1. A Framework for Paying for Social Determinants of Health
Presentation for SNP Alliance
October 11, 2013

2. Purpose of Paper
Current MA P4P increases resources for plans that provide better quality care and reduces resources for plans when disparities are measured
Recent paper commissioned by Amerigroup (now Wellpoint) suggests:
Current MA P4P could disadvantage plans that serve a disproportionate share of beneficiaries with LOW socioeconomic status (SES)
Solutions include adjusting more MA quality measures for case mix (including SES) and rewarding quality improvement
This paper looks more broadly at how Medicare payment can be designed to reflect socioeconomic status and related “downstream” factors

3. Characteristics of SNPs
SNPs enroll a disproportionate share of dual eligibles
90% SNPs vs 20% FFS
Dual eligibles have higher poverty, high prevalence of no high school education, more racial and ethnic representation, miniscule rates of retiree coverage
i.e., low socioeconomic status
SNPs have perspective and experience that can help educate policymakers about the effects of socioeconomic status on health
SNP experience can inform design of health policy solutions for Congress

4. Socioeconomic Status Affects Health
Research concludes SES plays a significant role in a person’s health
Low SES affects how individuals use health care and their health outcomes
SES deemed a “determinant” of health, like biological factors – age, sex, genetics
Differences in SES and related factors can lead to disparities in health outcomes
Research has found a host of social factors “downstream” from SES that affect health
Health literacy, access to transportation/social supports, health behaviors, neighborhood
Many but not all downstream factors within sphere of influence of health system
SES not within sphere of influence of health system but can help identify/target interventions that reduce SES-related health disparities

5. Conceptual Framework for Determinants of Healthz
MEDICAL ILLNESS:
Acute/Chronic
SOCIAL DETERMINANTS
BEHAVIORS:
Smoking
Diet/Nutrition/Exercise
Substance Abuse
USE OF CARE:
Preventive Screenings
Doctor vs ER Visits
Treatment Adherence
MEDIATORS/MODERATORS:
Health Literacy/Language
Transportation/Social Supports
BIOLOGICAL DETERMINANTS:
Age, Sex, Genetics
OUTCOMES:
Quality and Cost of Care
Scope of Health Plan
CONDITIONS:
Drug Dependence, Frailty
Homelessness
Socio-economic Status (SES)
Race/Ethnicity/Culture
Neighborhood

6. Twelve Social Factors of Concern to SNPs
SNP Alliance identified 12 social factors that they view as most challenging for beneficiaries and plans in the care delivery process

7. Criteria Could Help Select Social Factors for Medicare Payment
Criteria could be applied to SNP identified factors and universe of social factors found to affect health in order to select ones most appropriate for Medicare payment
Strong base of evidence that social determinant affects health
Complexity/severity of illness is increased by social determinant
Proximity to providers and plans, i.e., within sphere of influence of health system
Social determinant links to other social factors for possible spill-over effects
Degree of social/political acceptance of need to address

8. Role of Race and Ethnicity
Racial and ethnic groups are a growing part of the Medicare population
SNPs enroll racial/ethnic groups at higher rates than traditional Medicare and non-SNP MA plans
Minorities experience worse outcomes (greater illness and mortality) than non-minorities
Focus of social epidemiological research has been on racial/ethnic health disparities , more than SES health disparities
Institute of Medicine concerned that some racial/ethnic health disparities stem from discrimination in the health system
A goal of this Administration is to reduce disparities in wages, health care, social justice
Relationship between race/ethnicity and health is complicated by strong correlation with SES
Overlap in reducing racial/ethnic health disparities will be created by addressing SES health disparities
SES and downstream social factors are relevant as means to address health disparities of all kinds

9. Goals of Medicare Payment
Medicare payment policy has focused on 3 main goals:
Payment accuracy
Encouraging efficient use of services
Ensuring access to care
Broad national policy goals have been addressed through Medicare payment
Graduate medical education, access to care in rural areas
In general, Medicare payment does not account for social determinants
Exception: Medicaid status included in MA risk adjustment model
Current Medicare payment design could incorporate social determinants
Policymakers asked: would such a payment add new resources to the system or be budget neutral?

