Taking an All-Patient Approach to Advancing Health Equity

As payers incorporate much-needed financial incentives to advance health equity, provider organizations and clinically integrated networks (CINs) should adopt payer-agnostic approaches for true transformation.

Both public and private payers have begun incorporating financial incentives into contracts with providers to advance health equity. The ACO (accountable care organization) Realizing Equity, Access, and Community Health (REACH) Model is one of the first efforts by the Centers for Medicare & Medicaid Services (CMS) Innovation Center to incorporate financial mechanisms explicitly tied to health equity. Specifically, a REACH ACO’s global budget is increased or decreased based on the vulnerability of its patient population, as measured by attributed beneficiaries’ score on the Area Deprivation Index and dual-eligibility status. Participants must also develop a health equity plan and meet health equity data reporting requirements; the reported data are used to calculate a quality bonus.

Additional Medicare incentives

In alignment with ACO REACH, CMS recently incorporated changes into the Medicare Shared Savings Program (MSSP) to incentivize health equity. Beginning in performance year (PY) 2023, ACOs can earn additional quality bonus points for delivering high-quality care to vulnerable patient populations while also meeting certain quality reporting requirements. Additionally, beginning in PY 2024, certain ACOs serving high proportions of underserved patient populations can receive advance investment payments to enable the delivery of whole-person care.

In the FY2024 Inpatient Prospective Payment System (IPPS) proposed rule, released in April 2023, CMS included a series of health equity related proposals, including a new Health Equity Adjustment bonus that would be added to a hospital’s Total Performance Score. The prominence of health equity in the IPPS proposed rule should be a signal to stakeholders that policies to promote health equity will be a theme in rulemaking for years to come.

Medicare Advantage Incentives

In similar fashion to traditional Medicare, CMS is also taking steps to integrate financial incentives for health equity into Medicare Advantage. In the contract year 2024 final rule released in April 2023, CMS finalized its proposal to remove and replace the current incentive for high-performing health plans, the Reward Factor, with a calculated health equity index (HEI). The HEI will summarize performance across multiple existing Star Ratings system measures for a subset of enrollees with certain social risk factors, and points will be awarded based on performance rank across all contracts. This change will apply to 2027 Star Ratings and is estimated to net CMS approximately $5 billion in savings over 10 years.

Medicaid Managed Care Incentives

To kick off 2023, CMS also issued guidance on how Medicaid managed care organizations should pay for and report coverage of nonclinical care, such as housing, food and long-term support. This flexibility is intended to support and expand innovative approaches to addressing health-related social needs. CMS will continue to incorporate financial incentives for health equity going forward. During the annual Value-Based Payment Summit in January 2023, CMS Innovation Center Deputy Administrator and Director Liz Fowler shared plans to release several new payment models that will incorporate financial adjustments intended to help more safety-net providers participate. The incorporation of social risk factors into risk adjustment methodologies used to set financial targets may further tie financial rewards to the advancement of health equity.

Commercial Payer Incentives

New health equity–focused financial incentives are being introduced by commercial payers as well. In late 2022, Blue Cross Blue Shield (BCBS) of Massachusetts announced a value-based payment contract that will reward equity in clinical areas, including colorectal cancer screenings, blood pressure control and care for diabetes. BCBS of Michigan also launched the SDOH (social determinants of health) Standardized Data Collection and Aggregation Initiative, which offers financial incentives to physician organizations for collecting and submitting data. The data will eventually be used help identify and close gaps along the care continuum.

Beyond payer incentives

As important as these financial adjustments are, their mere existence will not combat the root causes of health disparities that persist in our country. As payers continue to adopt payment mechanisms intended to advance health equity, CINs and integrated delivery networks will need to be methodical about translating these incentives to lasting change. Some approaches will need to be contract specific. For example, the benefit enhancements and beneficiary engagement incentives that REACH ACOs can leverage to address social risk factors must be intentionally used for aligned beneficiaries. For systemic transformation, however, CINs and integrated delivery networks will need to focus on payer-agnostic approaches to whole-person care within their community. This includes better SDOH screening, data collection and analysis for a provider organization’s entire patient population. Data collection tools supported by CMS include those developed by Accountable Health Communities, the North Carolina SDOH team and PRAPARE (Protocol for Responding to and Assessing Patients’ Assets, Risks, and Experiences). Robust screening and data can lead to a better understanding of the disparities that exist among a provider organization’s full patient population, which then allows the organization to better address community vulnerabilities with a cohesive approach.

Based on the resources available in a given market, providers may work to build capabilities to address inequities internally or through community partnerships. Organizations should also leverage insights and lessons learned by peers, such as from health system leaders at Froedtert & the Medical College of Wisconsin, Main Line Health and Arkansas Health Network to grasp real-world approaches to addressing social determinants of health.

Froedtert first undertook efforts to understanding vulnerabilities in its population through screening and documentation of social risk factors, then utilized tools in its electronic medical record (EMR) to drive data collection. Utilizing the NowPow software tool, Froedtert uses data from the EMR to match resources in the community with patients’ needs.

Main Line Health recognized the importance of nutrition to one’s health and the prevention of acute illness. To help prevent readmissions for recently discharged patients, Paoli Hospital screened patients for food insecurity and connected at-risk patients with local food shelves and resources. At its Bryn Mawr Hospital, ED staff determined that many patients who present in the ED do not have consistent access to food. In response, the hospital implemented the Eat Well, Be Well program, which provides patients with a short-term supply of food to bridge the gap between discharge and getting connected to additional resources.

Arkansas Health Network (AHN) identified access to care for its patients as a barrier to health equity. Rather than expanding care options on its own, AHN partnered with two local CINs to expand the scope and reach of services to provide better access for its rural communities. AHN leveraged existing structures through its collaboration with the CINs to eliminate redundancies and improve financial and quality metrics for its shared population.

Key takeaways for provider organizations

  • Expect payers to expand the use of value-based payment models to incentivize health equity
  • Screening for SDOH across your full patient population provides critical insight on where to focus
  • Community-based partnerships are an effective approach to providing nonclinical healthcare
  • Addressing disparities among process metrics, such as cancer screenings and annual wellness visits, can be a great place to start in the advancement of health equity

As your organization considers solutions to advance health equity within your own community, reach out to our Value-Based Care Strategy Consulting experts for help with your initiatives and goals.

Michael Koch, MHA, Consulting Director, also contributed to this post.

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