Can value-based care move the needle on health equity?

By Nicole Kelm, senior manager, Deloitte Health Equity Institute, Deloitte Services LP

Many of our clients, colleagues, and collaborators are searching for ways to help ensure that no one is disadvantaged based on social position, race, geography, gender identity, income, veteran status, age, or type of health coverage. Value-based care (VBC) is a payment model where providers (e.g., hospitals, clinicians, labs) are reimbursed based on health outcomes and care quality. But as one of the leaders of the Deloitte Health Equity Institute, I am keenly aware that there are no simple solutions for an issue as complex and nuanced as health equity (see Activating health equity).

The philosophy behind VBC is to create a financial incentive—for health care providers and payers—to keep their patients and members healthy and away from expensive hospital visits. But this model typically does not consider the 34% of working-age adults who are underinsured or the 9% who have no health coverage at all.¹ Moreover, research from the Deloitte Center for Health Solutions found that a majority of health systems are not passing along the incentives to physicians. This could be a barrier to broader adoption of VBC. If physicians aren’t being incentivized in alignment, VBC likely won’t be effective (see Moving in sync to value-based care).

I recently spoke with Mark Bethke, who leads Deloitte’s VBC practice and co-leads our Population Health Innovation practice, and Dorrie Guest, who heads Deloitte’s Physician and Ambulatory Services team. Dorrie and Mark recently released a report that describes how VBC could be an important tool in creating a more equitable health care system (visit Mark's LinkedIn page to see the report). Here is an excerpt from our conversation:

Nicole: What do you see as the potential structural barriers to health equity? How might VBC models help remove those barriers and address some of the upstream social and economic drivers of health?

Dorrie: Value-based care is rooted in population health. It was initially built around insured populations. Health plans had access to patient claims data, which made it possible to identify groups of patients by their disease state. The idea was to help those people manage their condition or comorbidities and keep them from becoming patients in the first place. Ideally, when they did seek care, that care would be less expensive, higher quality, and more convenient for the patient. However, this model excluded the underinsured and uninsured…the people who are often most impacted by health inequities. There are also clinical biases and clinical decisions that are influenced by a patient’s race, socioeconomic class, ethnicity, or insurance coverage.

Mark: VBC has evolved over time with the help of pilots and in subsets of the population within Medicare Advantage and employer groups. But a health system or a payer can’t just flip a switch and move all their patients from a  fee-for-service [FFS] payment model to a value-based care model. And VBC initiatives that exclude certain subsets of the population could exacerbate biases.

Nicole: Why might VBC be a better model for addressing health equity than the traditional FFS model?

Dorrie: People who have a chronic condition could benefit from a VBC model. But it can be extremely difficult to identify them—particularly the uninsured and underinsured—if they only access care via an emergency room when their condition is at its worst. And once these patients are released, they may not receive any sort of follow-up care. If the patient is uninsured, the hospital or health system could have to write off the cost of care. Rather than waiting until someone is at the height of their disease, some organizations have established programs that apply VBC principles to the uninsured. They identify high-risk patients, provide care management, and help those patients manage their condition, or conditions, at home.² Treating patients in lower-cost settings earlier in the disease state could be a win-win-win for the patient, the organization that provided care, and the community at large. Along with reducing uncompensated care, keeping patients out of the hospital can also free up bed capacity. We are starting to see more VBC components in Medicare Advantage, which now allows coverage for some non-medical services such as rides to medical appointments and healthy groceries for people who have certain chronic conditions.³ Providing annual wellness visits in a person’s home, for example, could give the clinician insight into some of the drivers of health that might be negatively impacting that patient’s health.

Mark: VBC should not be limited to people who have certain types of health coverage. Everyone should have access to the right level of care at the right time. But expanding the reach of VBC could require the confidence that it is a model that can be scaled up to reach patients who are at risk of not receiving necessary care or preventive services.

Nicole: How else might health care organizations benefit from a VBC model? 

Mark: The VBC payment model aligns perfectly with the reason some clinicians and physicians got into medicine in the first place. Many of them want to take care of patients and improve their health…particularly those who might have limited access to care. Helping patients live healthier lives may benefit the patient, their family members, and the communities in which they live. But structural issues, contractual issues, and various limitations of data can make it feel like an impossible change.

Dorrie: The burden of providing care beyond the insured population has always been borne by the clinical side of the health care industry. That responsibility could be redistributed to other sectors including health plans, government payers, pharmaceutical companies, and medical device manufacturers. Medical devices, for example, could make it possible for patients to manage a condition from their home, but the price for some devices might be out of reach for the uninsured and underinsured.

Nicole: What types of data should health care organizations be collecting to measure quality and determine if health care and access is becoming more equitable?

Mark: VBC models are typically centered around attribution logic [where providers accept accountability for managing the full continuum of care for their patients].⁴ This may require a visit to a physician, a nurse practitioner, or some other care provider. This can create an inherent bias for people who might not have that access to a clinician. Risk adjustment could play a significant role in VBC. Some models may center around patient demographics and diagnosis codes. But social and environmental risk factors may not be part of a diagnosis, nor reflected on a claim. That information could be included and used by risk adjusters.

Dorrie: It may be important to know whether people can access care. We did a study for a state that had expanded Medicaid access. The state estimated that more than 600,000 people would gain health coverage as a result. We were asked to evaluate the likely capacity, access, and equity issues that could arise. We found that limited access to transportation, particularly in rural areas, could make it impossible for some people to access health care services. We also determined that diabetes was the most prevalent disease state among people who didn’t have easy access to care. We put together a program that brought mobile clinics to these health care deserts. Another issue was that nurse practitioners and physician assistants in this state were not allowed to write prescriptions. Legislation passed to change that rule. The program helped bring down uncontrolled diabetes in those regions. Data related to buying patterns and transportation patterns can also be highly predictive and could be used to help identify people who have a high-risk disease.

Nicole: Health care organizations may be looking for ways to improve health equity. Are you optimistic this is achievable?

Mark: Absolutely. Many hospital and health systems leaders and their boards are talking about health equity. They may be building health equity into their contracts with health plans and even vendors. VBC is another tool that can be used to help address health equity. Every health system is at a different point in their health equity journey.

Dorrie: It may be achievable, but only if every stakeholder makes health equity a priority. Health inequities can affect every stakeholder in the ecosystem. It is important to look beyond the competitive landscape and recognize that every organization could have a role to play in solving this issue. A coalition made up of a wide range of stakeholders might bring innovative solutions to the table. When we started our VBC practice, we recognized quickly that it can take a village to make changes.

This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor.

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Endnotes: 

¹ State of U.S. Health Insurance in 2022: Biennial Survey, The Commonwealth Fund, September 29, 2022

² Sources of payment for uncompensated care for the uninsured, Kaiser Family Foundation, April 6, 2021

³ The Medicare value-based care strategy, Health Affairs, July 21, 2022

⁴ Patient Attribution Fact Sheet, Health Care Payment Learning & Action Network 

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