Achieving health equity is increasingly becoming a priority for any organization committed to transforming the health of individuals and populations. While this commitment has traditionally fallen to providers, provider organizations, and dedicated community organizations, health equity is becoming increasingly important to payers, including as a factor or incentive in new financial models, as well.
As laid out in ECG’s blog post Health-Related Social Needs and Value-Based Care, social determinants of health (SDOH) are being addressed through health-related social needs in innovation models. SDOH are often barriers to achieving health equity in healthcare.
In this blog post, we outline current and emerging payer approaches to incentivize health equity improvement and the implications for providers and health systems.
Current Payer Approaches to Health Equity
Medicare, commercial payers, and state Medicaid programs are incorporating health equity requirements and activities to varying degrees. Outlined below are detailed requirements and activities by payer line of business.
Medicare
CMS has identified health equity as “the first priority” in its Medicare and Medicaid strategic plan.¹˒² The health equity framework focuses on standardizing the collection of data, analyzing data to understand current inequities, developing policies to address gaps, supporting providers in managing gaps, improving services to the underserved, and increasing accessibility and coverage in ways that improve health equity. To date, this framework has been incorporated into Medicare programs in the following ways:
- Medicare Fee-for-Service (FFS): Within traditional Medicare FFS, CMS has focused on including health equity-related measures in mandatory quality programs, such as the addition of health equity coding categories (e.g., ICD-10 Z codes) within the Hospital Inpatient Quality Reporting Program³˒⁴ and SDOH screening in the Merit-based Incentive Payment System.
- Medicare Advantage (MA): Currently, MA plans are required to provide free language and translation services and incorporate a provider’s cultural and linguistic capabilities within provider directories.⁵ Looking forward to 2027, the MA Star Ratings program⁶ will incentivize plans to improve care for patients with social risk factors such as disabilities, dual-eligible status, and socioeconomic status through the establishment of a health equity index factor.
- Medicare Shared Savings Programs (MSSPs): CMS’s largest accountable care organization (ACO) program for traditional Medicare beneficiaries has created participation incentives for providers serving dual-eligible and low-income beneficiaries, such as advanced investment payments to develop staffing and technology infrastructure, longer time periods in upside risk only, and revised assignment methodology, to better recognize the impact of dual-eligible and low-income enrollment.⁷
- CMS Center for Medicare and Medicaid Innovation (CMMI) Models: CMMI models vary in their incorporation of health equity but are relatively advanced compared to traditional Medicare programs. For instance, the ACO Realizing Equity, Access, and Community Health (ACO REACH) program integrates health equity factors across data collection requirements, patient screenings, and financial benchmark methodology.⁸ The Making Care Primary Model includes enhanced service payments based on the patient’s health risk.⁹ The All-Payer Health Equity Approaches and Development Model includes health equity as one of three programmatic pillars¹⁰ and states that participants in this model are required to develop a statewide health equity plan, including creating payment methodologies that adjust for social risk.
State Medicaid
As the largest payers for underserved communities, state Medicaid agencies play a vital role in achieving broader health equity. States have aimed to address equity gaps through a variety of methods, including:
- Developing bridge programs for justice-involved individuals reentering the community.¹¹
- Expanding data collection and coding requirements to reflect HRSNs and promote service referrals to meet identified needs.¹²
- Expanding payment and coverage for nonclinical services that are provided by community-based organizations.¹³
- Providing state funding for care coordination services, capacity expansion, quality improvement, and population health activities through non-visit-based payments.¹⁴
- Adjusting capitated payments based on patient acuity, including HRSNs (i.e., social risk adjustment).¹⁵
Commercial Payers
The integration of health equity within commercial plans varies by payer organization and product. To date, many commercial payers have remained focused on patient and provider education, while others have made more discrete, programmatic changes. The organizations that have advanced beyond education have often focused on data collection by following CMS’s frameworks to gather additional demographic information and screen for HRSNs. Some commercial payers have also developed local programs through philanthropic grants that provide access to services to address various HRSNs. Examples of payer activities include the following:
- UnitedHealthcare has implemented improved data collection and coding for HRSNs to identify barriers to health equity.¹⁶
- Aetna collects SDOH data via annual health risk assessments and promotes the use of Z codes.
- Cigna has developed several programs, including parental health activities to decrease barriers for marginalized communities, a diabetes program that connects patients to community resources, and LGBTQ+ health programs that include gender-affirming care.¹⁷
- Blue Cross Blue Shield Association has a national health equity strategy focused on decreasing disparities in parental health¹⁸ and improving outcomes for parents and babies.¹⁹
Provider Implications and How to Prepare
As payers continue to prioritize health equity and adjust their benefits accordingly, health systems and provider groups will need to prepare for changes in their reimbursement incentives, clinical programs, and reporting capabilities. In ECG’s experience, we have found three key domains that provider organizations will need to evaluate regarding health equity. Within each domain, there are several action items providers should consider when developing near- and midterm strategic plans. By proactively incorporating health equity into organizational strategy, providers can advance patient care and access, preserve reimbursement, and ensure alignment with payer partners.
