The question of whether Medicare should consider the socio-economic status of the patients hospitals serve when it judges the effectiveness and quality of care hospitals provide continues to stir discussion and debate in the health care community.

The issue arose recently in the context of the Centers for Medicare & Medicaid Services’ new star ratings of hospitals, which some groups maintained could be unfair to hospitals that serve especially high proportions of low-income patients.

The same issue has arisen in discussions about the fairness of Medicare’s hospital readmissions reduction program, with legislation seeking to address this currently before Congress, and could arise again soon as CMS continues to implement its new merit-based incentive payment system (MIPS).

Proponents of adjusting ratings based on the socio-economic status of the patients hospitals serve maintain that such providers should not be penalized for challenges beyond their control. Those who oppose such adjustments do not want CMS to “…mask potential disparities or minimize incentives to improve the outcomes of disadvantaged populations.”

The National Association of Urban Hospitals has long called for socio-economic risk adjustment of Medicare’s readmissions reduction program (most recently here), maintaining that the large numbers of low-income patients private safety-net hospitals serve are more challenging to treat than typical hospital patients and more likely to require post-discharge readmission to address continuing medical and social issues. NAUH has endorsed H.R. 1343, the Establishing Beneficiary Equity in the Hospital Readmissions Program Act, and S. 688, a bill of the same name in the Senate, both of which would direct CMS to introduce such risk adjustment to the program.

CMS continues to study the issue. Even as it awaits the results of a two-year review by the National Quality Forum, its Office of the Assistant Secretary for Planning and Evaluation is performing its own analysis as part of a broader effort to reform Medicare post-acute care payments.

For a closer look at this issue, see this article from CQ Roll Call presented by the Commonwealth Fund.