Insights

CMS’s recent integration of health equity into its new and existing value-based payment (VBP) programs (as outlined below) signals a strong commitment to equitable care delivery. We expect health equity to be incorporated into additional federal programs and for private payers to follow CMS’s example in designing their own plans for managing the diverse needs of rural, multicultural, high-need, or otherwise historically underinvested populations.

Considering these changes, healthcare stakeholders should evaluate their current capabilities for tracking and managing health equity and prepare a strategy to address the social needs of their respective populations. Federal programs often reward early adopters before phasing in mandated policies, so organizations who move proactively can benefit from first-mover advantages and prepare to avoid future penalties.

Public and Private Emphasis on Health Equity

Addressing health equity has become the number one strategic priority for many provider organizations while private companies (from private equity-funded startups to well-established organizations) work to fit their offerings into a healthcare system that places health equity at its core. In addition to the private sector, the Centers for Medicare and Medicaid Services (CMS) released its Framework for Health Equity and the Center for Medicare and Medicaid Innovation’s (CMMI’s) recent Strategic Refresh listed advancing health equity as one of its five priorities.

This parallel movement across private and public sectors indicates that health organizations need to be ready to operate in a health equity-focused ecosystem, and accountable care will play a vanguard role. The ways in which health equity considerations enter the healthcare system more broadly will be heavily influenced by CMS’s value-based payment (VBP) models; the recent updates to the Medicare Shared Savings Program (MSSP) and ACO REACH, which featured major changes around the incorporation of health equity, highlight the importance accountable care organizations (ACOs) will play in this effort. Organizations that lean into this evolution toward value-based care will have the opportunity to help shape how health equity goals are met by the healthcare system, stay ahead of the curve, and achieve financial success.

Historically, ACOs have disproportionately operated in urban settings and served less vulnerable populations. Providers who primarily treat rural and underserved beneficiaries have not adopted value-based payment models at the same rate, depriving many underserved beneficiaries of the benefits of the high-quality, whole-person, and coordinated care ACOs can provide. Achieving health equity requires a sustained, societal-level approach to alleviate the health disparities driven by current and former societal-level actions or inactions. The actions CMS is taking with the changes to its flagship value-based care program—the MSSP—and its most advanced total-cost-of-care model to date—ACO REACH—demonstrates the types of measures needed to achieve these ambitious health equity goals.

Health Equity Provisions in ACO REACH

In early 2022, CMS announced a rebranding of and revisions to the Global and Professional Direct Contracting model; from January 2023 onward, the model will be known as the ACO Realizing Equity, Access, and Community Health (ACO REACH) model. The inclusion of the word “equity” highlights one of the core reasons for the update—ACO REACH now includes several provisions aimed at bolstering health equity as described below:

1. Inclusion of health equity plans. ACOs are now required to submit a health equity plan at the beginning of each model Performance Year to participate in the program. The plan must include how the ACO will identify health disparities, specify health equity goals and strategies, and include a plan for implementation and methods for evaluating progress. The health equity plan is a requirement CMS expects to incorporate into other value-based care payment models going forward.
2. Adjusted performance benchmarks: ACOs will receive a health equity adjustment to performance benchmarks. Beneficiaries classified as being in the top decile of underserved beneficiaries—as defined by Area Deprivation Index (ADI) and dual eligible status—will increase ACO benchmarks, making it easier for ACOs serving these beneficiaries to remain under their target benchmark and achieve financial success.
3. Increased incentives for supporting data: CMS is adding incentives to collect beneficiary demographic and social determinants of health (SDOH) data. The collection of demographic data will be required and ACOs will receive bonus points towards their Total Quality Score for doing so. CMS will also provide a tool for submitting SDOH data alongside the demographic information which, while currently optional, is something CMS expects to include as a component of quality performance in future model Performance Years.
4. Adjusted risk scoring methodology: ACO REACH will adjust risk scoring methodology to better reflect the cost of caring for medically complex beneficiaries by accounting for changes in ACOs’ demographic risk scores before applying the 3% cap on risk score growth. This cap was introduced in previous models to mitigate risk score gaming – where fraudulent diagnosis coding increases risk scores and therefore payments – but stakeholders expressed concern that the cap could lead to ACOs avoiding underserved populations who are disproportionately high-need and could drive risk score growth beyond the cap.
5. Expanded scope of practice: An expansion in the scope of practice authority for nurse practitioners will create new opportunities to provide needed beneficiary care, particularly in low-income and underserved areas.

Health Equity Adjustments to the Medicare Shared Savings Program

Unlike ACO REACH which was designed with health equity built directly into the model’s structure, the MSSP—CMS’s flagship accountable care program—has not historically accounted for health equity, to the program’s detriment. Since its establishment in 2012 the MSSP has included various unintentional disincentives for ACOs with high shares of minority populations and seen over a third of these ACOs exit the program, a higher attrition rate than for other ACOs. Recognizing these oversights, beginning in 2023, the MSSP program will include multiple adjustments designed to establish health equity as a priority and remove existing disincentives.

Although health equity is not as integral to the MSSP as the ACO REACH model—there is currently no requirement for a health equity plan, for example—changes to the MSSP include several program adjustments targeting health equity:

1. Advanced payments for health equity: CMS is easing participation barriers for ACOs entering underserved areas by providing health equity-adjusted advance payments meant to provide capital for the upfront investments necessary to succeed in the program (e.g., staff, data infrastructure), payments which will be higher for ACOs serving beneficiaries classified as higher need. As with ACO REACH, this determination will be driven by dual eligibility status and the ADI.
2. Reduced caps on negative regional adjustments: Data suggested that MSSP ACOs have been cherry-picking healthier beneficiaries, as evidenced by the majority of ACOs receiving a positive regional adjustment to their benchmark. CMS hopes to limit the risk of a large negative benchmark adjustment for ACOs treating high-needs beneficiaries by reducing the cap on negative regional adjustments from 5% to 1.5% and introducing an adjustment to reflect the impact of high-needs beneficiaries.
3. Adjusted risk score methodology: Initially introduced with ACO REACH, the MSSP will also adjust risk score methodology to account for demographic changes when determining the cap on risk score growth, limiting the disincentive on bringing underserved beneficiaries into the ACO.
4. Adjusted quality performance scores: CMS hopes to reduce disincentives for ACOs to enroll complex beneficiaries by implementing a health equity adjustment to ACO’s quality performance scores, offering up to 10 bonus points to an ACO’s MIPS quality performance category score for addressing certain health equity and SDOH factors.

Moving Forward

Although health equity hasn’t historically been a driving factor in payment for value-based healthcare, CMS’s incorporation of health equity incentives in both the MSSP and ACO REACH signals a movement toward greater accountability for equitable patient care. Moving forward, proactive organizations that lean into this evolution will find themselves best positioned to achieve financial success.

As experts on the evolution of value-based payment in the industry, Leavitt Partners, an HMA Company, can help clients successfully navigate the evolving role of value in healthcare, including the development of strategic plans for implementing health equity. With subject matter experts on value market analytics, alternative payment models, federal strategies, insurance market insights, and alliances, our strategic insights help our clients better understand what the future likely holds so they can make stronger, more informed strategic decisions that will improve the strength of their position in the market, in the public sector, and in their bottom line.

Check out our intelligence briefs, created in partnership with the Institute for Advancing Health Value, on the advancement of health equity in ACO REACH and the MSSP. You can also discover more ways Health Management Associates and Leavitt Partners can help by contacting Kate de Lisle at [email protected].