Jul, 20, 2017

How States Can Integrate Social Determinants of Health (SDOH) into Payment and Quality Improvement Policies

Where people live, work and play — and the experiences they have, especially growing up — matters. These social determinants of health (SDOH) include a broad array of social and environmental risk factors such as poverty, housing stability, early childhood education, access to primary care, access to healthy food, incarceration and discrimination. One recent study weighed each factor’s contribution to health outcomes and ascribed 30 percent to health behaviors, 40 percent to social and economic circumstances, 10 percent to the environment, and 20 percent to medical care.

State policy makers are increasingly focused on SDOH because of their important influence on health care outcomes and Medicaid spending. In the context of Medicaid, unaddressed social determinants of health surface as intergenerational health disparities that drive healthcare spending. A new brief released by State Health and Value Strategies examines why states should account for social determinants of health in setting Medicaid payments and measuring quality, and also explores what methods Medicaid programs can use to examine SDOH and account for them in their payment and quality improvement policies.

By accounting for SDOH in payment and quality improvement policies, states can maximize their Medicaid investments: incorporating SDOH in Medicaid payment models means states can structure their payments to reflect the health and well-being of their populations. Accurate payment models incentivize Medicaid health plans and ACOs to provide care that meets the needs of their covered populations and ultimately translates into more effective use of taxpayer funds. Likewise, factoring SDOH data into Medicaid quality measures provides states with an opportunity to more closely examine variations in outcomes across Medicaid populations and drill down on how to address gaps in quality, in turn increasing the effectiveness of state Medicaid programs.

In the brief we outline five action steps states can begin using to leverage SDOH metrics in their Medicaid programs and two case studies of states that are pioneering such efforts. Massachusetts and Minnesota have been leaders at leveraging SDOH data to align payment models and measure the quality of care. The work in both states offers useful learnings for informing similar work in other states. The brief provides state policy makers who are considering using SDOH data in Medicaid managed care programs with five actions steps:

  1. Identify and work with partners to develop SDOH reporting and data analytics capacity.
  2. Use literature and qualitative data to identify leading SDOH and their impact and consider looking to other states who have already conducted literature reviews.
  3. Assess existing sources of SDOH data such as claims and enrollment data that contain information on income and other demographics.
  4. Analyze risk factors predictive of costs and health outcomes once a state has a database in place.
  5. Get started using SDOH by identifying short- and longer-term goals for using SDOH to improve care.

As states grapple with uncertainty in Washington, using SDOH data and metrics offers an important opportunity to make health care investments more effective and improve the health and welfare of the most vulnerable residents.