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Intention matters in health policy. Nearly a decade ago, federal policy makers set an intention to make health care more financially sustainable, affordable, and efficient by shifting the national health care system toward value.1 Setting that policy intention proved to be a critical step for signaling direction and informing expectations for the health care industry, prompting years of broad engagement and work to improve health care delivery. However, that progress has not translated into analogous progress in reducing the critical problem of health inequities in the US.
The specter of disparities looms large over value-based payment. There are no convincing data that payment programs have reduced the inequity that affects marginalized populations, such as racial and ethnic minorities and socioeconomically vulnerable individuals. Instead, payment models could worsen disparities for these groups. Early participation in accountable care organizations was higher in affluent communities than in communities with more Black residents and poor, uninsured, less educated, or disabled individuals.2 Communities with more socioeconomically vulnerable populations were less likely than others to be selected for joint replacement bundled payment programs.3 Value-based payment models also adjust for patient illness severity in determining financial bonuses or penalties. But these risk adjustment methods are incomplete for marginalized populations, potentially inducing practice changes that exacerbate disparities.
Policy and practice leaders have already started enacting some solutions, designing systems to monitor for disparities and prioritize research studying them. However, while essential, vigilance and evaluation alone are insufficient for achieving greater equity. The idea that disparities are “unintended” consequences of payment policy must be abandoned, and instead, an explicit new intention and goal must be set to reduce disparities through payment programs. To do so, policy makers should engage the clinical community and translate lessons from the early value-based payment movement into 3 changes to “pay for equity” (Table).
First, policy makers should set national pay-for-equity goals over the next decade. While this approach sounds aspirational, it is exactly the approach adopted to move from fee-for-service reimbursement toward value-based payment. In 2015, policy makers announced explicit goals to shift at least half of all Medicare payments to quality or value and 85% of all payments by 2018.1 Multiple states followed suit and set similar targets.
Achieving those goals has not been without challenges. But progress has been aided by clear, unapologetic goals, and a decade later, value-based payment is here to stay. The same boldness and cultural shift are needed to promote equity through payment reform. To achieve this shift, policy makers could seek input from the clinical community, particularly clinicians who provide care to large proportions of marginalized patients. Potential pay-for-equity goals could include deadlines for incorporating equity-focused measures into payment models and tying reimbursement to performance.
Second, policy makers could revise legislation by incorporating equity into definitions of value. As a direct function of statute, payment models have been evaluated based on whether they improve quality or save money. The Center for Medicare and Medicaid Innovation was created through section 1115A of the Social Security Act, which permits the Department of Health and Human Services to scale up payment programs only if that expansion is expected to “reduce spending…without reducing the quality of care” or “improve the quality of patient care without increasing spending.”4
Problematically, equity is not specifically included in section 1115 criteria, or any other laws governing payment policy for that matter. Policy makers could address this issue by revising statutes to include definitions of value that directly consider equity alongside cost and quality. One potential change could be to revise criteria and require that policy makers consider how programs affect equity, independent of cost savings.
For example, several bundled payment programs have targeted avoidable utilization of lower extremity joint replacement surgery and postsurgery care. However, as historically marginalized individuals, Black patients undergo joint replacement less frequently than White patients and are more likely to receive surgery at low-volume or low-quality hospitals. Black patients and White patients also differ in postsurgery skilled nursing facility use and readmission risk.
A statute could prompt policy makers to evaluate how payment models affect disparities in access to care by race, in part via “equity audits” that include input from participating clinicians. These audits could be incorporated as one component of formal evaluations assessing how programs affected health care access, use, and outcomes for marginalized patients. In the case of bundled payments, an equity audit could examine how the rates of elective joint replacement surgery, skilled nursing facility use, and surgical complications change for Black patients vs White patients over the duration of the program.
Another solution could be to revise statutes so that policy makers can expand payment models that reduce disparities, even if those models are found to increase spending. Currently, payment models that increase spending are widely viewed as policy failures, a perspective that will stifle progress toward equity given the potential trade-offs between equity and cost-efficiency.5 New payment models could address questions such as “What makes care more equitable?” or “What addresses underuse among marginalized groups?,” not just “What programs save money?” Policy makers could also seek clinician input on equity-focused programs by using existing forums such as the Physician-Focused Payment Model Technical Advisory Committee. To increase equity, the US must pay for it and signal that commitment in law and model creation.
