Value-based payment reforms must be designed with equity in mind, experts say

Health insurance payment reforms implemented over the last decade have a spotty record in driving down costs and can unintentionally worsen the inequities experienced by marginalized groups, experts say.

Most healthcare experts agree that something needs to be done to reform payment systems, note the authors, but effective reform must “reconcile existing tensions between financial incentives and equity goals," according to an article in JAMA.

The authors—Amol Navathe, M.D., Ph.D., and Joshua Liao, M.D., of the University of Pennsylvania—argue that “payment reform alone cannot overcome the root causes of health inequity, but it is nonetheless an important tool for helping to achieve health equity. Because no strategy is a panacea, progress will require the collective effects of systematic reforms enacted under a guiding framework to align payment and equity goals.”

Navathe and Liao write that payment reforms that place the burden—and the financial penalties—solely on providers might tend to push clinicians to serve those demographic groups that would cost them less. The authors argue mandates that make every organization in a region participate in payment reform would reduce the likelihood that some providers might cherry-pick the healthier patients.

However, such mandates aren’t always feasible if payment models target less common conditions or cover services that tend to cluster, such as bariatric surgeries.

“Mandates may also be undesirable if they require extensive financial investments from safety-net organizations or force them to compete against other organizations,” write Navathe and Liao.

Navathe and Liao recommend a more comprehensive approach that would include targeting specific institutions, such as accountable care organizations. They point to efforts along these lines by by the Centers for Medicare & Medicaid Services with its ACO REACH Model that’s scheduled to begin in January 2023.

The article also points to value-based healthcare coverage as one part of a comprehensive approach. However, Navathe and Liao state that while such arrangements measure quality, they don’t compare quality scores between underserved and other populations. The authors note that such comparisons have been made at the state level and by some health insurance companies, and those might provide examples on how to proceed.

Navathe and Liao write that performance-based incentives have also been tried and found wanting, pointing out that “clinicians caring for marginalized populations could be disproportionately penalized if incentives are based on direct comparisons between safety net and other organization types. Comparisons can be even more problematic if they require participants to outperform other organizations to even become eligible for incentives.”

One way to address this would be to pay more to providers who care for more lower-income individuals, and less to those who primarily care for wealthier people. “These models would effectively reward the same level of achievement, but with larger incentive amounts for participants serving marginalized populations.”