Health equity incentive in P4P model needs adjusting

A health equity incentive in CMS' pay-for-performance model for end-stage renal kidney disease reduced financial penalties among dialysis facilities treating a disproportionate number of patients with social risk factors. However, the incentive failed to narrow disparities in key outcome metrics, according to a new research letter.

The research letter published in the New England Journal of Medicine found that disparities in the rates of home dialysis, kidney transplantation and placement on a transplant waiting list did not narrow following the implementation of a health equity incentive in the End-Stage Renal Disease Treatment Choices (ETC) Model.

The ETC Model is one of the largest randomized evaluations of pay-for-performance models in the U.S., assigning dialysis facilities and nephrologists in about 30% of hospital referral regions to receive financial awards or penalties. The incentives are based on three outcome measures: the use of home dialysis, kidney transplantation ad placement on transplant waiting list.

CMS launched in 2021 but noticed in its inaugural year that dialysis facilities that treated more patients with social risk factors received more financial penalties. Subsequently, CMS added a health equity incentive to the ETC model to benefit facilities treating disproportionately more patients who are dually eligible for Medicare and Medicaid or receiving Medicare’s low-income subsidy.

In the ETC Model's second year, the health equity incentive reduced financial penalties among facilities that disproportionately served patients who were Black, Hispanic, uninsured or covered by Medicaid. The incentive adjustment was also linked to fewer penalties for facilities treating more patients living in the most socially disadvantaged neighborhoods, the research letter found.

However, the ETC Model failed to significantly improve outcomes among these facilities, possibly due to social risk factors not considered in the health equity incentive calculation, the research letter stated.

"Major causes of end-stage kidney failure include diabetes, obesity and hypertension, all conditions which significantly impact individuals in disadvantaged communities throughout the course of their lives," said research letter co-author Rachel Patzer, PhD, MPH, president and CEO of Regenstrief Institute and the Leonard Betley Professor of Surgery at the IU School of Medicine.

"It’s important that payment systems recognize the facilities that disproportionately serve patients in these communities, so that they are not unfairly penalized and can continue to help meet their patients’ needs," Patzer continued.

In addition to Patzer, co-authors included Regenstrief Institute and the IU School of Medicine research scientists Adam Wilk, PhD, and Kelsey Drewry, PhD, M.A. Both Wilk and Drewry are health economists and health services researchers.

Together, the authors called "careful consideration of the design and consequences of health-equity incentives in future pay-for-performance models."

CMS is testing health equity incentives in other pay-for-performance and other value-based care models. The models include the newer accountable care organization (ACO) program, ACO REACH, and the Making Care Primary (MCP) Model.

Many provider organizations have voiced concerns that it is necessary to adjust performance in value-based care models for social risk factors in order to achieve fair assessment and reward providers accordingly.

However, the Trump administration recently terminated the MCP Model early, along with the ETC Model, Primary Care First Model and Maryland Total Cost of Care Model.

Jacqueline LaPointe is a graduate of Brandeis University and King's College London. She has been writing about healthcare finance and revenue cycle management since 2016.