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To appropriately hold participants accountable for population outcomes, value-based payment models must account for the factors that drive variation in outcomes outside of participant performance.
over time, there has been growing recognition that beyond clinical factors, social and economic conditions can play a role in shaping variation of population outcomes that are targeted by value-based payment models.
A lack of social risk adjustment in prior models may have deterred participation because of financial penalties levered on organizations treating higher-risk, and therefore higher-cost, populations. The Centers for Medicare and Medicaid Services (CMS) has recently incorporated measures related to social drivers of health into risk adjustment for payment models, including the ACO Realizing Equity, Access, and Community Health (REACH) Model and the Transforming Episode Accountability Model.
These programs use composite, area-level measures such as the Area Deprivation Index (ADI) and the Community Deprivation Index to capture dimensions of social risk—such as transportation barriers and housing stability—and combine them with patient-level indicators, including dual eligibility and low-income subsidy status, to adjust benchmarks or target prices. These measures are operationalized within payment models as adjustments to spending benchmarks for specific patient populations.
To appropriately hold participants accountable for population outcomes, value-based payment models must account for the factors that drive variation in outcomes outside of participant performance.