Social risk is the flour, not the icing, in baking the cake of value-based care

March 14, 2022 / By Melissa Clarke, MD

Population health, and the payment arrangements it supports, cannot be done successfully without incorporating social risk.

Adoption of value-based payment

The decade since the passage of the 2010 Affordable Care Act (ACA), has witnessed a gradual increase of providers being reimbursed via some form of quality-linked payment. A few have even transitioned to advanced forms of population-based payment and large-scale practice transformation. These value-based payment (VBP) models, such as advanced alternative payment models (APMs), hold providers financially accountable for the quality and cost of care delivered to patients. Currently about 40 percent of Centers for Medicare & Medicaid (CMS) payments occur through APMs. Commercial payers have followed Medicare’s lead, launching APMs with tailored episode and population-based models.

Social risk and health outcomes

A key index of the quality of care provided is a patient’s health outcome. Health outcomes, as assessed in population health by quality metrics, form the basis for many value-based payment models. Providers must now answer the question: “Is the care that I am providing improving my patient’s health condition?”

Although health care is essential to health, it is a relatively weak health determinant. Population health literature is replete with evidence that the main determinant of health outcomes is not solely the quality of care provided, but the social conditions in which the individual plays, works, lives and worships, also called the social drivers of health.

Neighborhood-based living conditions not only drive health outcomes directly, they also can shape an individuals’ health behaviors, which are another health determining factor. For example, the decision to self-medicate anxiety or depression can be closely related to the lack of mental health services in a community. Similarly, the ability to eat nutritious food is related to the availability, cost, and quality of fresh produce in one’s neighborhood. Further evidence shows that stress, such as that experienced due to racism and discrimination, negatively affects health across one’s lifespan and may have multi-generational impacts on health. 

However, despite the evidence, social drivers of health are yet to be explicitly addressed in VBP arrangements for achieving health outcomes for populations with high social risk. Many programs only consider a patient’s clinical risk, but not their social risk, in determining reimbursement and resourcing.

Our lack of policies and regulations regarding social risk capture and social need gap closure treat social factors like racism, housing, food, and environment as if they are just the icing on the cake. They are in fact, the flour of the VBP cake, an essential part of the ability to enhance health outcomes. These social drivers, and their impact on clinical outcomes, must be accounted for in advanced payment models or unintended consequences will continue to result. 

The unintended consequences of excluding SDoH in value-based care

One unintended consequence of excluding social risk has been unequal participation and success in transformation models along socio-economic, racial and ethnic lines. Providers in communities with low-income patients have been less likely to participate in certain value-based programs. Similarly, although hospitals caring for more vulnerable patients participated in shared saving programs, they were less likely to receive shared savings.

Providers are expected to reach the same quality outcomes working against great adverse social factors, such as higher rates of poor health literacy, fewer resources to pay for medications, less autonomy to control one’s time to schedule doctor visits and wellness activities, and lower access to healthy foods, clean air and mental health care. As a result, the very practices that care for patients with high social risk may end up at a disadvantage.

Health disparities are costly to society. Analysts estimate that disparities amount to approximately $93 billion in excess medical care costs and $42 billion in lost productivity per year as well as additional economic losses due to premature deaths. Those are staggering numbers.

The solution is not to lower the expectations for improved outcomes for providers who care for individuals from these communities. Rather, it is to resource these practices appropriately so that they can provide patient-centered coordinated care, with strong community linkages.

Medicare Advantage (MA) plans recognize the value of addressing members’ social drivers of health, but because of the lack of a standardized approach, there is no agreement on the methods, the extent, nor the metrics to do so. MA plans cite a need for evidence, return on investment, strong community partnerships, and guidance from CMS. So, another unintended consequence is a wide variation in implementation of potential MA plan benefits across Medicare beneficiaries.

Policies and regulations for a standard approach to social risk capture and accountability

CMS is starting to be more proactive in using value-based payment models to close health disparity gaps. One such model that attempts to level the playing field is the Accountable Care Organization (ACO) Investment Model. It provides up front resources to new ACOs to form in rural and underserved areas, and encourages current Medicare Shared Savings Program ACOs to transition to arrangements with greater financial risk.

The ACO Investment Model was developed to address the concern that providers working with disadvantaged populations lack adequate access to the capital needed to invest in infrastructure necessary to successfully implement population care management. However, this model is only available in a handful of states.

To truly bring social risk front and center in population health, more research and guidance are needed in several areas. The first is to develop uniform definitions of social drivers of health and their impact on clinical risk. From there, health disparity-related quality metrics can be derived. There is also room to be more prescriptive in collecting SDoH data, such as using Z codes, as well as race, ethnicity and gender data on populations being served.

An additional step would be to compile evidence-based best practices for addressing social risk and require the use in APM models, funding them up front, and tying additional payments to success at closing health disparity gaps. In all value-based payment models, there must be a clear return on value established, such as a link to potentially preventable events, with more guidance and funding for these APMs to close gaps related to social drivers of health.

Going forward, health care can bake addressing social drivers of health into the design of value-based health care arrangements. These measures will help move us closer to health equity, avoid the unintended consequences of ignoring social risk, and dually address poorly managed chronic care and lost productivity to society from health disparities.

Melissa E. Clarke, MD, CMQ, is senior medical director, health care transformation and health equity, at 3M Health Information Systems.