Medicaid accountable care organizations (ACOs) are designed to improve health care quality while delivering more efficient care. But, medical care is only one of several factors affecting health outcomes. Social determinants of health (SDOH), such as living environment and access to healthy food, affect health outcomes and, consequently, an ACO’s bottom line. Because most ACOs are ultimately responsible for total cost of care and quality, ACOs have a clear business case to address SDOH.

State Approaches to Addressing SDOH through Medicaid ACOs

Of the 12 early innovator states that have launched statewide Medicaid ACO programs, many have identified SDOH as a critical issue. These states are shaping Medicaid ACO efforts to address SDOH by: (1) encouraging or requiring SDOH interventions; (2) developing risk adjustment strategies; (3) recruiting SDOH-savvy ACOs; and (4) encouraging or requiring community partnerships. In response to these state policies, Medicaid ACOs coordinate care, collect data, integrate services, and build partnerships that align with the state’s SDOH priorities.

1.   Encouraging or Requiring SDOH Interventions

Some states strongly encourage or require ACOs to implement SDOH interventions. New York, for example, in its Value-Based Purchasing (VBP) Roadmap, requires certain providers in VBP agreements, including ACOs, to implement at least one SDOH intervention. The state offers providers a comprehensive menu of possible SDOH interventions, such as a Housing First program to address homelessness or mold abatement to alleviate respiratory issues. Managed care organizations (MCOs) must also provide startup funds for investment in the intervention. In addition, New York’s new Bureau of Social Determinants of Health will focus on SDOH initiatives and work closely with ACOs, among other provider entities.

In two models that incorporate aspects of both ACOs and MCOs, Massachusetts and Oregon expect its ACOs to provide services outside the traditional Medicaid benefit package. These services — health-related services in Oregon and flexible services in Massachusetts — can address SDOH, such as a member’s living environment. For its pay for performance and shared savings program, Massachusetts is including quality measures related to screening for social needs. Similarly, Oregon is considering coordinated care organization (CCO) incentive measures related to SDOH, such as food insecurity. The state uses performance on these measures to determine incentive payments paid out of the state’s quality pool. Oregon is also considering adjusting its rate-development process to reward CCOs that provide more efficient, higher-quality care and offset disincentives for investing in health-related services that address SDOH, such as premium slide. In particular, Oregon is exploring the potential to build a higher profit margin into the capitation rate of high-performing CCOs.

2.   Developing Risk Adjustment Strategies

Minnesota and Massachusetts plan to adjust for SDOH risks when developing their ACO payment methodologies. This strategy allows the state to capture risk beyond traditional diagnostic data and avoid penalizing providers that serve populations with greater SDOH-related needs.

To develop its total cost of care benchmarks and ACO-specific capitation rates, Massachusetts is using a methodology that it has developed to risk adjust based on the stability of housing status and a standardized “neighborhood stress score,” a composite measure developed with census data. Minnesota will adjust for social risk factors when determining the population-based payment for its integrated health partnerships (IHPs). This risk-adjustment methodology is part of a larger state initiative to create payments that address health disparities. In developing its strategy, the state is assessing neighborhood poverty, low educational attainment, family homelessness, and diminished parental functioning (e.g., child receiving child protection services).

3.   Recruiting SDOH-Savvy ACOs

States are also using application and procurement processes to ensure that partners and contractors emphasize SDOH. States then provide targeted support to these SDOH-savvy ACOs to further enhance and refine the ACO’s SDOH strategy.

In its RFP for Regional Accountable Entities (RAEs), Colorado identified an SDOH strategy as one of 29 evaluation criteria. The state supports each RAE’s SDOH strategy through initiatives such as the Colorado Opportunity Project, which identifies SDOH relevant to each major life stage.

Similarly, Minnesota’s RFP for its new IHP model assigned 15 out of 100 possible points to responses on community partnerships and SDOH. During contract discussions, the IHP must propose at least one quality measure tied to interventions to reduce health disparities. The state, in turn, provides SDOH data on the IHP’s population, including information about homelessness or past incarceration.

In Rhode Island’s certification application for Accountable Entities (AEs), applicants must demonstrate the capacity to address SDOH. Applicants must describe how they identify SDOH needs (e.g., screening tools) and track and follow up on SDOH-related referrals. They must also identify three key domains of social need for each population for which certification is being sought, building upon the state’s three identified priority areas (housing insecurity, food insecurity, and safety and domestic violence).

Vermont’s All-Payer ACOs are required to submit a budget to the Green Mountain Care Board that includes a description of their “strategy and spending on community investments (e.g., early childhood development, housing, mental health, substance use, and other services that address social determinants of health).”

4.   Encouraging or Requiring Community Partnerships

States also encourage or require ACOs to enter into partnerships with community-based organizations (CBOs) that address SDOH.

In New York, advanced VBP arrangements must include at least one CBO, such as a housing organization or a food bank, which can contract directly with an MCO or subcontract with the ACO. Similarly, Massachusetts requires its ACOs to partner with behavioral health and long-term services and supports “Community Partners” to coordinate social service and health needs. Rhode Island’s AEs and Colorado’s RAEs must also establish relationships with CBOs.

In Minnesota, IHPs that formally partner with CBOs may enter into a more favorable risk arrangement with the state (i.e., a modification of the shared savings model).  Also, in Minnesota’s Accountable Communities for Health model, community care teams partner with IHPs or Medicare Shared Savings Program ACOs to address the clinical and social needs of a population.

Promising Results

Although most states are still in the early stages of their SDOH-specific ACO initiatives, some pioneering ACO programs focusing on SDOH are beginning to yield promising results. For example, Oregon’s CCO model achieved a seven percent reduction in health care expenditures, including reductions in inpatient utilization and avoidable emergency department visits; the state also saw improvements in some measures of appropriateness of care. According to an evaluation report on Oregon’s 1115 demonstration, most CCOs believed health-related services were effective at improving outcomes and reducing costs.

CHCS will continue to monitor these Medicaid ACO programs, as well as their SDOH-specific initiatives, and report on progress in future updates.

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