More Insurers Finding Ways to Pay for Health Equity

May 23, 2023
CMS, Medicaid agencies, and commercial insurers are experimenting with payment models that provide incentives for underserved patients, as determined by an “area deprivation index”

In December 2022, Blue Cross Blue Shield of Massachusetts (BCBSM) announced that four of the state’s largest healthcare systems had signed agreements that link financial incentives to improvements in health equity.

Increasingly, government and commercial insurers are looking for ways to incentivize healthcare providers to expand offerings in underserved communities and to close gaps in preventive screenings and hospitalization rates.

A leader in the “pay-for-equity” movement, BCBSM said its new contracts would initially focus on measuring and rewarding equity in care in several clinical areas where inequities have been identified, including colorectal cancer screenings, blood pressure control and care for diabetes.

Mark Friedberg, M.D., BCBSM’s senior vice president of performance measurement & improvement, spoke to Healthcare Innovation in January 2023: “At a very high level, every health plan can do what we’ve done; it’s a matter of will more than anything else; and you can start now,” he said. “There are no justifiable excuses for failing to collect self-reported race and ethnicity data from your members, or for using data to approach and address inequities.”

Kedar Mate, M.D., president and CEO of the nonprofit Institute for Healthcare Improvement (IHI), which works with BCBSM on the initiative, says the field of payment in healthcare, which disagrees on a lot of things, “seems to be coalescing around the idea that we could and should pay for more equitable care. If we want to see long-term investment in improving health equity, it can't be done on grant programs from foundations or government. It has to be done on long-term payment policy that seeks to create lasting and durable financial flows toward specific strategic objectives.”

Mate says he is encouraged by the fact that there seems to be consensus now that we need to have a payment flow toward equity improvement activities. “The ‘how’ is a little bit more complicated,” he adds.

“I have to credit BlueCross BlueShield in Massachusetts, in particular, but it's not unique to the Massachusetts program,” he says. “There are other regional Blues across the country that are contemplating a similar payment-for-equity program as part of their quality contracting with provider organizations.”

The ACO REACH model

Change is happening at the federal level, too. The CMS Innovation Center’s ACO REACH model is an evolution of the Direct Contracting model and will test how providers can be incentivized to collaborate across multiple treatment plans, spend more time with patients with complex, chronic conditions and ultimately, improve patient health outcomes. Each model participant must design and implement a comprehensive health equity plan that identifies its underserved communities and establishes initiatives to measurably reduce health disparities within their beneficiary populations. ACO REACH also is incorporating a Health Equity Benchmark in which ACOs working with underserved patients, as determined by an “area deprivation index” and Medicaid eligibility, receive an additional $30 per beneficiary per month payment.

Mate calls the program’s equity benchmark a good starting point. “I don't know whether that amount alone will be sufficient to attract a great deal of attention, but I do think it's a start. It's exactly what we should be seeing more of and it's likely enough to at least invite the ACO REACH participants to pay attention to inequities in their design and to start to consider disparities and inequities and build solutions into the approach in the model.”

In August 2022, CMMI named the 110 participants provisionally accepted to participate in the ACO REACH model starting next year. CMMI accepted fewer than 50 percent of applicants, and 18 organizations withdrew their applications after receiving provisional acceptance. 

The changes that CMS Innovation Center made as it shifted from Direct Contracting to ACO REACH added recognition for some of the challenges that working with underserved populations create, says Marc Berg, M.D., co-founder of Bluerock Care, a physician practice in Washington, D.C., participating in the ACO REACH model. In some parts of the country, some people really haven’t been to the doctor much at all, he notes. “When we start taking care of them, there will be a peak in healthcare costs. At least temporarily, you may not be lowering costs for this group because these people didn't even go to the doctor before,” Berg says. “So that's what this health equity benchmark starts to compensate for. CMS has to make sure it is not disincentivizing addressing those kinds of populations.” Berg says he believes the health equity benchmark adjustment is just the first step. “Other steps will come where they actually build the health equity component more fundamentally into the risk adjustment. That will be the big next step. But this is a great first step.” Berg thinks that CMS is combining significant ambition with the right amount of caution. “You would like to go much faster and deeper in terms of measuring the impact of social determinants of health on the existence of comorbidities. The challenge is that many of those issues aren't really well registered, and sometimes for good reasons. How far do you go in explicitly measuring such items, because patients might be reluctant to share that information. There's a balance that has to be found.” “People who are in the world of innovation and risk adjustment have said for years and years that you have to adjust for and take into account this underserved component,” Berg says, “because otherwise doing an ACO in the inner city of a town with a lot of underserved people is very difficult. I hope that these kinds of steps are not going to be tied to this administration only.”

In another example of an ACO REACH partnership, the Medical University of South Carolina (MUSC Health) and value-based healthcare company Upstream say they are creating opportunities for providers to improve key metrics and improve clinical outcomes for patients, while strengthening the coordination of primary and specialty care within the network.

