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Value-Based Care News

Social Determinants of Health Key to Value-Based Purchasing Success

Providers and payers are quickly transitioning away from fee-for-service, but value-based purchasing success hinges on both parties addressing social determinants of health.

Value-based purchasing and social determinants of health

Source: Thinkstock

By Jacqueline LaPointe

- We are quickly heading to the value-based purchasing tipping point, according to the Vice President of Network Management at Health Partners Plans in Pennsylvania.

“While adoption rates are still relatively low in some regions of the country, almost all health plans and providers are doing work in this space and the percentage of spending in the value-based care space will continue to increase,” seasoned commercial and government health insurance plan executive Brian Donovan recently told

“I can see it approaching maybe 50 percent for most health plans within the next five years if we consider their entire book of business.”

The transition away from fee-for-service has been a long journey. While some health systems and plans have been engaging in types of value-based contracts for decades, the Affordable Care Act (ACA) really got the ball rolling for most providers through programs like the Medicare Shared Savings Program and hospital pay-for-performance initiatives.

President Obama signed the ACA into law on March 23, 2010. However, value-based purchasing contracts are still in their infancy at most provider organizations almost nine years later.

READ MORE: How Addressing Social Determinants of Health Cuts Healthcare Costs

One recent poll showed 62 percent of healthcare organizations are “just beginning” their journey to value-based care. Another 21 percent of healthcare organization leaders said they were about halfway there.

Updated data from the Health Care Payment Learning & Action Network (HCP-LAN) also revealed that just 34 percent of healthcare payments made in 2017 were tied to an alternative payment model.

Providers and payers are hesitant to put all their eggs in the value-based purchasing basket.

Alternative payment models bring a significant amount of financial risk with them for both sides. Payers and providers need more comprehensive data and analytics to effectively influence healthcare spend and care quality.

Fee-for-service did not require that deep dive into patient data, so many stakeholders are struggling to align their workflows with value-based care and purchasing models.

READ MORE: How Social Risk Factors Influence Value-Based Reimbursement

However, there is “a recognition by both sides that we can no longer do business the same way that we have in the past,” Donovan said.

“Not only here in southern Pennsylvania, but in rest of the country, value-based care models will continue to play a significant role in driving improvement in the healthcare system,” he continued. “The models will improve the management of medical and pharmacy spend, quality and outcomes for members and patients, and the overall patient experience, as well as address physician burnout, and most importantly, social determinants of health.”

Addressing social determinants of health through value-based contracts

Value-based purchasing require providers to improve patient outcomes at a lower cost. However, the care delivered within the walls of a hospital or practice only impact as little as ten percent of an individual’s long-term health and outcomes, according to commonly cited statistics.

The conditions in which individuals are born, grow, work, live, and age make up the remaining 90 percent.

“Social determinants of health are life-enhancing resources such as food supply, housing, economic and social relationships, transportation, education, and healthcare distribution across populations. The factors effectively determine length and quality of life,” Donovan emphasized.

READ MORE: Value-Based Contracts Rely on Patient Attribution, Data Sharing

However, providers and payers are just “learning how critical that component is to the success of any value-based program that you look to roll out to your population or to the market.”

In his experience as the Senior VP of Business Development and Payer Relations at Saxton & Stump LLC, as well as his positions at major organizations like Centene and Catholic Health Initiatives, Donovan hadn’t always taken social determinants into account when developing value-based contracts.

Brian Donovan, VP of Network Management, Health Partners Plans, discusses how addressing social determinants of health leads to value-based purchasing success.
Brian Donovan, VP of Network Management, Health Partners Plans Source: Health Partners Plan

“I've been a part of the value-based purchasing space for the past at least 12 years, if not more,” he explained. “At that time, social determinants weren’t even a part of the conversation. It wasn't even a part of the common vernacular. However, through the evolution of the programs and populations, social determinants of health are a significant component of the programs, especially in determining the overall success of the programs.”

Incorporating social determinants of health into value-based purchasing contracts can make the difference between a model that merely incentivizes providers to alter their workflows and one that sustainably lowers costs and improves quality, bringing long-term savings to all stakeholders.

To address social determinants of health through these contracts, payers need to develop the right reimbursement structure.

Providers have probably been performing services or activities that address social determinants of health for a long time. Some providers take the extra step to document socioeconomic information or connect patients with a social service organization in the community.

But successful value-based purchasing contracts will offer providers a reimbursement structure that pays them for consistently delivering services beyond the traditional clinical realm.

“It's a matter of us taking the work that they've already been doing and incorporating it into the overall management of the populations that are going to become a part of these programs,” Donovan stated. “That is the first step in the process.”

Implementing data analytics tools is the second step to incorporating social determinants of health into value-based contracts, he continued.

Payers need data analytics systems that first allow them to collect social determinants of health data from their members. Then, the systems need to be able to make that information available to clinical teams.

But the data analytics tools aren’t necessarily available to payers and providers just yet. Providers and payers are using sophisticated data analytics and artificial intelligence tools to identify patients with chronic illnesses or frequent emergency department visits and connecting that data to social, economic, behavioral, and other datasets.

However, these systems only really allow payers and providers to understand patients who regularly touch the healthcare system. Unfortunately, many of those who face housing insecurity, a lack of transportation, and other social risk factors aren’t always seeing their providers.

“We tend to have at least marginally workable data on people who are traditional seekers of care, and that can help with risk stratification and prediction. But what about the people who aren’t in the system?” asked John Supra, VP of Solutions and Services at the Care Coordination Institute in South Carolina.

About half of the members of a given population do not seek care in a given year, he explained at the 2018 Value-Based Care Summit hosted by Xtelligent Healthcare Media. Yet these are the individuals who are incurring excessive healthcare costs and experiencing worse patient outcomes.

Developing and implementing the necessary tools to address social determinants of health will be slow moving, Donovan pointed out.

“There's infrastructure and capital that is required to set yourself up to be able to deal with social determinants of health,” he said. “But the industry is beginning to realize and understand just how critical it is to bring that into the value equation if we are going to be successful in driving outcomes, controlling quality, and managing costs.”

While providers and payers may have to wait for the technology, they should be working on the third step for addressing social determinants of health. And that is creating community-based provider networks alongside the traditional provider network.

“We need to recognize that the majority or at least a significant portion of a member's care doesn't necessarily have to come through the physical health network,” Donovan explained. “There's a whole community-based network out there that members typically access and use that could actually support improving their health as they're navigating the physical health network.”

Developing networks of approved YMCAs, churches, social service organizations, and other community providers will be key to helping providers and payers extend their reach beyond the hospital or practice.

Providers already have a lot of their plates managing the clinical aspect of healthcare and the administrative responsibilities that come with value-based purchasing. But entering value-based contracts with payers who have a community provider network can help providers start to effectively impact healthcare spend and care quality when patients are not in their exam rooms.

Donovan and his team at Health Partners Plan are diligently working to make value-based purchasing successful for their providers. The health plan is “extremely committed to tackling social determinants of health,” he said.

“We've come a long way in 15 years,” he concluded. “Do we have the perfect solution that allows us to focus on social determinants of health say maybe the same way that we can chronic diseases or illnesses, high-risk members, or other segments of the population that are typically dealt with in these types of programs? We aren’t there yet but we are getting there.”


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