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Keys to success in the Medicare Advantage health equity index

The Medicare Advantage health equity index may not go into effect until 2027, but it will still affect payer strategies in 2024.

Kelsey Waddill
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Published: 17 Jun 2024

In the second half of 2024, payers may want to revisit their equity strategies to ensure that they are on track to succeed on the Medicare Advantage health equity index.

CMS added a health equity index to the Medicare Advantage program in December 2023 as part of its efforts to promote equity in the US healthcare system. Although the rule does not go into effect until the Medicare Advantage Star Ratings calculations for 2027, payer performance on these measures will matter in 2024 because data from this year will inform 2027 star ratings.

In the health equity index, payers must focus on member populations with social risk factors, specifically dual eligibles, individuals with disabilities, and low-income members. They must gather data on social risk factors and create interventions that address any care disparities they find.

Juan Montañez, senior managing director in the healthcare risk management and advisory practice at FTI Consulting, indicated that, while the index builds on payers’ ongoing efforts in social determinants of health and health equity, it may pose some difficulties.

“Health plans are being challenged with getting out of their comfort zone a little bit and making a concerted effort to address the needs of this population within the larger program that has unique needs, unique challenges that require specialized attention on the part of the health plan,” Montañez told HealthPayerIntelligence. “Not just the health care needs of the individual, but all the social factors that could impede their access to services in a timely manner, all have to be addressed.”

The stakes are high for health plans. Experts have estimated that 13% of Medicare Advantage organizations would lose one-half star due to the initiative. Many Medicare Advantage plans have already tasted the effects of a star ratings drop in 2024 when the share of 5-star rated plans temporarily dropped from 11.2% to 5.7%.

CMS projected that the health equity index would result in a modest but real reduction in spending of around $670 million. This reduction should indicate to payers that plans will not receive the same rebates they are accustomed to seeing and that Medicare Advantage organizations will have to work harder to achieve a high star rating in this category, Montañez noted.

At AHIP 2024, Montañez shared with HealthPayerIntelligence his perspective on the challenges associated with this new initiative and what health plans can do to secure a higher star rating for 2027.

Challenges of the health equity index

One of the primary challenges that the health equity index presents is that payers must collect social risk data.

While many payers already have the data management infrastructure to gather member information, social risk is not typically included in these data collection processes because they may not have visibility into such data. As a result, plans may need to innovate ways to systematically access reliable social risk data and incorporate it into their existing infrastructures.

Once they have successfully collected social risk data, payers may face challenges in employing mechanisms for acting on that data through member engagement. Resolving this gap may involve adopting new technologies and channels for member engagement that will meet members where they are.

Third, payers may lack the diverse and localized arrangement of partnerships necessary for success. Health plans have long created social determinants of health programs that can meet members’ non-clinical needs, but not all of them have established the types of partnerships with local leaders that the health equity index requires.

Changes payers may need to make

Many payers have laid the groundwork for success in the health equity index initiative. However, they will need to build on that foundation and may have to rethink some of their strategies in light of these new goals.

Payers must refine their population health and analytics capabilities for the health equity index. Specifically, they will have to ensure that their data collection mechanisms allow them to pull in the appropriate social risk and member profile information. These mechanisms should give them a glimpse into how best to engage these members.

Adjusting member engagement strategies may also be necessary. Member engagement might expand beyond the member to include the member’s family, their caregivers and representatives, their communities, and the community leaders most connected to them.

Along the same lines, payers will need to improve care management. Their care management strategies should incorporate new, local partnerships with community-based organizations, faith-based organizations, specialized vendors, and others that will help the payer create an individualized strategy for the member.

Keys to success

Personalization will be the crucial factor that defines success and failure on the health equity index.

“It's going to come down to: how can [health plans] tailor their approaches depending on these sub-populations?” Montañez shared. “If they stay at too high of a level, they might be able to effectively manage half of their members—or more, perhaps—but then there are going to be some that, if you just use your typical one-size-fits-all approach, it might not work.”

Yes, payers should be able to build on some of their previous work in social determinants of health and health equity. But Montañez emphasized that the index is looking for individualized plans of action. Payers must go back to the member profile and create strategies that are even more personalized and localized.

Historically, health plans have not performed well in following up after social risk interventions, Montañez added. After referring the member to a partner, payers should follow up and ask if members ultimately had access to and used the services.

To improve follow-up, payers should also assess the outcomes of social risk interventions. Once payers have confirmed that the members used the referred services, they should assess the results and determine whether that approach was the best strategy for that member.

Testing interventions to see if they are not just a solution but the best solution for members is uncommon. Systematic calibration of various intervention strategies to fit members’ needs will be crucial to success in the health equity index. Artificial intelligence may have a role to play in this iterative process, and in assessing effectiveness, Montañez suggested.

Many insurers will have to start reimbursing their social risk intervention partners. Payers who want to succeed in the health equity index may need to begin paying the community-based organizations and other resources that help them serve their members. There may be opportunities to use value-based contracts to compensate and incentivize partners.

While many payers have long-term relationships with national-level nonprofits and organizations that address specific social determinants of health, Montañez emphasized that the health equity index will drive payers to think more locally.

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