Online Program

What's So Standard About Risk-Standardization? (302809)

Keywords: risk-standardization, indirect standardization, health care, institutional performance

Indirect standardization is a common technique for risk-adjusting institutional-level rates of events. As part of the Affordable Care Act, hospitals are now required to report certain adverse events (such as readmissions and mortality), from which risk-adjusted rates are produced using the indirect standardization method. These risk-standardized rates are then used to compare hospitals nationwide in terms of their performance. The penalty for poor performance is severe, meaning already budget-strapped hospitals stand to lose millions of dollars in reimbursements if their risk-standardized rates are among the worst. However, the method of indirect standardization is not so standard. We highlight our experience uncovering two methods of indirect standardization and demonstrate how their use changes the end result in terms of hospital-level risk-standardized rates, using hospital-acquired pressure ulcers as an example. Our findings illustrate the importance of investigating and communicating the impact of various approaches when methodological choices exist.