The COVID-19 pandemic has exposed and exacerbated existing health inequities in the United States. Black and Latinx Americans have experienced a disproportionate burden of COVID-19 infections and hospitalizations due to economic disadvantages, structural racism, and higher rates of underlying chronic conditions.
Value-based payment (VBP) structures have the potential to reduce health disparities, and during the pandemic, health care organizations with VBP models have had greater flexibility to effectively pivot their care delivery. However, too few organizations are actively prioritizing equity in their VBP models. We outline three strategies for payers and providers to embrace health equity in VBP design and implementation.
Payers And Providers Should Select And Support Equity-Focused Quality Measures
Measure selection is demonstrative of a model’s goals related to quality and value improvement. While groups such as the National Quality Forum have developed roadmaps for “disparities-sensitive” measures, few well-validated equity measures are currently being used in VBP.
Effective equity measures require accurate and complete collection of key sociodemographic data (for example, race, language, income, and geography). Unfortunately, the quality of these data elements is often poor due to real and perceived barriers, including inconsistent data collection guidance, resource constraints, and enrollee and staff discomfort. These missing data mean that systems cannot identify and act on disparities. With data quality being critical, policy incentives and patient engagement should be used to improve documentation. For example, Covered California requires health plans to achieve 80 percent self-reported racial and ethnic identity for enrollees.
As data improve, payers and providers can consistently generate quality improvement reports that stratify existing quality measures by subgroups, including race and ethnicity. Some Medicaid agencies already require managed care organizations to create such stratified reports.
For further impact, payers should thoughtfully link payment to equity measures. Some Medicaid agencies, including in Rhode Island, have adopted pay-for-reporting and pay-for-performance programs for measures that are linked with social needs screenings and health disparities. Payments can also be tied to interventions that directly address identified disparities. Michigan Medicaid, for example, launched a pay-for-performance initiative for health plans to implement evidence-based models to reduce racial disparities in low birthweight. Selecting new measures, improving sociodemographic data quality, and implementing pay-for-performance initiatives are good starting points; however, a more comprehensive approach is likely needed to significantly reduce disparities across health outcomes.
Payers And Providers Should Implement More Fundamental Changes In Payment And Performance Measurement To Address Health Disparities
Significant progress requires addressing health care organizations’ broader capabilities and culture, including collaboration with non-health care partners, cultural competency of clinicians, or governance structures. These types of organizational competencies and cultural changes are foundational to new care delivery models, such as implementing more virtual care options to expand access and leveraging community health workers to address social drivers of health. Unfortunately, such care models are poorly supported under current fee-for-service payment systems. More person-level, global payment models for Medicaid and dual-eligible populations can help sustain care models that improve equity.
With substantial shifts in payment, the debate on adjusting performance measures for social risk is even more important. VBP can inadvertently exacerbate health disparities by nudging health systems to cherry-pick healthier, and less diverse, patients to achieve high-quality scores in their contracts. Furthermore, providers that focus on disadvantaged populations have consistently been penalized by various VBP models for not meeting quality benchmarks. Such penalties threaten the financial stability of safety-net systems that have played a critical role in treating patients with COVID-19, particularly those from communities of color.
While some argue that adjusting for social risk excuses poorer outcomes for disadvantaged patients, this concern could be mitigated by transparent public reporting of racial and ethnic disparities and linking additional incentive payments to relative improvement rather than absolute performance.
Beyond conceptual concerns, accounting for social risk factors in VBP requires careful consideration of which data elements to select and the context for using that data. The COVID-19 pandemic has elevated discourse on how labeling race, rather than racism, as a social risk factor further pathologizes race. Early attempts at using simple data elements, such as number of dual-eligible beneficiaries served, have spurred further discussion on reliable proxy measures for social risk.
As opposed to risk adjusting quality measures for social factors, payers may consider an alternative approach: increasing upfront reimbursement for organizations caring for socially vulnerable populations. For example, Massachusetts Medicaid provided higher global budgets to managed care organizations with higher-risk beneficiaries; their model combined medical and behavioral diagnoses with social factors such as housing stability and neighborhood stress scores. When patient-level social risk data are not readily available, state Medicaid agencies and international health systems have piloted using area-based data, such as Census block data and geocoded data from consumer databases.
Payers Should Empower Health Care Organizations To Address Social Drivers Of Health
Reducing health inequities requires moving upstream to address social drivers of health, such as food insecurity and transportation access. Health care organizations with VBP arrangements (for example, accountable care organizations) were early adopters in screening patients for unmet social needs and partnering with community-based organizations. Despite these advances, health systems with VBP contracts are still limited in their ability to integrate social care due to short-term funding streams and regulatory concerns about how they can spend their dollars.
Policy makers can give payers more flexibility to support social drivers, as seen in policy changes that allowed supplemental benefits in Medicare Advantage to cover food, structural home modifications, and transportation. More importantly, payers can build capacity for health and social care integration at the regional or state level to expand beyond an individual patient and organization. Illustrative examples include the Centers for Medicare and Medicaid Services-funded Integrated Care for Kids model or North Carolina’s Healthy Opportunities pilots. During the COVID-19 pandemic, California counties continue to leverage infrastructure from their existing “Whole Person Care” social drivers demonstration, including data sharing and cross-sector staff, to more effectively coordinate a COVID-19 response inclusive of health and social needs.
Conclusion
The COVID-19 pandemic has hastened the need to prioritize health equity in value-based payment reform. Going beyond identifying the persistent health disparities in our system will require taking concrete steps related to performance measurement, reimbursement, and care delivery.
Authors’ Note
Robert Saunders has a consulting agreement with Yale-New Haven Health System for the development of measures and development of quality measurement strategies for the Center for Medicare and Medicaid Innovation alternative payment models under the Centers for Medicare and Medicaid Services Contract No. 75FCMC18D0042/Task Order No.75FCMC19F0003, “Quality Measure Development and Analytic Support,” Base Period. Mark B. McClellan, MD, PhD, is an independent board member on the boards of Alignment Healthcare, Cigna, Johnson & Johnson, and Seer; co-chairs the Guiding Committee for the Health Care Payment Learning and Action Network; and receives fees for serving as an adviser for Arsenal, Blackstone Life Sciences, and MITRE.
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Health Equity Should Be A Key Value In Value-Based Payment And Delivery Reform - Health Affairs
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