Considering Social Determinants of Health in Reimbursement

In a recent JAMA Network Open study, French researchers from Inserm and public assistance hospitals in Paris found that a pediatric patient’s socioeconomic status is strongly linked to length of stay and the overall cost of care. They suggested that reforming hospital payments to offset such social determinants of health (SDoH) could both help hospitals reduce their costs while improving the quality of care for such vulnerable patients.

While it might be easy to say France’s healthcare system is too different to draw comparisons, Matthew Davis, MD, MAPP, interim chair, department of pediatrics, Ann & Robert H. Lurie Children’s Hospital of Chicago and Northwestern University Feinberg School of Medicine, and colleague Kristin Kan, MD, MPH, MSc, published an invited commentary in the same journal issue arguing that the United States could also benefit from adjusting Medicaid payments in order to better provide care and support to lower income pediatric patients.

“If the healthcare industry does not consider social determinants of health, the industry will continue to ignore a major influence on patterns of health and health care utilization,” Davis says. “Over the last 10 to 20 years, the healthcare industry has invested healthy in analytics and interventions that try to leverage typical tools of healthcare itself. While those will continue to be important going forward, the leaders in the healthcare industry will be the ones who are able to distinguish themselves by understanding social and environmental influences on child and adult health-and acting to address them in partnership with patients and providers.”

Recent evidence suggests the absence of SDoH considerations in reimbursement models fundamentally distorts payment patterns for the hospitals that are more likely to serve more economically disadvantaged populations. Davis said this is a big problem-and one that has many unintended consequences for balancing costs and care.

“When such hospitals-which often are academic medical centers-experience payments that are lower than needed to appropriately care for individuals at socioeconomic disadvantage, then the academic resources and medical know-how of such institutions are put at risk for all of their patients, from across all socioeconomic strata, not just the populations that are socioeconomically disadvantaged,” he says.

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The answer, Davis and Kan stated, is to find ways to amend Medicaid reimbursements to include these vital SDOH factors. While Davis admitted that including such SDoH in reimbursement strategies remains a challenge, especially considering that most current reimbursement systems do not incorporate data about social factors for patients, making adjustments to add in that information should be relatively straightforward.

 “It’s highly likely that a payer will know the ZIP code of a residence for the patient,” he says. “The ZIP code is an extraordinarily informative connector to many social determinant measures such as poverty, education, employment, and access to healthy foods.”

Davis said that payer organizations will play a central role in implementing the kinds of changes that will allow SDoH to be addressed in reimbursements, considering they largely control the mechanics of reimbursement. But he said policy makers and hospital industry itself could also help ensure that the market makes room for different reimbursement arrangements that take SDoHs into account.

“If the potential policy remedies depend exclusively on legislative or regulatory changes in order to occur, then it is possible they could take effect with such policy advances in a short time period-as soon as a year or two, depending on policymakers’ priorities,” Davis says. “On the other hand, if the healthcare industry itself recognizes and leverages the value of considering social determinants of health in reimbursement arrangements, then the market may drive the adoption of SDoH in reimbursement even faster and farther than policy change alone could accomplish.”

Regardless, Davis and Kan said that it critical that the industry moves toward including consideration of SDoH into future payment models-to both lower costs and help patients.

“Considering SDoH in reimbursement presents an appealing opportunity not only to address inequities in reimbursement for hospitals, but also to make certain that hospitals that serve patients at high risk for poor health continue to have access to hospitals that are most accustomed to serving them,” Davis says.

Kayt Sukel is a science and health writer based outside Houston.