As Medicaid payers explore methods to improve health outcomes, many are focusing on the potential of value-based payment (VBP) programs that explicitly incentivize providers to address health disparities. Designing such VBP programs requires thoughtful decision-making on which disparities to prioritize, how to measure them, and how to define success.

Two Medicaid health plans, AmeriHealth Caritas Delaware and Community Health Plan of Washington, have been refining VBP programs since 2019 as members of the Advancing Health Equity learning collaborative. This blog post explores their distinct VBP approaches and shares key lessons, including facilitators and challenges, for developing and implementing VBP programs to reduce health disparities.

AmeriHealth Caritas Delaware

AmeriHealth Caritas Delaware (ACDE), part of a national plan, serves more than 100,000 members under Delaware’s Medicaid program. ACDE partners with Nemours Children’s Health via the KidWell Network — a pediatric accountable care organization (ACO) made up of Nemours’-employed physicians and their clinically integrated network practices — and the Delaware Division of Medicaid and Medical Assistance (Medicaid). Through the ACO arrangement, ACDE and the KidWell Network have a shared savings and risk VBP contract that holds KidWell Network accountable for managing quality of care, reducing unnecessary emergency department (ED) visits, and managing total cost of care.

In 2021, under the ACO contract, ACDE and Nemours jointly selected four child health quality measures based on their importance to pediatric health outcomes and disparities among members:

• Immunization combo 7 (a set of critical childhood vaccines);
• Immunization for flu;
• Lead screening; and
• Potentially preventable ED utilization

For each measure, the ACO could earn an additional incentive payment for a three percent reduction in each disparity between the Black and Hispanic/Latino pediatric populations (data was initially aggregated for these two groups, a decision that will not be repeated in future iterations of the model) and the white reference population. Half the incentive payment could be earned for any reduction below three percent in the disparity.

Early results were promising but showed room for improvement. KidWell Network reduced disparities and earned the full incentive payment for three of the four measures: flu vaccination, lead screening, and potentially preventable ED utilization. However, for one of these measures, the decrease in disparity was due to worsened performance in the white reference population as opposed to improved performance in the combined Black and Hispanic/Latino populations. This unintended feature of the initial model design provided ACDE with an actionable lesson for refining the model.

Community Health Plan of Washington

Community Health Plan of Washington (CHPW) is governed by 21 community health centers (CHCs) across Washington State, providing care to over 315,000 members. CHPW operates a total cost of care VBP program for its CHCs, which includes accountability on performance metrics related to clinical quality, member experience, and condition management and documentation. In partnership with its CHCs and the Washington State Health Care Authority, which administers Medicaid in the state, CHPW designed a multi-phase payment program, including VBP, to advance health equity.

For the first phase of its program (2021-2023), CHPW provided an annual upfront payment – up to $50,000 – to each participating CHC. This funding was an advance payment of shared savings without risk of quality-based withholding or clawbacks. To receive payment, CHCs were required to submit brief quarterly progress reports. CHCs reported that they appreciated the flexibility to build internal capacity for health equity work and to design projects to address health disparities and meet community needs. For example, some CHCs used funding to hire community health workers, improve language interpretation services, and engage members in program design.

During this phase, CHCs were expected to join bi-monthly group learning sessions to share resources and discuss barriers. CHCs also participated in a CHPW-run learning series focused on building the skills to promote equity.

CHPW redesigned the program in 2024, seeking to build on CHCs’ investments by creating a VBP model with accountability to reduce disparities. Over three years, the redesigned program will ask CHCs to:

1. Assess equitable care provision in their organization;
2. Analyze demographic data and select one of eight priority health measures, which include measures such as well-child visits, breast cancer screenings, and controlling high blood pressure, to target for disparities reduction;
3. Build an intervention to address the selected disparity; and
4. Earn incentive payments for reductions in the selected disparity.

Common Challenges

While both plans saw their initial payment models as a valuable starting point for reducing disparities, each identified challenges and anticipate refining their programs over time. Challenges to designing and implementing VBP models to address disparities included:

• Partnership with patients and communities. Both ACDE and CHPW reflected that engaging patients earlier to inform program design would have strengthened their programs and helped them better understand community priorities. Both plans are exploring how to better incorporate patient voice into their work moving forward.
• Measurement of disparities. ACDE is working to refine how disparities are measured in its program. In the future, it will only pay bonuses when disparities are decreased and overall quality is improved. ACDE is also considering the best way to create benchmarks and quality targets, and will likely shift away from using a white reference population. CHPW plans to add an accountability component to its program, which will require specifying how disparities are identified and what level of improvement will be needed to earn the incentive payment.
• Alignment across existing efforts. Both plans are exploring how they can better align their VBP programs with other health equity priorities. ACDE is working with Nemours to identify how the VBP program can more explicitly support and incentivize equity-focused care delivery transformation. CHPW has used its recently developed health disparities report to develop a menu of equity-focused quality measures, ensuring a consistent focus on eight key disparities in all organizational health equity work.

Keys to Success

The plans in Delaware and Washington took different approaches to VBP with focus on health disparities, but both plans were able to develop, deploy, and begin refining their programs. Their strategies differed, but the plans experienced similar facilitators:

• Design in partnership with providers. Each plan developed its model as part of the Advancing Health Equity project, which brought together multi-stakeholder teams consisting of plans, state Medicaid agencies, and, importantly, health care providers. Working closely with providers enabled the plans to develop a contract that ensured participation, balanced feasibility with innovation, and supported provider-identified changes to care delivery.
• Build on existing VBP programs. Building on an existing VBP program — by leveraging active contracts, resources, data, and processes — enabled the plans to integrate a focus on reducing disparities into each program more quickly than if they had built a new model from scratch.
• Embrace continuous quality improvement. Both plans wrestled with the best way to add provider organization-level accountability for health disparities into VBP programs. This is a new challenge for the health care industry with few best practices; willingness to try something new and evolve approaches along the way was a key approach to developing these VBP programs.

Moving Forward

Though ADCE and CHPW designed and implemented their VBP programs in very different settings and using different processes, both experienced similar challenges and facilitators to their work. Medicaid plans around the country exploring how to address disparities through their VBP work can learn from these experiences.