Hospitals that see the most Black patients are paid less than other hospitals, report finds

How American hospitals are paid for care is structurally designed to reimburse less for care provided to Black patients, according to a new study from physician researchers at UCLA, Princeton, Johns Hopkins and Harvard.

The study, released Aug. 3 and shared with Becker's, used Medicare and American Hospital Association data from 5,740 U.S. hospitals. The data was used to analyze what percentage of each hospital's Medicare patients were Black, the average severity of illnesses among a hospital's patients and hospital claims submitted to Medicare.

There are 574 "Black-serving" hospitals, or the top 10 percent of hospitals with the most Black patients. At those 574 hospitals, nearly 44 percent of Medicare patients are Black, compared to 5.2 percent at remaining hospitals.

"Medicaid patients' second-class status was baked in at the program's outset ... [when] Congress chose to separate coverage for the poor (many of whom were Black) from that of the elderly (most of whom were White)," the authors wrote. "Medicare offered seniors a federal plan modeled on Blue Cross coverage, while Medicaid, passed simultaneously, relegated the poor to a welfare-based program largely controlled by state governments, some of them openly racist."

Four key takeaways:

  1. Black-serving hospitals are paid $283 less than other hospitals for every day a patient is there.

  2. Black-serving hospitals lost an average of $17 for every day a patient was there, while other hospitals made an average of $126 per day per patient.

  3. The disparities in daily reimbursements were not because of differences in patient illness severity or hospital size, location, ownership model or teaching status.

  4. If reimbursement levels were equal, Black-serving hospitals would have received an additional $14 billion in payments in 2018 alone, or $25 million per hospital.

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