With Social Determinants of Health top of mind for health plan leaders, the question of sustainable financing becomes critical
By Brendan O’Connor, Director of Business Development, Quantified Ventures
At the HealthCare Executive Group Annual Forum in Minneapolis, former Acting Administrator of the Centers for Medicare & Medicaid Services (CMS), Andy Slavitt, who is now leading the Medicaid Transformation Project, was asked a question by an audience member: “If you were to be the Administrator of CMS in the next administration, what would be your top three priorities?” Without a pause, Andy said his first priority would be to truly integrate health and human services, much like rest of the world has done. Andy’s point is an important one, and one that came up throughout the three-day forum. Simply put, until we, as a country, begin treating things like trauma, social isolation, housing, and yes, even food, as significant factors of health, we will struggle to improve health outcomes and reduce healthcare costs, now estimated to be 17.9% of the U.S. Gross Domestic Product.
The social determinants of health are increasingly seen as more critical to health than someone’s genetic code or the medical care they receive, yet things like the home environment, community safety, access to food and transportation, financial stability, and education have historically been considered outside the realm of healthcare. Two converging trends promise to change this paradox: the growth of value-based care to align payment with positive health outcomes and the growing evidence base demonstrating the health and financial impacts of social interventions. As health plans and health systems take on more risk for health outcomes and cost containment, they are recognizing the need to think differently about the boundaries of responsibility—namely, does provider care extend to the community and, if so, how can we build the capacity of community-based organizations to be highly effective partners in improving health?
Real and perceived barriers have slowed the adoption of strategies and interventions impacting the social determinants of health. Apart from the shifting of responsibility to other entities perceived to be more able or incentivized to improve outcomes, the question of, “what can and should government-sponsored health plans pay for?” has perplexed policymakers and health plan leaders for years. The general feeling is that Medicaid and Medicare won’t subsidize an individual’s rent any time soon, but several bright spots have emerged that have demonstrated the impact a health plan can have when focused on the social determinants of health.
Geisinger’s Fresh Food Pharmacy program is demonstrating that by expanding access to fresh, healthy, diabetic-appropriate foods to their members with Type 2 Diabetes, they can improve HbA1c levels more than traditionally diagnosed medicines—at a fraction of the cost. This “Farmacy” program goes beyond a short-term healthy food prescription by providing diabetes self-management classes and access to pharmacists, dieticians, care managers, and health coaches—all with an eye towards providing the basis for long-term healthy behavior change.
Montefiore Health System in New York City has developed a targeted approach to improving housing stability for its patients, many of whom were previously discharged from the hospital with nowhere to go except a homeless shelter or back to the street. This lack of a safe and healthy healing environment led to preventable emergency department visits and hospitalizations costing far more than an average night of housing. A night in a hospital bed can cost between $2,000 - $4,000, while a night in Montefiore’s housing program costs just $140 on average. Recognizing a 300% return on its investment, Montefiore is doubling down and buying additional medical respite beds and permanent housing.
As these bright spots build the evidence base and business case for why certain social factors should be supported by Medicaid and Medicare, there are other creative ways to pay for many of these services. The growth of Value-Based Purchasing in state Medicaid has provided the flexibility sought by health plans to pay for services that are not included in state Medicaid plans, while in some cases being able to include the payment in rate setting calculations to determine future capitation rates. Pay for Success is another alternative payment mechanism that enables plans and community-based organizations to enter into risk-based vendor contracts that allow the plans to pay for the achievement of predetermined outcomes. This risk mitigation payment strategy can be especially helpful for plans seeking to address the social determinants of health without the upfront financial risk that so often hinders innovation. Building on Montefiore’s successful housing program, we are working with AmeriHealth Caritas DC, the largest Medicaid Managed Care organization in Washington, DC, to improve medical respite capacity for its homeless members through this Pay for Success financing model.
Rarely will social determinants of health strategies be executed to their full potential if sustainable funding isn’t considered from day 1. The default funding model to date has largely been grant-focused, with the conversation of how to sustain the programs pushed to some later date down the road. The reality is that this approach fails our community partners, plan members, and patients. By spending the time in advance of project development to determine what the ideal future state looks like from a sustainable financing standpoint, the likelihood of developing a strategy that meets the needs of the health plan, the plan members, the broader community, and the state is enhanced.
 National Health Expenditure Accounts. The Centers for Medicare & Medicaid Services. 2018.
 Erskine, A., Feinberg, A., Hess, A., Slotkin, J. “How Geisinger Treats Diabetes by Giving Away Free, Healthy Food”. Harvard Business Review. October 25, 2017.
 Morse, S. “What Montefiore's 300% ROI from social determinants investments means for the future of other hospitals”. Healthcare Finance. July 5, 2018.