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Accounting for Social Risk Factors in Medicare Payment

Overview of Report Series January 2017

Equitable health care represents a commitment by providers and payers to provide a universally high standard of health care quality to all patients and enrollees, regardless of their individual characteristics. Achieving this critical aim may require greater resources and more intensive care for patients with social risk factors compared to more advantaged patients. Social risk factors may be defined as a set of constructs that capture the key ways in which social processes and social relationships could influence key health-related outcomes in Medicare beneficiaries. Providers can address and mitigate the effects of social risk factors, but when social risk factors are not accounted for in performance measurement and payment in the health care system, achieving good outcomes may be more difficult for providers disproportionately serving socially at-risk populations.  

One way to achieve high-performance health systems—including one that promotes equity—is by aligning payment strategies with policy goals, such as improving quality and efficiency in health care or reducing disparities. Payment can help incentivize such goals. Reforms to better align payment with policy goals shift from paying for volume (fee-for-service) to paying for quality, also known as value-based payment (VBP), and payers such as the Centers for Medicare & Medicaid Services (CMS) have increasingly moved toward VBP.

Although VBP programs have catalyzed health care providers and plans to address social risk factors in health care delivery through their focus on improving health care outcomes and controlling costs, the role of social risk factors in producing health care outcomes is generally not reflected in payment under current VBP design. This misalignment has led to concerns that trends toward VBP could harm socially at-risk populations: Providers disproportionately serving socially at-risk populations are more likely to score poorly on performance/quality rankings, more likely to be penalized financially, and less likely to receive bonus payments under VBP. VBP may be taking resources from the organizations that need them the most.

Acting through the Office of the Assistant Secretary for Planning and Evaluation (ASPE), the Department of Health and Human Services contracted with the National Academies of Sciences, Engineering, and Medicine to convene an ad hoc committee to prepare a series of five brief reports to inform ASPE analyses that account for social risk factors in Medicare payment programs mandated under the Improving Medicare Post-Acute Care Treatment Act. (See the “About the Series” box to learn more about each of the five reports.)  In the fifth and final report, the committee puts the entire series in context and offers additional thoughts about how to best consider the various methods for accounting for social risk factors, as well as next steps.


Social Risk Factors and Indicators

In its first report, the committee developed a framework by which social risk factors might influence health care outcomes of interest to Medicare’s VBP programs (see figure). The social risk factors include:

  • socioeconomic position;
  • race, ethnicity, and cultural context;
  • gender;
  • social relationships;
  • and residential and community context.

The committee found compelling reasons for considering each indicator listed for inclusion in Medicare quality and measurement programs and makes no distinctions in terms of which social risk factor or indictor is “most important” from either a conceptual or empirical standpoint.

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Data Sources and Availability

The committee identified three sources of data on social risk factors for possible use by CMS: 

1) new and existing sources of CMS data

Existing sources of CMS data include administrative records and beneficiary surveys with limited social risk factor data (such as race and ethnicity). CMS could also collect new social risk factor data. While collecting new data incurs cost and burden, accounting for social risk factors could mitigate adverse consequences of the current VBP system and therefore could justify the expected costs and burden of new data collection. Such data collection will also facilitate monitoring for potential unintended consequences of accounting for social risk factors in VBP on health disparities. Social risk factor data could also be used to target quality improvement initiatives, to inform the development and implementation of appropriately tailored interventions, and for research.

2) data from providers and plans

Data from providers and plans include electronic health record (EHR) data and administrative data that providers and plans send to CMS. Some social risk factor data are already captured here. New social risk factor data that providers and plans could collect could also be important for the care or services providers and plans provide.

3) alternative government data sources

Alternative government data refer to administrative data and national surveys that federal agencies other than CMS (including other agencies within HHS) and state agencies oversee and maintain that contain information on social risk factors that CMS could use. These include data that could be linked to Medicare beneficiary data at the individual level, as well as area-level data that could be used to describe a Medicare beneficiary’s residential environment or serve as a proxy for individual level effects.

The committee recommends that CMS collect information about relevant, relatively stable social risk factors, such as race and ethnicity, language, and education, at the time of enrollment.

The table below provides a summary of the availability of data for the various indicators. The table is meant to convey readiness for use of any specific indicator, not a prioritization or preference.

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From the Report >>

                            

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Methods

In it third report, the committee identified methods in four categories to account for social risk factors. Those categories include:

1. stratified public reporting, which seeks to make overall quality visible to consumers, providers, payers, and regulators;

2. adjustment of performance measure scores, which accounts for social risk factors statistically in an effort to more accurately measure true performance;

3. direct adjustment of payments, which explicitly uses measures of social risk factors in payment but by itself does not affect performance measure scores; and

4. restructuring payment incentive design, which implicitly accounts for social risk factors in payment.

Some opponents of accounting for social risk factors have stated that by making it easier for providers and plans to reach performance targets (or rewarding them at lower levels of absolute performance), accounting for social risk factors may remove incentives to improve quality and efficiency for patients with social risk factors. While acknowledging this potential unintended consequence, the committee suggests that any approach should include sufficient incentive for quality improvement—overall, and for socially at-risk populations. Achieving this might require a combination of reporting and payment methods.

