Medicaid plans are pouring increasing amounts of resources into SDOH, and that approach is helping them obtain good profit margins, one analyst says.
Nov. 15—New federal payment models in the coming weeks and months will include funding to address the social determinants of health (SDOH), says the government’s healthcare leader.
Healthcare organizations have increasingly sought to coordinate with, and connect their patients to, community-based organizations that aim to address various factors that can adversely affect health.
“But what if we went beyond connections and referrals?” Alex Azar, secretary of the U.S. Department of Health and Human Services (HHS), said at a Nov. 14 Washington, D.C., event co-hosted by the Hatch Foundation for Civility and Solutions and Intermountain Healthcare.
“What if we provided solutions for the whole person, including addressing housing, nutrition, and other social needs?” Azar said. “What if we gave organizations more flexibility so they could pay a beneficiary’s rent if they were in unstable housing, or make sure that a diabetic had access to, and could afford, nutritious food?”
Azar said such efforts will be included in payment models coming from the Center for Medicare and Medicaid Innovation (CMMI).
As an example of the potential of SDOH initiatives to improve patient health and drive down costs, Azar cited the experience of accountable care organizations (ACOs). One ACO in Chicago began screening high-risk patients for malnutrition and then supporting them after discharge from the hospital with follow-ups, referrals, and nutrition coupons. The ACO reported the initiative saved more than $3,800 per patient.
Such initiatives followed the release of data from the Agency for Health Research and Quality (AHRQ), which found malnourished patients were twice as costly to treat at hospitals as well-nourished patients. Azar said malnutrition is involved in 12 percent of nonmaternal, non-neonatal hospital stays and amounts to $42 billion in annual healthcare spending.
“As part of our efforts to deliver value-based health care, we are moving more toward a system where providers can take on more risk,” Azar said. “This will, in turn, broaden the opportunities for providers to benefit from addressing social determinants of health.”
Azar envisions providers acting as “accountable navigators of the health system,” supplemented by navigators within the social services system.
“Paying for outcomes means paying for the right inputs—whether they are healthcare services or not,” Azar said. “And we need to prevent disease by providing not just the right health services but also the right holistic approach to prevention and well-being.”
Emerging efforts to address SDOH have come from CMMI’s Accountable Health Communities model. The five-year, three-track model launched in 2017 to test approaches to bridging the social-needs gap between clinical and local service providers.
Medicaid Plans Tackling SDOH
Azar also cited the successful SDOH efforts of Medicaid managed care organizations, “which stand to benefit if the model drives down healthcare costs.”
Ana Gupte, PhD, managing director with Leerink Partners, said this week at a Washington, D.C., roundtable that she has seen Medicaid plans pouring increasing levels of resources into SDOH, especially for their dual-eligible special needs enrollees; aged, blind, and disabled (ABD) populations; and long-term care populations.
Addressing SDOH has allowed plans covering such populations to obtain enough savings to derive profit margins from ABD-population capitated payments that range from $10,000 to $15,000 and dual-eligible annual payments ranging from $25,000 to $30,000.
“So, if you’re even making a 2 percent profit margin on that, it’s very big,” Gupte said.
The number of insurers moving into Medicaid managed care plans also is increasing due to policy changes under the Bipartisan Budget Act, which will allow them to obtain more access to dual-eligible enrollees by 2021 if they are offering plans in both Medicare and Medicaid, Gupte said.
“They are investing a lot into Medicaid, even if they were earlier only in Medicare Advantage [MA],” Gupte said.
Medicare Advantage Approaches
Azar this week described MA plans as “one of the best ways” to address SDOH in Medicare.
“Because MA plans hold the risk for their patients and they compete for their patients’ business, they have an incentive to offer benefits that are both appealing to their members and that will bring down health costs—whether those benefits are traditionally thought of as health services or not,” Azar said.
“The key is just that we need to give them the flexibility to do this, which we generally haven’t done.”
That will begin to change in 2019, when plans will be allowed to pay for a wider array of health-related benefits, such as transportation and home health visits. And in 2020, benefits can include additional services, such as home modifications and home-delivered meals.
“These interventions can keep seniors out of the hospital, which we are increasingly realizing is not just a cost-saver, but actually an important way to protect their health, too,” Azar said. “And if seniors do end up going to the hospital, making sure that they can get out as soon as possible, with the appropriate rehab services, is crucial to good outcomes and low costs as well.”
MA plans had expected the administration to go even further in allowing them to fund SDOH, Gupte said.
However, “most of the plans are excited that they can include some of that and at least get paid partway because they’re doing it now and not getting” paid by Medicare, Gupte said.
Existing SDOH initiatives by MA insurers include outfitting housing projects with wheelchair ramps, providing wraparound home-based care management, and using home health aides.
The new SDOH flexibility is part of a “perfect storm” of positive developments that are expected to fuel the growth of MA plans, said Matthew Borsch, managing director, BMO Capital Markets. Borsch, however, is skeptical that MA population growth will reach 11 percent in 2019, as projected by the Centers for Medicare & Medicaid Services (CMS).
Paul Heldman, managing partner with Heldman Simpson Partners, viewed the new MA plan flexibilities in SDOH as part of an experiment by CMS to determine whether such initiatives can reduce medical needs in the future.
Monday, Nov. 19
Conference call by CMS titled “Physician Fee Schedule Final Rule: Understanding 3 Key Topics.” Learn more.
Webinar by the National Medicare Advocates Alliance titled “Better Advance Care Legal Counseling.” Learn more.
Tuesday, Nov. 20–Friday, Nov. 23
Nothing scheduled (Nov. 22: Thanksgiving).