How to pay for equitable outcomes

Value-based care launched more than two decades ago in a push to improve quality while curbing costs. Now policymakers want to make bridging healthcare disparities an additional goal of the payment models.

A year after the 10-year anniversary of the Center for Medicare and Medicaid Innovation, regulators are evaluating the efficacy of existing payment models and the impact they have had on bridging—and dividing—outcomes and costs across patient groups.

At the start of the year, the Centers for Medicare and Medicaid Services issued a request for information on metrics that could be used to assess equity achievement among providers. Federal regulators also recently unveiled their strategic plan, in which providing equitable care is a central feature. CMS Administrator Chiquita Brooks-LaSure, who is the first Black woman to lead the agency, has also made it clear that bridging disparities holds a strong personal significance to her.

“For every decision being made, we’re asking ourselves, ‘How is this action advancing health equity?’ ” Brooks-LaSure wrote in a September blog post.

Along with the federal government, providers are also increasingly viewing healthcare equity as taking precedence, with 58% of health systems identifying equity as a top priority in 2021, more than double the 25% from two years ago, according to a survey from the Institute for Healthcare Improvement. Insurers will be a critical part of further incentivizing health equity among providers. And once CMS approves new or updated models, most private payers are likely to follow.

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But incorporating health equity into physician payment isn’t as simple as layering equity onto existing models.

Previous value-based care payment programs have actually dinged hospitals that serve underserved communities. Hospitals that cared for a high proportion of Black adults were penalized more frequently by CMS value-based programs than other hospitals in 2019, even after accounting for safety-net status, according to a March study published in the Journal of the American Medical Association.

Other programs, like the Medicare Advantage star ratings, incentivized organizations to withhold best-practice information from one another and led some risk-based entities to cherry-pick patients.

For value-based care to truly reflect all patients, payers and providers must build a stronger data infrastructure and collection system, invest in social determinants of health resources and listen to the communities they serve to focus on their individual needs, observers say. Most importantly, the commitment to equity must be embedded in every function across the organization—and payers and providers should begin strategizing now, said Dr. Mai Pham, former head of CMMI.

“It’s always better when you have a clear theory of action, and you have an overall strategy,” Pham said. “Not, you know, one corner of the company thinking about value-based payment over there, and a separate corner of the company thinking about social drivers over here.”

CMS’ largest hospital-based value-based care programs would be a natural starting point for federal regulators to evaluate and update to measure equity, given their size offers them the largest impact, said Dr. Rishi Wadhera, head of health policy and equity at the Smith Center for Outcomes Research in Cardiology at Beth Israel Deaconess Medical Center. These programs include the Hospital Readmissions Reduction Program, which incentivizes hospitals to reduce avoidable readmissions through improved communication and care coordination; the Hospital Value-Based Purchasing Program, which rewards acute-care hospitals for improving the inpatient hospital experience; and the Hospital-Acquired Condition Reduction Program, which reduces Medicare payments for hospitals that rank in the lowest quartile for patients acquiring new conditions in the hospital.

Although analysis of each program’s impact on equity is still in its early stages, Wadhera said that, at best, each had no impact on bridging healthcare disparities and, at worst, perpetuated existing inequities.

“Equity has not been on the forefront of value-based care models, and that’s why for the last decade, we’ve been disproportionately penalizing hospitals that care for poor populations, that care for racial and ethnic minority adults,” Wadhera said. “Value-based care programs and, specifically, the three hospital-based pay-for-performance programs, probably propagated inequities unintentionally.”

Not just the feds

Signs that federal regulators plan to incorporate equity as a payment metric are also coming from the commercial space.

In September, Blue Cross Blue Shield of Massachusetts said it will update its marquee Alternative Quality Contract system to financially reward providers that improve care for people of color.

By offering providers population health payments plus awards for long-term improvement of quality, patient outcomes and individual experience, BCBS Massachusetts slowed the rate of medical spending by up to 12% while improving care over the course of eight years, with savings accelerating over time, according to a report in the New England Journal of Medicine.

Prior capitation models did not connect payment to quality achievements in a clear-cut way and offered annual rate increases, which limited the types of investments providers were willing to make. The average annual claims paid by patients with doctors in the AQC were $461 less than those in the control group, according to the study.

CMS based its accountable care organization models on BCBS Massachusetts’ AQC payment system, said Dr. Mark Friedberg, senior vice president of performance measurement and improvement at the Blues plan.

“Why are we including this financial incentive? It’s really to create an immediate and large and sustained business case for provider organizations to make investments that are going to be needed to really move the needle on equity of care,” Friedberg said.

The insurer also views investment around equity of care as a way to reduce costs. While BCBS Massachusetts is still determining how reimbursement should work, it plans to compare providers’ internal process measures, like cancer screenings, chronic disease management measures and patient experience. It also has provided health systems in its network with a report comparing how they performed on each measure and will sponsor equity training for providers through the Institute for Healthcare Improvement at the start of 2022. Friedberg said the insurer won’t roll out its payment plan until at least 2023.

