Fig. 1 All payment models are subject to inequity.
Courtesy of John Cherf, MD, MPH, MBA, and Shreyasi Deb, PhD, MBA


Published 12/1/2017
John Cherf, MD, MPH, MBA; Shreyasi Deb, PhD, MBA

Healthcare Disparities Concern Continue

New value-based payment models can make a difference
Health and healthcare disparities are important measures of difference that cannot be confused or ignored.

Disparities in the quality of health across populations are well-documented in both developed and developing nations. The 2016 National Healthcare Quality and Disparities Report shows that the quality of health care has improved gradually each year, but gains remain uneven. Minorities, particularly African-Americans and Hispanics in low-income and uninsured households, have shown smaller gains.

Healthy People 2020 (a U.S. Department of Health and Human Services [HHS] initiative) defines health equity as the ";attainment of the highest level of health for all people. Achieving health equity requires valuing everyone equally with focused and ongoing societal efforts to address avoidable inequalities, historical and contemporary injustices, and the elimination of health and healthcare disparities."

Moreover, it is important to distinguish the differences between health ";equity" and health ";equality." Health equity refers to the study and causes of differences in the quality of health and health care across different populations and refers only to the absence of disparities in controllable or remediable aspects of health. It is not possible to achieve complete equality in health, as some factors of health are beyond human influence.

Thus, inequity implies some kind of social injustice (based on an inequality). If one population dies younger than another because of genetic differences, a nonremediable/controllable factor, we tend to say that there is health inequality but not inequity.

On the other hand, if a population has a lower life expectancy due to lack of access to medications, the situation would be classified as health inequity. These inequities may include differences in the ";presence of disease, health outcomes, or access to health care" among populations with a different race, ethnicity, sexual orientation, or socioeconomic status (Table 1).

Health equity falls into two major categories: horizontal equity, the equal treatment of individuals or groups in the same circumstances; and vertical equity, the principle that individuals who are unequal should be treated differently according to their level of need.

Disparities and the new payment models
The value-based payment models from the U.S. Centers for Medicare & Medicaid Services (CMS) are built on the Triple Aim of the following principles:

  1. improving the patient experience of care, including quality and satisfaction
  2. improving the health of populations
  3. reducing the per capita cost of healthcare

Table 2 summarizes the impact of equality and inequality on socioeconomic measures such as education, population density, structural inequality, and environmental hazards. These models are likely to impact the existing healthcare disparities that are driving discussion and debate on this topic.

One primary concern is that the payment of bonuses and penalties may exacerbate the difference in the quality of healthcare services between more affluent and less affluent patients, which may lead to inequality and inequity. Providers with lower quality scores often care for higher numbers of minority patients and those who have lesser means, leading researchers to ask if hospitals provide lower quality care to minorities.

Fig. 1 presents a continuum of payment models that move from fee-for-service methods that encourage volume, to prospective capitation, which encourages the highest accountability from providers. In-between these extremes are the two tracks of the Quality Payment Program (QPP): the Merit-based Incentive Payment System (MIPS) and the Advanced Alternative Payment Model (APM).

In March 2016, HHS set a goal of tying 30 percent of Medicare fee-for-service payments to quality or value through APMs by 2016 and 50 percent by 2018. Given the stringent requirements for participation in an APM, most clinicians, and especially specialist physicians, will continue to be on the MIPS track for at least the first few years of the QPP. As the healthcare economy transitions from a volume-based to a value-based market, it is incumbent for providers, such as orthopaedic surgeons, to limit the potential adverse impact on health equity.

Impact on orthopaedics
Analyses using both Medicare and Veterans Administration data have shown racial/ethnic disparities in joint arthroplasty. The reasons for these differences include patient-level factors, provider-level factors, and system-level factors.

The Medicare APMs in orthopaedics, such as the Comprehensive Care in Joint Replacement (CJR) Model, do not control for risks arising from these factors, leading to concerns that such model designs may unintentionally penalize hospitals (and therefore, surgeons) that care for medically complex patients or for patients who have lower socioeconomic status.

An analysis of Medicare claims data from Michigan found that reconciliation payments to hospitals under the CJR model were reduced by $827 per episode for each standard-deviation increase in a hospital's patient complexity. This study also found that risk adjustment could increase reconciliation payments to some hospitals by as much as $114,184 annually.

Thus, although it is a complicated area, incorporating socio-economic and clinical risk adjustments in these payment models is necessary to mitigate the impact of disparities in the practice of medicine. The current risk adjustment and comorbidity indices—such as Charlson, Elixhauser, and the CMS risk adjustment model Hierarchical Condition Category—are found to have weak discriminatory ability to predict postacute discharge settings and hospital readmission following joint replacement.

As health care moves toward value-based payment models, more robust predictors of outcomes are necessary. Such predictive ability is also important in terms of reimbursement. Avoidance and reduction of adverse events are imperative for keeping episode costs low in CJR episodes.

Most of the current studies on disparities in orthopaedic care are limited to joint replacements. There should be more research on how the new value-based payment models impact disparities in other areas of orthopaedics. At the same time, we need to continue our efforts to develop risk adjustment models and outcome measures in orthopaedics.

John Cherf, MD, MPH, MBA, is the practice and payment section leader of the AAOS Health Care Systems Committee, a member of the AAOS Council on Education, and a member of the AAOS Now Editorial Board.

Shreyasi Deb, PhD, MBA, is senior manager, health policy, in the AAOS office of government relations.


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