Healthcare Payment Models May Be Worsening Health Disparities For Marginalized Patients

By Lou Portero - Last Updated: November 7, 2022

Payment and incentive systems can encourage health systems to cater to healthier people while worsening health disparities for marginalized patients with more complex health needs, according to two leading experts in a recent Center for Health Journalism webinar, 

In a Journalism webinar Dr. Marshall Chin, an internist, professor, and researcher who focuses on health equity at the University of Chicago Medicine, and Dr. Amol Navathe, an associate professor of health policy and medicine at the University of Pennsylvania and a commissioner of the Medicare Payment Advisory Commission, discussed health payment model and how they drive health disparities and inequities. They also discuss the critical role of journalists in exposing the forces that impact the health of marginalized people. 

The U.S healthcare system is hinged on a tiered payment system that has created a well-reported access barrier. Health providers and hospitals receive different payment amounts depending on the patient’s health insurance. 

In addition to this payment model, Dr. Chin and Dr. Navathe noted the model exacerbating health disparities: Value-based payments. This model incentivizes providers and hospitals for a better quality of care and outcomes. 

According to Dr. Navathe, this well-intentioned approach to managing care and creating accountability may, at first glance, seem like a silver bullet for the country’s healthcare cost problem. 

“But we should really worry,” he said. “Value — in the context of how much health we get for dollar spent — does not equate to equity.”

Dr. Navathe stated that value-based models depend on risk adjustments to incentivize caring for sicker patients. However, these risk adjustments are often incomplete for marginalized groups such as people of color and low-income populations. Furthermore, he noted that the accuracy of risk assessments also depends on how well clinicians capture all the applicable codes. While wealthier practices might be able to afford resources like a dedicated coding staffer or better software to prompt providers, struggling safety net systems may not be able to afford the same resources.

As a result, practitioners may avoid taking patients who lower their good outcomes – and hence the financial incentives that come with them. Safety net providers who accept more high-risk patients may be financially penalized unfairly.

“The poor equity outcome here is that safety net hospitals — hospitals that care for more racial and ethnic minorities — were more likely to receive financial penalties,” Dr. Navathe said.  

Despite all the drawbacks of the value-based models, Dr. Navathe noted that It’s not all doom and gloom. Value-based payment models can also align with health equity goals.

“We need to make policy intentional about achieving equity and be willing to put dollars and resources behind it,” Navathe said.

He also listed positive steps to address health equity, such as the Pennsylvania Rural Health Model. Under this program, Medicare pays rural hospitals a predetermined amount in advance to cover inpatient and outpatient treatment. Medicare also introduced the Accountable Care Organization (ACO) model to promote health equity in underprivileged populations.

Other steps the experts noted that could advance health equity include culturally tailored care, team-based care, and using community health workers, Chin added.

Furthermore, the two experts also encouraged journalists to be more mindful when reporting on payment reform—asking well-designed questions like How, if at all, has a payment system been designed to advance health equity? What structurally racist policies are embedded in payment systems, and are they being rooted out? How are new programs being monitored to ensure they don’t worsen disparities?

The experts also noted that journalists could start with these individual stories and work backward: How does the system’s design fail to address the medical and social needs of disadvantaged populations? What does that look like on the ground?

“Much of the dialogue nationally has focused on access and affordability because they’re easy to understand,” Dr. Chin said. However, reporting on payment systems provides “a huge opportunity to impact and do a lot of good.”

Source: Centeforhealthjournalism

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