{"subscriber":false,"subscribedOffers":{}} Using Advanced Payments In Population-Based Models To Address Equity | Health Affairs

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A graphic of multiple medical professional stylized vector drawings, the top left corner has text that states "Health Affairs Forefront, Accountable Care for Population Health".

Editor’s Note:

This article is the latest in the Health Affairs Forefront series, Accountable Care for Population Health, featuring analysis and discussion of how to understand, design, support, and measure patient-centered, cost-efficient care under the umbrella of accountable care.

This article is written by Joshua Liao and Amol Navathe in response to the latest developments in policy and research affecting accountable care. Other authors will contribute to the series as well.

Additional articles will be published throughout 2023. Readers are encouraged to review the Call for Submissions for this series. We are grateful to Arnold Ventures for their support of this work.

 

Population-based payment models may not be designed to promote health equity without explicit intention—recognition that has spurred the emergence of new models focused specifically on reducing disparities in care.

One promising design strategy would be to provide participating organizations with upfront payments that are earmarked explicitly for work that can address inequities. Historically, only a limited number of participants in small demonstrations have been able to access advanced payments—much less those provided specifically to address patient needs in ways that reduce disparities.

That is set to change in January 2024, when policymakers will begin offering new Advance Investment Payments to new, inexperienced, and low-revenue Medicare Shared Savings Program participants. As of May 18, 2023, eligible organizations can apply to receive these payments via the Medicare application portal.

There is rationale for this new strategy. Upfront payments can support complex budgeting and investment dynamics at many organizations, particularly in the early phases of model participation. Upfront payments can also offset the uncertainty and delayed nature of receiving funds received after the fact (oftentimes more than one year after initiating participation) in retrospective financial reconciliation. Guidance about use of funds is critical for setting an explicit intention to address equity in payment models and preventing participating organizations from reallocating them to other purposes.

In this article, we describe features of forthcoming Advanced Investment Payments and future areas of work. Collectively, they highlight equity-oriented upfront payments as an encouraging development in population-based models—one worth careful consideration from policymakers, payers, and health care delivery organizations seeking to drive accountable care for population health.

Advanced Investment Payments

One of the largest and longest running accountable care organization (ACO) models, the Shared Savings Program has long sought to encourage clinicians and organizations around the country to coordinate care and improve outcomes for Medicare populations. However, Advanced Investment Payments represent the first time that ACOs can receive upfront capital to address disparities.

Advanced Investment Payments are advances on shared savings payments. They include upfront funds of $250,000 along with up to two years of additional payments, calculated based on ACO size (number of attributed beneficiaries, capped at 10,000 per quarter, and made on a per-beneficiary, per-quarter basis). Per-beneficiary payments can range up to $45 and will be based on several measures of socioeconomic need: beneficiaries’ eligibility for Medicare Part D low-income subsidy; their Medicare/Medicaid dual-eligibility status; and the degree of social need surrounding their place of residence, as defined by the Area Deprivation Index (ADI) as a composite measure of socioeconomic disadvantage incorporating factors such as income and housing.

In providing advanced payments, policymakers seek to promote equity in population-based payment via more holistic approaches to addressing patient needs, including those related to social drivers of health. To that end, the statute dictates the ways in which ACOs must use and report on Advanced Investment Payments.

Organizations can use these funds to increase staff, create infrastructure, and redesign care for historically underserved beneficiaries, including by addressing social drivers of health. ACOs are encouraged to work with community-based organizations to screen and manage identified health-related social needs. Each year, organizations receiving advanced payments must also publicly report their spend plans and actual spending amounts.

Areas For Future Work

As upfront capital for addressing equity, Advanced Investments Payments are a welcome development in population-based care. However, this first iteration of advanced payments also underscores several areas for future work.

First, policymakers should carefully assess and monitor the impact of advanced payments on equity outcomes, with an eye toward future policy adjustments. In 2024, Advanced Investment Payments will be limited to a subset of new, less-experienced ACOs in the Shared Savings Program. But over the long term, policymakers should consider how to expand incentives to reflect the fact that meaningful equity improvements can also occur in more experienced ACOs and their historically marginalized populations.

Over time, policymakers may also need to adjust the amount of advanced payments. Funds calculated based on utilization may not necessarily capture the costs of addressing patients’ health-related social needs. To enable adjustments that capture actual costs, future policies could require population-based model participants receiving advanced payments to report not just how funds were spent, but also the actual costs of doing so.

Future policy adjustments could also involve different approaches to recouping advanced payments. In this first iteration, policymakers can recover advanced payments from ACOs’ earned shared savings if balances exist. However, annual recoupment could inadvertently undercut organizations’ ability to make meaningful investments to address disparities—efforts that will almost certainly require multi-year efforts. Conversely, in later years of advanced payments, policymakers may consider linking payments to outcomes such as reductions in disparities in order to ensure that funds are directed toward intended impact. Accordingly, policymakers will likely have to revisit recoupment requirements to mitigate risk, maximize equity outcomes, and enable investment over the longer-term.