Domain One: Data and Technological Development
Providers will need to collaborate with payers (where feasible) to ensure health equity and HRSN data is captured and measured accurately. This may require adjustments to electronic health record platforms or systems to support additional patient entry assessments. Recommended considerations include:
- Developing a methodology and capability to track and risk-stratify patient populations based on not only disease state but also social risk factors.
- Determining technology requirements to collect and analyze HRSN information on both patient and population levels. This will include the ability to track data over time to measure and manage performance.
- Preparing staff for additional coding and billing requirements to capture required HRSN screenings and associated interventions.
- Ensuring that data input and capture are available at every touch point to facilitate care delivery and decision-making.
Domain Two: Financial Analysis, Modeling, and Revenue Cycle Evaluation
Providers will need to have a detailed understanding of how newly released health equity measures may impact value-based care bonus payments, traditional FFS program requirements, and overall managed care financial performance. Recommended action items include:
- Analyzing historical quality data to estimate current performance on newly implemented metrics and determine the associated financial impact.
- Tracking the financial return of various health equity interventions to understand sustainability and determine whether interventions will meet financial priorities and payer/provider goals.
- Developing the capability to incorporate indices that document health equity (e.g., the area deprivation index, the social vulnerability index), effectiveness, and the propensity to include considerations in resource allocation decisions.
Domain Three: Operational and Strategic Alignment
Providers will need to modify care delivery models, streamline workflows, and develop community-based partnerships to ensure full integration of health equity priorities into the organizational culture. This will include:
- Incorporating near- and midterm health equity priorities and goals as part of the broader system strategic plan.
- Deploying a multimodality approach to communication with stakeholders that includes opportunities for frequent updates, feedback from stakeholders, and sharing of successes.
- Establishing an inclusive governance and management structure to monitor patient- and population-level outcomes.
- Educating and retraining the workforce on health equity priorities and goals and achievement of success in outcomes.
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Edited by Matt Maslin
¹ https://www.cms.gov/priorities/innovation/strategic-direction-whitepaper.
² https://www.cms.gov/newsroom/fact-sheets/fy-2024-hospital-inpatient-prospective-payment-system-ipps-and-long-term-care-hospital-prospective.
³ https://www.cms.gov/newsroom/fact-sheets/fy-2024-hospital-inpatient-prospective-payment-system-ipps-and-long-term-care-hospital-prospective.
⁴ https://qualityreportingcenter.com/globalassets/2023/04/iqr/scrnsocdrvrs_-scrn_pos_specs-thi-edits-v2508.pdf.
⁵ https://www.cms.gov/files/document/health-equity-fact-sheet.pdf.
⁶ https://www.cms.gov/newsroom/fact-sheets/2024-medicare-advantage-and-part-d-final-rule-cms-4201-f.
⁷ https://www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2024-medicare-physician-fee-schedule-proposed-rule-medicare-shared-savings-program.
⁸ https://www.cms.gov/priorities/innovation/media/document/aco-reach-health-equity-slides.
⁹ https://www.cms.gov/priorities/innovation/media/document/mcp-ovw-webinar-slides.
¹⁰ https://www.cms.gov/priorities/innovation/innovation-models/ahead.
¹¹ https://www.cms.gov/files/document/health-equity-fact-sheet.pdf.
¹² https://www.ohsu.edu/sites/default/files/2021-06/Oregon%20Medicaid%20addresses%20SDOH%20and%20health%20equity1.pdf.
¹³ https://www.kff.org/policy-watch/a-look-at-recent-medicaid-guidance-to-address-social-determinants-of-health-and-health-related-social-needs.
¹⁴ https://www.governor.ny.gov/news/governor-hochul-announces-groundbreaking-medicaid-1115-waiver-amendment-enhance-new-york.
¹⁵ https://www.medicaid.gov/sites/default/files/2024-01/ny-medicaid-rdsgn-team-appvl-01092024.pdf.
¹⁶ https://www.uhc.com/content/dam/uhcdotcom/en/B2B-Newsletters/b2b-pdf/Advancing-Health-Equity-to-Improve-Outcomes.pdf.
¹⁷ https://www.thecignagroup.com/our-impact/esg/healthy-society/health-equity.
¹⁸ https://www.bcbs.com/the-health-of-america/healthequity/top-ten-maternal-health-equity-actions.
¹⁹ https://www.bcbs.com/the-health-of-america/healthequity/how-maternity-navigator-victoria-brown-breaks-down-barriers-healthy-pregnancies.
