Improving Health Equity With Value-Based Care

Improving Health Equity in Commercial Markets: Guidance from National Leaders, Part I

National organizations like CMS and the National Committee for Quality Assurance (NCQA) recognize the urgent need to improve health equity. Commercial health plans may want to incorporate some features of plans from these industry leaders into their own health equity strategies.

Understanding and Implementing Health Equity Strategy Guidance from National Leaders

There are significant, damaging, and persistent gaps in health outcomes improving health equity is among the most urgent national healthcare priorities. Government and industry leaders have published different plans for improving health equity. As the organizations directly responsible for shaping and improving patient care in the commercial market, health plans should be aware of the similarities and differences between these overarching strategies. Then, after weighing alternatives, they can consider whether and how to implement this guidance in their operations to meet health equity goals.

Health equity goals and value-based care goals merge

Over the past decade, the adoption of value-based payment (VBP) models has accelerated:

• The Center for Medicare and Medicaid Innovation (CMMI, or the Innovation Center) has launched a series of new models
• The Medicare Shared Savings Program has grown to include more than 500 ACOs
• Commercial payers have structured approximately a third of their payments as alternative payment models (APMs)
• State Medicaid programs have included payment reforms in their Medicaid programs

However, despite the growth of value-based care, there remains a concern that alternative payment models (APM) do not close persistent health equity gaps. Thus, CMS and health plan accreditation bodies like the NCQA have prioritized health equity goals and sought to entwine them with existing value-based care efforts.

These plans have many similar emphases—notably calls for improving healthcare data collection and evaluating models according to their impact on health equity—but also contain unique elements. Commercial payers may want to familiarize themselves with both plans and identify activities that resonate with their missions.

The Center for Medicare & Medicaid Innovation’s (CMMI) strategy to embed health equity in value-based care

CMMI’s guidance focuses on overhauling the healthcare system to consider and promote health equity. While focused on the federal market, their plans are nevertheless leading indicators of how commercial healthcare delivery and transformation may evolve.

While CMMI continues to focus on expanding the reach of value-based care—for instance, by publishing a goal of ensuring that all Medicare beneficiaries with Parts A and B are in an accountable care model by 2030—improving health equity is becoming an equal, complementary priority. CMMI’s strategy refresh declares that each Medicare payment model should include components designed to increase access for historically underserved populations and ameliorate health outcome gaps existing across socioeconomic lines.

CMMI’s health equity goals are segmented into the following five categories:

1. Develop new models to address health equity and social determinants of health (SDoH)

CMMI has tested several models oriented towards improving health equity. However, the development of future models and updates to existing ones will embed health equity more squarely across the lifecycle of models, from conception to implementation to evaluation.

2. Increase the number of beneficiaries from underserved communities receiving care through value-based payment models

CMMI recognizes that the incentives and application processes of its models may systematically exclude providers responsible for the care of socioeconomically at-risk patients. Additionally, once in models, safety net providers may not receive the level of dedicated financial and technical assistance needed to close health quality gaps that have opened across generations.

A variety of model features including upfront payments, risk adjustment for social determinants of health, benchmarking methodologies that correct for historic under provision of care, enhanced technical assistance, and payment incentives for closing quality gaps may be tested to incentivize the participation of more providers serving at-risk beneficiaries.

3. Evaluate models for their health equity impacts

CMMI will assess each of its models according to its health equity impact on underserved populations. Evaluations will include theoretical hypotheses of how models can close equity gaps (for instance, theory of change maps) and track standardized healthcare quality measures to assess whether under-resourced groups experience greater health improvements.

In addition to evaluating each model’s impact on health equity, the Innovation Center plans to conduct meta-analyses of its model portfolio and share site-specific evaluation findings with partners.

4. Improve demographic data collection regarding race, ethnicity, language, geography, and disability to identify quality gaps and develop interventions more accurately

CMMI recognizes that collecting more accurate demographic data is an important prerequisite for improving health equity. Current healthcare data does not allow for the timely or accurate detection of equity gaps and inhibits the development of plans to address them.

The Innovation Center will require participants in all-new models to collect more detailed demographic data throughout model lifecycles. Where possible, common area-level indices such as the Social Vulnerability Index (SVI) and the Area Deprivation Index (ADI) will be used to identify geographic equity gaps and better characterize beneficiary risks.

In addition to identifying pre-existing health disparities, CMMI will stratify evaluation results across demographic lines and identify population subgroups best (or worst) impacted by new payment models. This healthcare data will inform model refinements and the development of new models.

5. Lower Out-of-Pocket Costs for Beneficiaries

The Innovation Center recognizes that evaluations focused on total cost of care may ignore cost burdens for individuals and families. Lowering out-of-pocket costs, particularly pharmacy costs, is a critical component of improving health equity that may therefore be unaccounted for in many existing analyses.

Potential methods include:

• Incentivizing the use of generic drugs
• Constructing shared savings and bundled payments of care arrangements to lower out-of-pocket pharmacy costs
• Reducing cost-sharing for low-income beneficiaries
• Including specific payments to cover pharmacy costs

In addition to untenable drug costs, low-income patients are vulnerable to differential out-of-pocket costs depending on where they receive care. The Radiation Oncology Model exemplifies an attempt by Medicare to test payment schemes where the amount paid is constant across care settings. This strategy could expand in the future if successful.

Using CMMI’s strategy as a roadmap to meeting health equity goals

CMMI’s health equity strategy outlines high-level principles Medicare hopes to follow in uniting value-based care expansion with efforts to improve healthcare disparities.

While not directly focused on the commercial market, payers can use CMMI’s pivot to health equity as an opportunity to reflect on evolving their own alternative payment models to promote equitable outcomes. CMMI’s guidance about developing health equity-focused models, including health equity metrics in evaluations of model performance, improving healthcare data collection, and emphasizing out-of-pocket costs are sensible baseline principles payers can emulate.

In Part II of this series on improving health equity, we review NCQA’s health equity guidance which includes more practical suggestions geared towards commercial payers.

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