Third, policy leaders could convene clinicians, insurers, community organizations, and patient advocates into a multidisciplinary group to guide an agenda for achieving new equity goals. In 2015, when policy makers set value-based payment targets, they helped organize insurers and other health care organizations into the Health Care Payment Learning & Action Network, a group dedicated to supporting and providing direction for value-based payment policy.6 Policy makers could adopt a similar strategy to help ensure that equity-based payment policies of the next decade succeed.
One early focus area could be to build on work from the Department of Health and Human Services and other groups to invigorate performance measurement around equity.7 These efforts could involve promoting collection of data related to factors that can drive disparities, such as education; economic, racial, and ethnic minority status; housing stability; and food security. These data could then be used to create dedicated disparity measures and capture the gaps in performance for different patient groups. For instance, disparities could be defined based on performance differences between marginalized and other patient groups and improvement as reductions in those gaps over time.
As new measures are created, existing performance measures could also be used not only to measure how clinicians perform overall, but how they perform for marginalized patients. Early candidates for this use could include measures that capture conditions and areas of care where both clinicians can influence outcomes and marginalized patients face well-known disparities (eg, hypertension and cancer screening). Using this approach, which would harmonize with and support statutory payment model equity audits, the multidisciplinary group could also guide efforts to link equity-based measures to risk adjustment, incentives, and other components of payment programs. The adage rings true: it is not possible to address what is not measured and encouraged.
Admittedly, these steps are simply a start. Policy makers must translate policy intention into programs that meet the needs of specific populations, including those that target root causes of inequity. Clinicians need to engage in new programs, which must account for patients who experience disparities due to multiple factors. Ultimately, no policies are perfect, and no payment models are impermeable to unintended consequences.
Nonetheless, policy and practice leaders could work together to make progress toward equity using value-based payment. The last decade has underscored the fact that policy intention precedes policy implementation. It is time to build on that experience and set a national intention to pay for equity.
Corresponding Author: Joshua M. Liao, MD, MSc, University of Washington, 1959 NE Pacific St, Seattle, WA 98195 (firstname.lastname@example.org).
Published Online: June 4, 2021. doi:10.1001/jama.2021.8562
Conflict of Interest Disclosures: Dr Liao reported personal fees from Kaiser Permanente Washington Research Institute; textbook royalties from Wolters Kluwer; and honoraria from Wolters Kluwer, the Journal of Clinical Pathways, and the American College of Physicians. Dr Lavizzo-Mourey reported board membership for General Electric, the Howard Hughes Medical Institute, the Intel Corp, Merck, and the Smithsonian Institution. Dr Navathe reported grants from Hawaii Medical Service Association, Anthem Public Policy Institute, Commonwealth Fund, Oscar Health, Cigna Corp, Robert Wood Johnson Foundation, Donaghue Foundation, Pennsylvania Department of Health, Ochsner Health System, United Healthcare, Blue Cross Blue Shield of North Carolina, Blue Shield of California, and Humana; personal fees from Navvis Healthcare, Agathos Inc, NavaHealth, YNHHSC/CORE, Maine Health Accountable Care Organization, Maine Department of Health and Human Services, National University Health System–Singapore, Ministry of Health–Singapore, Elsevier Press, Medicare Payment Advisory Commission, Cleveland Clinic, Analysis Group, and VBID Health; and equity from Embedded Healthcare and NavaHealth; as well as noncompensated board membership with Integrated Services Inc.
Disclaimer: This article does not necessarily represent the views of the US government or the Department of Veterans Affairs.
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 Substantial Physician Turnover and Beneficiary “Churn” in a Large Medicare Pioneer ACO, Health Affairs.
Liao JM, Lavizzo-Mourey RJ, Navathe AS. A National Goal to Advance Health Equity Through Value-Based Payment. JAMA. Published online June 04, 2021. doi:10.1001/jama.2021.8562
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