Efforts to make the healthcare system more efficient and equitable by adjusting population-based payments for social risk factors may be missing the mark, suggests a new study from Harvard and Yale. The study published in the latest edition of Health Affairsputs current risk adjustment methodologies under a microscope to find out if they truly support equitable delivery of care.
Researchers tied individual-level predictors of social disadvantage (i.e., race, ethnicity, and educational attainment) to the Hierarchical Condition Categories (HCC) model currently used to risk-adjust payments in Medicare Advantage and benchmarks in the Medicare Shared Savings Program. They found that Medicare spending was similar or substantially lower for groups at higher risk of experiencing social disadvantage. For example, total annual Medicare spending per beneficiary was $574 lower for Black beneficiaries and $1,462 lower for Hispanic beneficiaries than for White beneficiaries.
The findings run counter to what some may think: groups at higher risk of experiencing social disadvantage should have higher spending compared to groups with less risk. Healthcare stakeholders have expressed concerns that risk adjustment methods will fail to account for the higher spending associated with historically marginalized populations, resulting in worse health disparities.