As they gain insight about the use of advanced payments going forward, policymakers could also consider adjusting how payments are targeted toward certain activities. In prior demonstrations, the receipt of advanced payments was not associated with differential changes in quality or spending. One potential reason is the wide scope of those advanced payments, which were provided to spur broad care transformation but not specific activities or focus areas, such as disparity reduction. Forthcoming experience with Advanced Investment Payments can yield insight about the benefits and impact of targeted, rather than general, investment payments.

Second, policymakers should create a unified approach that combines advanced payments with other incentives to drive equity in population-based models. This work could start with aligning criteria used in different programs to determine different types of equity-focused payments. For instance, the ongoing ACO REACH model addresses payment and equity by increasing ACOs’ financial benchmarks, a strategy that could serve as a complement to advanced payments. However, adjustments occur based on two criteria also used in determining Advanced Investment Payments (Medicare/ Medicaid dual eligibility, area-level social need defined by ADI) but not the third (low-income subsidy eligibility). Notably, low-income subsidy eligibility is not dependent on state policy designs, which can and do vary.

As another example, the Maryland Total Cost of Care Model includes Health Equity Advancement Resource and Transformation (HEART) payments, quarterly per-beneficiary, per-month payments made to participating practices that serve complex patients living in socioeconomically disadvantaged areas. The ongoing cadence of HEART payments could serve as complements to upfront, more time-limited advanced payments. However, HEART and Advanced Investment Payments only share ADI—not any individual-level measures—as a criterion for determining payments.

In integrating criteria, policymakers might also consider new measures currently not used in existing population-based models. This is an important step because every criterion has limitations. For instance, while it represents a useful, multi-dimensional way to capture area-level need, ADI is a composite measure that provides limited insight into specific types of need, and it can be heavily influenced by overall values for certain factors, such as housing prices, that cloud underlying variation.

One solution would be to explore other multidimensional measures of need that include subcategories of risk or opportunity. One option would be Social Vulnerability Index, which provides insights about different types of need (socioeconomic, racial and ethnic minority, household, housing and transportation). Alternatives for population-based models involving state and federal collaboration could include Health Opportunity Indices created by some states to capture categories of need, such as economic opportunity, community environment, and wellness disparity.

Another strategy would be to combine values from ADI with individual-level data on social need gathered by health care organizations, insurers, or other community-based organizations. Although this approach would certainly require time, stronger coordination between health care and community groups, and advances in data collection, it is nonetheless worthwhile as a long-term way to identify and address specific facets of social needs for different patients and communities.

New Opportunities

Forthcoming Advanced Investment Payments provide Medicare a new opportunity to evaluate the impact of upfront payments and chart a course for future work creating unified sets of eligibility criteria and complementary geographic and individual measures of social need.

Ideally, over the next several years, more state and private payers would follow Medicare’s lead in implementing and iterating on equity-oriented advanced payments. The rationale for such payments, and the care delivery challenges they can overcome, are highly salient and applicable to the care of many patient populations, not just to Medicare beneficiaries.

Incorporating advanced payments into multiple population-based models from multiple payers would increase the salience to prospective or participating organizations; create a broad base of experience and evidence about the impact of these payments; and ultimately support a future wave of equity-focused population-based models. In these models, advanced payments could support initial investments by population-based model participants while ongoing per-beneficiary payments enable ongoing support and spending benchmark adjustments account for the impact of social drivers of health on utilization and spending outcomes.

Together, these elements would reflect population-based models designed explicitly with the intention of improving health equity as well as overall outcomes to achieve population health.

Authors’ Note:

Dr. Liao reported personal fees/honoraria from Marcus Evans, Comagine Health, and Brown University outside the submitted work. He also reports service on the Physician-Focused Payment Model Technical Advisory Committee. The views represented here are his and do not represent those of the committee.

Dr. Navathe reports grants from Hawaii Medical Service Association, grants from Commonwealth Fund, grants from Robert Wood Johnson Foundation, grants from Donaghue Foundation, grants from the Veterans Affairs Administration, grants from Arnold Ventures, grants from United Healthcare, grants from BlueCross BlueShield of North Carolina, grants from Humana, personal fees from Navvis Healthcare, personal fees from Singapore Ministry of Health, personal fees from Elsevier Press, personal fees from Medicare Payment Advisory Commission, personal fees from Analysis Group, personal fees from VBID Health, personal fees from Advocate Physician Partners, personal fees from the Federal Trade Commission, personal fees from Catholic Health Services Long Island, and equity from Clarify Health, personal fees and board membership for The Scan Group, and non-compensated board membership for Integrated Services, Inc. outside the submitted work in the past 3 years. Dr. Navathe also reports service on the Medicare Payment Advisory Commission. The views represented here are his and do not represent those of the commission.

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