A risk of some methods to account for social risk factors is the perception of different standards for different populations, and this is a concern of critics of adjustment. The committee states that if CMS’s goals for VBP include monitoring for and reducing disparities, stratified public reporting by patient characteristics within reporting units (for example, publicly reporting data for patients by race and ethnicity within a hospital) must be part of any approach to improve on the status quo. Only such public reporting makes disparities visible by showing quality information for different subgroups.

Conclusion: The committee supports four goals of accounting for social risk factors in Medicare payment programs: reducing disparities in access, quality, and outcomes; improving quality and efficient care delivery for all patients; fair and accurate reporting; and compensating health plans and providers fairly. These goals would best be achieved through payment based on performance measure scores adjusted for social risk factors (or adjusting payment directly for these risk factors) when combined with public reporting stratified by patient characteristics within reporting units.

The committee notes that some restructuring of payment formulas may still be needed to ensure that there are enough incentives for health plans and providers to improve access, quality, and outcomes for groups that are disadvantaged by social risk factors. Some examples of incentivizing payment formulas include paying for performance or for a change in performance for subgroups with high levels of social risk factors. Furthermore, improving health equity may require both accounting for social risk factors in payment and quality improvement interventions.

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Moving Forward

Accounting for social risk factors is necessary but insufficient by itself to achieve health equity. Achieving equity may require accounting for social risk factors as well as other payment reforms, further research to identify what drives observed differences in quality and outcomes for patients with social risk factors, and interventions to improve the quality of care and to reduce disparities. It is possible to deliver high-quality care to socially at-risk populations. Patients with social risk factors need not experience low-quality care and poor health outcomes, and there are strategies health care providers and payers can undertake to improve care and health outcomes for socially at-risk populations. In its second report, the committee identified 6 systems practices, grounded in community-informed and patient-centered care and emerging out of a commitment to health equity, serving as commonalities across these strategies.

Conclusion

The committee urges policymakers to remember that quality measurement and payment policies affect the lives of real patients. In the case of accounting for social risk factors, changes to the current VBP system would especially influence the lives of patients with social risk factors who have historically experienced barriers to accessing high-quality health care. Together, accounting for social risk factors in quality measurement and payment in combination with complementary approaches may achieve the policy goals of reducing disparities in access, quality, and outcomes and quality improvement and efficient care delivery for all patients, and thereby promote health equity.

About the Series

Accounting for Social Risk Factors in Medicare Payment: Identifying Social Risk Factors

In the first report, the committee presented a conceptual framework and described the results of a literature search linking five social risk factors and health literacy to health-related measures of importance to Medicare quality measurement and payment programs. 

Systems Practices for the Care of Socially At-Risk Populations

In the second report, the committee reviewed the performance of providers disproportionately serving socially at-risk populations, discussed drivers of variations in performance, and identified six community-informed and patient-centered systems practices that show promise to improve care for socially at-risk populations. 

Accounting for Social Risk Factors in Medicare Payment: Criteria, Factors, and Methods

The committee’s third report identified social risk factors that could be considered for inclusion in Medicare quality measurement and payment, criteria to identify these factors, and methods to account for them in ways that can promote health equity and improve care for all patients. 

Accounting for Social Risk Factors in Medicare Payment: Data

The fourth report provides guidance on data sources for and strategies to collect data on social risk factor indicators that could be accounted for Medicare quality measurement and payment programs. 

Accounting for Social Risk Factors in Medicare Payment

In the fifth and final report, the committee aims to put the entire series in context and offers additional thoughts about how to best consider the various methods for accounting for social risk factors, as well as next steps.  


 

Read the Dissemination Meeting highlights.

Committee on Accounting for Socioeconomic Status in Medicare Payment Program
Donald M. Steinwachs (Chair) Johns Hopkins Bloomberg School of Public Health
John Z. Ayanian University of Michigan 
Charles Baumgart xG Health Solutions (until July 2016)
Melinda Buntin Vanderbilt University School of Medicine
Ana V. Diez Roux Drexel University Dornsife School of Public Health
Marc N. Elliott RAND Corporation
José J. Escarce University of California, Los Angeles
Robert Ferrer University of Texas Health Science Center at San Antonio
Darrell J. Gaskin Johns Hopkins Bloomberg School of Public Health
Mark D. Hayward University of Texas at Austin
James S. Jackson University of Michigan
Daniel Polsky University of Pennsylvania
Meredith Rosenthal Harvard T.H. Chan School of Public Health
Anthony Shih The New York Academy of Medicine

Study Staff
Kathleen Stratton Study Director
Leslie Y. Kwan Associate Program Officer
Alexis Wojtowicz Senior Program Assistant 
Doris Romero Financial Associate
Hope Hare Administrative Assistant
Rebecca Morgan Senior Research Librarian, National Academies of Sciences, Engineering, and Medicine
Rose Marie Martinez Senior Board Director, Board on Population Health and Public Health Practice
Sharyl Nass Board Director, Board on Health Care Services

National Academy of Medicine Greenwall Fellow in Bioethics 
Brendan Saloner, Johns Hopkins Bloomberg School of Public Health

Study Sponsor
Department of Health and Human Services–Office of the Assistant Secretary for Planning and Evaluation