“We’re intending this to be a long-term investment,” Friedberg said. “One of the nice things about us being commercial is it allows us to be flexible. We’re going to learn as we go."

Efforts among for-profit payers are also underway, with the largest commercial insurers saying they were driven by the national racial reckoning over the death of George Floyd and the spotlight on disparities related to the COVID-19 pandemic to hire equity experts, invest in providers’ digital infrastructure and screen patients for needs related to the social determinants of health.

Humana and CVS Health’s Aetna hired their first chief health equity officers this year, elevating the focus on healthcare disparities to the C-suite. Centene Corp. has also posted an opening for a health equity officer on LinkedIn, who would be in charge of promoting cultural competency across the insurer’s clinical and population health programs and extending those activities to the broader healthcare system. None of the insurers responded to interview requests about plans to incorporate equity into value-based payment models.

“Social risk adjustment in healthcare performance measures is becoming increasingly factored in to payment models,” said IHI President and CEO Dr. Kedar Mate. “It’s not just CMS, it’s also commercial and private payers. Many of them are moving exactly in the same direction and gathering the information necessary to create provider specific reports, share those reports, and start having a conversation with their providers around how to support them, where there are documented disparities that are present.”

But as the old policy saying goes, you don’t count until you’re counted.

Collecting the right data

Providers have not previously been incentivized to collect data on patients’ race, ethnicity and other personal information, said Pham, the previous CMMI chief who currently serves as president and CEO of the Institute for Exceptional Care, which works to improve care for people with intellectual and developmental disabilities.

Payers, meanwhile, have long argued that they rely on providers for patient information. Thirty-eight percent of health systems said inconsistent data collection represented a major barrier to implementing equity-focused measures, according to the IHI report. To incorporate equity into value-based care models, providers need to know much more about their patients.

Groups like the National Quality Forum have developed roadmaps for “disparity sensitive measures” that providers can use. CMS approved new medical codes this year for tracking food insecurity, housing instability and homelessness, allowing researchers to start compiling data on the costs the social factors inflict on the healthcare industry and patient outcomes.

Payers like Kaiser Permanente have also invested in tools such as Now Pow that clinicians can use to collect social determinants data. In September, Unite Us, a tech company focused on measuring health outcomes, paid an undisclosed sum to purchase Now Pow, making it the leading integrated health and social care network provider in the nascent market.

In June, UnitedHealth Group launched an in-house predictive analytics system that uses artificial intelligence to screen and predict employer customers’ social needs. By assigning each member a personalized health score, UnitedHealth aims connect patients with community resources, lower its healthcare spend and better understand the social needs of commercial enrollees, who have not traditionally been part of health equity conversations, the company said.

“You should really learn about who you’re serving, and you should also recognize your place in the community,” Pham said. “If you’re a well-resourced provider, you should take a step back maybe and understand that payers may redirect some resources elsewhere. If you know you’re a provider serving a lot of impoverished patients, I would start making a wish list of the types of help I would want from a payer.”

This year, CMS has also started comparing hospitals with similar numbers of dual-eligibles in the Hospital Readmissions Reduction Program to better account for the heightened patient risk at safety-net hospitals compared with health systems operating in primarily white, affluent communities.

Minnesota has adopted a statewide system that pays providers for reporting and performance on measures that are linked with social needs screenings and health disparities. Rhode Island’s Medicaid agency has likewise adopted a similar program, along with some other states’ Medicaid departments.

“I think payers are incented to create better outcomes because if you need more expensive care less, then they also get the benefit,” IHI’s Mate said. “They’re noticing that a lot of what costs them lots of money is inequities.”

CMS needs to report on its own progress in bridging healthcare inequities, Mate added.

But it is critical for payers to avoid pathologizing race, and remember that data on an individual’s identity is not a substitute for the lived experience of racism, said Dr. Joshua Liao, medical director of payment strategy at UW Medicine in Washington state. Specialists must also be engaged in collecting this data since, in many instances, they serve as a patient’s primary point of contact, Liao said.

“Things like race identity, race centrality, ethnic identification, those things are going to be really important, because if we get the data and make the assumption that they then capture what we want, we may then kind of barrel forward,” said Liao, who also serves on HHS’ Physician-focused Payment Model Technical Advisory Committee, which is in the process of making recommendations to federal regulators about how to incorporate equity into value-based models. “I think we need to be cautious in certain aspects of social risks.”

Multipayer models created with both private plans and federal programs in mind help physicians ease into accepting risk, since they allow providers to align the incentives of multiple, larger patient populations and simplify the structure of their operations. It also eases the administrative burden on providers, particularly those with fewer resources, said Maryellen Guinan, principal policy analyst at America’s Essential Hospitals.

“We really need to level the playing field, and not create what, essentially right now, is a vicious cycle,” Guinan said. “Our members (safety-net hospitals) are the ones who are being innovative and forming initiatives to address social determinants of health. But at the same time, they’re being penalized by these measures that don’t incorporate all those factors. It’s really just taking resources away from the work they’re doing.”