Social Determinants of Health and Medicaid Payments
Greater use of the emergency room has been linked to homelessness. Diabetes-related hospital admissions have been attributed to food insecurity. And social isolation has been identified as a risk factor for stroke and heart attack. These are just a few of the ways in which social, economic, and environmental factors—the social determinants of health (SDoH)—have been adversely linked to health outcomes, as well as healthcare utilization and spending.
Overview of article
- States can take several steps to factor social determinants of health (SDOH) into Medicaid payment policies. For example, some states are beginning to require managed care organizations (MCOs) to screen enrollees for social needs. Meanwhile, some providers and plans are working with community-based organizations (CBOs) to link individuals to resources such as food pantries, housing supports, and transportation assistance
- 2 strategies directed at MCOs to address SDOH among Medicaid beneficiaries, include accounting for the social determinants of health in risk adjustment, which allows states to improve the accuracy of the relative rates they pay their MCOs while also providing MCOs with the incentive to assess their members for social needs and capture data. For example, Massachusetts implemented a new Medicaid payment model that incorporates housing indicators and neighborhood stress scores into its MCO risk adjustment formulas. In this state’s model, individuals who have had three or more addresses in a single calendar year, or individuals who are coded as “homeless” in a medical encounter record, increase an MCO’s risk score, resulting in higher payments to the plan. Neighborhood stress scores include a composite measure of “financial stress” from census data, based on addresses that are geocoded to the census block group or tract. Enrollees who live in neighborhoods with higher-than-average stress may also trigger higher payments for MCOs. Early evaluations of the Massachusetts model have found that adding social determinants and related variables to risk scores strengthens the predictive power of risk adjustment and yields more accurate payments to MCOs
- The second strategy is to ensure that the needs of beneficiaries are not only identified but met, states can require or incentivize MCOs to implement SDOH interventions. In existing arrangements with MCOs, states often offer bonus payments or other incentives to MCOs that succeed in measurably improving access to care, disease management, and clinical outcomes. Pay-for-performance arrangements may also reward measurable reductions in preventable healthcare utilization and total cost of care
- The article outlined an incremental approach states can use to develop interventions that meet social needs including the following: 1) Identifying metrics related to SDOH processes and outcome quality metrics; 2) Using a standardized screening tool for SDOH; 3) Rewarding MCOs for implementing and providing standardized data on SDOH programs; and 4) Rewarding MCOs for SDOH-related quality metrics and/or clinical metrics related to their SDOH programs
- Overall, if states incorporate SDOH into their healthcare payment policies, they can better address the socioeconomic barriers their citizens face, improve citizens’ health, and reduce avoidable healthcare utilization and spending. The step-by-step strategies outlined in this article can help states begin their journey toward achieving these goals