Importance of Considering Health Disparities in Future Value-Based Payment Models

A recent research letter published in the New England Journal of Medicine emphasizes the necessity of carefully designing future health incentive programs to avoid unintended consequences related to health disparities. The study examines the End-Stage Renal Disease Treatment Choices Model, a pay-for-performance initiative introduced by the Centers for Medicare and Medicaid Services (CMS). This program aims to promote increased use of home dialysis and kidney transplants among Medicare beneficiaries with end-stage kidney disease, with the goals of improving quality of life and reducing healthcare costs.

Patients opting for home dialysis or kidney transplants generally experience better quality of life than those receiving traditional in-center dialysis. The model is among the largest randomized evaluations of pay-for-performance strategies in the U.S., assigning dialysis facilities and nephrologists in certain regions to financial incentives based on their patients' treatment choices, including the use of home dialysis and transplants.

In its first year, the program's financial penalties disproportionately affected facilities serving socially at-risk populations. To address this, Medicare introduced incentives targeting facilities treating many individuals who are dually eligible for Medicare and Medicaid or receiving low-income subsidies, aiming to reduce disparities in access to advanced treatments.

Despite these efforts, the incentives did not significantly narrow existing disparities in home dialysis and transplant access, likely because social risk factors were not factored into the incentive calculations. However, the initiatives did lessen penalties among facilities serving predominantly Black, Hispanic, uninsured, Medicaid-covered populations, or residents of high-disadvantage neighborhoods.

Rachel Patzer, Ph.D., highlighting the findings, stressed the importance of payment systems recognizing the challenges faced by facilities serving disadvantaged communities. Conditions such as diabetes, obesity, and hypertension, which are major causes of end-stage kidney failure, are more prevalent in these populations and influence treatment disparities.

The study advocates for designing future incentive models that account for social determinants of health to prevent unfair penalties and support facilities serving vulnerable communities. Properly structured incentives can help address long-standing health disparities and improve equitable access to quality care.

Source: https://medicalxpress.com/news/2025-04-consideration-consequences-health-disparity-incentives.html