Where Does the Money Go? Analyzing the Patient Experience in Safety-Net Hospitals

Background: Low-income, publicly insured admissions historically cost more to treat than does the average patient. To ensure that hospitals are reimbursed an adequate amount for care of indigent populations, Medicare reimburses hospitals an additional percentage amount according to federally set financial schedule. At 15% of a disproportionate patient percentage, a hospital is reimbursed an extra 2.5% of the standard prospective payment rate. Objective: This research seeks to determine whether hospital qualification as a Medicare Disproportionate Share Hospital results in higher patient experience ratings. Methods: A regression discontinuity method was used to determine the effect of lagged Disproportionate Share Hospital (DSH) status on next year patient experience ratings. The Hospital Consumer Assessment of Healthcare Providers and Systems data provide publicly available patient ratings. Results: On average, hospital ratings increase by 6% as a result of DSH status. Hospital ratings increase by an average of 6.5% when nonprofit hospitals are analyzed. This finding is primarily driven by patient facility cleanliness and medical provider communication ratings. Conclusions: The federal mandate that individuals purchase health insurance in the United States coupled with the state expansion of Medicaid coverage will theoretically eliminate the need for Medicare DSH payments. It is calculated, however, that hospitals will need increased Medicaid reimbursements of more than $300 per patient to make up for the loss of Medicare DSH reimbursements. Hospitals will likely suffer financially as a direct result of reduced Medicare reimbursements through the DSH program.