Updated on: July 9, 2018

Incorporating Socioeconomic Status for Medicare Advantage: Addressing the Social Determinants of Health

Original story posted on: July 6, 2018

Accounting for socioeconomic factors is critical to the sustainability of healthcare.

A recent blog headline in the American Council of Science and Health captured the healthcare industry’s attention. The headline read, Medicare Could Cover Food, Air Conditioners...Is Sex Next?

The focus was on recent action by the Centers for Medicare & Medicaid Services (CMS) to address socioeconomic status and the related social determinants of health (SDoH) for beneficiaries of the Medicare Advantage program. A number of industry publications had produced Related Stories on the topic. With all the industry attention, one would have thought the action was the greatest thing since the Internet. Given the rapidly rising price tag attributed to SDoH, the attention was not altogether surprising, considering the price tag: some $1.7 trillion spent on 5 percent of patients.

Using the premise that SDoH drive poor health outcomes and increase costs, it has become a must for CMS to equalize these factors by providing related coverage to beneficiaries. The provision of, if not linkage to, non-clinical resources has grand potential to decrease healthcare spending, through the provision of:

  • Non-emergent medical transportation to reduce obstacles to care access;

  • Air conditioners for those with asthma or emphysema; and

  • Specific foods for those struggling with diabetes and renal disease.

CMS’s new regulation will permit coverage of these types of “nontraditional benefits” as long as they “increase health and improve quality of life.” In the current value-based climate, the hope is these changes will also contribute to yielding greater return on investment and dividends for healthcare organizations and providers of care.


Why is Attention to Socioeconomic Status Mandated?
A quick definition: Medicare Advantage (aka Medicare Part C) allows Medicare beneficiaries to receive Medicare-covered benefits through private health plans instead of entirely through original Medicare. Some Medicare Advantage plans have no premium at all, leaving the beneficiary to only pay the Part B premium. These plans have become cost-effective for many persons, especially those on limited and fixed incomes. A majority of these individuals are predisposed to the SDoH:

  • Thirty-seven percent of Medicare Advantage beneficiaries have annual incomes of less than $20,000.

  • Medicare Advantage has a higher overall share of racial/ethnic populations compared to traditional Medicare fee-for-service (FFS): 30 percent versus 23 percent.

  • Medicare Advantage has a higher share of individuals with incomes under $30,000: 59 percent versus 50 percent for FFS.

In a nutshell, CMS is expanding the definition of “primarily health related” to permit supplemental benefits that “compensate for physical impairments, diminish the impact of injuries or health conditions, and/or reduce avoidable emergency room utilization.”

To say these goals align with the 2019 fiscal imperatives set by a majority of healthcare organizations is an understatement. The new rule permits payers to adjust cost-sharing for both preventive care and healthcare services related to a member’s health conditions.

Accounting for socioeconomic factors, as well as the full scope of the SDoH, is critical to sustainability of the healthcare industry.

Countless organizations have reconciled strategies to cover the SDoH, as reported previously in both ICD 10monitor and Talk-Ten-Tuesdays. From Kaiser’s focus on homelessness to the HealthPartners Plan Food is Medicine Program, payerss and providers are stepping up to leverage resources that address the SDoH; all have committed to achieving a stronger fiscal bottom line. Experts claim that working to prevent or address health issues with these health-related programs though indirect healthcare benefits is more cost-effective than other ways to spend additional healthcare dollars. Harvard Pilgrim provides Medicare Advantage plans with $0 co-pays for prescription drugs and other services (e.g. imaging tests) and reduced co-pays for provider visits. Humana has multiple Medicare Advantage plans with $0 premiums, $0-$10 co-pays, and no annual deductible to encourage higher enrollment. Many of those covered by these health plans are predisposed to chronic illness and the SDoH.


What Else is on the Horizon to Address the Social Determinants?

In addition to the coverage change for Medicare Advantage beneficiaries, CMS will incorporate socioeconomic status of dual-eligible patients toward readmissions. These beneficiaries are eligible for both Medicare and Medicaid; if a person has Medicare and full Medicaid coverage, most of their healthcare costs are likely covered.

