MedCity Influencers

A Paradigm Shift Towards Reimbursing the Root Causes of Diseases

Medicare needs to incentivize providers by reimbursing them for identifying and addressing social determinants of health. Doing so will ultimately improve patient health outcomes and simultaneously save risk-bearing organizations money.

social determinants of health,

Research shows that sixty to eighty percent of population health outcomes are driven by non-clinical factors, mainly social determinants of health (SDoH). SDoH includes the environmental factors that affect where people work, live, learn, and play and are a significant discussion topic among providers and payers. Yet health plans, specifically Medicare and Medicaid, do not reimburse providers for identifying and addressing these social determinants. As a result, Z- codes, ICD-10-CM used to report on social and environmental conditions affecting patients are only captured in less than 2% across all claims.

In addition to the lack of reimbursement, most healthcare organizations do not screen for SDoH because they are not required to. Amidst a growing provider shortage and nursing shortage, some groups understandably resist completing voluntary additional tasks, especially ones for which they cannot receive reimbursement.

Further complicating the matter, the organizations attempting to administer SDoH screenings often require help completing them due to the need for more standardization and inefficiencies in distributing SDoH screenings. In particular, CMS does not have a standardized form for collecting information on health barriers, so organizations often use publicly available or have to create custom screening forms. For example, they might leverage census data to collect information on their patients’ demographic information or socioeconomic status.

Ironically, SDoH barriers often get in the way of conducting SDoH screenings. In particular, the lack of phone numbers, email addresses, and language barriers can make it challenging for organizations to complete SDoH screenings.

The hurdles extend beyond the assessment. Once the screening is administered and SDoH risk factors are assessed for patients, these organizations face another uphill battle: addressing the risk factors. For example, take a patient who lives in a food swamp and needs a medical meal service. Though healthcare organizations may know the patient could benefit from such a service, they may prove reluctant to pay for it, especially if they will not receive reimbursement.

Yet the cost of not screening for or providing services to address social determinants greatly impacts healthcare organizations’ bottom lines.

Here’s what that means in numbers.

Non-emergent emergency department usage costs Medicare $4.4 billion dollars on an annual basis. One study found that food insecurity is highly correlated with non-emergency department use, as 84.9 non-emergent emergency department visits per 1,000 beneficiaries have been attributed to food insecurities. Funding medically tailored meals (MTMs) is a small cost compared to ER visits.

For example, one payer provided three medically tailored meals to patients for thirteen weeks over six months. Results showed a 31% decrease in emergency department visits and a 36% reduction in median healthcare costs. The potential savings could significantly impact healthcare organizations’ bottom lines.

Despite the numbers, Medicare and Medicaid do not currently reimburse for providing MTMs or any intervention to address SDoH. No Z or ICD-10 codes exist to bill Medicare or Medicaid for MTMs, even though the numbers show that MTMs reduce unnecessary ER visits.

Thus it seems an oversight that providers receive reimbursement for identifying and addressing chronic diseases like diabetes and excessive utilization of repeated healthcare services — think Emergency Department utilization, readmissions, and unplanned hospitalizations – but not the underlying causes that exacerbate those conditions. This points to a current challenge in healthcare.

Treating people with a cold is an excellent way to demonstrate how healthcare works today.  Providers do what they can to mitigate the fever, sore throat, headache, etc., but the healthcare field is not working on creating a vaccine to treat the underlying virus causing those symptoms. By going upstream and addressing the SDoH, the healthcare system could be building a vaccine not to treat one chronic disease but all of them.

As evidence stacks up that supports considering and addressing SDoH, the paradigm in healthcare is beginning to change. With the shift towards value-based care, groups receive incentives to prioritize preventive measures, even without reimbursement from Medicare or Medicaid. In addition, Medicare’s new Realizing Equity, Access and Community Health (REACH) Accountable Care Organization (ACO) program does require organizations participating in the program to identify and show how they address the health barriers in their patient populations. However, many risk-bearing organizations view doing so as a check-box activity and may lack the funds and resources to adequately address the social determinants of health affecting their patient populations.

With programs like ACO REACH needing to show the efficacy of their plans to address SDoH factors, other organizations can follow suit. To further support this shift and empower risk-bearing organizations to address SDoH, Medicare needs to incentivize providers by reimbursing them for identifying and addressing social determinants of health. Doing so will ultimately improve patient health outcomes and simultaneously save risk-bearing organizations money.

Such a paradigm change would offer the first step towards a healthcare model focusing on the root causes, empowering people to stay healthy longer and lessen the burden on providers.

Photo: vaeenma, Getty Images

With over 10 years of healthcare technology experience, and having led sales strategies for top-tiered companies including Athenahealth, DataRobot, and to name a few, Mike Ward's long history of driving successful healthcare tech has made significant strides in bringing innovative healthcare solutions to market. Ward’s experience in the healthcare industry including hospitals, payers, independent medical providers, and biotechnology, paired with his knowledge of sales, Software as a Service (SaaS), Data Analytics, Customer Experience, and Business Development, make him a key player for the Spatially Health team. Ward holds a Master of Science - MS in Healthcare Management from The Johns Hopkins University - Carey Business School.

This post appears through the MedCity Influencers program. Anyone can publish their perspective on business and innovation in healthcare on MedCity News through MedCity Influencers. Click here to find out how.