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Advancing Health Equity Through Federal Payment and Delivery System Reforms

Authors
  • Headshot of Ana Ferguson Bryan
    Ava Ferguson Bryan

    Research Fellow, Center for Surgery and Public Health, Brigham and Women's Hospital

  • Headshot of Ciara Duggan
    Ciara Duggan

    Research Assistant, Harvard T.H. Chan School of Public Health

  • Thomas Tsai
    Thomas C. Tsai

    Assistant Professor of Health Policy and Management/ Assistant Professor of Surgery, Harvard T.H. Chan School of Public Health and Harvard Medical School

Authors
  • Headshot of Ana Ferguson Bryan
    Ava Ferguson Bryan

    Research Fellow, Center for Surgery and Public Health, Brigham and Women's Hospital

  • Headshot of Ciara Duggan
    Ciara Duggan

    Research Assistant, Harvard T.H. Chan School of Public Health

  • Thomas Tsai
    Thomas C. Tsai

    Assistant Professor of Health Policy and Management/ Assistant Professor of Surgery, Harvard T.H. Chan School of Public Health and Harvard Medical School

Toplines
  • Medicare and Medicaid can promote health equity through health care payment and delivery system reform

  • The federal government is newly prioritizing health equity in Medicare and Medicaid; shifting to equity-focused payment reform can help move the needle

In several commentaries over the past six months, leaders from the Centers for Medicare and Medicaid Services (CMS) and Center for Medicare and Medicaid Innovation (CMMI) have announced advancing health equity as a top priority. This emphasis is a result of CMMI’s review of the first 10 years of the Innovation Center, which showed that equity was not a priority in model design, participant recruitment, or evaluation. In our review of the past decade of evidence on these experiments, we identified the following five areas in which CMS can focus efforts to advance health equity through payment and delivery system reform.

Improve Data Collection

To identify and track disparities in health care access and outcomes, CMS needs more and better data on race, ethnicity, and social determinants of health (SDOH) across Medicare, Medicaid, and commercial payers. CMS could require these data be collected in order to get paid for providing a health care service. Another option is to leverage financial incentives — for example, by offering additional payment for reporting data on race and ethnicity or patients’ social needs (e.g., housing, food insecurity) when submitting information about health care encounters. This strategy — voluntarily capturing data — has been underutilized, even when financial incentives were available. CMS recently proposed measures on SDOH be included in Medicare’s hospital reporting program, indicating its intention to prioritize collection.

Monitor the Impact of Payment Programs on Health Equity

Historically, CMS and CMMI have not systematically evaluated payment and delivery system reform models’ impact on health equity (e.g., reported quality or outcomes by race/ethnicity, geography, or social needs). CMS and CMMI can ensure this analysis is included in evaluations going forward. They also can require that organizations participating in payment models develop and report progress on equity impact plans for addressing disparities. These requirements were introduced for the first time when the agency announced ACO REACH, a new value-based care model for physicians and other health care providers. CMMI has signaled this will become a new standard for the future.

Shift from Pay-for-Performance to Invest-for-Equity

To account for structural factors driving health disparities, CMS could consider shifting from pay-for-performance approaches to invest-for-equity programs. Current pay-for-performance models have largely relied on risk adjustment to level the playing field and account for differences in patient complexity, but current risk-adjustment approaches focused on age and medical comorbidities may not fully account for social risk factors, which contribute to poor health outcomes. CMS can steer greater resources to providers serving patients with greater social risk in underresourced communities based on widely available proxy measures for socioeconomic disadvantage, such as patients’ income, insurance status (e.g., those dually eligible for both Medicare and Medicaid), or community-level indices that include factors like income, housing, education, and employment by neighborhood. For example, ACO REACH will include a health equity benchmark adjustment in 2023 that will provide additional resources to participating physicians and other health care providers serving a disproportionate number of underserved beneficiaries.

Ensure Innovative Models Reach Underresourced Communities

A key element in promoting equity is ensuring value-based payment models, which have the potential to improve quality and increase affordability, reach underresourced communities and the providers serving them. In more than 50 demonstration programs over the past decade, provider participation has been voluntary. While this gives clinicians freedom to experiment when they’re ready, the reality is that predominantly large, well-resourced health systems participate, and therefore are more likely to benefit from the innovations in terms of savings, flexibility, staffing, and new technology. There is an opportunity to develop innovative state-based models in Medicaid to ensure low-income and minority patients can also benefit. CMMI hopes to scale and spread the models and increase safety-net provider participation using financial support, ample time to allow a transition of staffing, and technical assistance.

Align Incentives Across Programs

The next phase of equity-oriented payment and delivery system reform will require alignment across payers — Medicare, Medicaid, commercial — to provide both consistency of incentives for providers and consistency of experience for beneficiaries. One such step would be the establishment of a limited set of equity-focused quality metrics common to all CMS programs. CMS and CMMI have stated they plan to focus on a more limited, but strategic, portfolio of programs with an emphasis on health equity to further reduce complexity and align incentives.

While reducing disparities will surely require other efforts to address structural barriers, mistrust, and racism in health care, these steps towards equity-focused payment reform could help to move the needle in the next decade of health reform.

The views expressed in this blog post do not reflect the official views of the Executive Office of the President or the U.S. government.

Publication Details

Date

Contact

Ava Ferguson Bryan, Research Fellow, Center for Surgery and Public Health, Brigham and Women's Hospital

Citation

Ava Ferguson Bryan, Ciara E. Duggan, and Thomas C. Tsai, “Advancing Health Equity Through Federal Payment and Delivery System Reforms,” To the Point (blog), Commonwealth Fund, June 15, 2022. https://doi.org/10.26099/emga-aj89