Valinda Rutledge, chief corporate affairs officer for Upstream, notes that the organizations in ACO REACH get a 10 percent quality bonus for collecting patient demographics in the first year, and in the following year it will become a requirement to start doing social determinants of health screening. She says for Upstream’s health equity plan, “we identified patients in our top three counties, based upon area deprivation index, and we're going to do a targeted intervention. We're going to screen for social determinants of health and refer to community-based organizations for food insecurity. We're going to enroll them in care management, and we're going to do an annual wellness visit. Then we're going to calculate our outcome measures to see if it decreases ED or inpatient admissions.”

Equity payments to primary care practices in Maryland

For several years, the State of Maryland has been working with the Center for Medicare & Medicaid Innovation to move all the hospitals in the state from fee-for-service to a globally budgeted system. They also have worked together to create a related Maryland Primary Care Program (MDPCP), a voluntary program open to all Maryland primary care practices and modeled after the CMMI’s national Comprehensive Primary Care Plus (CPC+) program.

Chad Perman, M.P.P., executive director of the MDPCP Office in the Maryland Department of Health, notes that the program is in its fifth year. He says the program has grown exponentially since year one. “As far as we know, it's the largest advanced primary care program for Medicare in the nation, both on a per-capita basis, and a practice basis. We now have 538 practices participating, so we're quite proud of that. We have built a large foundation for community-based primary care as part of a larger model.”

A recent addition to the MDPCP is the Health Equity Advancement Resource and Transformation (HEART) payment of $110 per beneficiary per month, which was developed by CMS and the state to provide additional financial support to practices in the program serving socioeconomically disadvantaged populations to improve health outcomes and lower costs and advance health equity.

CMMI did analyses of differences in total cost of care between patients of different social needs using the Area Deprivation Index, Perman explains. “What they found, not surprisingly, was that there was a significant difference in total cost of care per beneficiary per month,” he adds, “and they thought we should address this.”

“We see primary care practices as having a lot of opportunity to address equity. They often understand both the medical and non-medical needs of the patients that they serve and have a trusted relationship with them over time,” says Emily Gruber, M.P.H, M.B.A, health equity manager for the MDPMP program. “They can be the linkage between medical care and the community or social support. But the missing piece of the puzzle is having the financial resources to address those needs. That's where the HEART payment comes in. It provides financial resources for primary care practices to be able to address both medical and social needs for this targeted high-need cohort. These patients have both high medical complexity and high ADI [area deprivation index] based on their address, which is a proxy for socioeconomic disadvantage. Practices can spend these funds to address medical needs or to address social needs.”

The MDPMP program expects to study whether patients who are receiving the additional support from the HEART payment are experiencing reduced emergency department visits or hospital events. “We want to follow this cohort of HEART beneficiaries and determine if that group is seeing better outcomes over time, but we have not done that analysis yet,” Gruber says. “We think it is too early. The payment has really been out there for a year and four months.”

Paying for equity in Medicaid

Medicaid programs also are starting to figure out ways to incentivize managed care plans to address equity issues.

During a talk at a December 2022 Center for Health Care Strategies event, Martha Farlow, deputy director for policy at MassHealth in Massachusetts, described MassHealth's Primary Care Payment Reform strategy, including efforts to move primary care away from fee-for-service incentives. She spoke about the Massachusetts Accountable Care Partnership (ACP) plans, which are partnerships between a Medicaid managed care organization and a provider organization.

“We introduced our ACO models for the first time in 2018, which marked a really large shift in the way we think about care and value-based payment and quality and cost coming together,” Farlow said. There are about 725,000 members currently enrolled in 13 different ACP plans. “These plans run the gamut in terms of the providers that make them up. We've got some hospital-based ACPs; we've got some community primary care base ACPs. Some are large, some are statewide. We also have some more local and regional ones,” she added. “What makes these exciting is this partnership between the plan and the provider, where they're holding joint accountability for health outcomes, lower costs and improved member experience.”

Farlow described their pioneering work on risk adjustment. “We account for not just medical but social risk, and all of our capitation rates are adjusted based on social risk, which includes a factor that we call ‘neighborhood stress score,’ as well as adjustments for homelessness and for living in a rural county.”

The program has been running for five years, but the assessment aspect has been challenging, partly due to the impact of the pandemic. The Commonwealth had some promising early results in 2018. It saw increased connection to primary care — primary care visits went up from 2018 to 2019. It was 12 percent higher for patients in ACOs than for those who are not in ACOs. There was also improvement in avoidable readmissions. “Across the board, our clinical quality scores were high and rising between 2018 and 2019,” Farlow explained. “We have 22 quality measures that we're tracking across our program and also implemented some exciting programs like our community partners program in the community, as well as flexible services where we paid for housing and nutrition supports for members, that I think really helped our ACPs to grow and blossom to what they have become.”

One thing for payers at all levels to be aware of is the limited impact relatively small equity adjustments might have. “If your incentive payment for quality is relatively modest, then the relevant leverage from the equity component of an already small or inconsequential quality payment may be fairly limited,” says IHI’s Mate. “On the other hand, if the quality incentive payment is substantial in size, then the equity component of that quality payment may in fact be noteworthy and create lasting change in how providers provide care.”

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