How Social Risk Factors Influence Value-Based Reimbursement

December 28, 2016 - Safety-net providers received more financial penalties under Medicare value-based reimbursement programs because the hospitals treated more beneficiaries with social risk factors, such as dual eligibility, low income, race, ethnicity, and rural area residency, the Department of Health and Human Services (HHS) Office of the Assistant Secretary for Planning and Evaluation (ASPE) recently reported to Congress.

To ensure safety-net providers are not unfairly penalized, ASPE suggested that Medicare value-based reimbursement programs account for social risk by modifying financial incentives and quality measures.

“There are three key strategies that should be considered as Medicare aims to administer fair, balanced programs that promote quality and value, provide incentives to reduce disparities, and avoid inappropriately penalizing providers that serve beneficiaries with social risk factors,” ASPE stated.

“Measuring and reporting quality for beneficiaries with social risk factors, setting high, fair quality standards for all beneficiaries, and the provision of targeted rewards and supports for better outcomes for beneficiaries with social risk factors, may help ensure that all Medicare beneficiaries can achieve the best health outcomes possible,” added the federal office.

ASPE found that social risk factors negatively impacted patient outcomes and provider performance in several value-based reimbursement initiatives, such as the Hospital Readmissions Reduction, Physician Value-Based Payment Modifier, and End-Stage Renal Disease Quality Incentive programs.

Regardless of provider, beneficiaries with social risk factors experienced worse outcomes on a range of quality measures, including process, clinical outcome, safety, and patient experience measures. They also faced higher resource use.

The greatest predictor of poor patient outcomes, however, was dual enrollment in Medicare and Medicaid.

For example, in the Hospital Readmissions Reduction Program, dually enrolled beneficiaries had 24 to 67 percent higher odds of a hospital readmission across conditions. Even after adjusting for clinical risk factors, dually enrolled beneficiaries had a 10 to 31 percent higher odds of readmission.

Similarly, providers that disproportionately treated patients with social risk factors faced more value-based penalties. For instance, safety-net providers in the Hospital Readmissions Reduction program had 9 to 20 percent higher odds of hospital readmissions.

ASPE added that social risk factor effects on value-based penalties may threaten beneficiary care access. Providers may avoid treating patients with certain characteristics just to decrease their chances of facing financial penalties in Medicare value-based reimbursement programs.

To mitigate the social risk factor influence on safety-net providers, ASPE suggested a multipronged approach that targets quality measures and Medicare financial incentives. The approach included rewarding providers for better patient outcomes for beneficiaries with social risk factors, creating measures for beneficiaries with social risk factors, and developing high, but fair quality standards.

ASPE advised the lawmakers to develop value-based incentive payments that reward providers for improving quality for beneficiaries with social risk factors. With targeted financial incentives, safety-net providers would not be disproportionately penalized.

The federal office stated:

“To encourage improvement in care and outcomes for beneficiaries with social risk factors, and to avoid creating disincentives to caring for beneficiaries with social risk factors, high standards and reporting must be coupled with targeted payment adjustments to reward improvement and/or achievement in beneficiaries with social risk factors. Value-based reimbursement programs should track, measure, and report performance on beneficiaries with social risk factors to understand how they influence financial incentives and care quality.”

However, the report noted that providers and beneficiaries will need access to additional support or resources to reduce the social risk impact. For example, more community engagement may help to get beneficiaries without transportation or stable housing to the physician or help them to adhere to a healthy lifestyle.

Healthcare policymakers should also create health equity measures or domains to measure care disparities as well as to monitor the financial impact of social risk factors on safety-net providers.

“Failing to measure and report performance for beneficiaries with social risk factors could impede progress toward ensuring Medicare’s value-based purchasing programs have their intended effects and are not associated with unintended consequences,” stated ASPE.

The CMS Office of Minority Health has taken steps to develop quality measures on care disparities according to some social risk factors. For example, the office recently started to post quality information stratified by race and ethnicity on their website.

Medicare value-based reimbursement programs should also establish high, but fair quality and resource use standards, ASPE continued. Quality measures used to determine value-based incentive payments or penalties should be assessed to determine if frailty, medical complexity, functional status, or other social risk factors affect their ability to fairly evaluate provider performance.

Setting new standards, however, may be difficult for healthcare policymakers because many stakeholders have opposed adjusting standards for social risk factors. Critics have argued that controlling performance for social risk factors may mask care disparities and prevent leaders from identifying and reducing care gaps.

In response, ASPE suggested that “fair” standards adjust different types of quality measures for social risk factors. While process measures may not need to be adjusted, outcome measures should be controlled for more appropriate evaluation of provider performance.

The federal office concluded that the three-fold approach is key to addressing social risk factors in value-based reimbursement programs.

The report stated:

“This set of strategies –measure and report performance; set high, fair standards; and provide targeted reward and support –are not mutually exclusive – for example, policymakers could choose both to adjust resource use measures for social risk and also to provide additional payment adjustments for high performance for beneficiaries with social risk factors, or to provide targeted quality improvement support. Indeed, a multi-pronged approach employing all three strategies is likely needed to ensure that Medicare’s value-based purchasing programs adequately account for social risk, help drive improvements in care and outcomes for at-risk beneficiaries, and do not cause unintended consequences as they continue to expand.”

Dig Deeper:

• Understanding the Value-Based Reimbursement Model Landscape

• Value-Based Care Penalties Spark Greater Quality Improvements