How to address health equity in alternative payment models

How APMs can address health equity 

APMs incentivize healthcare providers to deliver high-quality, coordinated care to patients. The CMS Innovation Center regularly tests new payment and delivery models to identify which strategies successfully improve care and lower costs.

For the Health Care Payment Learning & Action Network (HCP LAN), there are three main components of APMs: payment and incentives, how a healthcare delivery system is organized, and performance metrics. Additionally, APMs must prioritize three major areas when designing their strategy, according to Marshall Chin, co-chair of HCP-LAN’s Health Equity Advisory Team and a general internist and health services researcher at the University of Chicago.

First, APMs should directly reward reductions in health disparities. Second, models should consider how upfront funding can be used for equity purposes, and third, payments should be adjusted for the social risks of the populations served.

A critical aspect of improving health equity through APMs is selecting what quality measures to assess.

“A lot of groups are taking standard clinical performance measures and stratifying by social risk categories, such as race or ethnicity,” Chin shared with RevCycleIntelligence. “They might take a measure like diabetes control or hypertension control and compare across different racial and ethnic groups.”

“There are other areas that could be very important, too. Measurement of trust of patients in the healthcare system or perceptions of discrimination received in the care are some examples of patient experience measures that might be important.”

Quality metrics can also be used to measure and improve community health, such as assessing days at work or school within a population. Identifying underlying social issues can pave a path to improving patients’ overall health and well-being.

Putting health equity into practice 

With increasing importance placed on health equity, APMs have started incorporating measures and incentives that address disparities. The ACO Realizing Equity, Access, and Community Health (ACO REACH) model and the Medicare Shared Savings Program (MSSP) are two models that include health equity-related policies.

In 2023, CMS also added a health equity adjustment to the MSSP quality performance scores. The adjustment awards bonus points to accountable care organizations (ACOs) serving high shares of disadvantaged beneficiaries, such as those receiving the low-income subsidy, those with dual eligible status, and individuals in locations with a high area deprivation index (ADI). This adjustment can only result in score increases and does not penalize ACOs.

The ACO REACH model, announced in 2022, has several aspects related to health equity. All ACOs participating in ACO REACH must have a health equity plan in place identifying how they are addressing or plan to address healthcare disparities. This documentation helps CMS better understand ACOs’ approaches.

In addition, the ACO REACH model has a health equity benchmark adjustment where an ACO can receive an increase or decrease in its monthly benchmark based on patient characteristics within the ACO. Similar to MSSP, if an ACO serves a higher share of disadvantaged or underserved beneficiaries, they can receive a benchmark increase of up to $30 per beneficiary. However, if they serve too few disadvantaged patients, they can receive up to a $6 decrease in their monthly benchmark.

The model also requires ACOs to report sociodemographic and health-related social needs data to CMS. Starting this year, ACOs will be penalized for not submitting the correct data.

“The quality outcomes [in the ACO REACH model] are aimed at preventing unnecessary emergency room and hospital visits along with managing chronic medical conditions in a clinic setting,” Vivian Anugwom, director of health equity and patient education at Allina Health, told RevCycleIntelligence via email.

“This improves patient well-being and establishes a provider-patient relationship. ACOs are being measured on all-condition readmissions, all-cause unplanned admissions for patients with multiple chronic conditions, timely follow-up after acute exacerbations of chronic conditions, and a patient satisfaction survey.”

The ACO REACH model has helped Allina Health build upon its ongoing work to advance health equity, such as increasing access to colorectal cancer screening among underserved populations and screening for health-related social needs, Anugwom shared.

Challenges with APMs and health equity 

Although integrating health equity initiatives into APMs seems like a straightforward way to improve outcomes, it doesn’t come without challenges. Some challenges are model-specific, while others highlight system-wide problems.

For example, using ADI to calculate ACO benchmark adjustments in ACO REACH may not be the most accurate method to lower benchmarks.

“The ADI is too blunt of a tool to really understand disparities,” Aisha Pittman, senior vice president of Government Affairs at the National Association of ACOs (NAACOS), told RevCycleIntelligence. “If you’re in a high-cost region, but you are an underserved individual, the ADI for your state is still high. There are no regional-specific adjustments.”

“We’re not fully comfortable with the approach of lowering the benchmark for some, but we do like the aspect of increasing it and recognizing the additional needs those beneficiaries here have.”

The data collection requirements may also be challenging, as the information is not fully standardized so that it can be used in the context of payment, and patients may experience distrust with providers who bombard them with repetitive questions.

A good part of addressing these challenges falls on the shoulders of CMS in the form of policy changes and increased provider education, according to Pittman. Policies that amend benchmark adjustments to account for patient characteristics and social needs would improve the effectiveness of the health equity benchmark.

The government should also prioritize standardizing data and educating providers on best practices regarding the ACO REACH health equity requirements. In addition, ACOs that participated in the ACO REACH model test can help share best practices for participating in the APM.

However, before addressing model-specific challenges, the system itself must undergo change.

“Both our care delivery system and payment system are not set up in a way that supports being able to care for diverse populations,” Chin indicated. “The system is basically set up to reward volume and to capture a well-paying payer mix, as opposed to enabling providers and systems to specifically seek out and care for disadvantaged populations and communities.”

Providers may be able to implement short-term strategies to address this problem, but sustainable, long-term change requires alignment across all stakeholders.

“Until healthcare organizations and health plans are supported in the goal of advancing health equity, there’s not going to be the flow of money that will adequately support and incentivize those care systems, like team-based care, community health workers, or systems to refer patients to social agencies to help with social needs,” he added.

All members of an organization must be on board to achieve health equity, including information technology staff, the patient experience group, clinicians, strategic operations, finance staff, senior leadership, and the front office staff.

“Unless everyone is brought in and equity is prioritized, it’s not going to happen,” Chin said. “And that’s not going to happen unless there is a variety of strong health equity training, including talking about social drivers of health, structural racism, and other systems of oppression.”

On the bright side, Chin believes now is a good time to kickstart some of these changes and improve health equity.

“Five years ago, I don’t think we were at a point where we could bring together these diverse stakeholders to have these talks about intentionally advancing health equity,” he noted. “Whereas now, there are plenty of groups within each of these different stakeholders that generally want to advance health equity. Now, people are starting to think about payment and how it aligns with care transformation to advance health equity. It’s a game-changer.”

With major stakeholders, including CMS, state Medicaid agencies, and private payers, getting involved in health equity strategies, the industry will likely see increasing momentum.

“I encourage all the people who are interested and passionate about advancing equity to do what they can both locally in their professional associations and nationally in their state because now is a particularly good time to make progress on how APMs, ACOs, payment models, and care transformation can advance health equity,” Chin concluded.