10. Components of MA and FFS Payment
Both FFS and MA payment systems have 3 components
Base Pay = core payment per unit of service , per patient or per person
Adjustments to base pay = multipliers to base pay
Add-ons or separate payments = separate lump sum payment
ACA added new quality bonus adjustments (pay for performance) to payment for both MA plans and FFS acute-care hospitals
P4P planned for other FFS settings

11. Components of MA Payment
Base Rate = Plan Bid
Risk Adjustment = demographic (age/sex) and health (limited to 70 diagnoses), 1 social (Medicaid status proxy for income)
Add On = rebate for financial efficiency, must fund new benefits

12. BIOLOGICAL DETERMINANTS: Race/Ethnicity/Culture
Current Adjustments to MA Capitated Payment z
MEDICAL ILLNESS:
Acute (AMI)
Chronic (Obesity/Diabetes/COPD/CHF)
SOCIAL DETERMINANTS
BEHAVIORS:
Smoking
Diet/Nutrition/Exercise
Substance Abuse
USE OF CARE:
Preventive Screenings
Doctor Visits
Emergency Room
Treatment Adherence
POSSIBLE MEDIATORS:
Health Literacy/Language
Transportation
Social Supports
BIOLOGICAL DETERMINANTS:
Age, Sex, Genetics
OUTCOMES:
Quality and Cost of Care
Scope of Health Plan
CONDITIONS:
Drug Dependence
Frailty
Homelessness
Socio-economic Status (SES) SSI Status, Education, Occupation
Race/Ethnicity/Culture
= included in MA
payment
Neighborhood

13. Components of FFS Payment

14. Components of FFS Payment
Base rate = fee schedule or prospective payment
Adjustments = area wages + patient level adjustments + facility level adjustments
Patient level varies, reflects demographic (age/sex), diagnoses, functional status
Facility level reflects teaching/rural status, share of low income benes served
Exclude SES factors
Add on = separate payment to achieve national policy goals:
Graduate medical education
Access to rural providers
Financial viability of hospitals that serve low income populations

15. Quality Bonus Payment (P4P)
ACA added quality bonus “adjustments” to both MA and FFS base payments
P4P has potential to improve quality outcomes and reduce health disparities in Medicare
Caveat: Medicare P4P could exacerbate SES-related health disparities in Medicare as unintended consequence
Only CAHPS measures are adjusted for case-mix (reflect includes health status, demographics and education)
MedPAC: broaden case-mix adjustment of hospital all-cause readmissions measure to include income/SES
Same argument can be made for all outcome measures and those that are clinically-based
Issue of whether socioeconomic status should be included in case mix adjustment of quality measures will need to be addressed
Lack of case mix will have larger effects over time as more health outcomes measures are being added to P4P
Should providers/plans be held accountable for differences in patient quality that derive from differences in SES?
NQF informed SNP Alliance that CMS has asked NQF to address this question

16. Options for Designing Payment that Reflect Social Determinants of Health
1. Modify MA risk and FFS case-mix adjustments in order to reflect effects of social characteristics of patients on costs of care
Incorporate measures of SES or other social characteristics of beneficiaries into the risk/case-mix models
Per MedPAC, adding race/ethnicity and income does not improve accuracy of the MA risk model
Include/interact in the risk/case-mix models more diagnoses that are highly correlated with SES
For example, substance abuse could be interacted with several diagnoses in MA risk model
2. Modify P4P to control for independent effects of SES on health outcomes
Apply case-mix adjustment to all outcome measures and broaden case-mix adjustment to include more SES factors of beneficiaries

17. Options for Designing Payment that Reflects Social Determinants of Health
3. Create separate payment to reduce health disparities linked to SES disparities
Addressing SES disparities will reduce racial/ethnic disparities
Not all plans would qualify, i.e., plans enrolling more beneficiaries with higher SES would not likely receive added payment
4. Create new payment adjustment to reduce health disparities linked to SES
Adjust base payments for social status, not just health and case-mix
Example: 1 percent adjustment in base rates in areas that have SES or quality disparities among Medicare beneficiaries

18. Potential Adjustments or Add-Ons to MA Capitated Payment

19. Key Data Considerations
Data issues will be a major consideration in any new payment policy, including:
Does necessary data exist that identifies social characteristics/determinants of Medicare beneficiaries?
If so, at what level (beneficiary, plan, geographic area)?
Who collects the data?
Can the data be gamed?
Policymakers are skeptical of descriptive data collected by providers or plans, more comfortable with data collected by Social Security or other agencies
If no data exists, could it be readily collected?
By whom? At what level? Is it gamable?
Is the data accurate?

20. Data Issues for 12 Social Factors of Concern for SNPs

21. Other Considerations in Medicare Payment
Policymakers may be concerned with other issues when considering any new Medicare payment:
Should payment modification or new payment be linked to results?
ACA ushered in a new era of accountability
If goal is to reduce disparities, then how could policymakers know payment is working?
Should payment modification or new payment add resources to Medicare or be designed to be budget neutral?
Would payment modification or new payment duplicate Medicaid or other federal programs designed to address same or similar issue?