The purpose of this study was to determine whether pay-for-performance (PFP) increases existing racial care disparities.

Medicare's PFP program provides financial rewards to hospitals whose care performance ranks in the highest quintile relative to peers and reduces funding to hospitals that rank in the lowest quintile. Pay-for-performance is designed to improve care but may disproportionately penalize hospitals caring for large minority populations.

Using Medicare data, 3449 US hospitals were ranked by performance on PFP process measures for acute myocardial infarction (AMI), community-acquired pneumonia (CAP), and heart failure (HF). These rankings were compared with the percentage of African American (AA) patients in a center. We determined the eligibility for financial bonus (highest quintile ranking) or penalty (lowest quintile) among centers treating large AA populations (≥20%) versus not after adjusting for hospital facility (catheterization, percutaneous coronary intervention, surgery), academic status, number of hospital beds, location, patient volume, and region.

The percentage of AA patients treated by a center was inversely associated with performance for AMI and CAP (P < .01) but not HF (P = .06). Relative to hospitals with <20% AA, those with ≥20% AA were less likely eligible for financial bonuses and more likely to face penalties: for AMI, adjusted odds ratio (OR) 0.7 (95% CI 0.5-1.0) and 1.8 (1.4-2.4), respectively; for CAP, OR 0.5 (95% CI 0.3-0.6) and 2.3 (1.8-2.9), respectively; for HF, OR 1.0 (95% CI 0.7-1.2) and 1.2 (0.9-1.5), respectively.

Hospitals with large minority populations may be at financial risk under PFP. Thus, PFP may worsen existing racial care disparities.