Social determinants of health and value-based reimbursement

Two of the biggest trends in modern health policy are shaping the evolution of today’s Medicaid programs. For starters, the shift towards value-based payment (VBP) is helping providers address health-related factors beyond a patient’s immediate need for care. Along with an increasing emphasis on social determinants of health, this shift is laying the groundwork to amplify preventative medicine as well as improved population health.



Value-Based Care versus Fee-For-Service: VBP asserts that the healthcare delivery system – from individual physicians to large hospitals and treatment centers – is accountable for both the quality and cost of care. Under this model, reimbursement is contingent upon the quality of care provided and is thereby tethered to patient outcomes. This concept differs markedly from the established fee-for-service model, which typically assigns reimbursements based on services provided, regardless of the outcome. So what happens when transitioning from fee-for-service to value-based payment models?


In essence, VBP promotes an environment in which providers can focus predominantly on patient care versus volume. The belief is that the resulting quality improvements will curtail the need for repeat hospital visits and ultimately reduce overall healthcare costs long term.


In the same vein, social determinants of health (SDOH) are also woven into today’s innovative payment and delivery models. SDOH refers to economic and social conditions that lead to health disparities between individuals or communities. Examples include living and working conditions, physical location, distribution of wealth, and level of education – interrelated factors that often result in disproportionate access to resources like skilled providers, public transportation, or local pharmacies.


SDOH is intrinsically linked to programs like Medicaid, which seeks to provide financial assistance for the health-related needs of those with limited income. The modern payment model presents a restructured distribution of responsibility across a broader spectrum of resources. If we enable support from a variety of angles, we can ensure improved, longer-lasting outcomes for patients.


It starts with supplemental governmental community benefits such as food stamps, access to transportation, and pharmacy assistance. We’ve already seen the benefits of assisting with secondary Medicaid eligibility and enrollment for patients who are unable to pay for essential medical visits and treatments. Taking another step forward, there are additional community benefits that target the same overarching goal of helping patients avoid unexpected, costly hospital stays.


For instance, let’s consider a diabetic patient who needs to meet regularly with a nutritionist to establish and maintain a healthy diet. This patient may need assistance with both high out-of-pocket expenses and access to nutritious foods. Ideally, the patient would receive support in the form of Medicaid coverage as well as food stamps, leaving them financially equipped to obtain healthy foods and better positioned to elude future hospital visits related to diabetes or poor diet.


Fittingly, CMS provides states with options to transition from traditional volume-based payments to value-based care for Medicaid recipients. Identifying SDOH and relevant community benefit enrollment programs to address the underlying needs of our patients is critical. In doing so, we can boost community health and enhance the patient experience, while simultaneously reducing uncompensated care and high-cost treatment plans.

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