Experience incentivizing reduction of racial and ethnic disparities in a Medicaid hospital quality incentive program.

Objectives: We aimed to describe the experience of a state Medicaid agency incentivizing reduction of racial and ethnic disparities in a hospital quality incentive program (QIP).

Study Design: Retrospective review of a decade of experience implementing a hospital health disparity (HD) composite measure.

Methods: Observational analysis of programwide trends in missed opportunity rates and between-group variance (BGV) for the HD composite from 2011 to 2020 and subanalysis of 16 metrics included in the HD composite for at least 4 years over the decade.

Results: Programwide missed opportunity rates and BGV fluctuated widely from 2011 to 2020, likely due to variation in measures included in the HD composite. When the 16 measures that were included in the HD composite for at least 4 years were collapsed into a hypothetical 4-year period, missed opportunity rates decreased across the 4 consecutive years, from 47% in year 1 to 20% in year 4. Differences among racial and ethnic subgroups also decreased across the 4-year period, as reflected in the BGV decrease from 7.85 × 10-4 in year 1 to 5.10 × 10-4 in year 4.

Conclusions: Construction of a composite measure, use of a summary disparity statistic, and measure selection are key considerations in the design and interpretation of equity-focused payment programs. This analysis revealed improved aggregate quality performance and a modest reduction in racial and ethnic disparities for measures included in the HD composite for at least 4 years. Further research is needed to evaluate the association between equity-oriented incentives and health disparities.