health Disparity Score is the simple average of a zip code’s z-scores in relation to the entire state’s scores for each PLACES measure.  The z-score represents how far above or below the mean score that zip code ranks for that measure.

Unlike many other indices, ASH’s Health Equity Index measures relativity at a state rather than national level.  ASH strongly believes that measures of equity must be made below a national level.  Health care delivery systems are creatures of state influences such as licensure, regulation, the health insurance market, and Medicaid and CHIP program administration.  If we are to influence health outcomes, we must measure them at actionable levels.

The Health Equity Index can then be used to identify the communities in each state with the greatest opportunities to improve health.  We call these “Health Opportunity Zones” and define them as those zip codes with a Composite Health Disparity Score greater than one standard deviation above the mean Composite Health Disparity Score for the state in which they are located.

Finally, we define hospitals that provide more than 10 percent of the Medicare inpatient discharges or outpatient claims attributable to patients residing within a Health Opportunity Zone as “Critical Community Partner Hospitals” and believe these are precisely those that CMS seeks to identify as safety-net hospitals in this request for information.

ASH also has developed our own proposed methodologies for distributing additional Medicare resources to safety-net hospitals identified through this process.  We have shared this methodology with MedPAC and you can learn more about it here, on the ASH web site, and we also have appended a description of ASH’s proposal to advance health equity to this letter.

A Final, Vital Consideration:  Resources

ASH believes the safety-net index developed by MedPAC would do a better job of recognizing the financial challenges associated with providing care to low-income, uninsured, and Medicare-covered populations than the current Medicare DSH methodology.  We also believe the safety-net index would benefit from the Medicaid-related refinements we describe briefly above.

This request for information, however, is about health equity, and ASH does not believe the hospitals targeted for supplemental payments through the current Medicare DSH program are necessarily the same hospitals best positioned to advance health equity.  If the administration is serious about addressing health equity for the Medicare population – and ASH believes it is – then CMS needs to identify the communities where health outcomes are unacceptable and provide additional financial resources to the hospitals that are serving those communities.

It is unreasonable to expect to be able to address social determinants of health and the health inequities they produce without making new, meaningful investments in the providers that do the most to undertake this challenge and that means new federal money.  ASH is not unmindful of the challenge this poses in the current economic climate, but we also recognize that if health equity is truly a priority of CMS and the administration they need to make funding a program to address health equity a priority as well.  ASH strongly encourages CMS to work within the Department of Health and Human Services and the administration, and with Congress, to make health equity a serious policy priority and to support that priority with the resources needed to make health equity solutions possible.

Go here to see ASH’s entire letter to CMS.