The new proposed rule for Medicare’s Inpatient Prospective Payment System (IPPS) for the 2019 fiscal year will factor in socioeconomic status … sorta. The 21st Century Cures Act required that CMS develop a transitional methodology for the Hospital Readmissions Reduction Program (HRRP), one that allows for separate comparison of hospitals based on a facility’s proportion of patients dually eligible for Medicare and Medicaid; this is a proxy for socioeconomic status.

In the FY 2018 IPPS final rule, CMS finalized a payment adjustment methodology whereby hospital performance is assessed relative to the performance of hospitals within the same peer group. Hospitals are stratified into five peer groups, or quintiles, based on their proportions of dual-eligible stays. CMS will implement the stratified methodology in the 2019 program.

In the proposed rule, CMS clarifies definitions of dual-eligible patients, the proportion of dual eligibles, and the applicable period for dual eligibility. This is a touchback directly to socioeconomic status; hello, SDoH!

The Benefit for Beneficiaries and the Industry

While this payment adjustment is not based on the full scope of the SDoH, it is a step in an important direction, and one that recognizes socioeconomic status as a key factor in the healthcare equation. Many have heard the mantra over the years that where “CMS goes, private insurers follow.” This is especially true when we consider the impact of SDoH on value-based care initiatives.

Over 80 percent of payerss are currently working to integrate SDoH into their benefit programs and initiatives. Those payerss that have done so can demonstrate the financial merits of these actions, with significant savings per member noted. One example is WellCare Health Plans, which developed the HealthConnections program to address the socioeconomic needs of vulnerable patients. Profound outcomes were identified by linking beneficiaries to community service programs or helping to pay for basic utilities: savings of $2,601 per member, annually.

Accountable Care Organizations (ACOs) have joined the masses focused on the SDoH by developing strong collaborative relationships with community resource providers. Chicago-based Advocate Health Care launched two quality improvement initiatives within their ACO to target malnutrition and food insufficiency. Food insecurity is among the most common SDoH. The ACO completed a screening of all patients at risk for malnutrition. Those individuals with elevated risk scores received an oral nutritional supplement within two days of admission. In addition, Advocate Health implemented an enhanced nutrition care program for high-risk patients. Those identified were provided nutrition education, post-discharge instructions, follow-up calls, and coupons for retail oral supplements. Within the first six months, the ACO reduced healthcare costs by $3,800 per patient, resulting in $4.8 million in total savings. Hospital readmission rates also dropped among patients at risk for malnutrition.

With every blessing, however, there usually comes a curse. The new CMS rule has been criticized for bias toward those beneficiaries covered under Medicare Advantage, leaving those covered under traditional Medicare plans at a disadvantage. One could pose the same challenge with respect to those beneficiaries who are dual eligibles receiving extra resources. However, it becomes tough to dispute the merits of accounting for socioeconomic status as a factor in assuring that care needs are met.

Equalizing reimbursement to all hospitals, including the safety net hospitals, is a necessity, and an important element of the new rule.

Lest we forget, these primarily public and teaching hospitals serve the largest proportion of low-income patients, and those primarily impacted by the SDoH.


Announcement and clarification of CMS Readmissions IPPS FY 2018 update

Rule and Regulations Update for Medicare Dual Eligibles

Program Note:

Listen to Ellen Fink-Samnick discuss SDoH today on Talk-Ten-Tuesday at 10 a.m. ET

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Ellen Fink-Samnick, MSW, ACSW, LCSW, CCM, CRP

Ellen Fink-Samnick is an award-winning industry expert who empowers healthcare’s transdisciplinary workforce through professional speaking, writing, mentoring, and consultation. Known as “The Ethical Compass of Professional Case Management,” Ellen is an esteemed author with more than 100 publications to her credit. She has developed content for many of the industry’s knowledge projects for case managers, including books, chapters, articles, and continuing education on the ethical use of technology, competency-based case management, collaborative care, the Social Determinants of Health, and dimensions of workplace bullying. Her contributions to professional case management, ethics, and clinical social work transverse professional associations and credentialing organizations.

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